NATIONAL REALTY L P, DEFM14A, 2000-02-15

NATIONAL REALTY L P
DEFM14A, 2000-02-15
REAL ESTATE OPERATORS (NO DEVELOPERS) & LESSORS

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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement

[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

NATIONAL REALTY, L.P.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ ] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

-------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

-------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

-------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

-------------------------------------------------------------------------

(5) Total fee paid:

-------------------------------------------------------------------------

[_] Fee paid previously with preliminary materials.

[X] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
$67,392.93
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(2) Form, Schedule or Registration Statement No.:
S-4 Registration No: 333-93969
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(3) Filing Party:
American Realty Investors, Inc.
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(4) Date Filed:
December 30, 1999
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NATIONAL REALTY, L.P. AMERICAN REALTY TRUST, INC.

YOUR VOTE ON OUR PROPOSED BUSINESS COMBINATION IS VERY IMPORTANT

To the shareholders of American Realty Trust, Inc. and the limited partners of
National Realty, L.P.:

American Realty Trust, Inc. (ART) and National Realty, L.P. (NRLP) have
agreed to combine to create a new company named American Realty Investors, Inc.
(Newco). If the ART merger and the NRLP merger are approved by our shareholders
and limited partners, as applicable, we will combine our businesses through two
separate mergers with wholly owned subsidiaries of Newco (the mergers and
related transactions are collectively referred to as the business combination).
After the mergers, NRLP and ART will be subsidiaries of Newco.

In order to complete the mergers, we must obtain the approval of our
shareholders and limited partners. We believe that the business combination will
benefit the security holders of both companies and we ask for your support in
voting for the merger proposals at the special meetings.

When the business combination is completed, NRLP's limited partners will
receive one share of common stock of Newco for each partnership unit of NRLP
they currently own and ART shareholders will receive 0.91 shares of common stock
of Newco for each share of ART common stock they currently own and one share of
preferred stock of Newco for each share of ART preferred stock they currently
own.

We anticipate that approximately 12.4 million shares of Newco common stock
will be issued to shareholders of ART and limited partners of NRLP in or as a
result of the mergers. We estimate that NRLP unitholders will own approximately
2.8 million shares, or 22.7%, of Newco common stock, while ART common
shareholders will own approximately 9.6 million shares, or 77.3%, of Newco
common stock following the mergers. More information about the business
combination is contained in the materials that accompany this letter.

The boards of directors of both ART and NRLP Management Corp., the general
partner of NRLP, have approved the mergers and recommend that their respective
security holders vote for the merger proposals as described in the attached
materials.

ART shareholders will vote at ART's special meeting on March 21, 2000, at
10:00 a.m., local time, at 10670 North Central Expressway, Suite 600, Dallas,
Texas. NRLP limited partners will vote at NRLP's special meeting on March 21,
2000, at 10:30 a.m., local time, at 10670 North Central Expressway, Suite 600,
Dallas, Texas.

Your vote is important, regardless of the number of shares or units you
own. Please vote as soon as possible to make sure that your shares or units are
represented at the special meetings. You may vote your shares or units by
completing the enclosed proxy card, by telephoning the transfer agent or by
voting on the Internet. You may also cast your vote in person at the special
meetings.

Very truly yours,

_________________________________ _________________________________
Karl L. Blaha, President Karl L. Blaha, President
American Realty Trust, Inc. NRLP Management Corp.

_________________________________ _________________________________

Neither the Securities and Exchange Commission nor any state securities
commission has approved the common stock and preferred stock to be issued under
this joint proxy statement and prospectus or determined if this joint proxy
statement and prospectus is accurate or incomplete. Any representation to the
contrary is a criminal offense.

This joint proxy statement and prospectus is dated February 9, 2000, and is
first being mailed to shareholders and unitholders on or about February 11,
2000.
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AMERICAN REALTY TRUST, INC.
10670 N. Central Expressway
Suite 600
Dallas, Texas 75231

_______________________

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

_______________________

To the Shareholders of AMERICAN REALTY TRUST, INC.:

NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of
American Realty Trust, Inc. ("ART") will be held at the offices of ART, 10670 N.
Central Expressway, Suite 600, Dallas, Texas, 75231, on Tuesday, March 21, 2000,
at 10:00 a.m., local time, for the following purposes:

1. To consider and vote upon approval of the reorganization and consolidation
of ART and National Realty, L.P. ("NRLP") described in the accompanying
joint proxy statement/prospectus to be effected pursuant to an Agreement
and Plan of Reorganization (the "Plan of Reorganization") dated as of
November 3, 1999, by and among ART, NRLP, and American Realty Investors,
Inc. ("Newco"), a corporation formed for the purpose of effecting the
transactions contemplated by the Plan of Reorganization. The Plan of
Reorganization provides, among other things, for the following transactions
(collectively referred to in the accompanying joint proxy
statement/prospectus as the "Reorganization"):

(a) the merger of ART Acquisition Corp., a wholly owned subsidiary of
Newco, with and into ART pursuant to an Agreement of Merger in which
(1) each share of common stock of ART outstanding immediately prior to
the effective time of the merger will be converted into .91 shares of
common stock of Newco and (2) each share of preferred stock of ART
outstanding immediately prior to the effective time of the merger will
be converted into one share of preferred stock of Newco (other than
shares held by holders who have properly exercised dissenters' rights
under Georgia law); and

(b) the merger of NRLP Acquisition Corp., a wholly owned subsidiary of
Newco, with and into NRLP pursuant to an Agreement of Merger in which
each partnership unit of NRLP outstanding immediately prior to the
effective time of the merger (other than units held by ART and its
subsidiaries) will be converted into one share of Newco common stock.

As a result of the Reorganization, ART and NRLP will become subsidiaries of
Newco.

2. To consider and transact such other business as may properly come before
the Special Meeting.
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Only holders of record of shares of ART common stock and preferred stock at
the close of business on January 26, 2000, the record date for the Special
Meeting fixed by the ART board of directors, are entitled to notice of and to
vote at the Special Meeting and any adjournments or postponements thereof. A
list of these shareholders will be available for examination at the offices of
ART located at 10670 N. Central Expressway, Suite 600, Dallas, Texas, 75231 at
least ten days prior to the Special Meeting.

A summary of the provisions of Georgia law pertaining to the rights of
holders of ART preferred stock to demand appraisal of the fair value of their
shares if the Reorganization is approved and consummated, including a summary of
the requirements with which shareholders demanding such appraisal must comply,
is contained in the joint proxy statement/prospectus under the heading "THE
REORGANIZATION AGREEMENT-Dissenters' Rights." The entire text of the applicable
provisions of Georgia law is included as Appendix D to the accompanying joint
proxy statement/prospectus.

The accompanying joint proxy statement/prospectus describes the
Reorganization in detail.

The Reorganization is of great importance to ART and its shareholders.
Please read the joint proxy statement/prospectus carefully and then, if voting
by proxy, you may complete, sign and date the enclosed proxy card and return it
in the enclosed self-address postpaid envelope, or you may vote by telephone or
Internet, which authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card by mail. To vote
by telephone or Internet, read the proxy statement and then follow the steps
detailed on the proxy card.

Your prompt response will be appreciated.

By Order of the Board of Directors

Robert A. Waldman
Secretary and Corporate Counsel

Dallas, Texas
February 11, 2000

YOUR VOTE IS IMPORTANT.

TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY CARD AND
PROMPTLY MAIL IT IN THE ENCLOSED SELF-ADDRESSED POSTPAID ENVELOPE, OR TO VOTE BY
TELEPHONE OR INTERNET, FOLLOW THE DIRECTIONS ON THE PROXY CARD.
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NATIONAL REALTY, L.P.
10670 N. Central Expressway
Suite 600
Dallas, Texas 75231

_______________________

NOTICE OF SPECIAL MEETING OF LIMITED PARTNERS

_______________________

To the Limited Partners of NATIONAL REALTY, L.P.:

NOTICE IS HEREBY GIVEN that a Special Meeting of the Limited Partners of
National Realty, L.P. ("NRLP") will be held at the offices of NRLP, 10670 N.
Central Expressway, Suite 600, Dallas, Texas, 75231, on Tuesday, March 21, 2000,
at 10:30 a.m., local time, for the following purposes:

1. To consider and vote upon approval of the reorganization and consolidation
of NRLP and American Realty Trust, Inc. ("ART"), described in the
accompanying joint proxy statement/prospectus to be effected pursuant to an
Agreement and Plan of Reorganization (the "Plan of Reorganization") dated
as of November 3, 1999, by and among NRLP, ART and American Realty
Investors, Inc. ("Newco"), a corporation formed for the purpose of
effecting the transactions contemplated by the Plan of Reorganization. The
Plan of Reorganization provides, among other things, for the following
transactions (collectively referred to in the accompanying joint proxy
statement/prospectus as the "Reorganization"):

(a) the merger of NRLP Acquisition Corp., a wholly owned subsidiary of
Newco, with and into NRLP pursuant to an Agreement of Merger in which
each unit of limited partnership of NRLP outstanding immediately prior
to the effective time of the merger (other than shares held by ART and
its subsidiaries) will be converted into one share of common stock of
Newco; and

(b) the merger of ART Acquisition Corp., a wholly owned subsidiary of
Newco, with and into ART pursuant to an Agreement of Merger in which
each (1) share of ART outstanding immediately prior to the effective
time of the merger will be converted into .91 shares of Newco common
stock and (2) each share of preferred stock of ART outstanding
immediately prior to the effective time of the merger will be
converted into one share of preferred stock of Newco (other than
shares held by holders who have properly exercised dissenters' rights
under Georgia law).

As a result of the Reorganization, NRLP and ART will become subsidiaries of
Newco.

2. To consider and transact such other business as may properly come before
the Special Meeting.
<PAGE>

Only holders of record of units of limited partnership of NRLP at the close
of business on January 26, 2000, the record date for the Special Meeting fixed
by the board of directors of NRLP's general partner, NRLP Management Corp., are
entitled to notice of and to vote at the Special Meeting and any adjournments or
postponements thereof. A list of these unitholders will be available for
examination at the offices of NRLP located at 10670 N. Central Expressway, Suite
600, Dallas, Texas, 75231 at least ten days prior to the Special Meeting.

The accompanying joint proxy statement/prospectus describes the
Reorganization in detail.

The Reorganization is of great importance to NRLP and its unitholders.
Please read the joint proxy statement/prospectus carefully and then, if voting
by proxy, you may complete, sign and date the enclosed proxy card and return it
in the enclosed self-address postpaid envelope, or you may vote by telephone or
Internet, which authorizes the named proxies to vote your units in the same
manner as if you marked, signed and returned your proxy card by mail. To vote
by telephone or Internet, read the proxy statement and then follow the steps
detailed on the proxy card.

Your prompt response will be appreciated.

By Order of the Board of Directors
of NRLP Management Corp.

Robert A. Waldman
Secretary and Corporate Counsel

Dallas, Texas
February 11, 2000

YOUR VOTE IS IMPORTANT.

TO VOTE YOUR UNITS, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY CARD AND
PROMPTLY MAIL IT IN THE ENCLOSED SELF-ADDRESSED POSTPAID ENVELOPE, OR TO VOTE BY
TELEPHONE OR INTERNET, FOLLOW THE DIRECTIONS ON THE PROXY CARD.
<PAGE>

Forward Looking Statements

Certain statements, excluding those made under the captions "SUMMARY,"
"RISK FACTORS," "BUSINESS OF ART," "BUSINESS OF NRLP" and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ART"
and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF NRLP," constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 (the Reform Act). These
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
ART, NRLP or Newco to be materially different from any future results,
performance or achievements expressed or implied by these forward-looking
statements. These factors include, among others: general economic and business
conditions, which will, among other things, affect the supply and demand for
commercial real estate, availability and creditworthiness of prospective
tenants, lease rates and the availability of financing; adverse changes in the
real estate markets including, among other things, competition, risks associated
with real estate acquisitions; governmental actions and initiatives;
environmental/safety requirements; and other changes and factors referenced in
this joint proxy statement and prospectus.

Where You Can Find More Information

ART and NRLP file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any document filed by
ART or NRLP at the SEC's public reference rooms in Washington, D.C., New York,
New York and Chicago, Illinois. The public reference room at the SEC's office in
Washington, D.C. is located at 450 Fifth Street, N.W. Please call the SEC at 1-
800-SEC-0330 for further information on the public reference rooms. The
companies' SEC filings are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
"http:\\www.sec.gov." In addition, because ART's common stock is listed on the
New York Stock Exchange, reports and other information concerning ART (symbol:
"ARB") can also be inspected at the office of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005. Because NRLP's units of limited
partner interest are traded on the American Stock Exchange (symbol: "NLP"),
reports and other information concerning NRLP can also be inspected at the
office of the American Stock Exchange, 86 Trinity Place, New York, New York
10006.

Newco has filed a registration statement on Form S-4 to register with the
SEC the Newco common stock to be delivered to the ART shareholders and the NRLP
unitholders in the business combination. This joint proxy statement and
prospectus is a part of that registration statement and constitutes a prospectus
of Newco in addition to being a proxy statement of both ART and NRLP for the
special meetings. As allowed by SEC rules, this joint proxy statement and
prospectus does not contain all the information you can find in the registration
statement or the exhibits to the registration statement.

The federal securities laws allow ART and NRLP to "incorporate by
reference" information into this joint proxy statement and prospectus, which
means important information may be disclosed to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this joint proxy statement and prospectus,
except for any information superseded by information in, or incorporated by
reference in, this joint proxy statement and prospectus. This joint proxy
statement and prospectus incorporates by reference the

i
<PAGE>

documents set forth below that have been previously filed with the SEC. These
documents contain important information about our companies and their finances.

ART SEC Filings (File No. 001-09948) Period
Annual Report on Form 10-K Year ended December 31, 1998
Annual Report on Form 10-K/A Year ended December 31, 1998
Annual Report on Form 10-K/A Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter ended September 30, 1999
Quarterly Report on Form 10-Q/A Quarter ended September 30, 1999
Quarterly Report on Form 10-Q Quarter ended June 30, 1999
Quarterly Report on Form 10-Q Quarter ended March 31, 1999

NRLP SEC Filings (File No. 001-09648) Period
Annual Report on Form 10-K Year ended December 31, 1998
Annual Report on Form 10-K/A Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter ended September 30,1999
Quarterly Report on Form 10-Q/A Quarter ended September 30, 1999
Quarterly Report on Form 10-Q Quarter ended June 30, 1999
Quarterly Report on Form 10-Q Quarter ended March 31, 1999

ART and NRLP are also incorporating by reference additional documents that
either company may file with the SEC between the date of this joint proxy
statement and prospectus and the date of the special meetings. If any document
ART or NRLP files with the SEC during that time period changes in any way a
statement made in any earlier document, including this document, you should
consider the most recently reported information to be the correct information
making the earlier statements invalid to the extent they are modified.

ART has supplied all information contained or incorporated by reference in
this joint proxy statement and prospectus relating to ART, and NRLP has supplied
all the information relating to NRLP.

Documents incorporated by reference are available from either company
without charge, excluding all exhibits unless specifically incorporated by
reference in this joint proxy statement and prospectus. Shareholders and
unitholders may obtain free copies of documents incorporated by reference in
this joint proxy statement and prospectus or those that are exhibits to the Form
S-4 by requesting them in writing or by telephone from the appropriate party at
the following address:

For ART Documents: For NRLP Documents:
Investor Relations Department Investor Relations Department
American Realty Trust, Inc. National Realty, L.P.
10670 North Central Expressway 10670 North Central Expressway
Suite 300 Suite 300
Dallas, Texas 75231 Dallas, Texas 75231
Tel: (214) 692-4800 Tel: Tel: (214) 692-4800
1-800-400-6407 1-800-400-6407

If you would like to request documents from either company, please do so by
March 10, 2000 to receive them before the special meetings.

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<PAGE>

You should rely only on the information contained or incorporated by
reference in this joint proxy statement and prospectus to vote on the approval
of the business combination. Neither ART nor NRLP has authorized anyone to
provide you with information that is different from what is contained in this
joint proxy statement and prospectus. This joint proxy statement and prospectus
is dated February 9, 2000. You should not assume that the information contained
in the joint proxy statement and prospectus is accurate as of any date other
than that date, and neither the mailing of this joint proxy statement and
prospectus to shareholders and/or unitholders nor the delivery of Newco common
stock in the business combinations shall create any implication to the contrary.

We have authorized no one to give you any information or to make any
representation about either of the proposed mergers or the companies that
differs from or adds to the information contained in this document or in the
documents ART and NRLP have publicly filed with the SEC. Therefore, if anyone
should give you any different or additional information, you should not rely on
it.

If you live in a jurisdiction where it is unlawful to offer to exchange or
sell, or to ask for offers to exchange or buy, the securities offered by this
document, or to ask for proxies, or, if you are a person to whom it is unlawful
to direct these activities, then the offer presented by this document does not
extend to you.

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TABLE OF CONTENTS

<TABLE>
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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION...................... 1
SUMMARY................................................................... 5
General................................................................... 5
Proxy Statement for ART and NRLP.......................................... 5
Purpose of the Business Combination....................................... 5
Summary of Risk Factors................................................... 6
The Companies............................................................. 7
The Mergers............................................................... 9
New York Stock Exchange Listing of Newco Common Stock..................... 10
The Special Meetings...................................................... 11
The Recommendation of the ART Board....................................... 11
The Recommendation of the NRLP General Partner............................ 12
Conflicts of Interest..................................................... 12
Opinions of Financial Advisors............................................ 12
Federal Income Tax Considerations......................................... 13
Accounting Treatment...................................................... 14
Comparison of Shareholder and Partner Rights.............................. 14
Comparative Per Unit/Share Information.................................... 15
Market Prices and Dividend Information.................................... 16
RISK FACTORS.............................................................. 17
Possible Detrimental Effects of the Merger................................ 17
Correlation Between the Value of the Newco Common Stock and the Success of
the Combined Business of ART and NRLP.................................. 18
Investments in Real Property are Illiquid and Subject to Various Economic
Risks.................................................................. 20
Potential Environmental Liability ........................................ 20
Difficulty of Locating Suitable Investments; Competition.................. 21
Dependence on Rental Income from Real Property............................ 21
Properties that Serve as Collateral for Mortgage Notes Receivable......... 21
Property Operating Risks.................................................. 22
Investments in Non-Recourse Mortgage Loans................................ 22
Possibility of Uninsured Loss on Uninsurable or Economically Uninsurable
Property............................................................... 23
Costs of Compliance with the Americans with Disabilities Act and Similar
Laws................................................................... 23
Noncompliance with Other Laws............................................. 24
Changes in Laws........................................................... 24
Lack of Control and Other Risks of Equity Investments in and with Third
Parties................................................................ 24
Limitations on Remedies................................................... 25
RATIO OF EARNINGS TO FIXED CHARGES........................................ 26
USE OF PROCEEDS........................................................... 26
THE SPECIAL MEETINGS...................................................... 27
Introduction.............................................................. 27
ART Special Meeting....................................................... 27
NRLP Special Meeting...................................................... 27
Voting Instructions....................................................... 27
Voting by Written Proxy Card.............................................. 27
Voting by Telephone or the Internet....................................... 28
Record Date; Votes Required............................................... 28
Dissenter's Rights........................................................ 28
Proxy..................................................................... 29
Solicitation of Proxies................................................... 29
Other Matters............................................................. 30
THE PROPOSED BUSINESS COMBINATION AND RELATED MATTERS..................... 30
General................................................................... 30
Background of the Business Combination.................................... 30
Effects of the Mergers.................................................... 32
Effective Time of the Mergers............................................. 32
Exchange of Securities.................................................... 32
Cash in Lieu of Fractional Shares of Newco Common Stock................... 33
Conditions to the Business Combination; Termination; Waiver and
Amendment.............................................................. 33
Reasons for the Business Combination...................................... 35
The Recommendation of the ART Board....................................... 35
The Recommendation of the NRLP General Partner............................ 37
Opinion of Financial Advisors............................................. 40
Opinion of ART's Financial Advisor........................................ 40
Opinion of NRLP's Financial Advisor....................................... 46
Federal Income Tax Considerations......................................... 53
Litigation................................................................ 59
THE REORGANIZATION AGREEMENT.............................................. 60
Exchange of Certificates.................................................. 62
Accounting Treatment...................................................... 63
Consequences Under Federal Securities Laws; Resale of Newco Stock. ....... 63
Dissenters' Rights........................................................ 63
Interests of Certain Persons in the Mergers............................... 65
Management and Board of Directors after the Merger........................ 65
Stock Options............................................................. 66
Expenses of the Mergers................................................... 66
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION.................... 66
BUSINESS OF NEWCO......................................................... 74
MANAGEMENT OF NEWCO....................................................... 74
Directors................................................................. 74
Executive Officers........................................................ 75
Officers.................................................................. 76
EXECUTIVE COMPENSATION OF NEWCO........................................... 76
BUSINESS OF ART........................................................... 76
General................................................................... 76
The Manager............................................................... 77
Geographic Regions........................................................ 81
Real Estate............................................................... 81
Mortgage Loans............................................................ 89
Related Party............................................................. 90
Investments in Real Estate Investment Trusts and Real Estate
Partnerships........................................................... 92
Legal Proceedings......................................................... 97
Competition............................................................... 97
Employees................................................................. 97
SELECTED FINANCIAL DATA OF ART............................................ 98
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF ART................................................... 99
Introduction.............................................................. 99
Liquidity and Capital Resources........................................... 99
Results of Operation...................................................... 108
</TABLE>

iv
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<TABLE>
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Environmental Matters..................................................... 114
Inflation................................................................. 114
Year 2000................................................................. 115
Quantitative and Qualitative Disclosure About Market Risk of ART.......... 115
BUSINESS OF NRLP.......................................................... 117
General................................................................... 117
The Manager............................................................... 118
Geographic Regions........................................................ 118
Real Estate............................................................... 119
Mortgage Loans............................................................ 123
Investment in Marketable Equity Securities of ART......................... 127
Legal Proceedings......................................................... 127
Competition............................................................... 128
Employees................................................................. 128
SELECTED FINANCIAL DATA OF NRLP........................................... 129
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF NRLP.................................................. 130
Introduction.............................................................. 130
Liquidity and Capital Resources........................................... 130
Results of Operations..................................................... 134
Environmental Matters..................................................... 138
Inflation................................................................. 138
Taxes..................................................................... 139
Year 2000................................................................. 139
Quantitative and Qualitative Disclosure About Market Risk of NRLP......... 139
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF ART..... 141
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF NRLP.... 142
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF ART..................... 143
Policies with Respect to Certain Activities............................... 143
Certain Business Relationships............................................ 143
Related Party Transactions................................................ 144
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF NRLP.................... 146
Certain Business Relationships............................................ 146
Related Party Transactions................................................ 146
Indebtedness of Management................................................ 148
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON................... 148
CONFLICTS OF INTEREST..................................................... 148
MARKET FOR ART'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS............ 150
MARKET FOR NRLP'S UNITS OF LIMITED PARTNER INTEREST AND RELATED SECURITY
HOLDER MATTERS......................................................... 151
DESCRIPTION OF THE CAPITAL STOCK OF NEWCO................................. 152
Description of Common Stock............................................... 152
Voting Rights............................................................. 152
Dividends................................................................. 152
Description of Preferred Stock........................................... 152
Series A.................................................................. 153
Series B.................................................................. 155
Series C.................................................................. 155
Series D.................................................................. 157
Series E.................................................................. 157
CHARTER AND BYLAWS OF NEWCO............................................... 158
Authorized Stock.......................................................... 158
Directors................................................................. 158
Stockholder Meetings and Special Voting Requirements...................... 159
Amendment of the Charter and Bylaws....................................... 159
Transactions with Interested Officers or Directors........................ 159
Anti-Takeover Effect of Authorized but Undesignated Preferred Stock....... 159
Liability for Monetary Damages............................................ 160
Indemnification and Advancement of Expenses............................... 160
ANTI-TAKEOVER PROVISIONS OF THE ORGANIZATIONAL DOCUMENTS OF NEWCO......... 161
Number of Directors; Removal; Filling Vacancies........................... 161
Advance Notice Provisions for Director Nominations and Stockholder
Proposals.............................................................. 161
Business Combinations Under Nevada Law.................................... 162
DESCRIPTION OF THE CAPITAL STOCK OF ART................................... 162
General................................................................... 162
Common Stock.............................................................. 162
Special Stock............................................................. 163
DESCRIPTION OF THE PARTNERSHIP UNITS OF NRLP.............................. 170
General................................................................... 170
Participation in Net Income, Net Loss and Distributions................... 170
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES............................... 170
COMPARISON OF OWNERSHIP OF UNITS AND SHARES............................... 172
SECURITYHOLDER PROPOSALS.................................................. 183
LEGAL MATTERS............................................................. 183
EXPERTS................................................................... 183
INDEX TO FINANCIAL STATEMENTS............................................. F-1
</TABLE>

APPENDICES:

APPENDIX A - Agreement and Plan of Reorganization
APPENDIX B - Opinion of Fieldstone, Inc.
APPENDIX C - Opinion of Houlihan Lokey Howard & Zukin
APPENDIX D - Georgia Dissenters' Rights

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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

1.Q: What is being proposed?

A: We are asking you to approve the combination of National Realty,
L.P. (NRLP) and American Realty Trust, Inc. (ART) as separate subsidiaries of
newly formed American Realty Investors, Inc. (Newco). To accomplish this, we,
the board of directors of ART and the general partner of NRLP, are proposing the
mergers of two separate newly created subsidiary corporations of Newco with and
into NRLP and ART, respectively.

As a result of the combination, the limited partners of NRLP, other
than ART and its subsidiaries, and the common shareholders of ART will receive
shares of common stock of Newco in exchange for each unit and/or share they now
hold. After the business combination is complete, your shares of Newco common
stock are expected to trade on the New York Stock Exchange (NYSE) under the
symbol "ARL."

After the business combination, ART and NRLP will continue to exist
but will be subsidiaries of Newco. NRLP will be the surviving entity in its
merger and will have as its limited partners ART, one or more subsidiaries of
ART and Newco. NRLP Management Corp., a wholly owned subsidiary of ART, will
continue to act as the general partner of NRLP. ART will be the surviving
entity in its merger and will be a wholly-owned subsidiary of Newco.

2.Q: Why is the business combination being proposed?

A: The board of directors of ART and of the general partner of NRLP have
each determined that the business combination is likely to benefit the security
holders of ART and NRLP in several ways. The combined entity will be larger,
with a greater number of shareholders and greater equity capitalization than
either NRLP or ART.

We believe that investors, especially institutional investors, are
more likely to invest in the combined entity due to its larger market
capitalization. This, together with the listing of Newco common stock on the
NYSE, should result in greater liquidity for existing investors. For the same
reasons, we believe that the combined entity will be better able than either
NRLP or ART alone to attract new investors and, therefore, to obtain financing
to pursue additional real estate acquisition and development projects. Finally,
the combined entity will eliminate duplicative record keeping and reporting and
thereby reduce ongoing expenses.

We also believe that the business combination will provide investors
increased opportunity for growth of their investment.

3.Q: What will I receive in the merger?

A: Each partnership unit in NRLP (other than those owned by ART and its
wholly owned subsidiaries) will be converted into one share of Newco common
stock. For example, if you own 100 units, you will receive 100 shares of Newco
common stock.

Each share of common stock in ART will be converted into .91 shares of
Newco common stock. For example, if you own 100 shares of common stock in ART,
you will receive 91 shares of Newco common stock. Newco will not issue
fractional shares of common or preferred stock. Instead, a holder of ART common
stock will receive cash instead of any resulting fraction of a share in an
amount reflecting the market value of the fraction of a share.

Each outstanding share of preferred stock of ART will be converted
into one share of Newco preferred stock with substantially the same rights and
preferences as the applicable ART preferred stock.

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After the business combination, current holders of partnership units
of NRLP, other than ART and its subsidiaries, will own 22.7% of the Newco common
stock, and current shareholders of ART common stock will own 77.3% of the Newco
common stock. After the merger, current holders of ART preferred stock will own
all of the outstanding Newco preferred stock.

4.Q What vote is required to approve my merger?

A: In order to approve your merger, the holders of the majority of
(a) partnership units of NRLP or (b) shares of ART common stock and each
outstanding series of ART preferred stock, as applicable, must vote in favor of
the applicable merger.

ART currently owns 3,501,569 NRLP partnership units, representing
approximately 55.4% of the outstanding partnership units of NRLP.

Basic Capital Management, Inc., the advisor to and majority
shareholder of ART, currently owns 6,008,872 shares of ART common stock,
representing approximately 56.9% of the outstanding shares of ART common stock.

Although not required by either (1) Delaware law or the terms of the
NRLP partnership agreement or (2) Georgia law or the terms of ART's charter, the
boards of the general partner of NRLP and ART have agreed to condition the
effectiveness of the business combination upon receipt of the approval of a
majority of NRLP partnership units, other than those held by ART and its
subsidiaries, and a majority of shares of ART common stock, other than those
held by Basic Capital, that are voted at the applicable meeting, either in
person or by proxy.

5.Q: What do I need to do now?

A: Please mail your signed proxy card in the enclosed return envelope as
soon as possible so that your units of NRLP or shares of ART stock may be
represented at the appropriate meeting.

6.Q: Where and at what time will the meetings be held?

A: The ART special meeting will be held on March 21, 2000, at the offices
of ART at 10670 North Central Expressway, Suite 600, Dallas, Texas, 75231, at
10:00 a.m., Central Standard Time.

The NRLP special meeting will be held on March 21, 2000, at the offices of
NRLP at 10670 North Central Expressway, Suite 600, Dallas, Texas, 75231, at
10:30 a.m., Central Standard Time.

7.Q: If my units or shares are held by my broker, will my broker vote my units
or shares for me?

A: Your broker may vote your units or shares on the merger only if you
instruct your broker how to vote. You should follow the directions provided by
your broker regarding how to instruct your broker to vote your units or shares.
If you do not tell your broker how to vote, your units or shares will not be
voted on the merger. If you hold your shares or units in a brokerage account,
you cannot vote in person at your meeting.

8.Q: Can I change my vote after I have mailed my signed proxy card?

A: Yes. You may change your vote at any time before your proxy is voted
at your meeting. You may do this by sending a written notice stating that you
would like to revoke your proxy or by completing and submitting a new proxy card
bearing a later date than the proxy relating to the same units or shares to our
transfer agent, American Stock Transfer

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and Trust Company, attention Joe Alicia. You may also attend your meeting and
vote in person. Simply attending the meeting, however, will not revoke your
proxy. If you hold your shares or units in a brokerage account and you have
instructed your broker to vote, you must follow your broker's instructions
regarding how to change your vote.

9.Q: Should I send in my certificates now?

A: No. After the mergers are completed, you will receive written
instructions for exchanging units of NRLP and shares in ART for Newco stock.

10.Q: I've lost my certificate. What should I do?

A: After the close of the business combination, you will receive a letter
of transmittal with complete instructions.

11.Q: What are the tax consequences of the merger?

A: If you own shares of stock of ART, the exchange of your ART stock for
stock of Newco should be treated as a transfer of your ART stock to Newco.
Subject to certain limited exceptions, you should not recognize any gain or loss
as a result of the merger other than gain or loss attributable to receipt of
cash in lieu of fractional shares, cash received upon the exercise of dissenters
rights or the receipt of nonqualified preferred stock. If you own NRLP units,
the exchange of your units for stock of Newco should be treated as a transfer of
your NRLP units to Newco and should, in almost all cases, be tax-free to you.
In those infrequent cases where your share of NRLP's liabilities exceeds your
basis in your units, you will recognize gain to the extent of that excess. This
gain should be treated, for the most part, as capital gain. After the
consolidation, you will be a stockholder rather than a limited partner, so you
will no longer receive the pass-through tax treatment accorded to partners and
you will no longer receive a Schedule K-1.

The aggregate tax basis of the Newco common stock received by an ART
shareholder will be equal to the aggregate tax basis of the ART common stock
converted into Newco stock, reduced by any amounts allocable to a fractional
share interest for which cash is received. The tax basis of the Newco common
stock received by an NRLP unitholder who recognizes no gain or loss pursuant to
the merger will be equal to the tax basis of the NRLP units converted into Newco
stock, reduced by the amount of the partnership liabilities attributable to
these units.

It is a condition to the consummation of the mergers that Newco, ART
and NRLP receive an opinion of Locke Liddell & Sapp LLP to the effect that the
mergers will be treated for federal income tax purposes as transfers of property
governed by Section 351 of the Internal Revenue Code. We will not waive this
condition unless we amend this document and resolicit your proxy.

12.Q: When do the companies expect to complete the business combination?

A: If the mergers are approved by the unitholders of NRLP and the
shareholders of ART, the business combination will occur as soon as possible
after approval. We expect this to occur during the first quarter of 2000.

13.Q: Will I have dissenters' rights in the merger?

A: No. Under applicable law dissenters rights are not available to the
holders of ART common stock or NRLP partnership units. Dissenters' rights are
available to the holders of ART preferred stock, as described in the section
entitled "THE REORGANIZATION AGREEMENT--Dissenters' Rights" on page 63.

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<PAGE>

14.Q: When will shares of Newco begin trading?

A: Application has been made to list the shares of Newco common stock on
the New York Stock Exchange. We anticipate that the shares of Newco common stock
will begin trading on the New York Stock Exchange on the day after the business
combination is completed.

15.Q: How can I tell how many NRLP units or shares of ART I own?

A: The number of units or shares that you own is given on your proxy card.

16.Q: Who can I contact for more information?

A: ART shareholders who have questions about the ART merger or the
business combination may call Investor Relations at (214) 692-4800 or
1-800-400-6407.

NRLP unitholders who have questions about the NRLP merger or the business
combination may call Investor Relations at (214) 692-4800 or 1-800-400-6407.

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SUMMARY

This summary highlights selected information from this proxy statement and
may not contain all information that is important to you. To understand the
business combination more fully and for a more complete description of the terms
of your mergers, you should read carefully this entire proxy statement and the
documents to which we have referred you. The following summary is qualified in
its entirety by reference to the detailed information appearing elsewhere in
this proxy statement.

General

Proxy Statement for ART and NRLP. This proxy statement describes the
--------------------------------
proposed business combination of ART and NRLP through the mergers of ART and
NRLP with separate subsidiaries of Newco. Through this proxy statement, ART's
board of directors and NRLP Management Corp., the general partner of NRLP (NMC),
are asking the shareholders of ART and the unitholders of NRLP, respectively, to
approve the merger of their companies with the subsidiaries of Newco.

The ART merger proposal will require the affirmative vote of holders
representing a majority of the shares of ART common stock and of ART preferred
stock, voting as separate classes, then outstanding. Basic Capital Management,
Inc., the advisor and affiliate of ART (BCM), currently owns 56.9% of the shares
of ART common stock. BCM plans to vote all of its shares in favor of the ART
merger. Although not required by Georgia law or ART's charter, the ART board
has agreed to condition the effectiveness of the ART merger upon the receipt of
the approval of a majority of the shares of ART common stock, not owned by BCM,
represented at the ART special meeting, whether in person or by proxy. The ART
merger will not take effect unless the NRLP merger is approved.

The NRLP merger proposal will require the affirmative vote of NRLP
unitholders representing a majority of the total votes authorized to be cast by
the holders of NRLP partnership units then outstanding. ART and a subsidiary of
ART currently own 55.4% of the outstanding NRLP units, and ART is the 100% owner
of its general partner, NMC. ART plans to vote all of its partnership units in
favor of the NRLP merger. Although not required by Delaware law or the NRLP
partnership agreement, NMC has agreed to condition the effectiveness of the NRLP
merger upon the receipt of the approval of a majority of NRLP partnership units,
not owned by ART or its subsidiaries represented at the NRLP special meeting,
whether in person or by proxy. The NRLP merger will not take effect unless the
ART merger is approved.

Purpose of the Business Combination. The purpose of the business
-----------------------------------
combination is (a) to combine ART and NRLP, (b) to create a new company,
American Realty Investors, Inc. (Newco), which will operate as the parent
corporation of NRLP and ART, and (c) to distribute the shares of Newco common
stock to the current shareholders of ART and the unitholders of NRLP (other than
ART). ART and NRLP are engaged in substantially the same business and have
substantially similar operating concepts and philosophies. Combining the
operations of the two companies under the ownership of Newco should enable Newco
to (1) attract financing at more competitive rates than are available to either
NRLP or ART separately and (2) compete more effectively for investments.

As a result of the business combination, ART and NRLP will each (directly
and/or indirectly) become subsidiaries of Newco, a recently formed Nevada
corporation, and the capital stock of Newco will be distributed to the former
shareholders of ART and unitholders of NRLP (other than ART and its
subsidiaries). Former shareholders of ART and former unitholders of NRLP will
become shareholders of Newco. In the ART merger, (a) each outstanding share of
ART common

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<PAGE>

stock will be converted into .91 shares of Newco common stock, and (b) each
outstanding share of ART preferred stock will be converted into one share of
Newco preferred stock with similar rights and privileges. In the NRLP merger,
each outstanding partnership unit of NRLP (other than those owned by ART or its
subsidiaries) will be converted into one share of Newco common stock.

The diagrams set forth below illustrate the ownership of ART, NRLP and
Newco after consummation of the mergers.

------------------------ -----------------------
ART NRLP
Shareholders - 77.3% Unitholders - 22.7%
------------------------ -----------------------

Resulting
Structure
- ---------
---------
NEWCO
---------

100% ART shares

-------
ART
-------

44.6% NRLP units

55.4% NRLP units

--------
NRLP
--------

Summary of Risk Factors. In considering whether or not to vote in favor of
-----------------------
your merger, ART shareholders and NRLP unitholders should carefully consider all
of the information set forth in this joint proxy statement and prospectus and,
in particular, should evaluate the factors set forth under the caption "RISK
FACTORS" herein. These factors include, among other things:

. Dilution of current ownership interest. If the business combination
--------------------------------------
is consummated, the percentage ownership of the ART shareholders and
the NRLP unitholders in the assets of their respective companies will
be diluted.

. Application for the listing and trading of Newco common stock. While
-------------------------------------------------------------
the listing of the Newco common stock on the NYSE is a condition
precedent to ART's and NRLP's obligation to consummate the mergers,
there can be no assurance that an active market for the Newco common
stock will develop or be sustained in the future on the NYSE.

. Reliance on the Newco board of directors to declare dividends on the
--------------------------------------------------------------------
Newco common stock. Dividends will not be paid on shares of Newco
------------------
common stock unless and until they are declared by the Newco board.
Holders of Newco common stock will not have the authority to direct or
compel the board to declare dividends with respect to the Newco common
stock.

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. Anti-takeover effect. If the mergers are consummated, BCM will
--------------------
acquire an aggregate of 6,255,043 shares of Newco common stock, or
approximately 50.3% of the Newco shares outstanding after the merger.
As a result of the foregoing, third party attempts to acquire control
of Newco may not be practicable. Accordingly, if the mergers are
approved, it is unlikely that an attempted take-over of Newco, which
might result in an increase in the price at which Newco shares could
be sold, will occur.

. Newco's dependence on operations of ART and NRLP. The value of the
------------------------------------------------
Newco common stock is substantially related to the success of the
businesses of ART and NRLP which are subject to a number of risks as
generally described herein under "RISK FACTORS" on page 17.

The Companies

American Realty
Investors, Inc.
(Newco) A newly formed Nevada corporation that has not, to
date, conducted any activities other than those
incident to its formation, the execution of the
reorganization agreement and the preparation of this
joint proxy statement and prospectus. As a result of
the business combination, ART and NRLP will become
wholly owned subsidiaries of Newco. The business of
Newco will be the businesses currently conducted by ART
and NRLP. We anticipate that approximately 12.4 million
shares of Newco common stock will be issued to
shareholders of ART and unitholders of NRLP in the
mergers. We estimate that former shareholders of ART
will own approximately 9.6 million shares, or 77.3%, of
Newco common stock and the former NRLP unitholders
(other than ART) will own approximately 2.8 million
shares, or 22.7%, of Newco common stock.

American Realty Trust,
Inc. (ART) A publicly traded Georgia corporation engaged primarily
in the business of investing in equity interests in
real estate (including equity securities of real
estate-related entities), leases, joint venture
development projects and partnerships and financing
real estate and real estate activities through
investments in mortgage loans, including first,
wraparound and junior mortgage loans. The day-to-day
operations of ART are performed by BCM. BCM is a
contractual advisor under the supervision of the board
of directors of ART. The duties of BCM include, among
other things, locating, investigating, evaluating and
recommending real estate and mortgage note investment
and sales opportunities, as well as financing and
refinancing sources for ART. BCM also serves as a
consultant in connection with ART's business plan and
investment policy decisions made by the ART board of
directors. As of December 31, 1999, ART owned
approximately 55.4% of NRLP's

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outstanding units of limited partner interest. ART
is the 100% owner of NRLP Management Corp., the
general partner of NRLP.

National Realty, L.P.
(NRLP) A publicly traded Delaware limited partnership
primary engaged in the business of owning and
operating a portfolio of real estate and financing
real estate and real estate activities through
investments in mortgage loans through National
Operating, L.P., a Delaware limited partnership
(NOLP). BCM performs administrative functions for
NRLP, including accounting services, mortgage
servicing and portfolio review and analysis, on a
cost reimbursement basis. BCM also performs loan
placement services, leasing services, real estate
brokerage and property management services with
respect to some of NRLP's properties, and may
perform other services for NRLP for fees and
commissions.

Basic Capital Management,
Inc. (BCM) An affiliate and majority shareholder of ART. BCM
is the advisor to ART, NRLP and NOLP. As of
December 31, 1999, BCM owned 6,008,872 shares of
ART common stock, representing approximately 56.9%
of the outstanding shares of ART common stock.

NRLP Management Corp.
(NMC) A Nevada corporation and a wholly owned subsidiary
of ART. NMC is the general partner of NRLP and
NOLP.

National Operating, L.P.
(NOLP) A Delaware limited partnership and 99% owned by
NRLP. NOLP is the operating partnership of NRLP.

Garden Capital, L.P.
(GCLP) A Delaware limited partnership in which NOLP is
the 99.3% limited partner and Garden National
Realty, Inc., a Nevada corporation and wholly
owned subsidiary of ART, is the .7% general
partner.

NRLP Acquisition Corp. A Delaware corporation and the newly-formed and
wholly owned subsidiary of Newco which is to be
merged with and into NRLP.

ART Acquisition Corp. A Georgia corporation and the newly-formed and
wholly owned subsidiary of Newco which is to be
merged with and into ART.

The principal operating offices of each of Newco, ART, NRLP, ART
Acquisition Corp. and NRLP Acquisition Corp. are located at 10670 North Central
Expressway, Suite 300, Dallas, Texas 75231. The telephone number is
(214) 692-4700.

For more information on the business combination, you may call our
solicitation agent, Georgeson Shareholder Communications, Inc., at
1-800-221-5724.

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The Mergers

Conditions of the Mergers. Completion of the mergers is dependent upon the
-------------------------
fulfillment of a number of conditions, including the following material
conditions:

. the approval of the mergers by the holders of a majority of the
partnership units of NRLP voting at the meeting (other than those
held by ART or its subsidiaries) and the holders of a majority of
the capital stock of ART voting at the meeting (other than those
held by BCM);

. this joint proxy statement and prospectus having been declared
effective by the SEC;

. the shares of Newco common stock to be issued in the merger having
been approved for listing on the New York Stock Exchange;

. all necessary consents from third parties having been obtained;

. each party having performed its obligations under the reorganization
agreement in all material respects;

. no restraining order, injunction, order or decree of any court having
been issued;

. the delivery of opinions of legal counsel;

. the filing by the parties of all documents and instruments required to
be filed with governmental entities; and

. no action having been taken by any state or federal government or
agency which would prevent the merger or impose material
conditions on the merger.

The reorganization agreement permits the parties to waive any of these
conditions to the merger that are in favor of that party. If the parties elect
to waive any of these material conditions to one of the mergers, this joint
proxy statement and prospectus will be amended or supplemented, as appropriate,
and will be recirculated to the affected unitholders or shareholders if the
waiver occurs prior to approval of the applicable merger by the unitholders or
shareholders. If any of these material conditions to one of the mergers is
waived after the parties receive unitholder or shareholder approval, the
unitholders or shareholders of a party adversely affected by the waiver will be
asked to reapprove that merger.

The reorganization agreement may be terminated by one or more parties at
any time prior to the effective time if specific events occur. See "THE PROPOSED
BUSINESS COMBINATION AND RELATED MATTERS--Conditions to the Business
Combination; Termination; Waiver and Amendment" on page 33.

Availability of Dissenters' Rights. Holders of ART common stock do not
----------------------------------
have dissenters' rights under Georgia law. The holders of ART preferred stock
will have dissenters' rights as described in the section entitled "THE
REORGANIZATION AGREEMENT--Dissenters' Rights"

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<PAGE>

on page 63. NRLP unitholders do not have dissenters' rights under the NRLP
partnership agreement or Delaware law.

The Mergers. The reorganization agreement provides that, subject to the
-----------
satisfaction or waiver of certain conditions, ART Acquisition Corp. will be
merged with and into ART, whereupon the separate existence of ART Acquisition
Corp. will cease and ART will be the surviving entity of the ART merger. In
addition, NRLP Acquisition Corp. will be merged with and into NRLP, whereupon
the separate existence of NRLP Acquisition Corp. will cease and NRLP will be the
surviving entity of the NRLP merger. The mergers will become effective upon the
filing of certificates of merger with the Secretary of State of each of the
states of Georgia and Delaware. As soon as practicable following the closing of
the business combination, ART shareholders and NRLP unitholders (other than ART
and its subsidiaries) will receive shares of Newco stock. See "THE PROPOSED
BUSINESS COMBINATION AND RELATED MATTERS" on page 30.

The reorganization agreement may be terminated and the mergers abandoned
prior to the effective time, whether before or after the shareholder and
unitholder approvals are obtained, as follows:

. by mutual written consent of ART and NRLP;

. by ART or NRLP if the mergers have not been consummated on or before
March 31, 2000;

. by ART or NRLP if any of the conditions precedent to ART or NRLP's
obligations under the agreement have not been met or, to the
extent permitted by applicable law, have not been waived in
writing prior to this date; or

. by ART or NRLP if either party accepts a proposal from an unaffiliated
party concerning a merger, sale of substantial assets or similar
transaction or the sale of any securities.

Under the reorganization agreement, the ART board and the general partner
of NRLP have agreed to propose and recommend to the ART shareholders and the
NRLP unitholders the adoption and approval of the business combination as
described herein.

New York Stock Exchange Listing of Newco Common Stock

Newco will take all actions as are necessary and within its control to
cause the Newco common stock to become listed on the New York Stock Exchange.
The listing of the Newco shares for trading on the NYSE is a condition to the
respective obligations of ART and NRLP to consummate the mergers. See "THE
PROPOSED BUSINESS COMBINATION AND RELATED MATTERS--Conditions to the Business
Combination; Termination; Waiver and Amendment" on page 33.

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<PAGE>

The Special Meetings

Date, Time and Place The ART special meeting will be held on March
21, 2000, at the offices of ART at 10670
North Central Expressway, Suite 600, Dallas,
Texas 75231, at 10:00 a.m., Central Standard
Time.

The NRLP special meeting will be held on
March 21, 2000, at the offices of NRLP at
10670 North Central Expressway, Suite 600,
Dallas, Texas 75231, at 10:30 a.m., Central
Standard Time.

Matters to be Considered At your meeting, you will be asked to
consider and vote upon the proposal to
approve your merger.

Record Date January 26, 2000.

Votes Required Approval of the ART merger requires:

. The vote of a majority of the
outstanding shares of ART common stock
entitled to vote at the meeting;

. The vote of a majority of each series of
outstanding ART preferred stock, voting
separately as a series; and

. The vote of a majority of the shares of
ART common stock not owned by BCM
represented at the ART special meeting,
whether in person or by proxy.

Approval of the NRLP merger requires:

. The vote of a majority of the
outstanding NRLP partnership units
entitled to vote at the meeting and

. The vote of a majority of the NRLP
partnership units not owned by ART or
its subsidiaries represented at the NRLP
special meeting, whether in person or by
proxy.

ART owns 55.4% of the limited partnership units of NRLP. ART intends to
vote its units in favor of the NRLP merger. NRLP owns 1.9% of the outstanding
common shares of ART. NRLP intends to vote its shares in favor of the ART
merger. BCM owns 56.9% of the outstanding common shares of ART and 12.4% of the
outstanding partnership units of NRLP. BCM intends to vote its shares in favor
of the ART and NRLP mergers.

The Recommendation of the ART Board (see page 35)

The board of directors of ART has recommended that ART approve the merger.
The ART board has determined that the terms of the proposed merger are fair to
and in the best interests of

11
<PAGE>

ART's shareholders and unanimously recommends that its shareholders vote "for"
the ART merger. For a complete discussion of the reasons the board of directors
determined to recommend the ART merger, see "THE PROPOSED BUSINESS COMBINATION
AND RELATED MATTERS--The Recommendation of the ART Board" on page 35.

The Recommendation of the NRLP General Partner (see page 37)

The board of directors of NMC has recommended that NMC approve the NRLP
merger. The NMC board has determined that the terms of the proposed merger are
fair to and in the best interests of NRLP's unitholders and unanimously
recommends that its unitholders vote "for" the NRLP merger. For a complete
discussion of the reasons the general partner determined to recommend the NRLP
merger, see "THE PROPOSED BUSINESS COMBINATION AND RELATED MATTERS--The NRLP
General Partner Recommendation" on page 37.

Conflicts of Interest (see page 17)

In considering your board's recommendation that you vote for the merger,
you should be aware that the determination of the boards of NMC, the sole
general partner of NRLP, and ART to participate in the merger may have been
affected by conflicts of interest. In particular:

. ART is the sole shareholder of NMC, which is the general partner of
both NRLP and its operating partnership subsidiary (NOLP);

. ART holds 55.4% of the partnership units of NRLP;

. NRLP holds 1.9% of the shares of ART;

. BCM is the owner of 56.9% of the outstanding common shares of ART and
is an advisor to ART, and is the owner of 12.4% of the outstanding
partnership units of NRLP and performs administrative services to
NRLP and NOLP; and

. Karl L. Blaha and Colleen C. Currie are directors of each of NMC and
ART, which means that they have fiduciary duties to more than one
party to the mergers and that these duties may conflict.

The directors of NMC and of ART were aware of these interests and
considered them in approving the merger.

Opinions of Financial Advisors (see pages 40 and 46)

Fieldstone, Inc., ART's financial advisor (Fieldstone), has delivered its
opinion to the board of ART that, based upon the assumptions and analyses
contained in its letter dated November 3, 1999, after allowing for the factors
and assumptions stated in its opinion and as of that date, the merger
consideration to be received by the shareholders of ART in the merger is fair to
its shareholders from a financial point of view.

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<PAGE>

Houlihan Lokey Howard & Zukin, NRLP's financial advisor (Houlihan Lokey),
has given its opinion to the board of NMC that, based upon the assumptions and
analyses contained in its letter dated November 3, 1999, and as of that date,
the consideration to be received by unitholders of NRLP, other than ART, is fair
to its unitholders from a financial point of view.

These opinions are attached as Appendices B and C to this proxy statement.
We encourage you to read these opinions.

Federal Income Tax Considerations (see page 53)

The merger involves numerous federal income tax consequences to you,
depending in part on whether you are a common shareholder of ART, a preferred
shareholder of ART or a unitholder of NRLP. Material federal income tax
consequences of the merger generally include the following:

. Holders of ART common stock should not recognize gain or loss pursuant
to the merger other than gain or loss attributable to receipt of
cash in lieu of fractional shares. The aggregate tax basis of the
Newco common stock received by a shareholder will be equal to the
aggregate tax basis of the ART common stock converted in the merger,
reduced by any amounts allocable to a fractional share interest for
which cash is received. The holding period of the Newco common stock
will include the holding period of the ART common stock so
converted.

. Holders of ART preferred stock will not recognize gain or loss
pursuant to the merger as long as the Newco preferred stock is not
classified as "nonqualified preferred stock." In this case, the
aggregate tax basis in the Newco preferred stock received in the
exchange will be equal to the tax basis in the ART preferred stock
exchanged therefor, and the holding period of the Newco preferred
stock will include the holding period of the ART preferred stock.
Holders of ART preferred stock who receive Newco preferred stock
that is classified as "qualified preferred stock" will recognize
gain or loss computed based on the difference between the fair
market value of the Newco preferred stock and the adjusted basis of
the ART preferred stock.

. A unitholder generally will not recognize gain or loss upon an
exchange of units for Newco common stock pursuant to the merger. The
tax basis of the Newco common stock received by a unitholder
recognizing no gain or loss will be equal to the tax basis of the
NRLP units so converted, decreased by the amount of partnership
liabilities attributable to the units. The holding period of the
Newco common stock received in the merger will include the holding
period of the NRLP units so converted.

Tax matters are very complicated, and the tax consequences of the merger
to shareholders and limited partners will depend upon the facts of each
individual's situation. We urge you to consult your tax advisor for a full
understanding of the merger's tax consequences to you.

13
<PAGE>

Accounting Treatment (see page 63)

The combined company will account for the transaction under the purchase
method of accounting as if ART had acquired the minority interest in NRLP.
Accordingly, the combined company will record the assets and liabilities of ART
and the consideration paid to NRLP minority unitholders in the merger.

Comparison of Shareholder and Partner Rights (see pages 172 through 182)

The rights of ART shareholders are currently governed by Georgia law and
ART's charter and bylaws. The rights of NRLP unitholders are currently governed
by Delaware law and NRLP's partnership agreement. If the mergers are approved,
the rights of ART shareholders and NRLP unitholders will change and their rights
as Newco shareholders will be governed by Nevada corporate law and Newco's
charter and bylaws. Important differences in shareholder and unitholder rights
include the following:

. differences in the potential liability of shareholders for obligations
of the corporation;

. the inspection rights of shareholders;

. the ability of shareholders to call special meetings;

. the composition of the board of directors;

. the ability of shareholders to remove directors;

. the requirements for advance notice of actions to be taken at meetings
of shareholders;

. the ability of Newco to redeem its shares;

. the ability of Newco to pay dividends;

. the limitations on liability of directors and officers to Newco or its
shareholders;

. the indemnification of directors and officers;

. the requirements to amend the charter and bylaws;

. the requirements with respect to business combinations; and

. the provisions of Nevada law with respect to control share
acquisitions.

These different provisions may be less favorable to ART shareholders and
NRLP unitholders than the corresponding provisions of Georgia and Delaware law,
as applicable, and ART's charter and bylaws and NRLP's partnership agreement.
Some of these differences may have the effect of delaying, deferring or
preventing a change in control in Newco or other transaction that might involve
a premium price for Newco shares or otherwise be in their best interests of
Newco shareholders.

14
<PAGE>

Comparative Per Unit/Share Information

The following table sets forth per share/unit data of the shares of ART
common stock and units of NRLP partnership interests on a historical, pro forma
combined and pro forma equivalent basis. Pro forma equivalent information for
ART and NRLP was calculated by multiplying the pro forma per share amounts for
Newco by the exchange ratio for ART common stock and NRLP partnership units, .91
and 1, respectively. This table should be read in conjunction with the
historical financial statements and notes thereto contained herein and in NRLP's
and ART's Annual Reports on Form 10-K for the fiscal year ended December 31,
1998, Quarterly Reports on Form 10-Q for the fiscal quarter ended September 30,
1999, each of which is incorporated by reference herein, and in conjunction with
the unaudited pro forma combined financial information appearing elsewhere in
this proxy statement.

<TABLE>
<CAPTION>
ART Common Stock
Historical Newco
---------- -----
<S> <C> <C>
Income (loss) per common share

Nine months ended September 30, 1999............ $ .02 $2.89
Year ended December 31, 1998.................... (2.24) (.09)

Cash dividend per common share
Nine months ended September 30, 1999............ .05 .046
Year ended December 31, 1998.................... .20 .182

Book value per common share
September 30, 1999.............................. .40 4.64
</TABLE>

<TABLE>
<CAPTION>
NRLP Partnership Units
Historical Newco
---------- -----
<S> <C> <C>
Income (loss) per common share

Nine months ended September 30, 1999............ $12.86 $2.89
Year ended December 31, 1998.................... 7.36 (.09)

Cash distribution per unit
Nine months ended September 30, 1999............ .375 .05
Year ended December 31, 1998.................... .50 .20

Book value per unit
September 30, 1999.............................. 7.00 4.64
</TABLE>

15
<PAGE>

Market Prices and Dividend Information

The shares of ART common stock are traded on the New York Stock Exchange
under the symbol "ARB." The NRLP partnership units are traded on the American
Stock Exchange under the symbol "NLP." The following table sets forth the
quarterly high and low reported sales prices of ART common stock and NRLP
partnership units, as well as the quarterly distributions declared per share or
unit, as applicable, for periods indicated below. On November 2, 1999, the last
full trading day prior to the public announcement of the merger, the closing
price of ART common stock was $17.50 per share and the closing price of NRLP
partnership units was $20.00 per unit.

ART Common Stock

<TABLE>
<CAPTION>
HIGH LOW DISTRIBUTIONS
---- --- -------------
<S> <C> <C> <C>
1997
----
First Quarter $ 22 1/4 $ 9 3/4 $ .05
Second Quarter 16 5/8 11 1/2 .05
Third Quarter 13 1/4 12 1/8 .05
Fourth Quarter 15 1/2 12 5/8 .05

1998
----
First Quarter 15 14 .05
Second Quarter 15 1/16 14 1/4 .05
Third Quarter 16 1/4 13 7/8 .05
Fourth Quarter 16 3/8 14 3/4 .05

1999
----
First Quarter 17 3/8 15 1/2 .05
Second Quarter 16 3/4 5 7/16 -
Third Quarter 16 1/8 14 7/8 -
Fourth Quarter 17 5/8 16 1/8 -

NRLP Partnership Units

1997
----
First Quarter $ 19 1/8 $ 12 7/8 $ .10
Second Quarter 19 1/2 16 3/8 .10
Third Quarter 24 19 .10
Fourth Quarter 24 3/4 24 3/8 1.60

1998
----
First Quarter 24 1/8 19 3/8 .125
Second Quarter 20 1/16 18 1/2 .125
Third Quarter 22 19 .125
Fourth Quarter 23 19 3/4 .125

1999
----
First Quarter 23 3/4 21 3/4 .125
Second Quarter 22 7/8 21 3/4 .125
Third Quarter 22 1/8 21 1/4 .125
Fourth Quarter 21 3/8 17 3/8 .125
</TABLE>

/1/ Includes a special distribution of $1.10 per unit

16
<PAGE>

RISK FACTORS

ART shareholders and NRLP unitholders should consider, among other things,
the following risk factors in connection with the transactions contemplated by
the business combination. These factors are intended to identify the significant
sources of risk affecting an investment in the Newco common stock.

Possible Detrimental Effects of the Business Combination

Tax Risks to NRLP Unitholders. NRLP currently is taxed as a limited
-----------------------------
partnership and, as such, does not generally pay federal income tax at the
partnership level. Rather, its items of income, gain, loss and deduction flow
through to its unitholders. Unitholders will receive Newco common stock in the
merger transaction. Because Newco is a corporation, its income will be taxed at
the corporate level and, to the extent distributions are made to its
stockholders, these distributions will be taxable to the stockholders to the
extent of Newco's accumulated and current earnings and profits. As a result of
the merger, the former unitholders who become Newco stockholders will no longer
receive the pass-through tax treatment accorded to partners.

Dilution of Current Ownership Interest. If the business combination is
--------------------------------------
consummated, the percentage ownership of the ART shareholders and the NRLP
unitholders in the assets of their respective companies will be reduced. See
"Correlation Between the Value of Newco Common Stock and the Success of the
Combined Business of ART and NRLP" below.

Anti-Takeover Effect. If the mergers are consummated, BCM will acquire an
--------------------
aggregate of 6,255,043 shares of Newco common stock, or approximately 50.3% of
the Newco shares outstanding after the merger. As a result of the foregoing,
third party attempts to acquire control of Newco may not be practicable.
Accordingly, if the mergers are approved, it is unlikely that an attempted take-
over of Newco, which might result in an increase in the price at which Newco
shares could be sold, will occur.

Conflicts of Interest Between ART and NRLP. The managements of ART and
------------------------------------------
NRLP are subject to conflicts of interest in recommending the business
combination and approval of the related proposals because ART is the 100% owner
of NMC, the general partner of NRLP, and most members of management of ART also
are members of the management of NMC.

Conflicts of Interest Between ART and BCM. The management of BCM is
-----------------------------------------
subject to conflicts of interest in recommending the business combination and
approval of the related proposals because BCM is the majority owner of the
outstanding common stock of ART, and is the advisor to ART, and performs
administrative services to NRLP and NOLP.

Reliance on the Newco Board to Declare Dividends on the Newco Common Stock.
--------------------------------------------------------------------------
Dividends will not be paid unless and until they are declared by the Newco board
of directors. Holders of Newco common stock will not have the authority to
direct or compel the Newco board to declare dividends with respect to the Newco
common stock.

Application for the Listing and Trading of Newco Common Stock. While the
-------------------------------------------------------------
listing of the Newco common stock on the NYSE is a condition precedent to the
obligation of ART and NRLP to consummate the mergers, there can be no assurance
that an active market for the Newco common

17
<PAGE>

stock will develop or be sustained in the future on the exchange. In addition,
no assurances can be given as to the liquidity of or the price at which the
Newco common stock will actually trade.

Correlation Between the Value of the Newco Common Stock and the Success to the
Combined Business of ART and NRLP

As part of the merger consideration and pursuant to the mergers, ART
shareholders and NRLP unitholders will receive Newco common stock, the value of
which will be substantially dependent upon the success of ART's and NRLP's
combined business. Set forth below is a summary of potential risks relating to
ART's and NRLP's business operations.

Recent Operating History of ART. ART has experienced net losses of
-------------------------------
$22,805,000, $2,428,000, $5,554,000, $2,836,000 and $2,426,000, respectively,
for each of the fiscal years ended December 31, 1998, 1997, 1996, 1995 and 1994,
and ART had an accumulated deficit at December 31, 1998 of $51,880,000. For the
nine months ended September 30, 1999, ART had net income of $1,878,000 and an
accumulated deficit of $52,251,000. Through September 30, 1999, ART had
declared cumulative dividends in 1999 of $.05 with respect to each share of ART
common stock. During the fiscal year ended December 31, 1998, ART paid a
cumulative dividend of $0.20 with respect to each share. There can be no
assurance that Newco will be able to pay dividends in respect of the Newco
common stock in the future.

Recent Operating History of NRLP. NRLP has realized net income of
--------------------------------
$47,491,000, $8,718,000, $3,797,000, and $5,017,000, respectively, for each of
the fiscal years ended December 31, 1998, 1997, 1995 and 1994, and experienced a
net loss of $375,000 in the fiscal year ended December 31, 1996 and NRLP had an
accumulated partner's deficit at December 31, 1998 of $32,115,000. For the nine
months ended September 30, 1999, NRLP had net income of $82,929,000 and an
accumulated partner's equity of $48,399,000. Through September 30, 1999, NRLP
had declared cumulative dividends of $.375 with respect to each unit of NRLP
limited partnership interest. During the fiscal year ended December 31, 1998,
NRLP paid a cumulative dividend of $.50 with respect to each unit. There can be
no assurance that Newco will be able to pay dividends in respect of the Newco
common stock in the future.

Changes in Policies Without Shareholder Approval. The investment,
------------------------------------------------
financing, borrowing and distribution policies of ART and NRLP, and their
policies with respect to all other activities, growth, debt, capitalization and
operations, will be determined by the ART board and NMC, respectively. Although
they have no present intention to do so, the ART board and NMC, respectively may
amend or revise these policies at any time and from time to time at their
discretion without a vote of the stockholders of Newco. A change in these
policies could adversely affect the market price of the Newco common stock. See
"BUSINESS OF ART" on page 76 and "BUSINESS OF NRLP" on page 117.

Nature of Investments Made by ART and NRLP May Involve High Risk. ART and
----------------------------------------------------------------
NRLP may make investments in real estate-related assets and businesses which
have experienced severe financial difficulties, which difficulties may never be
overcome. Since these investments may involve a high degree of risk, poor
performance by any of these investments could severely affect the financial
condition and results of operations of ART and NRLP. ART has a significant
percentage of its real estate portfolio invested in unimproved land. Investments
in unimproved land involve a high degree of risk because the property generally
generates no income, other than from sales, but substantial carrying costs may
be incurred, particularly for real estate taxes and interest on loans

18
<PAGE>

secured by the land. If the land is not sold or developed in sufficient
quantities to timely pay these carrying costs, ART will have to use other
sources to pay for these costs. This may adversely affect the market price of
the Newco common stock.

Existing Debt Maturities. As of September 30, 1999, approximately $117.0
------------------------
million of ART's outstanding indebtedness became due within the next twelve
months. During the third quarter of 1999, ART either extended, refinanced, paid
down, paid off or received commitments from lenders to extend or refinance $33.7
million of the debt scheduled to mature in 2000. As of September 30, 1999,
approximately $3.1 million of NRLP's outstanding indebtedness became due within
the next twelve months. During the third quarter of 1999, NRLP paid off all of
its debt scheduled to mature in 2000. If ART or NRLP is unable to refinance any
of the foregoing indebtedness on acceptable terms, the company may be forced to
dispose of properties on disadvantageous terms, which could result in losses.
Resulting losses would adversely affect the amount of cash available for
additional investments, to make payments on its outstanding indebtedness or to
make distributions to Newco.

Possible Inability to Meet Payments on Debt Financing. ART's and NRLP's
-----------------------------------------------------
debt-to-equity ratio, inclusive of margin debt, was 21.0 to 1 as of December 31,
1998 and 20.6 to 1 as of September 30, 1999. Under certain circumstances, ART's
cash flow may be insufficient to meet required payments of principal, interest
on its debt and dividend distributions. If a property is mortgaged to secure
payment of indebtedness and either ART or NRLP is unable to meet mortgage
payments, the lender could foreclose upon the property, appoint a receiver and
receive an assignment of rents and leases or pursue other remedies, all with a
consequent loss of income and asset value to ART or NRLP. If ART or NRLP
defaults on secured indebtedness, the lender may foreclose and ART or NRLP could
lose its entire investment in the security for the loan. Because ART and NRLP
may engage in portfolio financings where several investments are cross-
collateralized, multiple investments may be subject to the risk of loss. As a
result, ART or NRLP could lose its interests in performing investments in the
event those investments are cross-collateralized with poorly performing or
nonperforming investments. In addition, recourse debt may subject other assets
of ART or NRLP to risk of loss. Any losses of this type would adversely affect
Newco's ability to make distributions in respect of the Newco common stock.
Distributions in respect of the Newco common stock will be subordinate in right
of payment to ART's and NRLP's debt obligations which, as of September 30, 1999,
had aggregate outstanding principal balances of approximately $791.4 million and
$298.0 million, respectively. Substantially all of ART's and NRLP's mortgage
notes receivable, real estate, equity security holdings and trading portfolio of
equity securities have been pledged to secure outstanding indebtedness. These
borrowings increase ART's and NRLP's risk of loss because they represent a prior
claim on ART's and NRLP's assets and require fixed payments regardless of
profitability. If ART or NRLP defaults on this secured indebtedness, the lender
may foreclose on ART's or NRLP's assets securing the indebtedness, and ART or
NRLP could lose its investments in the pledged assets.

Rising Interest Rates on Variable Rate Debt. As of September 30, 1999,
-------------------------------------------
approximately 13.7 % and 86.3 % of ART's indebtedness and 8.1% and 91.9% of
NRLP's indebtedness was subject to variable interest rates and fixed interest
rates, respectively. ART and NRLP may incur indebtedness in the future that also
bears interest at a variable rate or may be required to refinance these debts at
higher rates. Accordingly, increases in variable interest rates could increase
ART's or NRLP's interest expense and adversely affect the financial condition
and results of operations of ART or NRLP. In the event that ART's or NRLP's
financial condition and results of operations are adversely affected, the value
of the Newco common stock will likely decline.

19
<PAGE>

Investments in Real Property are Illiquid and Subject to Various Economic Risks.

Real property investments are subject to varying degrees of risk and are
relatively illiquid. Income from real property investments and Newco's resulting
ability to pay dividends to its stockholders may be adversely affected by a
number of factors, including:

. the general economic climate and local real estate conditions (such as
oversupply of or reduced demand for space and changes in market
rental rates);

. the perceptions of prospective tenants of the safety, convenience and
attractiveness of the properties;

. the ability of the owner of the properties to provide adequate
management, maintenance and insurance;

. the ability to collect on a timely basis all rent from tenants and
interest from borrowers;

. the expense of periodically renovating, repairing and reletting
spaces; and

. increasing operating costs (including real estate taxes and utilities)
which may not be passed through to tenants. Certain significant
expenditures associated with investments in real estate (such as
mortgage payments, real estate taxes, insurance and maintenance
costs) are generally not reduced when circumstances cause a
reduction in rental revenues from the investment.

If a property is mortgaged to secure the payment of indebtedness and if the
borrower is unable to meet its mortgage payments, a loss could be sustained as a
result of foreclosure on the property or the exercise of other remedies by the
mortgagee. Real estate values and income from properties are also affected by
factors such as compliance with laws, including tax laws, interest rate levels
and the availability of financing. The illiquid nature of real estate
investments may limit the ability of ART and NRLP to modify their portfolios in
response to changes in economic conditions.

Potential Environmental Liability.

Under various federal, state and local environmental laws, ordinances and
regulations, an owner of real estate may be liable for the costs of removal or
remediation of certain hazardous or toxic substances on the property. These
laws often impose environmental liability without regard to whether the owner
knew of, or was responsible for, the presence of hazardous or toxic substances.
The presence of hazardous substances, or the failure properly to remediate them,
may adversely affect the owner's ability to sell or rent the property or to
borrow using the property as collateral. Persons who arrange for the disposal
or treatment of hazardous or toxic substances may also be liable for the costs
of removal or remediation of these substances at a disposal or treatment
facility, whether or not the facility is owned or operated by this person.
Certain laws impose liability for release of asbestos-containing materials into
the air and third parties may seek recovery from owners or operators of real
properties for personal injury associated with asbestos-containing materials.
In connection with the ownership (directly or indirectly through its lending
activities), operation, management and development of real properties, ART or
NRLP may be considered an owner or operator of these properties or as having
arranged for the disposal or treatment of hazardous or toxic

20
<PAGE>

substances and, therefore, potentially liable for removal or remediation costs,
as well as for other related costs, including governmental fines and injuries to
persons and property.

Neither ART's nor NRLP's management is aware of any environmental matters
affecting properties or investments that would have a material adverse effect on
their respective business, assets or results of operations. No assurance can be
given that existing environmental assessments with respect to any of ART's or
NRLP's properties reveal all environmental liabilities, that any prior owner of
a property did not create any material environmental condition not known to ART
or to NRLP or that a material environmental condition does not otherwise exist
with respect to any one or more properties of ART or NRLP.

Difficulty of Locating Suitable Investments; Competition.

Identifying real estate investments has from time to time been highly
competitive. Completing an investment and realizing a return involves a high
degree of uncertainty. ART and NRLP compete for investments with many public
and private real estate investment entities, including financial institutions
(such as mortgage banks, pension funds and real estate investment trusts), other
institutional investors and individuals. Many competitors are considerably
larger, have greater financial resources and may have management personnel with
more experience than the officers of ART and NRLP. There can be no assurance
that ART or NRLP will continue to be able to locate and complete investments
which satisfy their respective investment objectives. In addition, there can be
no assurance that investments will provide anticipated returns or that ART or
NRLP will be able to fully invest their available capital.

Dependence on Rental Income from Real Property.

ART and NRLP's cash flow, results of operations and asset values would be
adversely affected if a significant number of tenants of each company's
properties failed to meet lease obligations or if a significant amount of space
is not able to be leased on economically favorable terms. In the event of a
default by a lessee, delays may be experienced in enforcing lessor rights and
substantial costs may be incurred in protecting the investment. The bankruptcy
or insolvency of a major tenant may have an adverse effect on a property. At
any time, a tenant may also seek protection under the bankruptcy laws, which
could result in rejection and termination of the tenant's lease resulting in a
reduction in the property's cash flow. If a tenant rejects its lease, a claim
for breach of the lease would be treated as a general unsecured claim (absent
the availability of collateral securing the claim). Generally, the amount of a
claim for breach would be limited to the amount owed for unpaid pre-petition
lease payments unrelated to the rejection, plus the greater of one year's lease
payments or 15% of the remaining lease payments payable under the lease (not
exceeding three years). No assurance can be given that a property in which ART
or NRLP has an interest will not experience significant tenant defaults in the
future.

Properties that Serve as Collateral for Mortgage Notes Receivable.

A substantial portion of ART's and NRLP's assets have been invested in
mortgage notes receivable, principally those secured by income producing real
estate. The income producing real estate properties include apartment
complexes, hotels, office buildings, shopping centers and partnership interests.
Those properties are located in the Midwest, Northeast and Southwest regions of
the United States. Specific geographic regions of the United States from time
to time will experience weaker regional economic conditions and housing markets,
and, consequently, will

21
<PAGE>

experience higher rates of loss and delinquency on mortgage loans. Any
concentration of loan assets in a region may present risks in addition to those
generally present for similar mortgage-backed or asset-backed securities without
this concentration. See "BUSINESS OF ART--Geographic Regions" on page 81 and "
BUSINESS OF NRLP--Geographic Regions" on page 118 for a description of the
geographic regions in which these companies own properties.

Property Operating Risks.

As described below, the properties in which ART and NRLP have an interest
are subject to industry-specific operating risks, any and all of which may
adversely affect income. All properties are subject to increases in operating
expenses, including: cleaning, electricity, heating, ventilation and air-
conditioning, elevator repair and maintenance, insurance and administrative
costs, and other general costs associated with security, landscaping, repairs,
regulatory compliance and maintenance. While commercial tenants are often
obligated to pay a portion of these escalating costs, there can be no assurance
that they will agree to pay these costs in the absence of a contractual duty or
that their payments will fully cover these costs. If operating expenses
increase, the local rental market, governmental regulations or the lease may
limit the extent to which rents may be increased to meet expenses without
decreasing occupancy rates. To the extent rents cannot be increased or costs
controlled, the cash flow and financial condition of ART and NRLP may be
adversely affected.

Apartment Properties. Market values of apartments can be affected
--------------------
significantly by the supply and demand in the geographic market for the
properties securing the loan and, therefore, may be subject to adverse economic
conditions. Market values of apartments may vary as a result of economic events
or governmental regulations outside the control of the borrower or lender.
Governmental regulations such as rent control laws may impact the future cash
flow of the apartments.

Hotel Properties. Like any income producing property, the income generated
----------------
by a hotel property is subject to local, regional and national economic
conditions and competition. However, because the income is primarily generated
by short-term occupancies, the level of income responds more quickly to market
conditions. Sensitivity to competition may require more frequent improvements
and renovations than other properties. To the extent a hotel is affiliated with
a regional, national or international chain, changes in the public perception of
the affiliated chain may have an impact on the income generated by the hotel.
In addition, since the hotel industry is generally seasonal, income generated by
a hotel property will fluctuate in accordance with the particular demand
characteristics of the market in which it is located.

Office and Retail Properties. The market value of office buildings and
----------------------------
shopping centers is affected by the risk that a lease may not be renewed, that
the space may not be released and that the terms of renewal or re-lease
(including the cost of required renovations or concessions to tenants) may be
less favorable than current lease terms.

Investments in Non-Recourse Mortgage Loans.

To the extent ART or NRLP invests in mortgage loans, the loans may or may
not be recourse obligations of the borrower and generally will not be insured or
guaranteed by governmental agencies or otherwise. In the event of a default
under this type of a loan, ART or NRLP may have to foreclose the mortgage or
protect its investment by acquiring title to the property. Taking title to a
property may require investing in substantial improvements or repairs in order
to maximize the

22
<PAGE>

property's investment potential. Borrowers may contest enforcement of
foreclosure or other remedies, seek bankruptcy protection against foreclosure
and/or bring claims for lender liability in response to actions to enforce
mortgage obligations. Because of relatively high "loan-to-value" ratios and
declines in the value of the mortgaged property, the amount received in
foreclosure may be less than the amount outstanding under the mortgage loan.

ART and NRLP may participate in loans originated by other financing
institutions. As a participant, the companies may not have the sole authority
to declare a default under the mortgage or to control the management or
disposition of the financed property or any related foreclosure proceedings.

ART and NRLP may participate in loans that are subordinated to other
obligations of the debtor. Any investments in subordinated mortgage loans
involve additional risks, including the lack of control over collateral and
related foreclosure proceedings. In the event of a default on a senior
mortgage, ART or NRLP may make payments to prevent foreclosure on the senior
mortgage without necessarily improving its position with respect to the real
property. In this event, ART or NRLP would be entitled to share in the proceeds
only after satisfaction of the amounts due to the holder of the senior mortgage.

Possibility of Uninsured Loss on Uninsurable or Economically Uninsurable
Properties.

ART and NRLP carry comprehensive liability, fire, extended coverage and
rental loss insurance with respect to all of the improved real property that
they own, with policy specifications, insured limits and deductibles customarily
carried for similar properties. There are specific types of losses (such as
losses arising from acts of war or relating to pollution) that are not generally
insured because they are either uninsurable or not economically insurable. If
an uninsured loss or a loss in excess of insured limits occurs, the capital
invested in a property as well as anticipated future revenues could be lost. In
addition, obligations on any mortgage indebtedness and the property would
continue. Any uninsured loss could adversely affect the financial condition and
results of operations of ART or NRLP.

With respect to those properties in which an interest is held through a
mortgage, as well as those properties owned by entities to whom an unsecured
loan is made, the borrowers will most likely be obligated to maintain insurance
on the properties and to arrange for ART or NRLP to be covered as a named
insured on the policies. The face amount and scope of the insurance coverage
may be less comprehensive than ART or NRLP would carry if it held the fee
interest in the property. Accordingly, in these circumstances, or if the
borrowers fail to maintain required coverage, uninsured or underinsured losses
may occur, which could have an adverse impact on cash flow or the financial
condition of ART or NRLP.

Costs of Compliance with the Americans with Disabilities Act and Similar Laws.

Under the Americans with Disabilities Act (ADA), places of public
accommodations and commercial facilities are required to meet requirements
related to access and use by disabled persons. Compliance with ADA requirements
could require both structural and non-structural changes to the properties in
which ART and NRLP invest. Noncompliance could result in fines imposed by the
federal government or an award of damages to private litigants. Although
management of ART and NRLP believe that their respective properties are
substantially in compliance with present requirements of the ADA, additional
costs may be incurred to ensure compliance in the future. A

23
<PAGE>

number of additional federal, state and local laws exist which impose additional
burdens or restrictions on owners with respect to access by disabled persons.
Those laws may require modifications or restrict renovations to properties in
which ART and NRLP invest. The ultimate amount of the cost of compliance with
the ADA or other related laws is not currently ascertainable. While the costs of
compliance are not expected to have a material effect on either ART or NRLP,
they could be substantial. If required changes involve greater expense than
currently anticipated, the financial condition and results of operations for
either ART or NRLP could be adversely affected.

Noncompliance with Other Laws.

Real estate properties are also subject to various federal, state and local
regulatory requirements, such as state and local fire and life safety
requirements. Failure to comply with these requirements could result in the
imposition of fines by governmental authorities or awards of damages to private
litigants. The management of ART and NRLP believe that their respective
properties are currently in material compliance with all of the regulatory
requirements. However, there can be no assurance that these requirements will
not be changed or that new requirements will not be imposed which would require
significant unanticipated expenditures by ART and NRLP having an adverse effect
on results of operations or financial condition.

Changes in Laws.

Increases in real estate taxes, income taxes and service or other taxes
generally are not passed through to tenants under existing leases. These
increases may adversely affect ART's and NRLP's cash flow from operations and
their ability to make distributions to Newco. Similarly, changes in laws
increasing the potential liability for environmental conditions existing on
properties or increasing the restrictions on discharges or other conditions may
result in significant unanticipated expenditures, which would adversely affect
funds from operations and thus the ability of ART or NRLP to make distributions
to Newco and payments on outstanding indebtedness.

Lack of Control and Other Risks of Equity Investments in and with Third Parties.

ART and NRLP may invest in shares or other equity interests of real estate
investment trusts or other entities that invest in real estate assets. In these
cases, ART and NRLP will be relying on the assets, investments and management of
the real estate investment trust or other entity in which it is investing. These
entities and their properties will be subject to the other risks affecting the
ownership and operation of real estate set forth herein.

ART and NRLP may also co-invest with third parties, through partnerships,
joint ventures or other entities, acquiring non-controlling interests in or
sharing responsibility for managing the affairs of a property, partnership,
joint venture or other entity. As a result, the applicable company will not be
in a position to exercise sole decision-making authority regarding the property,
partnership, joint venture or other entity.

24
<PAGE>

Investments in partnerships, joint ventures, or other entities may involve
risks which would not be present were a third party not involved, including the
possibility that:

. ART's or NRLP's partners or co-venturers might become bankrupt or
otherwise fail to fund their share of required capital contributions,

. the partners or co-venturers might at any time have economic or other
business interests or goals which are inconsistent with the business
interests or goals of ART or NRLP and

. the partners or co-venturers may be in a position to take action
contrary to the instructions or the requests of ART or NRLP and
contrary to ART's or NRLP's policies or objectives. These investments
may also have the potential risk of impasse on decisions, such as a
sale, because neither ART, NRLP nor its partner or co-venturer would
have full control over the partnership or joint venture. Consequently,
actions by a partner or co-venturer might result in subjecting
properties owned by the partnership or joint venture to additional
risk. In addition, ART or NRLP may in certain circumstances be liable
for the actions of its third-party partners or co-venturers.

Limitations on Remedies.

Although ART and NRLP will have contractual remedies upon the default by
borrowers under certain debt instruments, including foreclosing on the
underlying real estate or collecting rents generated therefrom, various legal
requirements (including the risks of lender liability) may limit the ability of
ART and NRLP to effectively exercise these remedies. The right of a mortgage
lender to convert its loan position into an equity interest may be limited or
prevented by certain common law or statutory prohibitions.

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<PAGE>

RATIO OF EARNINGS TO FIXED CHARGES

The following table summarizes the ratio of ART's earnings to fixed charges
and preferred stock dividends at the dates set forth below:

Year Ended December 31,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----

Ratio of earnings to
fixed charges and ** ** ** ** **
preferred stock dividends

** Earnings were inadequate to cover fixed charges and preferred stock
dividends by $4,887,000, $8,474,000, $4,819,000, $189,000 and $1,390,000 in
1998, 1997, 1996, 1995 and 1994, respectively.

USE OF PROCEEDS

Neither ART nor NRLP will receive any cash proceeds from the business
combination.

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<PAGE>

THE SPECIAL MEETINGS

Introduction

This joint proxy statement and prospectus is being furnished in connection
with the solicitation of proxies by the ART board of directors and the NRLP
general partner for use in connection with the special meeting to be held by
each entity and any adjournments or postponements of either meeting.

It is anticipated that the mailing of this joint proxy statement and
prospectus to ART shareholders and NRLP unitholders will commence on or about
February 11, 2000.

ART Special Meeting

The special meeting of holders of ART common stock and preferred stock will
be held on Tuesday, March 21, 2000 at 10:00 a.m., Dallas time at 10670 North
Central Expressway, Suite 600, Dallas, Texas. The purpose of the ART meeting is
to consider and vote upon the proposal to approve the merger and the
reorganization agreement. Holders of ART common stock and ART preferred stock
may vote at the meeting by attending the meeting and voting in person, by
completing the enclosed proxy card and returning it in the enclosed envelope, by
telephoning the transfer agent by voting on the Internet. Instructions for
voting by written proxy card, telephone or the Internet are set forth below.
Proxies will be received, tabulated and certified as to time of receipt and vote
by transfer agent.

If the shareholders have any questions regarding the merger or the
reorganization, they should contact Investor Relations at (214) 692-4800 or 1-
800-400-6407.

NRLP Special Meeting

The special meeting of NRLP limited partners will be held on Tuesday, March
21, 2000, at 10:30 a.m., Dallas time at 10670 North Central Expressway, Suite
600, Dallas, Texas. The purpose of the meeting is to consider and vote upon the
proposal to approve the merger and the reorganization agreement. Limited
partners may vote at the meeting by attending the meeting and voting in person,
by completing the enclosed proxy card and returning it in the enclosed envelope,
by telephoning the transfer agent or by voting on the Internet. Instructions
for voting by written proxy card, telephone or the Internet are set forth below.
Proxies will be received, tabulated and certified as to time of receipt and vote
by the transfer agent.

If the unitholders have any questions regarding the merger or the
reorganization, they should contact Investor Relations, at (214) 692-4800 or 1-
800-400-6407.

Voting Instructions

Voting by Written Proxy Card. To vote by written proxy card, sign and date
----------------------------
each proxy card you receive and return it in the prepaid envelope. If a
shareholder or unitholder is a corporation or partnership, the accompanying
proxy card must be signed in the full corporate or partnership name by a duly
authorized person. If the proxy card is signed pursuant to a power of attorney
or by an executor, administrator, trustee or guardian, the signer's full title
must be given and a certificate or

27
<PAGE>

other evidence of appointment must be furnished. If shares or units are owned
jointly, each joint owner must sign the proxy card.

Voting by Telephone or the Internet. Instructions for a shareholder or
-----------------------------------
unitholder of record to vote by telephone or the Internet are set forth on the
enclosed proxy card. The telephone and Internet voting procedures are designed
to authenticate votes cast by use of a personal identification number. The
procedures, which comply with both Georgia and Delaware law, allow shareholders
and unitholders to appoint a proxy to vote their shares or units and to confirm
that their instructions have been properly recorded.

Record Date; Votes Required

ART. Only holders of shares of record at the close of business on
---
January 26, 2000, will be entitled to notice of and to vote at the ART special
meeting. The ART merger and the reorganization agreement will be approved if the
reorganization receives the affirmative vote, in person or by proxy, of (1) a
majority of the outstanding shares of common stock entitled to vote at the ART
meeting, (2) a majority of the outstanding shares of each series of ART
preferred stock, voting separately as a class, and (3) a majority of the shares
of ART common stock, not owned by BCM, represented at the meeting, whether in
person or by proxy. The holders of a majority of the shares entitled to vote,
present in person or by proxy, will constitute a quorum for purposes of the ART
meeting. As of the record date for the ART special meeting, there were
10,563,720 shares of ART common stock outstanding and entitled to vote. BCM
currently owns 56.9% of the outstanding shares of ART common stock. BCM plans to
vote all of its shares in favor of the ART merger. The members of the board of
directors and executive officers of ART and their affiliates beneficially owned,
as of the record date for the ART special meeting, 7,528,218 shares, which
represent approximately 71.3% of the outstanding shares. The directors and
members of management intend to vote their shares in favor of all proposals.
Abstentions and broker non-votes have the same effect as a vote against the
proposals.

NRLP. Only limited partners of record at the close of business on January
----
26, 2000, will be entitled to notice of and to vote at the NRLP special meeting.
The NRLP merger and the reorganization agreement will be approved if the
reorganization receives the affirmative vote of (a) (1) a majority of the
outstanding NRLP partnership units and (2) a majority of the NRLP partnership
units, not owned by ART or its subsidiaries, represented at the NRLP special
meeting, whether in person or by proxy, and (b) the general partner. As of the
record date for the NRLP special meeting, there were 6,321,524 NRLP partnership
units outstanding and entitled to vote. ART currently owns 55.4% of the NRLP
partnership units. ART plans to vote all of its units in favor of the NRLP
merger. The general partner intends to vote in favor of the merger. Abstentions
and broker non-votes will, for the purposes of the merger vote, have the same
effect as a vote against the merger.

Dissenters' Rights

ART Shareholders. The holders of ART common stock who vote against the ART
----------------
merger will not be entitled to demand appraisal of, or to receive payment for,
their shares. The holders of ART preferred stock who vote against the ART
merger and who follow the procedures prescribed by Georgia law will be entitled,
in lieu of receiving shares of Newco preferred stock, to receive cash equal to
the "fair value" of the shareholders' shares. See "THE REORGANIZATION
AGREEMENT--Dissenters' Rights" on page 63.

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<PAGE>

NRLP Limited Partners. Limited partners who vote against the NRLP merger
---------------------
will not be entitled to demand appraisal of, or to receive payment for, their
partnership units. See "THE REORGANIZATION AGREEMENT--Dissenters' Rights" on
page 65.

Proxy

Enclosed is a form of proxy which should be completed, dated, signed and
returned by each ART shareholder and NRLP unitholder before the ART and NRLP
special meetings to ensure that each shareholder's shares or partner's
partnership units will be voted at the meeting. Any ART shareholder or NRLP
unitholder signing and delivering a proxy has the power to revoke the proxy at
any time prior to its use by:

(1) filing with the corporate secretary of ART or the general partner of
NRLP, as applicable, a written revocation of the proxy or a duly
executed proxy;

(2) submitting another proper proxy bearing a later date than that of the
proxy first given by:

(a) signing and returning a proxy card to either the corporate
secretary of ART or the general partner of NRLP;

(b) following the telephone voting instructions;

(3) attending and voting in person at the meeting.

Shares or units represented by a properly executed proxy, and all properly
completed proxies voted by telephone or the Internet, which are delivered
pursuant to this solicitation (and not later revoked) will be voted in
accordance with the instructions indicated on the proxy, and at the discretion
of the proxy holders on all other matters properly addressed at the meeting. If
an ART shareholder or NRLP unitholder executes a proxy without instructions, the
votes represented by the proxy will be submitted in favor of the proposals.

Solicitation of Proxies

ART and NRLP will share the expense of the proxy solicitation. Georgeson
Shareholder Communications, Inc. has been retained to act as proxy solicitor in
connection with the special meetings. The proxy solicitor may contact ART
shareholders and NRLP unitholders by mail, telephone, telex, telegraph and
personal interviews and may request brokers, dealers and other nominee
shareholders to forward the proxy materials to beneficial owners of ART shares
or NRLP units. The proxy solicitor will receive a fee estimated not to exceed
$2,500 for these services, plus reimbursement of out-of-pocket expenses. ART and
NRLP will indemnify the proxy solicitor against certain liabilities and expenses
in connection with the mergers, including liabilities under federal securities
laws. The telephone number of the proxy solicitor is 1-800-221-5724.

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<PAGE>

Other Matters

Neither the ART board nor the general partner of NRLP knows of any other
matters, other than those described in this proxy statement, which are to be
brought before the ART or NRLP special meetings. However, if any other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote that proxy in accordance with their judgment
on these matters.

THE PROPOSED BUSINESS COMBINATION AND RELATED MATTERS

General

The following is a description of all material matters concerning the
mergers and the business combination. Pursuant to the business combination, ART
and NRLP will become subsidiaries of Newco. Holders of ART common stock will
receive .91 shares of Newco common stock for each share of ART common stock, and
holders of ART preferred stock will receive one share of Newco preferred stock
for each share of ART preferred stock. Holders of NRLP partnership units, other
than ART and its subsidiaries, will receive one share of Newco common stock for
each unit. This description is qualified in its entirety by reference to the
reorganization agreement, a copy of which is attached as Appendix A to this
proxy statement and incorporated herein by reference. ART shareholders and NRLP
unitholders are urged to read the reorganization agreement in its entirety.

Background of the Business Combination

From their inception, both ART and NRLP have experienced considerable
growth. Beginning early 1998, market prices for publicly traded real estate
companies, particularly real estate investment trusts, began a significant
decline. As a result, both companies have been constrained from obtaining
financing through public equity or debt markets. At the same time, private
sources of financing, including bank credit facilities, were becoming more
difficult to obtain. For some time, the boards of ART and NMC, NRLP's general
partner, had been discussing ways to strengthen their balance sheets, increase
access to additional sources of capital and increase cash flows.

Because of the overlap of management, and the resulting familiarity with
each other's operations, and the similarity between the two companies' operating
philosophies, discussions between ART and NRLP about some form of business
combination began in August 1999. During these initial discussions, both
parties recognized that by combining they could compete more effectively with
other real estate acquirors and operators both for properties and attractive
sources of financing.

On August 25, 1999, management of ART reported to the ART board that
management had been reviewing alternative ways to combine ART and NRLP. The ART
board was informed that a proposal for a combination was being finalized by
management and would be submitted to the ART board within the next few weeks.

On September 7, 1999, management of ART sent a memorandum to the ART
board outlining a proposed structure of a potential combination between ART and
NRLP and recommending to the ART board the retention of Fieldstone, Inc. to
provide a fairness opinion to ART should a transaction be undertaken. During
this time, management of NMC had been evaluating this proposed combination, and
on September 3, 1999 sent a memorandum to the NMC board recommending the

30
<PAGE>

retention of Houlihan Lokey Howard & Zukin to render a fairness opinion to NRLP
should a transaction be undertaken.

Discussions between NRLP and ART continued from September 7 through
September 24, 1999 when both the NMC board and ART board met with their
respective fairness opinion providers to discuss the proposed transaction and
preliminary evaluations of the entities. Both the NMC board and the ART board
also, during these meetings, discussed the process of structuring a transaction
and valuing the entities and the legal steps to be followed to complete a
transaction.

On September 28, 1999, the ART board met to review the financial statements
of both NRLP and ART in connection with evaluating the consideration to be paid
in a proposed combination. The ART board also addressed specific strategic
advantages to ART that would result from a proposed transaction. See "REASONS
FOR THE BUSINESS COMBINATION - The Recommendation of the ART Board." At this
meeting, the ART board was also advised by the company's legal advisors that it
would be advisable to appoint an independent representative, someone who was not
also a member of the board of directors of NMC, to work with management to
negotiate the terms of any business combination with NRLP. The ART board
selected Roy E. Bode to serve as the independent representative.

On October 4, 1999, Randall Gonzalez resigned from the NMC board for
personal reasons. Also on October 4, 1999, the ART board met to review
preliminary evaluations and to receive a report from Mr. Bode on the status of
the discussions between management for NRLP and management for ART. At this
meeting, senior management and the fairness opinion provider and legal advisors
of ART made detailed presentations concerning pricing issues and the structure
of the proposed transaction.

On October 19, 1999, Richard D. Morgan was elected to fill the vacancy on
the NMC board left by Mr. Gonzalez's resignation. At this meeting, the NMC
board appointed Mr. Morgan to serve as that board's independent representative
to work with management of NRLP in negotiating the terms of the proposed
business between NRLP and ART.

On October 27, 1999, Mr. Bode and Mr. Morgan met to discuss the financial
terms of a proposed business combination. At that meeting, they each agreed to
recommend to their respective boards that each outstanding NRLP partnership
unit, other than those held by ART or its subsidiaries, be exchanged for one
share of Newco common stock and that each outstanding share of ART common stock
be exchanged for .91 shares of Newco common stock.

On October 28, 1999, the boards of NMC and ART met to receive the reports
of their respective independent representatives. At this meeting, both boards
agreed to accept the recommendations of the independent representatives, subject
to the receipt of a fairness opinion from their respective fairness opinion
providers that the ratios established were fair to each entity's
securityholders.

Special meetings of the boards of NMC and ART were held on November 2, 1999
to consider the proposal as negotiated and documented. At each entity's board
meeting, senior management and the fairness opinion provider and legal advisors
of that entity made detailed presentations concerning all material aspects of
the proposed transactions. Legal counsel to both boards reviewed the material
terms of the business combination agreements that had been distributed to the
board and discussed various aspects of the directors' fiduciary duties in
connection with the

31
<PAGE>

business combination. Each entity's fairness opinion provider then rendered its
oral opinion, subsequently confirmed by delivery of a written opinion, that as
of the date of the opinion, the consideration to be paid to the holders of NRLP
partnership units and ART common stock, as applicable, was fair, from a
financial point of view, to those holders. Following further discussion, during
which the directors asked numerous questions that were responded to by
representatives of management and by each entity's advisors, the boards of NMC
and ART, by unanimous vote, approved the definitive agreements and the
transactions contemplated thereby and authorized the officers of each entity to
execute and deliver the agreements.

On November 3, 1999, Newco, ART and NRLP executed and delivered the
agreement and plan of reorganization, a copy of which is attached to this proxy
statement as Appendix A.

Effects of the Mergers

The reorganization agreement provides that, subject to shareholder approval
and the satisfaction or waiver of the other conditions to the ART merger, ART
Acquisition Corp., a wholly owned subsidiary of Newco, will be merged with and
into ART. The separate existence of ART Acquisition Corp. will cease upon the
merger of the two entities, and ART will be the surviving corporation of the ART
merger. The reorganization agreement also provides that, subject to unitholder
approval of the merger and the satisfaction or waiver of the other conditions to
the NRLP merger, NRLP Acquisition Corp., a wholly owned subsidiary of Newco,
will be merged with and into NRLP. The separate existence of NRLP Acquisition
Corp. will cease upon the merger of the two entities, and NRLP will be the
surviving entity in the NRLP merger. As soon as possible after the mergers are
completed, the merger consideration will be paid to the ART shareholders and
NRLP unitholders as described below.

Effective Time of the Mergers

Subject to the satisfaction or waiver of the conditions to the obligations
of ART and NRLP to complete the mergers, the business combination will be
completed as quickly as possible following the approval of each of the mergers
by the ART shareholders and the NRLP unitholders at their respective special
meetings.

Exchange of Securities

As soon as possible after the effective time of the mergers, the exchange
agent for Newco will mail a letter of transmittal to each holder of record of
shares of ART capital stock and NRLP units. The letter of transmittal will also
contain instructions for surrendering ART certificates and NRLP certificates in
exchange for certificates representing shares of Newco capital stock. Upon
surrender of an ART certificate or an NRLP certificate to the exchange agent for
cancellation, together with the letter of transmittal and any other documents
reasonably required by Newco or the exchange agent, each holder of an ART
certificate representing shares of ART capital stock and each holder of an NRLP
certificate, other than ART and its subsidiaries, representing NRLP partnership
units will be entitled to receive a certificate representing shares of Newco
common stock or Newco preferred stock, as applicable. NRLP unitholders, other
than ART and its subsidiaries, will receive one share of Newco common stock in
exchange for each unit surrendered. Holders of ART common stock will receive
.91 shares of Newco common stock in exchange for each share surrendered.
Holders of ART preferred stock will receive one share of Newco preferred stock
in exchange for

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<PAGE>

each share surrendered. In addition, holders of ART common stock may receive
cash in lieu of fractional shares of Newco common stock.

After the effective time of the merger, each ART certificate and NRLP
certificate, other than those held by ART and its subsidiaries, will represent
only the right to receive, upon surrender, the certificate representing shares
of Newco common stock or preferred stock, as applicable, and cash in lieu of
fractional shares of Newco common stock in the case of ART common stock. The
exchange agent will not be entitled to vote or exercise any rights of ownership
with respect to the shares of Newco capital stock it holds, except that it will
receive and hold all dividends or other distributions paid or distributed with
respect to those shares for the account of persons entitled to dividends or
distributions.

Cash in Lieu of Fractional Shares of Newco Common Stock

No certificates representing fractional shares of Newco shares will be
issued pursuant to the mergers. In lieu of fractional shares, each holder of ART
common stock who would otherwise be entitled to a fractional Newco share will
receive, on the date the merger consideration is paid to the holders of ART
common stock, cash in an amount equal to the fraction (expressed as a decimal
and rounded to the nearest 0.01 of a share) multiplied by the value of a share
of Newco common stock.

Conditions to the Business Combination; Termination; Waiver and Amendment

Conditions. A number of conditions must be met in order to complete the
----------
business combination, including:

. the approval of the reorganization agreement by the holders of

(1) a majority of the outstanding NRLP units and the ART common
stock;

(2) the holders of a majority of each outstanding series of ART
preferred stock voting separately as a series;

(3) a majority of the shares of ART common stock, not owned by BCM,
represented at the ART special meeting, whether in person or by
proxy; and

(4) a majority of the NRLP partnership units not owned by ART or its
subsidiaries, represented at the NRLP special meeting, whether in
person or by proxy;

. no court or other governmental entity will have enacted a law that is
in effect and prohibits either merger or the business combination;

. the obtaining of any necessary consent of any lender or other third
party that is required to be obtained; and

. approval for listing of the Newco common stock on the NYSE.

33
<PAGE>

Termination. The reorganization agreement can be terminated by:
-----------

. the mutual consent of NRLP and ART;

. the action of the board of directors of either NMC, the general partner
of NRLP, or ART if, without fault of the terminating party, the mergers
are not completed by March 31, 2000;

. the action of the board of either NMC, the general partner of NRLP, or
ART if the other entity fails to comply in any material respect with any
of the covenants or agreements contained in the reorganization agreement
that were to have been performed by that entity at or prior to the date
of termination;

. by either NRLP or ART if either of them receives an offer from a third
party for a merger, merger or combination or a tender offer or exchange,
and the applicable board of directors determines, in its good faith
reasonable judgment, that the acceptance of the offer could reasonably
be required by the fiduciary obligations of those directors under
applicable law; or

. the action of the board of directors of either NMC, the general partner
of NRLP, or ART if the board of directors or the independent directors
of the other entity withdraw or adversely modify their approval or
recommendation of the reorganization agreement or the applicable merger.

Amendment. The parties may modify or amend the reorganization agreement, by
---------
written agreement prior to the completion of the merger, according to the
applicable provisions of the Delaware Revised Uniform Limited Partnership Act,
as it applies to NRLP, or the Georgia General Corporation Code, as it applies to
ART.

Covenants. The parties to the reorganization agreement made a number of
---------
covenants or promises. Each of the original entities covenanted to, among other
things:

. operate its business and that of its subsidiaries in the usual and
ordinary course consistent with past practices;

. use its best efforts to preserve its business organization;

. maintain its existing relations with customers, suppliers, employees and
business associates;

. not take any action that would adversely affect the ability of the
parties to complete the merger;

. take all actions necessary to convene the meetings to vote on the
approval of the reorganization agreement;

. give the representatives of the other parties reasonable access to
information concerning its business; and

34
<PAGE>

. notify the other parties of any material adverse change in the condition
of its business, properties, assets, liabilities or results of
operations.

Reasons for the Business Combination

Joint Reasons for the Business Combination. ART and NRLP are engaged in
------------------------------------------
substantially the same business and have substantially similar operating
concepts and philosophies. The boards of directors of ART and the general
partner of NRLP believe that the business combination will benefit the companies
for the following reasons:

. The size of the combined companies may represent a more attractive
investment vehicle for institutional investors.

. Newco, as a larger company, may benefit from greater access to the
capital markets.

. The size of the combined companies should enhance the opportunity to
raise capital through equity offerings.

. The preferred stockholders of Newco could benefit from holding preferred
stock in a larger parent company with a stronger capital structure.

. The operations and assets of ART and NRLP are complimentary.

- NRLP has an aging income portfolio that it would like to replace with
newer investments and developments;

- ART has land available for development opportunities; and

- NRLP enjoys significant cash flow while ART has substantial assets.

The purpose of the proposed transaction is to allow the companies to take
advantage of the benefits of joint operations by (a) combining ART and NRLP as
subsidiaries of Newco, a recently formed Nevada corporation, which will operate
as the parent corporation of NRLP and ART, and (b) distributing the shares of
Newco common stock to the current shareholders of ART and the unitholders of
NRLP. As a result of the mergers, ART and NRLP will each become subsidiaries of
Newco and the capital stock of Newco will be distributed to the former
shareholders of ART and unitholders of NRLP (other than ART and its
subsidiaries). In the ART merger, (1) each outstanding share of ART common stock
will be converted into 0.91 shares of Newco common stock and (2) each
outstanding share of ART preferred stock will be converted into one share of
Newco preferred stock. In the NRLP merger, each outstanding partnership unit of
NRLP (other than those owned by ART and its subsidiaries) will be converted into
the one share of Newco common stock.

The Recommendation of the ART Board

The ART board believes that the business combination is fair to and in the
best interests of ART and the ART shareholders and has unanimously approved the
reorganization agreement and the transactions contemplated by it. THE ART BOARD
UNANIMOUSLY RECOMMENDS THAT

35
<PAGE>

THE SHAREHOLDERS OF ART VOTE "FOR" ADOPTION AND APPROVAL OF THE REORGANIZATION
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY IT.

In considering the recommendations of ART's board with respect to the ART
merger, ART shareholders should be aware that some members of the ART board have
interests in the business combination that are different from, or in addition
to, yours. In addition, the executive officers and directors of ART will become
executive officers and directors of Newco. The ART board was aware of these
interests and considered them, among other matters, in approving the
reorganization agreement and the ART merger. See "THE REORGANIZATION AGREEMENT-
- -Interests of Certain Persons in the Mergers."

The discussion in this section regarding the information and factors
considered by the ART board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the merger,
the parties did not find it practical to and did not attempt to rank or assign
relative weights to any of the factors described below. Individual members of
the ART board may have given different weights to different factors. On
balance, however, the discussions among the members of the ART board evidenced
the general view that, except with respect to the increased exposure to
litigation resulting from the merger, the factors enumerated below were regarded
favorably by the ART board in making its determination to approve the merger.

In arriving at the decision to approve and recommend the terms of the
reorganization agreement, the ART board considered a number of factors,
including, but not limited to, the following:

. the conditions in the real estate industry;

. the strategic options available to ART;

. the limitations placed on ART's ability to take advantage of opportunities
due to its present size, level of leverage and limited borrowing capacity;

. the ART board's consideration of ART's strategic plan as an independent
company and the belief that its ability to pursue its plan would be
enhanced by the merger;

. the ART board's belief that the merger would create a company with a
larger equity capitalization that would, because of its increased size,
more easily attract the interest of institutional investors and financial
advisors, create more liquidity for the shareholders and have better
access to the capital markets than the constituent entities;

. the ART board's consideration of the business, operations, assets,
financial position, prospects and personnel of ART and NRLP and the common
operations of the companies;

. the ART board's belief that the merger would be accomplished for ART
shareholders on a generally tax-free basis for federal income tax
purposes;

. the ART board's belief that the availability of additional cash flow from
NRLP operations will be available for use in the development of ART
properties;

36
<PAGE>

. the ART board's consideration of presentations by, and discussions with,
senior executives of NRLP Management Corp. and representatives of Locke
Liddell & Sapp LLP, counsel to ART, regarding the terms of the
reorganization agreement, and the results of the management's due
diligence presentation; and

. the ART board's receipt of a letter dated November 3, 1999 from
Fieldstone, Inc. that, based upon the factors and assumptions stated in
its opinion and as of the date of the opinion, the merger consideration
to be received by the public shareholders of ART in the merger is fair
to the shareholders from a financial point of view.

The ART board also considered the matters described under "RISK FACTORS" as
well as a number of negative factors, including those discussed below, in its
deliberations concerning the business combination.

. The exchange ratio in the business combination was fixed in the business
combination agreement, which means that ART stockholders will receive
0.91 Newco common shares for each share of ART common stock they own and
one share of Newco preferred stock for each share of ART preferred stock
they own. The exchange ratio will not be adjusted for any change in the
value of ART's shares or the value of NRLP partnership units.

. As a result of the business combination, approximately 77.3% of the
equity of the combined company will be owned by ART shareholders and the
remaining 22.7% will be owned by former NRLP unitholders other than ART.
Accordingly, following the business combination, each ART shareholder
will hold a smaller percentage ownership in the ART assets.

. Management estimates that the transaction expenses associated with the
business combination will be $500,000 each or $1 million total.

. NRLP has an aging income portfolio which will require the purchase
and/or development of newer properties to replace NRLP's older assets.

. The risk that the public announcement of the business combination may
negatively affect the trading price of ART's common stock.

The Recommendation of the NRLP General Partner

NRLP Management Corp., the general partner of NRLP, believes that the
business combination is fair to and in the best interests of NRLP and the
holders of NRLP units. By unanimous vote, the NMC board approved the merger and
the transactions contemplated thereby and unanimously recommend that the NRLP
unitholders approve the merger. THE NMC BOARD UNANIMOUSLY RECOMMENDS THAT THE
UNITHOLDERS OF NRLP VOTE "FOR" ADOPTION AND APPROVAL OF THE REORGANIZATION
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY IT.

37
<PAGE>

In considering the recommendations of NRLP's general partner with respect to
the NRLP merger, NRLP unitholders should be aware that some members of the NMC
board have interests in the business combination that are different from, or in
addition to, yours. In addition, some of the executive officers and directors
of NMC will become executive officers and directors of Newco. The NMC board was
aware of these interests and considered them, among other matters, in approving
the reorganization agreement and the NRLP merger. See "THE REORGANIZATION
AGREEMENT--Interests of Certain Persons in the Mergers."

The discussion in this section regarding the information and factors
considered by NRLP's general partner is not intended to be exhaustive. In view
of the variety of factors considered in connection with its evaluation of the
merger, the general partner did not find it practical to and did not attempt to
rank or assign relative weights to the factors discussed below. Individual
members of the NMC board may have given different weights to different factors.
On balance, however, the discussions among the members of the NMC board
evidenced the general view that, except with respect to the increased exposure
to litigation resulting from the merger, the factors enumerated below were
regarded favorably by the NMC board in making its determination to approve the
merger.

In arriving at the decision to approve and recommend the terms of the
reorganization agreement, NRLP's general partner considered a number of factors,
including, but not limited to, the following:

. the strategic options available to NRLP to maximize value for the
unitholders and the conclusion that the merger represents the best
strategic option available;

. the likelihood of future merger in the real estate industry and the
conclusion that the merger affords the holders of units the opportunity to
own the equity of a larger public company that would be better positioned
in light of trends in the industry;

. the restrictions placed on NRLP's ability to take advantage of a number of
business opportunities due to its present size and level of leverage that
are a negative factor if the merger were not approved;

. the consideration of NRLP's strengths and weaknesses as an independent
company and the conclusion that its ability to pursue its strategic plan
would be enhanced by the merger;

. the belief that newer properties owned by ART will provide a more balanced
asset portfolio in light of NRLP's aging investment portfolio;

. the conclusion that the merger would create a company with a larger equity
capitalization and simplified ownership structure that would, therefore,
more easily attract the interest of institutional investors and financial
analysts, create more liquidity for the unitholders of NRLP and have
better access to the capital markets than the entities would separately;

. the consideration of the business, operations, assets, financial positions
and prospects of ART and NRLP and the shared management and the common
operations of the

38
<PAGE>

companies, factors that support a conclusion that the merger would be in
the best interests of the unitholders;

. the consideration of, and discussions with, senior executives of ART
regarding the terms of the reorganization agreement and other factors that
management believed would assist the NMC board in arriving at a fair value
for NRLP's interests;

. the analysis of the complexities of the limited partnership structure of
NRLP, a negative factor if the merger were not approved, and the relative
liquidity and marketability of units of NRLP compared to the expected
liquidity and marketability of shares of Newco's common stock;

. the analysis of the complexities to financial analysts and potential and
current unitholders of the cross ownership of the securities of NRLP and
ART, which makes it more difficult for securities analysts to analyze NRLP
and for investors to assess the opportunities and risks of an investment
in NRLP, compared to the simpler ownership structure of Newco following
the merger; and

. the receipt of Houlihan Lokey's opinion that, as of November 3, 1999, the
merger consideration was fair, from a financial point of view, to the
public unitholders.

NRLP's general partner also considered the matters described under "RISK
FACTORS" as well as a number of negative factors, including those discussed
below, in its deliberations concerning the business combination.

. The exchange ratio in the business combination was fixed in the business
combination agreement, which means that NRLP unitholders will receive one
share of Newco common stock for each unit of limited partnership interest
in NRLP. The exchange ratio will not be adjusted for any change in the
value of NRLP units or the value of ART common stock.

. As a result of the business combination, approximately 22.7% of the equity
of the combined company will be owned by former NRLP unitholders, other
than ART, and the remaining 77.3% will be owned by former ART
shareholders. Accordingly, following the business combination, each NRLP
unitholder will hold a substantially smaller percentage ownership the NRLP
assets.

. Management estimates that the transaction expenses associated with the
business combination will be $500,000 each or $1 million total.

. The business combination could be dilutive to NRLP's earnings per unit and
book value per unit on a historical pro forma basis due to ART's
historical losses and lack of cash flow.

. The risk that the benefits sought in the business combination would not be
obtained; achieving the anticipated benefits would depend upon a
successful integration of the companies' businesses and operations and a
successful transition to an internal management team.

39
<PAGE>

. The risk that the public announcement of the business combination may
effect trading price of NRLP's units. The announcement of the business
combination could trigger a decline in the trading price of NRLP units
and ART shares.

Opinion of Financial Advisors

Opinion of ART's Financial Advisor
----------------------------------

ART retained Fieldstone, Inc., or Fieldstone, to act as ART's financial
advisor in connection with the merger. In connection with this engagement, ART
requested that Fieldstone evaluate the fairness, from a financial point of view,
of the consideration to be paid to the holders of the issued and outstanding
shares of ART common stock in connection with the reorganization.

As part of its investment banking business, Fieldstone engages in the
valuation of businesses and securities in connection with mergers and
acquisitions, public offerings, private placements and valuations for corporate
purposes. On November 3, 1999, at a meeting of the ART board of directors held
to evaluate the merger, Fieldstone delivered an oral opinion, subsequently
confirmed by delivery of a written opinion dated November 3, 1999, to the board
of directors of ART to the effect that, as of the date of Fieldstone's opinion
and based upon and subject to certain matters stated in that opinion, the merger
consideration was fair, from a financial point of view, to the holders of ART
common stock.

Under the terms of the merger agreement ART's shareholders will receive
0.91 shares of Newco common stock for each share of ART common stock owned at
the effective time of the merger.

In connection with rendering its opinion, Fieldstone reviewed and
analyzed, among other things, the following:

. ART's Annual Reports, Forms 10-K and related financial information for
the three fiscal years ended December 31, 1998 and ART's Forms 10-Q
and the related unaudited financial information of the three months
ended March 31, 1999 and six months ended June 30, 1999;

. NRLP's Annual Reports, Forms 10-K and related financial information
for the three (3) years ended December 31, 1998 and NRLP's Forms 10-Q
and the related unaudited financial information for the three months
ended March 31, 1999 and six months ended June 30, 1999;

. specific publicly available business and financial information
relating to ART and NRLP, which were deemed relevant;

. relevant historical and projected financial operating information with
respect to the business and operation of ART and NRLP furnished to
Fieldstone by the management or advisors of ART and NRLP;

. appraisals of real estate assets of both ART and NRLP, or the
appraisals, as prepared by various recognized appraisal firms;

40
<PAGE>

. the market prices, trading history and valuation multiples of the ART
shares and the NRLP units which were compared to each other, as well
as specific publicly traded companies that Fieldstone deemed to be
relevant;

. conducted discussions with members of senior management of ART and
NRLP concerning their respective businesses and prospects;

. reviewed a draft of the reorganization agreement provided to
Fieldstone on November 2, 1999; and

. conducted specific financial studies and analyses and took into
account this relevant financial, economic and market criteria as
Fieldstone deemed appropriate in arriving at its opinion.

In the review and analysis and in arriving at its opinion, Fieldstone
assumed and relied upon the accuracy and completeness of all of the financial
and relevant information provided or publicly available and assumed and relied
upon the representations and warranties of each of ART, NRLP and Newco contained
in the reorganization agreement. Fieldstone was not engaged to, and did not
independently attempt to, verify any of this information. Fieldstone also relied
upon the management of both ART and NRLP as to the reasonableness and ability to
achieve the financial and operating projections (and the assumptions and bases
therefor) provided and, with the consent of the management of ART and NRLP,
Fieldstone assumed that these projections reflect the best currently available
estimates and judgments of the respective management and that the projections
and forecasts will be realized in the amounts and in the time periods currently
estimated by the management of ART and NRLP.

Fieldstone was not engaged to assess ART's or NRLP's ability to achieve
these projections or the assumptions on which the projections were based and
expressed no view as to these projections or assumptions. In addition,
Fieldstone did not conduct a physical inspection or appraisal of any of the
assets, properties or facilities of either ART or NRLP nor was Fieldstone
furnished with any direct written evaluation or appraisal reports. Fieldstone
also assumed that the conditions to the merger as set forth in the
reorganization agreement would be satisfied and that the merger would be
completed on a timely basis in the manner contemplated by the reorganization
agreement. Fieldstone also assumed that the merger would be treated as a tax-
free reorganization to the extent of the stock for stock exchange contemplated
by the merger agreement.

It should be noted that Fieldstone based its opinion on economic and market
conditions, existing circumstances and information available at the time the
opinion was given and does not address any matter subsequent to the date of the
opinion.

The full text of the written opinion of Fieldstone dated November 3, 1999,
which sets forth the assumptions made, matters considered and limitations on the
review undertaken, is attached as Appendix B, and is incorporated by reference.
Holders of ART common stock and preferred stock are urged to read this opinion
carefully in its entirety. The Fieldstone opinion is directed to the board of
directors of ART and relates only to the fairness of the merger consideration
from a financial point of view. The opinion does not address any other aspect of
the merger or related transactions and does not constitute a recommendation to
any stockholder as to how that stockholder should vote at the ART special
meeting. The summary of Fieldstone's opinion set forth in this joint proxy
statement is qualified in its entirety by reference to the full text of the
opinion. In preparing its opinion, Fieldstone performed a variety of financial
and

41
<PAGE>

comparative analyses, including those described below. The summary of the
analyses does not purport to be a complete description of the analyses
underlying Fieldstone's opinion. The preparation of a fairness opinion is a
complex analytic process involving various determinations as to the most
appropriate and relevant methods of financial analyses and the application of
those methods to the particular circumstances and, therefore, a fairness opinion
is not readily susceptible to summary description. Accordingly, Fieldstone
believes that its analyses must be considered as a whole and that selecting
portions of its analyses and factors, without considering all analyses and
factors, could create a misleading or incomplete view of the processes
underlying the analyses and opinion. In its analyses, Fieldstone made numerous
assumptions with respect to ART, NRLP, industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of ART and NRLP. The estimates contained in the analyses and
the valuation ranges resulting from any particular analysis are not necessarily
indicative of actual values or predictive of future results or values, which may
be significantly more or less favorable than those suggested by the analyses. In
addition, analyses relating to the value of businesses or securities do not
purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold. Accordingly, the analyses and estimates are
inherently subject to substantial uncertainty. Fieldstone' opinion and analyses
were only one of many factors considered by the ART board of directors in its
evaluation of the merger and should not be viewed as determinative of the views
of the ART board of directors or management of ART with respect to the merger
consideration or the reorganization.

ART and NRLP were valued using a cost, income and market approach, in order
to gain an underlying assessment of the two companies and determine a range of
values for the exchange ratio. An exchange ratio was also derived on the basis
of the two companies' market capitalization.

Valuation of ART
----------------

Cost, Income and Market Approach
--------------------------------

This valuation approach of ART included:

. an assessment of income producing properties,

. a land valuation,

. a lending portfolio valuation,

. an assessment of non-real estate operations, and

. a subsidiary valuation.

The value generated by this approach was then compared against the
companies market capitalization. No single valuation method was preferred over
another.

Income Producing Properties
---------------------------

For the most part, income producing properties were valued, based on an
income approach and a comparable analysis approach. The income approach used a
range of capitalization rates and the trailing twelve-month net operating
income. In some instances, Fieldstone was supplied alternative valuation
methods, such as appraisals, stabilized value estimates, and book/carrying
value, which, in the absence of other information, were utilized and

42
<PAGE>

compared against market comparables. Values derived under the income approach
were subjected to a comparable analysis, utilizing a nationwide market study,
the "Market Monitor" obtained from CB Richard Ellis. Using this valuation
technique, the total asset value for the income producing properties ranged
between $271,130,471 and $282,081,637.

Land Valuation
--------------

Fieldstone was also provided by ART, in the majority of cases, a property
by property land sales forecast that detailed projected revenue, timing, and
acreage of land parcels to be sold, and their respective debt balances. For the
most part, land values were derived based on these forecasts. Specifically,
varying mid-year discount rates of between 25%-30%, based on the respective
company's weighted average cost of capital for land holdings, were applied to
the sales forecast to derive estimated market value of the land portfolio.
Outstanding debt, taken at face value, was then subtracted from the estimated
market values to obtain the net equity value for each property. This valuation
approach provided a net equity value range from $357,129,214 under the 25%
discount rate, to $317,912,666 under the 30% discount rate.

Some relatively small parcels, which according to the provided sales
forecast, had no foreseeable sales activity, were valued at book value. The
estimated value of these parcels was less than $1 million.

Lending Portfolio Valuation
---------------------------

The lending portfolio was subjected to a portfolio review that evaluated
provisioning levels and whether equity write-downs were necessary. Performing
loans were valued at face value.

Management has indicated that the $92.2 million line of credit from NRLP to
ART will not be extinguished upon completion of the reorganization.

Non-Real Estate Operation (Pizza World Supreme, Inc.)
-----------------------------------------------------

ART, through a wholly-owned subsidiary, Pizza World Supreme, Inc., or PWSI,
operates and franchises pizza parlors featuring pizza delivery, carry-out and
dine-in under the trademark "Me-N-Ed's" in California and Texas.

Due to the lack of income projections for PWSI, a comparable company was
employed to determine the value of ART's holdings in PWSI on a Price/EBITDA
comparable. Six comparable publicly traded companies were identified including:

. Papa John's International, Inc.,

. PJ America, Inc.,

. Pizza Inn, Inc.,

. Sbarro, Inc.,

43
<PAGE>

. Chicago Pizza & Brewery, Inc. and

. Uno Restaurant Corporation.

Two comparable transactions were identified: Bain Capital's acquisition of
Domino's Pizza Inc. on September 25, 1998, and the Sbarro Family acquisition of
the remaining outstanding shares of Sbarro, Inc., which was approved on August
13, 1999.

For the basis of the valuation of ART, a range of values was set utilizing
the market value derived from the comparable take out companies and comparable
transactions utilizing take out companies, or take out multiples, since the
business profile of these companies more closely mirrors that of Me-N-Ed's than
that of all pizza parlors. Based on the methodology described above, PWSI range
of value is as follows:

<TABLE>
<CAPTION>
Estimated
Market Value
------------
<S> <C>
Comparable Company - Take Out $19,859,128.0
Comparable Transaction - Take Out $24,944,204.4
</TABLE>

Subsidiary Valuation
--------------------

In addition to its own real-estate related operations, ART has significant
investments in a number of real estate companies:

<TABLE>
<CAPTION>
Company Stake
- -------------------------------------------------------------------------------------
<S> <C>
Continental Mortgage and Equity Trust (CMET): 41.1%
Income Opportunity Realty Investors, Inc. (IORI): 30.4%
Transcontinental Realty Investors, Inc. (TCI): 31.1%
NRLP: 55.4%
</TABLE>

The valuation techniques described above were applied to the ART's equity
investments in its ownership interests in related companies, or ownership
interests. Once an estimated market value was obtained for the ownership
interests, ART's ownership stake was applied against that value to derive the
market value of ART's interest. In total, these ownership interests have a
range of value between $466,429,459 and $494,682,141.

ART owns a 55.4% stake in NRLP and, through a wholly-owned subsidiary,
serves as its general partner (an additional 1.3% stake). Fieldstone estimates
that this equity ownership, which is included in the value range given in the
preceding paragraph, is valued between $344,688,439 to $358,317,212.

Market Capitalization
---------------------

ART is listed on the New York Stock Exchange and has a market
capitalization of approximately $167.0 million. ART has 100,000,000 shares
authorized and 10,563,434 shares outstanding.

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<PAGE>

Valuation of NRLP
-----------------

Cost, Income and Market Approach
--------------------------------

This valuation approach of NRLP included:

. an assessment of income producing properties,

. a land valuation and

. a lending portfolio valuation.

The value generated by this approach was then compared against the
companies market capitalization. No single valuation method was preferred over
another.

Income Producing Property Valuation
-----------------------------------

NRLP owns a variety of income-producing real estate assets including 46
residential properties located in 19 states, 6 retail properties located in 5
states and 6 office properties located in 5 states.

Set out below is the estimated market value of the income producing
properties, derived under the two scenarios on a net basis (after sales and
reserves before outstanding debt):

<TABLE>
<CAPTION>
Property Type Value 1 Value 2
---------------------- ------------ ------------
<S> <C> <C>
Residential $365,269,299 $387,185,457
Retail 29,178,935 30,701,314
Office 24,744,576 25,906,712
------------ ------------
Total Asset Value $419,192,809 $443,793,483
============ ============
</TABLE>

Land Valuation
--------------

NRLP has a land portfolio underlying its income producing properties with a
book value of $38,865,000. This land portfolio included in the income producing
properties valuation.

Lending Portfolio Valuation
---------------------------

NRLP had a lending portfolio consisting of 17 loans of a short-term nature.
NRLP has an outstanding loan of $92,900,000 to ART. Summarizing, the loan
portfolio consists of carrying amounts of mortgage, net of discount, in the
amount of $176,937,000 and an allowance of estimated losses in the amount of
$1,910,000. As of August 31, 1999, two loans classified non-performing, RB
Cattle and Riverside.

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<PAGE>

Market Capitalization
---------------------

NRLP is a Delaware registered limited partnership with 6,321,526 Limited
Partnership units outstanding. NRLP is listed on the American Stock Exchange
and has a market capitalization of about $134.3 million. A subsidiary of ART is
the general partner of NRLP and holds a 2.0% General Partnership interest.

Miscellaneous
-------------

Pursuant to the terms of Fieldstone' engagement, ART has agreed to pay
Fieldstone for its services in connection with the merger, an advisory fee equal
to 1% of the transaction value, contingent upon the consummation of the merger
(less the nonrefundable fee of $150,000 set forth below). ART has also paid
Fieldstone a non-refundable fee of $150,000 for its services in rendering this
opinion and further agreed to reimburse Fieldstone for travel and other
reasonable out-of-pocket expenses incurred by Fieldstone in performing its
services, including the reasonable fees and expenses of its legal counsel, and
to indemnify Fieldstone and related persons against certain liabilities,
including liabilities under the federal securities laws, arising out of
Fieldstone's engagement.

Fieldstone has advised ART that, in the ordinary course of business,
Fieldstone and its affiliates may actively trade or hold the securities of ART
and NRLP for their own account or for the account of customers and, accordingly,
may at any time hold a long or short position in these securities. Fieldstone
has in the past provided investment banking and financial advisory services to
ART unrelated to the merger, including serving as managing underwriter for ART's
public offering of the ART preferred stock, for which services Fieldstone has
received compensation.

Fieldstone is a nationally recognized investment banking firm with full
licensing from appropriate NASD and other securities authorities worldwide and
was selected by ART based on its experience, expertise and familiarity with ART
and its business. Fieldstone regularly engages in the valuation of businesses
and their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and unlisted
securities, private placements and corporate purposes.

Opinion of NRLP's Financial Advisor
-----------------------------------

NRLP retained Houlihan Lokey pursuant to an engagement letter dated August
25, 1999, to render a fairness opinion, from a financial point of view to the
NRLP unitholders which are not affiliated with ART (referred to as the Non-
Affiliated Unitholders) of the consideration to be received by the Non-
Affiliated Unitholders for their NRLP units pursuant to the terms of the
reorganization agreement pursuant to which NRLP and ART would become
subsidiaries of Newco. The proposed exchange ratio of NRLP's limited partnership
units for Newco shares is 1.0 to 1.0. The proposed exchange ratio of ART's
common shares for shares of Newco is 1.0 to .91.

Houlihan Lokey is a nationally recognized investment banking firm that
provides financial advisory services in connection with mergers and
acquisitions, leveraged buyouts, business valuations for a variety of regulatory
and planning purposes, recapitalizations, financial restructurings, and private
placements of debt and equity securities. NRLP agreed to pay Houlihan Lokey a
fee of $150,000 for its preparation and delivery of the fairness opinion in the
business

46
<PAGE>

combination plus reasonable out-of-pocket expenses that may be incurred by
Houlihan Lokey in connection herewith, plus a refundable indemnification deposit
of $50,000. No portion of Houlihan Lokey's fee is contingent upon the successful
completion of the business combination or any other related transaction.
Houlihan Lokey has been retained by NRLP solely to deliver its fairness opinion
to the board of directors of NMC, the general partner of NRLP. NRLP agreed to
indemnify Houlihan Lokey and its affiliates against certain liabilities,
including liabilities under federal securities laws that arise out of the
engagement of Houlihan Lokey.

The full text of Houlihan Lokey's opinion, which sets forth the assumptions
made, general procedures followed, factors considered and limitations on the
review undertaken by Houlihan Lokey in rendering its opinion is attached hereto
as Appendix C and is incorporated herein by reference. The discussion of the
opinion below is qualified in its entirety by reference to the opinion. You are
urged to read Houlihan Lokey's opinion in its entirety carefully for a
description of the procedures followed, the factors considered and the
assumptions made by Houlihan Lokey.

Houlihan Lokey's opinion to the NMC board addresses only fairness from a
financial point of view of the consideration to be received in the business
combination by the Non-Affiliated Unitholders with respect to the NRLP units
held by them and does not constitute a recommendation as to how any person
should vote with respect to the business combination. Houlihan Lokey has not
been requested and does not intend to update, revise or reaffirm its fairness
opinion in connection with the business combination unless requested to do so by
the NMC board. Events that could affect the fairness of the business
combination, from a financial point of view, include adverse changes in industry
performance or market conditions and changes to the business, financial
condition and results of operations of NRLP or ART.

Houlihan Lokey did not, and was not requested by NRLP or the NMC board to,
make any recommendations as to the form or amount of consideration to be
received by the Non-Affiliated Unitholders in connection with the business
combination. Houlihan Lokey's opinion also does not address NRLP's underlying
business decision to effect the business combination. Houlihan Lokey was not
asked to opine on and does not express any opinion as to the tax consequences of
the business combination, the public market values or realizable value of
Newco's common shares given as consideration in the business combination, the
prices at which Newco's common shares may trade in the future following the
business combination, or the fairness of any aspect of the business combination
not expressly addressed in its fairness opinion.

In arriving at its fairness opinion, Houlihan Lokey completed the following
tasks, among others:

1. reviewed the annual report on Form 10-K for the fiscal years ended
December 31, 1998 and quarterly report on Form 10-Q for the quarter
ended June 30, 1999 for the NRLP and ART;

2. reviewed the annual report on Form 10-K for the fiscal years ended
December 31, 1998 and quarterly report on Form 10-Q for the quarter
ended June 30, 1999 for Transcontinental Realty Investors, Inc.,
Continental Mortgage and Equity Trust, and Income Opportunity Realty
Investors, Inc. (the ART Investment Companies and, collectively with
ART and NRLP, the Subject Companies);

3. reviewed the Subject Companies' property information binders dated
June 30, 1999;

47
<PAGE>

4. met with the senior management of BCM, the advisor for the Subject
Companies, to discuss the business combination, operations, financial
condition, future prospects and performance of the Subject Companies;

5. reviewed the reorganization agreement;

6. reviewed ART's land portfolio book dated August 1999;

7. reviewed ART's valuation book as of December 31, 1998;

8. reviewed public market trading data for the Subject Companies;

9. reviewed internally prepared financial statements for the Subject
Companies, for the six months ended June 30, 1997 and June 30, 1998
and for the fiscal year ended December 31, 1998;

10. reviewed a schedule of properties acquired or sold since June 30,
1999;

11. reviewed publicly available information on companies Houlihan Lokey
deemed comparable to the Subject Companies; and

12. conducted other studies analyses, studies and investigations as
Houlihan, Lokey deemed appropriate under the circumstances for
rendering the opinion expressed herein.

In order to determine the fairness, from a financial point of view, of the
consideration to be received by the Non-Affiliated Unitholders, Houlihan Lokey
determined an indicated range of the market value of equity for Newco, on a pro
forma basis, and the relative contribution of NRLP and ART to that market value
of equity.

The primary value of ART and NRLP are their real estate holdings that
consist of income producing real property, mortgage notes and loans receivable
and land held for sale. In addition, ART owns securities in the ART Investment
Companies, which hold similar types of assets. The securities of the ART
Investment Companies are publicly traded and were valued separately in order to
determine the value of ART's investments in those companies. Houlihan Lokey
performed various analyses to estimate a range of equity values for each the
Subject Companies, which resulted in the estimated range of equity value for
Newco, and the relative contribution to that value by NRLP.

In valuing the income producing properties held by the Subject Companies,
Houlihan Lokey conducted several analyses, including the following: (1) a "Net
Asset Value" approach whereby Houlihan Lokey applied capitalization rates to the
income producing properties held by the Subject Companies, (2) a "Portfolio"
approach whereby Houlihan Lokey applied market based multiples of comparable
public companies to representative segment level earnings of the Subject
Companies and (3) various other analyses. In valuing the land assets held for
sale, a "Discounted Cash Flow" approach was utilized whereby projected proceeds
from projected future sales of the land assets were discounted at an appropriate
rate to consider the risk of the cash flows and the time value of money. In
addition, certain other assets such as mortgage notes receivable were assumed to
be equal to book value.

48
<PAGE>

Net Asset Value Approach - Income Producing Property
----------------------------------------------------

The Net Asset Value approach assumes an orderly liquidation of the assets
of the Subject Companies in the open market. Houlihan Lokey reviewed financial
data for each of the individual income producing real property assets owned by
the Subject Companies. The income producing assets held by the Subject Companies
consist of various types of assets which Houlihan Lokey classified into the
following categories: apartment, hotel, retail, office and industrial. The
analysis utilized capitalization rates of net operating income (NOI) primarily
from the National Real Estate Index, an independent organization, which compiles
data from real estate transactions. The capitalization rates were applied to
the NOI of each individual income producing property by dividing the NOI of the
property by the capitalization rate to determine the value of each income
producing property. BCM provided the property level financial information used
to determine the NOI of each property to Houlihan Lokey. Once the individual
income producing property asset values were determined, each property's value
was allocated to the Subject Companies based on the respective ownership of the
assets. Houlihan Lokey adjusted the resulting aggregate net asset values of the
Subject Companies upward for cash, land assets held for sale and other assets
and downward for accounts payable, notes payable and other liabilities of the
applicable Subject Company.

Portfolio Approach - Income Producing Property
----------------------------------------------

The Subject Companies own various real estate assets that were combined
based on asset types, into portfolios. Portfolio level financial data by
portfolio was provided by BCM based on internally prepared property operating
statements, and by publicly filed financial statements on Form 10-K and 10-Q.
Houlihan Lokey used both sources of data to obtain representative earnings
before interest, taxes, depreciation and amortization (EBITDA).

In using the "Portfolio Approach," Houlihan Lokey applied market based
multiples of comparable public companies to representative historical EBITDA
levels of the various income producing property types for the Subject Companies
to arrive at the values of the income producing assets. Houlihan Lokey adjusted
the resulting portfolio values of the Subject Companies upward for land assets
held for sale and other assets and downward for notes payable of the applicable
Subject Company.

Discounted Cash Flow Approach - Land held for Sale
--------------------------------------------------

Houlihan Lokey utilized BCM's cash flow projections of land held for sale
to determine the value of ART's land holdings. Houlihan Lokey calculated a net
present value of the land holdings by applying discount rates ranging from 20 to
25 percent.

Other Analysis
--------------

The Subject Companies own other assets that were considered in the
valuation of NRLP and ART. Those assets consist primarily of notes and interest
receivable. Based on Houlihan Lokey's discussions with BCM, the value of those
assets was assumed to be equal to book value.

Valuation Conclusion - NRLP
---------------------------

Based on the approaches discussed above, Houlihan Lokey estimated a range
of total asset value for NRLP as follows: (1) $404.2 million to $444.0 million
for the NRLP income producing

49
<PAGE>

properties; and (2) $175.0 million for the notes and interest receivable. The
result indicated a range of value for the total assets of NRLP from $579.3
million to $618.0 million. After subtracting $344.4 million of NRLP's notes and
interest payable, the concluded range of equity value for NRLP is estimated to
be from $234.9 million to $274.6 million (see chart below).

<TABLE>
<CAPTION>
================================================================================================
NRLP VALUATION SUMMARY
- ------------------------------------------------------------------------------------------------
($ in millions)
Houlihan Lokey's Range of
Market Value of Equity
---------------------------------
<S> <C> <C>
Income Producing Properties
Portfolio Approach - Internal Financials $ 434.3 - $ 475.6
Portfolio Approach - Publicy Disclosed Financials 355.3 - 389.1
Net Asset Value Approach 423.2 - 467.1
----------- -------------
Concluded Enterprise Value 404.2 - 444.0

Notes and Interest Receivable 175.0 - 175.0 (1)
----------- -------------
Subtotal 579.3 - 619.0

Less: Notes and Interest Payable 344.4 - 344.4 (1)
----------- -------------
Concluded Equity Value $ 234.9 - $ 274.6
=========== =============
</TABLE>

(1) As per June 30, 1999 Form 10Q.

================================================================================

Valuation Conclusion - ART
--------------------------

Based on the approaches discussed above, Houlihan Lokey estimated a range
of total asset value for ART as follows: (1) $203.4 million to $225.4 million
for the ART income producing properties; (2) $533.7 million to $567.5 million
for land held for sale; $92.2 million for the notes and interest receivable; (3)
$66.1 million to $91.5 million for the ART Investment Companies; (4) $15.5
million for ART's 100 percent interest in American General Realty, a restaurant
business; and (5) $579.3 million to $619.0 million for 100 percent of the asset
value of NRLP. After subtracting $92.2 million to eliminate an intercompany
receivable (which for purposes of this analysis was included in NRLP's assets),
$836.4 million in a consolidated ART and NRLP notes and interest payable, and
$122.5 million for NRLP's minority interest, the concluded range of equity value
for ART is estimated to be from $478.8 million to $538.0 million (see chart
below).

50
<PAGE>

================================================================================
ART VALUATION SUMMARY

<TABLE>
<CAPTION>
($ in millions) Houlihan Lokey's Range
of Market Value of Equity
----------------------------------
<S> <C> <C>
Buildings & Improvements
Portfolio Approach - Internal Financials $ 200.4 - $ 221.8
Portfolio Approach - Publicly Disclosed Financials 170.4 - 188.8
Net Asset Value Approach 239.3 - 265.6
--------- ---------
Concluded Value - Income Producing Properties 203.4 - 225.4

Land
Discounted Cash Flow Approach 533.7 - 567.5 (1)

Notes and Interest Receivable 92.2 - 92.2 (2)

100% NRLP - Assets 619.0 - 579.3

ART Investment Companies:

30.4% Income Opportunity Realty Investors, Inc. 8.0 - 10.6

41.1% Continental Mortgage & Equity Trust 34.5 - 46.2

31.1% Transcontinental Realty Investors, Inc. 23.5 - 34.7
--------- ---------
Subtotal - ART Investments Companies 66.1 - 91.5
--------- ---------

American General Realty, Inc. (Pizza) 15.5 - 15.5

Less: Notes and Interest Payable (836.4) - (836.4)

Less - Minority Interest in National Realty, L.P. - 44.6% (122.5) - (104.8)

Less - NRT Intercompany Receivable (eliminated in consolidation) (92.2) - (92.2)
--------- ---------

Concluded Equity Value $ 478.8 - $ 538.0
========= =========
</TABLE>

(1) Based on management estimates of future land values and sale dates.

(2) As per June 30, 1999 Form 10Q. Net of allowance for estimated losses.
================================================================================

Newco Valuation and Relative Contribution Summary
-------------------------------------------------

Based on the above equity value indications for NRLP and ART, Houlihan
Lokey calculated the relative contribution of the Non-Affiliated Unitholders
interest in Newco. In order to establish the widest relevant range of value for
Newco, Houlihan Lokey utilized the low indicated value of the ART range combined
with the high indicated value of the NRLP range as well as the high indicated
value of the ART range combined with the low indicated value of the NRLP range.

The range of market value of equity for Newco is the result of: (1) the
value of ART including NRLP; less (2) the value of ART's 55.4% interest in NRLP;
plus (3) the value of NRLP's standalone market equity. The resulting pro-forma
range of market value of equity for Newco is from $601.2 million to $642.7
million.

The above range of market value of equity yields the pro-forma relative
value contribution by the Non-Affiliated Unitholders to Newco ranging from 16.3%
to 20.4%. This indicated relative contribution falls below the pro-forma
percentage of Newco shares that will be owned by the Non-

51
<PAGE>

Affiliated Unitholders following consummation of the business combination based
on the proposed exchange ratio pursuant to the Agreement.

================================================================================
Newco Valuation and

Relative Contribution Summary

<TABLE>
<CAPTION>
($ in millions) Houlihan Lokey's Range of
Indicated Equity Value
----------------------------------
American Low American High
------------- -------------
Newco Pro-forma Valuation Summary National High National Low
- --------------------------------- ------------- -------------
<S> <C> <C>
ART (Including NRLP) $ 478.8 - $ 538.0

Less: ART's Interest in NRLP (55.4%) (152.2) - (130.2)

ART (Excluding NRLP) 326.6 - 407.9

Add: NRLP 274.6 - 234.9
------------- -------------
Concluded Equity Value $ 601.2 - $ 642.7
============= =============

Pro-forma Relative Value Contribution to Newco
- ----------------------------------------------
NRLP's Percentage of Value Contribution to Newco 45.7% - 36.5%
Multiplied by: Non-Affiliated Unitholders' Ownership in NRLP 44.6% - 44.6%
------------- -------------
Houlihan Lokey's Concluded Range of Non-Affiliated
Unitholders Value Contribution to Newco 20.4% - 16.3%
============= =============

Pro-forma Percentage of Newco Shares Owned by Non-Affiliated
Unitholders 22.4%
-------------
</TABLE>
================================================================================

In conclusion, Houlihan Lokey's analyses indicated that the consideration
to be received in the business combination by the Non-Affiliated Unitholders
with respect to the NRLP units held by the Non-Affiliated Unitholders is fair,
from a financial point of view.

In arriving at its fairness opinion, Houlihan Lokey reviewed certain key
economic and market indicators including, but not limited to, growth in gross
domestic product, inflation rates, interest rates, consumer spending levels,
manufacturing productivity levels, unemployment rates and general stock market
conditions. Houlihan Lokey's opinion is based on the business, economic, market
and other conditions as they existed as of November 3, 1999 and on the projected
financial information provided to Houlihan Lokey as of that date. In rendering
its opinion, Houlihan Lokey has relied upon and assumed, without independent
verification, that the historical and projected financial information (including
the future value and estimated sale dates of the land held for sale) provided to
Houlihan Lokey by BCM has been reasonably and accurately prepared based upon the
best current available estimates of the financial results and condition of the
Subject Companies. Houlihan Lokey did not independently verify the accuracy or
completeness of the information supplied to it with respect to the Subject
Companies and does not assume responsibility for it. Except as set forth above,
Houlihan Lokey did not make any independent appraisal of the specific properties
or assets of the Subject Companies.

The summary set forth above describes the material points of more detailed
analyses performed by Houlihan Lokey in arriving at its fairness opinion. The
preparation of a fairness opinion is a complex analytical process involving
various determinations as to the most appropriate

52
<PAGE>

and relevant methods of financial analysis and application of those methods to
the particular circumstances and is therefore not readily susceptible to summary
description. In arriving at its opinion, Houlihan Lokey made qualitative
judgments as to the significance and relevance of each analysis and factor.
Accordingly, Houlihan Lokey believes that its analyses and summary set forth
herein must be considered as a whole and that selecting portions of its
analyses, without considering all analyses and factors, or portions of this
summary, could create an incomplete view of the processes underlying the
analyses set forth in Houlihan Lokey's fairness opinion. In its analysis,
Houlihan Lokey made numerous assumptions with respect to the Subject Companies,
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of the
respective entities. The estimates contained in the analyses are not necessarily
indicative of actual values or predictive of future results or values, which may
be more or less favorable than suggested by the analyses. However, there were no
specific factors reviewed by Houlihan Lokey that did not support its opinion.
Additionally, analyses relating to the value of businesses or securities are not
appraisals. Accordingly, the analyses and estimates are inherently subject to
substantial uncertainty.

Federal Income Tax Considerations

General. This section summarizes material U.S. federal income tax
-------
considerations relevant to the shareholders of ART and to the unitholders of
NRLP participating in the mergers. This discussion is based upon the provisions
of the Internal Revenue Code of 1986, as amended, applicable Treasury
Regulations, judicial decisions and current administrative rulings and
pronouncements, all as of the date of this document and any of which may be
changed at any time with retroactive effect. There can be no assurance that
future legislation, regulations, administrative rulings or court decisions would
not alter the tax consequences set forth below. The discussion does not
address all aspects of federal income taxation that may be important to
particular shareholders or unitholders in light of their personal investment
circumstances or to shareholders or unitholders subject to special treatment
under the federal income tax laws (such as dealers in securities, life insurance
companies, foreign persons, broker-dealers, regulated investment companies, tax-
exempt entities, financial institutions, taxpayers subject to the alternative
minimum tax, taxpayers who acquired their ART stock or NRLP units upon exercise
of employee stock options or otherwise as compensation and persons holding their
stock or units as part of a "straddle," "hedge" or other integrated investment)
and does not address any aspect of state, local or foreign taxation. For
purposes of this discussion, it is assumed that the ART stock and the NRLP units
are held by the ART shareholders and NRLP unitholders respectively, as capital
assets at the time of the consummation of the mergers, within the meaning of
Section 1221 of the Internal Revenue Code. THEREFORE, SHAREHOLDERS AND
UNITHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF MERGERS AND RELATED TRANSACTIONS, INCLUDING APPLICABLE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.

As a condition to ART's and NRLP's obligations to complete the mergers,
ART, NRLP and Newco will receive an opinion of Locke Liddell & Sapp LLP, dated
as of the closing date, to the effect that, for federal income tax purposes,
each merger shall be treated as part of a transaction that satisfies the
requirements of Section 351 of the Internal Revenue Code. We will not waive this
condition to the mergers unless we amend this document and resolicit your proxy.

53
<PAGE>

It is the opinion of Locke Liddell & Sapp LLP that the mergers, pursuant to
which the ART shareholders and the NRLP unitholders exchange their shares and
units for Newco stock, will be treated for federal income tax purposes as
exchanges described in Section 351 of the Internal Revenue Code. This opinion is
based upon assumptions and conditioned upon representations as to factual
matters and covenants to be made by ART, NRLP and Newco and such other parties
as requested by Locke Liddell & Sapp LLP, which representations and covenants
will be confirmed prior to the closing of the merger. This opinion is also based
upon representations contained in the merger agreements. The opinion assumes
that the merger will be consummated in accordance with the terms of the merger
agreements, that no conditions to the mergers will be waived, that the
assumptions and representations upon which the opinions are based will be true
and accurate as of the time the mergers are completed, and that no actions
inconsistent with these representations and assumptions has occurred or will
occur.

No ruling has been or will be obtained from the Internal Revenue Service in
connection with the mergers. ART shareholders and NRLP unitholders should be
aware that an opinion of counsel is not binding on the Internal Revenue Service
or the courts, and no assurance can be given that the Internal Revenue Service
will not challenge the tax treatment of the mergers.

Tax Consequences of the ART Transaction.
---------------------------------------

Treatment of Newco, ART and ART Acquisition Corp.:

No gain or loss will be recognized by Newco, ART or ART Acquisition Corp.
as a result of the merger of ART Acquisition Corp. into ART.

Treatment of ART Common Stock Shareholders:

Except as discussed in the next paragraph, a shareholder whose shares of
ART common stock are converted in the merger into shares of Newco common stock
will not recognize gain or loss upon the conversion. The aggregate tax basis of
the Newco common stock received by a shareholder will be equal to the aggregate
tax basis of the ART common stock so converted, reduced by any amounts allocable
to a fractional share interest for which cash is received. The holding period
of the Newco common stock will include the holding period of the ART common
stock so converted.

A holder of ART common stock that receives cash in lieu of fractional
shares of Newco common stock will be treated as having received the fractional
shares in the merger and then as having exchanged the fractional share for cash
in a redemption by Newco. Any gain or loss attributable to fractional shares
will generally be capital gain or loss, provided that the payment is not treated
as a dividend for tax purposes. The amount of the gain or loss will be equal to
the difference between the ratable portion of the tax basis of the ART common
stock converted in the merger that is allocated to the fractional share and the
cash received in lieu of it. Any capital gain or loss will constitute long-term
capital gain or loss if ART common stock has been held by the holder for more
than one year at the time of the consummation of the merger. For holders who
are individuals, net long-term capital gain is generally taxed at lower rates
than ordinary income.

54
<PAGE>

Treatment of ART Preferred Stock Shareholders:

Pursuant to the merger of ART Acquisition Corp. into ART, (1) holders of
issued and outstanding ART Series F preferred stock will receive Newco Series A
preferred stock and (2) holders of issued and outstanding ART Series I preferred
stock will receive Newco Series E preferred stock. No other series of ART
preferred stock will be issued and outstanding at the time of the merger
transactions. Accordingly, no other series of Newco preferred stock will be
issued pursuant to the merger transactions. Based upon the assumption that the
Newco Series A preferred stock is not classified as "nonqualified preferred
stock" within the meaning of Section 351(g)(2) of the Internal Revenue Code, as
described below, no gain or loss will be recognized by a holder of ART Series F
preferred stock upon the conversion of ART Series F preferred stock into Newco
Series A preferred stock pursuant to the merger. In this case, a shareholder's
aggregate tax basis in any Newco Series A preferred stock received in the
exchange will be equal to the shareholder's tax basis in the ART Series F
preferred stock exchanged therefor, and the holding period of the Newco Series A
preferred stock will include the holding period of the ART Series F preferred
stock.

However, the nonrecognition rule described above will not apply, and gain
or loss will be recognized upon the exchange of ART Series F preferred stock
solely for Newco Series A preferred stock, if the Newco Series A preferred stock
is classified as "nonqualified preferred stock" within the meaning of Section
351(g)(2) of the Internal Revenue Code. In this case, the gain or loss would be
computed based on the difference between the fair market value of the Newco
Series A preferred stock and the adjusted tax basis of the ART Series F
preferred stock. For these purposes, the term "nonqualified preferred stock"
means preferred stock if (1) the holder of the stock has the right to require
the issuer or a related person to redeem or purchase the stock within 20 years
of the issuance of the stock, (2) the issuer or a related person is required to
redeem or purchase the stock within 20 years of the issuance of the stock, (3)
the issuer or a related person has the right to redeem or purchase the stock
and, as of the issue date, it is more likely than not that the right will be
exercised within 20 years of the issuance of the stock, or (4) the dividend rate
on the stock varies in whole or in part (directly or indirectly) with reference
to interest rates, commodity prices, or other similar indices. For this
purpose, "preferred stock" is defined as stock which is limited and preferred as
to dividends and does not participate in corporate growth to any significant
extent.

The Newco Series A preferred stock is not mandatorily redeemable by Newco
or puttable to Newco by a holder of Newco Series A preferred stock. In
addition, the dividend rate on the Newco Series A preferred stock does not vary
in whole or in part (directly or indirectly) with reference to interest rates,
commodity prices or other similar indices. However, Newco does have the right
to redeem the Newco Series A preferred stock. The Newco Series A preferred
stock will constitute "nonqualified preferred stock" if it is more likely than
not that Newco will exercise the right. Section 351(g)(2) was added to the
Internal Revenue Code in 1997. To date, there is little guidance concerning the
scope of this provision. Neither the legislative history nor any other direct
authority establishes the parameters that will be utilized to determine whether
it is more likely than not that preferred stock like the Newco Series A
preferred stock will be redeemed. The Internal Revenue Service recently issued
proposed regulations addressing certain technical issues concerning
"nonqualified preferred stock." However, the proposed regulations did not
address this "more likely than not" issue. Newco has represented that it has no
plan or intention to redeem the Newco preferred stock. In addition, the Newco
Series A preferred stock has no features that effectively would require or are
intended to compel its redemption. Newco will take the position that the Newco

55
<PAGE>

Series A preferred stock is not more likely than not to be redeemed. However,
there can be no assurance that the Internal Revenue Service will not take a
contrary position.

There is analogous authority in the Section 305 regulations that gives some
indication of the standards that could be adopted by the Internal Revenue
Service. The Section 305 regulations set forth a safe harbor under which an
issuer's right to redeem preferred stock is not treated as "more likely than
not" to be exercised if (1) the issuer and the holder are not related, (2) there
are no plans, arrangements or agreements that effectively require or are
intended to compel the issuer to redeem the stock and (3) exercise of the right
to redeem the stock would not reduce the yield of the stock, as determined under
principles similar to the original issue discount rules.

If the same safe harbor is adopted for purposes of applying Section
351(g)(2) of the Internal Revenue Code, the Newco Series A preferred stock
should not be treated as nonqualified preferred stock. The Newco preferred
stock provides for the payment of dividends at a rate intended to provide a 10%
cumulative return, compounded on a quarterly basis as long as the preferred
stock is outstanding. The Newco Series A preferred stock may be redeemed by
Newco at any time for a fixed amount based on 103% of the adjusted liquidation
value of the stock. Neither the dividend rate nor the redemption percentage
increases over time. Therefore, a redemption of the Newco Series A preferred
stock would not decrease the yield. However, there can be no assurance that the
Internal Revenue Service will adopt this approach for defining nonqualified
preferred stock.

The Newco Series E preferred stock is redeemable by Newco at any time. In
addition, Newco has represented that it is anticipated that the Newco Series E
preferred stock will be redeemed within 20 years of the issuance of the stock.
Therefore, Newco anticipates taking the position that the Newco Series E
preferred stock is nonqualified preferred stock.

A holder of ART preferred stock that receives solely cash in exchange for
that stock in the merger by virtue of the exercise of dissenter's rights will
recognize capital gain or loss at the time of the consummation of the merger
equal to the difference between the tax basis of the ART preferred stock
surrendered in the merger and the amount of cash received for it, provided that
the payment is not treated as a dividend for tax purposes. The capital gain or
loss will constitute long-term capital gain or loss if the ART preferred stock
has been held by the holder for more than one year at the time of the
consummation of the merger. For holders who are individuals, net long-term
capital gain is generally taxed at lower rates than ordinary income.

Reporting Requirements of All ART Shareholders:

Under United States Treasury regulations, each ART shareholder that
exchanges ART stock for Newco stock in the merger will be required to retain
records and file with the shareholder's federal income tax return a statement
setting forth certain facts relating to the merger.

56
<PAGE>

Tax Consequences of the NRLP Transaction.
----------------------------------------

Treatment of Newco, NRLP and NRLP Acquisition Corp.:

No gain or loss will be recognized by Newco, NRLP or NRLP Acquisition Corp.
as a result of the NRLP merger.

Treatment of NRLP Unitholders:

Except as provided below, a unitholder whose units of NRLP are converted in
the merger into shares of Newco common stock will not recognize gain or loss
upon the conversion. The tax basis of the Newco common stock received by a
unitholder who recognizes no gain or loss will be equal to the tax basis of the
NRLP units so converted, decreased by the amount of the partnership liabilities
attributable to the units. The holding period of the Newco common stock
received in the merger will include the holding period of the NRLP units so
converted.

Under Section 357(c) of the Internal Revenue Code, if a corporation assumes
liabilities of the transferor (or accepts property subject to liabilities) in a
transaction subject to Section 351 of the Internal Revenue Code, the transferor
must recognize gain in the amount by which the liabilities exceed the
transferor's basis in the property contributed to the corporation. For this
purpose, partnership liabilities allocable to the NRLP units that are exchanged
by the unitholders will be treated as liabilities of the unitholders and assumed
by Newco. Accordingly, a unitholder will recognize gain upon the exchange of
units if and to the extent that (a) the aggregate amount of partnership
liabilities attributable to the units exchanged by the unitholder exceeds (b)
the unitholder's aggregate tax basis in the units exchanged. In general, because
the partnership's liabilities allocable to units are included in the basis of
those units, a unitholder's exchange of units will not cause the unitholder to
recognize gain under Section 357(c) of the Internal Revenue Code, unless the
unitholder's tax basis has been reduced by other factors, such as distributions
to the unitholder in excess of its share of the partnership's income or
distributions or deductions financed with nonrecourse debt (including through
predecessor partnerships acquired by NRLP). In the event that a unitholder
recognizes gain under Section 357(c), the gain will increase its basis in its
Newco stock.

Gain will generally be capital gain and will be treated as long term
capital gain to the extent that the unitholder has a holding period of more than
one year with respect to its units. It is possible that a portion of the gain
that unitholders recognize with respect to their units may be recharacterized as
ordinary income under Section 751 of the Internal Revenue Code. This will occur
if NRLP holds appreciated inventory, or depreciable property, other than real
estate, the value of which exceeds its depreciated basis. It is also possible
that a portion of the gain could be characterized as "unrecaptured Section 1250
gain," which is subject to tax at a rate in excess of the regular capital gains
rate.

Section 465 of the Internal Revenue Code requires individuals and closely
held corporations to recapture losses previously allowed with respect to their
interests in a partnership in the event their amount "at-risk" with respect to
that partnership becomes less than zero. The consequence of recapture is that a
taxpayer must recognize income equal to the negative at-risk amount. A
partner's at-risk amount is generally equal to its basis in its partnership
units, adjusted to exclude certain non-qualified partnership liabilities which
would otherwise be included in basis ("at-risk basis") and increased by any gain
recognized on the disposition of the partner's units. One event that would

57
<PAGE>

reduce a partner's at-risk amount and therefore potentially create a negative
at-risk amount is the reduction of the partner's share of qualified liabilities.
Although guidance is scarce, it is likely that the recapture income that a
partner would recognize is treated as either ordinary income or has the
character of the losses and deductions previously allowed.

In general, as long as a unitholder's at-risk basis in the units that it
exchanges is greater than the unitholder's share of qualifying indebtedness
attributable to those units, the unitholder should not recognize recapture
income under Section 465(e) of the Internal Revenue Code. However, if a
unitholder's share of the liabilities exceeds its at-risk basis in the units the
unitholder exchanges, it will be subject to at-risk recapture although the
amount of recapture will be reduced or substantially eliminated by the amount of
the gain that the unitholder recognizes under Section 357(c) of the Internal
Revenue Code apportioned to those units (as discussed above).

Unlike a share of stock, a unitholder's tax basis in its NRLP units is
increased by its share of partnership income and gain and decreased by
distributions to its unitholders. NRLP has recognized income and gain in
amounts significantly in excess of NRLP distributions in recent years. This
excess amount has resulted in a net increase in the tax basis of each unitholder
in its NRLP units. NRLP anticipates that the basis increases have been of such
a magnitude that no unitholder will recognize income or gain pursuant to Section
357(c) or Section 465(e). However, you should consult your own tax advisor
concerning whether these provisions apply to your particular circumstances.

Depending on the individual circumstances of each unitholder if a
unitholder recognizes gain, the unitholder may be able to offset this gain with
certain prior suspended loses from the issuing partnership (i.e. losses that
were allocated to a unitholder by the partnership, but which the unitholder
could not deduct under Section 704(d) of the Internal Revenue Code because they
exceeded the tax basis of the unitholder), subject to any applicable at-risk
limitations under Section 465 of the Internal Revenue Code.

Ownership of Newco Stock Instead of NRLP Units:

Following the completion of the mergers, unitholders of NRLP will be
stockholders of Newco. As such, they will not be taxed directly on the earnings
of Newco, in contrast to the treatment of a person who previously held a unit of
NRLP. Rather, Newco will be a taxpaying entity that will pay federal income tax
with respect to its taxable income. Thus, the unitholders of NRLP will lose the
tax benefits of operating through a "pass-through" entity for federal income tax
purposes. Former unitholders will be subject to "double taxation" to the extent
that Newco's earnings are first taxed to Newco and then distributed to Newco's
shareholders.

As stockholders of Newco, the former NRLP unitholders generally will
recognize taxable income with respect to the Newco stock upon the receipt of
dividends or upon the disposition of their Newco stock. Any dividends generally
will be included in the recipient's ordinary income to the extent that they are
paid out of Newco's current or accumulated earnings and profits; to the extent
they exceed the amount, they will first be treated as a nontaxable return of
basis to the extent of a stockholder's basis in its Newco stock, and then as a
gain from the sale of the Newco stock, generally as capital gain. Upon a sale
or other taxable disposition of Newco stock, a stockholder generally will
recognize taxable gain or loss equal to the difference between the amount
realized on the disposition and his adjusted tax basis in the disposed stock.
Provided that the Newco stock disposed of was held as a capital asset, any gain
or loss of this type generally will be capital gain or loss.

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Reporting Requirements of NRLP Unitholders:

Under United States Treasury regulations, each NRLP unitholder that
exchanges NRLP units for Newco stock in the merger will be required to retain
records and file with the unitholder's federal income tax return a statement
setting forth certain facts relating to the merger. Further, each NRLP
unitholder will be required to file a statement with its federal income tax
return setting forth information with respect to the unitholder's share of
NRLP's Section 751 assets and related matters.

Backup Withholding. An ART shareholder and an NRLP unitholder may be
------------------
subject to backup withholding at a 31% rate with respect to any payments
received in the mergers unless the shareholder or unitholder complies with
certification procedures required to avoid the withholding or is an exempt
recipient under applicable Treasury Regulations. Payments could include cash
received in lieu of fractional shares and cash received upon the exercise of
appraisal rights. Any amounts withheld under the backup withholding rules are
not an additional tax and may be refunded or credited against the holder's
federal income tax liability, provided that the required information is provided
to the Internal Revenue Service. Newco will report to the ART shareholders and
NRLP unitholders and to the Internal Revenue Service the amount of reportable
payments and any amount withheld in connection with the merger.

THE ABOVE DISCUSSION ADDRESSES ONLY THE FEDERAL INCOME TAX CONSIDERATIONS
OF THE PROPOSED TRANSACTIONS TO AN NRLP UNITHOLDER OR AN ART STOCKHOLDER
GENERALLY. THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
PROPOSED TRANSACTIONS AND THE OWNERSHIP AND DISPOSITION OF STOCK IN NEWCO ARE
COMPLEX AND, IN SOME CASES, UNCERTAIN. THESE CONSEQUENCES ALSO MAY VARY BASED
UPON THE INDIVIDUAL CIRCUMSTANCES OF EACH NRLP UNITHOLDER AND ART STOCKHOLDER.
ACCORDINGLY, NRLP UNITHOLDERS AND ART STOCKHOLDERS ARE URGED TO CONSULT, AND
MUST RELY UPON, THEIR OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES TO THEM OF THE
ACQUISITION, OWNERSHIP AND DISPOSITION OF STOCK IN NEWCO, INCLUDING THE
APPLICABILITY OF ANY STATE, LOCAL OR FOREIGN TAX LAWS AND ANY PENDING OR
PROPOSED LEGISLATION.

Litigation

Both ART and NRLP are involved in various lawsuits arising in the ordinary
course of business. Management of both entities is of the opinion that the
outcome of these lawsuits would have no material impact on either ART's or
NRLP's financial condition.

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THE REORGANIZATION AGREEMENT

The following is a discussion of the material provisions of the
reorganization agreement. This discussion is qualified in its entirety by
reference to the full text of the reorganization agreement, which is attached as
Appendix A to this proxy statement. We encourage you to read the reorganization
agreement in its entirety. For purposes of convenience, references to the
"original entity" means NRLP or ART, before giving effect to the mergers.
"Newco subsidiary" means the particular subsidiary of Newco that is merging with
and into NRLP or ART. "Surviving entity" refers to NRLP or ART, after giving
effect to the mergers.

Representations and Warranties of each of ART and NRLP. The reorganization
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agreement contains representations and warranties of each original entity
relating to, among other things:

. the original entity's organization, qualification, standing and
similar corporate or partnership matters;

. the original entity's capital structure, including the number of
authorized shares or units and the number of shares or units
outstanding;

. the authorization, performance and enforceability of the
reorganization agreement and that there are no violations of the
original entity's governing instruments or applicable laws and
agreements, governmental filings, authorizations and consents required
to complete the merger;

. the availability to Newco and the other parties of selected reports
and financial statements;

. the absence of any material adverse changes or events relating to the
business and properties of the original entity, its capital stock or
its accounting principles, practices or methods;

. the absence of any brokers or broker fees to be paid in connection
with the merger, other than those being paid to Fieldstone, ART's
financial advisor, and Houlihan Lokey, NRLP's financial advisor; and

. the absence of any untrue statements of a material fact or any
omission of a material fact relating to the original entity, as
represented by that original entity, but not as to the other parties
to the reorganization agreement, that must be stated in this document.

Representations and Warranties of Newco. Newco and each Newco subsidiary
---------------------------------------
made representations and warranties relating to:

. their proper organization, qualification, standing and similar
corporate or partnership matters;

. the authorization, performance and enforceability of the
reorganization agreement;

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. the absence of any violations of their governing instruments or
applicable laws and agreements, governmental filings, authorizations and
consents required to complete the merger; and

. the absence of any untrue statements of a material fact or any omission
of a material fact relating to Newco or the Newco subsidiary, as
represented by the party, but not as to the other parties to the
reorganization agreement, that must be stated in this document.