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                                                                     EXHIBIT 4.3

                           CERTIFICATE OF DESIGNATION,
                             PREFERENCES AND RIGHTS

                                     OF THE

                       SERIES I CUMULATIVE PREFERRED STOCK

                                ($2.00 Par Value)

                                       OF

                         AMERICAN REALTY INVESTORS, INC.

              Pursuant to Section 78.195, 78.1955 and 78.196 of the
                             Nevada Revised Statutes

         We, the undersigned, Ronald E. Kimbrough, Executive Vice President, and
Robert A. Waldman, Secretary, of American Realty Investors, Inc., a Nevada
corporation (the "Corporation"), pursuant to the provisions of Section 78.195,
78.1955 and 78.196 of the Nevada Revised Statutes, do hereby make this
Certificate of Designation, Preferences and Rights and do hereby state and
certify that, pursuant to the authority expressly vested in the Board of
Directors of the Corporation, as set forth in Article FOURTH of the
Corporation's Restated Articles of Incorporation, the Board of Directors, on
February 3, 2003, unanimously adopted the following resolution creating a series
of its Preferred Stock, $2.00 par value, designated as "Series I Cumulative
Preferred Stock":

         RESOLVED, that the Board of Directors of the Corporation, pursuant to
the authority expressly vested in it by the Corporation's Restated Articles of
Incorporation, does hereby provide for the issuance of a series of the
authorized Preferred Stock, $2.00 par value, of the Corporation, and does hereby
fix and herein state the designation and amount thereof and the voting powers,
preferences and relative participating, optional and other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereon, as follows:

Section 1. Designation and Amount. The shares of such series shall be designated
as "Series I Cumulative Preferred Stock" (the "Series I Preferred Stock") and
each share of the Series I Preferred Stock shall have a par value of $2.00 per
share and a preference on liquidation as specified in Section 5. The number of
shares constituting the Series I Preferred Stock shall be 10,000. Such number of
shares may be increased or decreased by the Board of Directors by filing
articles of amendment as provided in the Nevada Revised Statutes (the "NRS");
provided, that no decrease shall reduce the number of shares of Series I
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants.

Section 2. Dividends and Distributions.

                  (a) The holders of shares of Series I Preferred Stock shall be
         entitled to receive, when, as, and if declared by the Board of
         Directors and to the extent permitted under the NRS, out of funds
         legally available for the purpose and in preference to and with
         priority over dividends upon all Junior Securities (as defined in
         Section 5), quarterly cumulative dividends payable in arrears in cash
         on the fifteenth day following the end of each calendar quarter (each
         such date being referred to herein as a "Quarterly Dividend Payment
         Date"), in an amount per share (rounded to the next highest cent) equal
         to 8% per annum of the Adjusted Liquidation Value, as determined
         immediately prior to the beginning of such calendar quarter assuming
         each year consists of 360 days and each quarter consists


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         of 90 days. The term "Adjusted Liquidation Value" shall mean
         Liquidation Value (as defined in Section 5) plus all accrued and unpaid
         dividends through the applicable date.

                  (b) Dividends shall commence accruing cumulatively on
         outstanding shares of the Series I Preferred Stock from the date of the
         first issuance of Series I Preferred Stock to and including the date on
         which the Redemption Price (as defined in Section 8) of such shares is
         paid, whether or not there are profits, surplus or other funds of the
         Corporation legally available for the payment of such dividends.
         Dividends on the first Quarterly Dividend Payment Date shall accrue and
         shall be payable for a period of 45 days. Dividends payable on each
         Quarterly Dividend Payment Date shall be dividends accrued and unpaid
         through the last Business Day of the immediately preceding calendar
         month. The Board of Directors may fix a record date for the
         determination of holders of shares of Series I Preferred Stock entitled
         to receive payment of a dividend or distribution declared thereon other
         than a quarterly dividend paid on the Quarterly Dividend Payment Date
         immediately after such dividend accrued; which record date shall be not
         more than 50 days prior to the date fixed for the payment thereof.
         Unless otherwise provided herein, the term "Business Day" shall mean
         any day other than a Saturday, a Sunday, or a day on which banking
         institutions in Dallas, Texas are authorized or obligated by law or
         executive order to remain closed.

                  (c) So long as any shares of the Series I Preferred Stock are
         outstanding, the Corporation will not declare or pay any dividends on
         Junior Securities (other than dividends in respect of Common Stock
         payable in shares of Common Stock) or make, directly or indirectly, any
         other distribution of any sort in respect of Junior Securities, or any
         payment on account of the purchase or other acquisition of the Junior
         Securities, unless on the date of such declaration in the case of a
         dividend, or on such date of distribution or payment, in the case of
         such distribution or other payment (i) all accrued dividends on the
         Series I Preferred Stock for all past quarterly dividend periods in
         which dividends accrued have been paid in full and the full amount of
         accrued dividends for the then-current quarterly-yearly dividend
         periods have been paid or declared and a sum sufficient for the payment
         thereof set apart, and (ii) after giving effect to such payment of
         dividends, other distributions, purchase or redemption, the aggregate
         capital of the Corporation applicable to all capital stock of the
         Corporation then outstanding, plus the earned and capital surplus of
         the Corporation shall exceed the aggregate amount payable on
         involuntary dissolution, liquidation or winding up of the Corporation
         on all shares of the Preferred Stock, par value $2.00 per share, of the
         Corporation (the "Preferred Stock"), and all stock ranking prior to or
         on a parity with the Series I Preferred Stock as to dividends or assets
         outstanding after the payment of such dividends, other distributions,
         purchase or redemption. Dividends shall not be paid (in full or in
         part) or declared or set apart for payment (in full or in part) on any
         series of Preferred Stock (including the Series I Preferred Stock) for
         any dividend period unless all dividends, in the case dividends are
         being paid in full on the Series I Preferred Stock, or a ratable
         portion of all dividends, in the case dividends are not being paid in
         full on the Series I Preferred Stock, have been or are,
         contemporaneously, paid or declared and set apart for payment on all
         outstanding Preferred Stock entitled thereto for each dividend period
         terminating on the same or earlier date.

Section 3. Voting Rights and Powers. The holders of the shares of Series I
Preferred Stock shall have only the following voting rights:

                  (a) Except as may otherwise be specifically required by law or
         otherwise provided herein, the holders of the shares of Series I
         Preferred Stock shall not have the right to vote such stock, directly
         or indirectly, at any meeting of the stockholders of the Corporation,
         and such shares of stock shall not be counted in determining the total
         number of outstanding shares to constitute a quorum at any meeting of
         stockholders;

                  (b) In the event that, under the circumstances, the holders of
         the Series I Preferred Stock are required by law to vote upon any
         matter, the approval of such series shall be deemed to have been
         obtained only upon the affirmative vote of the holders of a majority of
         the shares of the Series I Preferred Stock then outstanding;

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                  (c) Except as set forth herein, or as otherwise provided by
         the Restated Articles of Incorporation or by law, holders of the Series
         I Preferred Stock shall have no special voting rights and their consent
         shall not be required for the taking of any corporate action;

                  (d) Notwithstanding anything herein to the contrary, if and
         whenever at any time or times all or any portion of the dividends on
         Series I Preferred Stock for any six quarterly dividends, whether or
         not consecutive, shall be in arrears and unpaid, then and in any such
         event, the number of directors constituting the Board of Directors
         shall be increased by two, and the holders of Series I Preferred Stock,
         voting separately as a class, shall be entitled at the next annual
         meeting of stockholders, or at a special meeting of holders of Series I
         Preferred Stock called as hereinafter provided, to elect two directors
         to fill such newly created directorships. Each holder shall be entitled
         to one vote in such election for each share of Series I Preferred Stock
         held. At such time as all arrearages in dividends on the Series I
         Preferred Stock shall have been paid in full and dividends thereon for
         the current quarterly period shall have been paid or declared and a sum
         sufficient for the payment thereof set aside, then (i) the voting
         rights of holders of Series I Preferred Stock described in this Section
         3(d) shall cease (subject always to revesting of such voting rights in
         the event of each and every similar future arrearages in quarterly
         dividends), (ii) the term of the directors then in office as a result
         of the voting rights described in this Section 3(d) shall terminate and
         (iii) the number of directors shall be reduced by the number of
         directors then in office elected pursuant to this Section 3(d). A
         vacancy in the class of directors elected pursuant to this Section 3(d)
         shall be filled by a director chosen by the remaining directors of the
         class, unless such vacancy is filled pursuant to the final sentence of
         Section 3(g);

                  (e) At any time when the voting right described in Section
         3(d) shall have vested and shall remain in the holders of Series I
         Preferred Stock, such voting right may be exercised initially either at
         a special meeting of holders of Series I Preferred Stock or at any
         annual or special stockholders' meeting called for the purpose of
         electing directors, but thereafter it shall be exercised only at annual
         stockholders' meetings. If such voting right shall not already have
         been initially exercised, the Secretary of the Corporation may, and
         upon the written request of the holders of record of at least 10% of
         the shares of Series I Preferred Stock then outstanding shall, call a
         special meeting of the holders of Series I Preferred Stock for the
         purpose of electing two directors pursuant to Section 3(d), and notice
         thereof shall be given to the holders of Series I Preferred Stock in
         the same manner as that required to be given to holders of the Common
         Stock for the annual meeting of stockholders. Such meeting shall be
         held at the earliest practicable date upon the notice required for
         special meetings of stockholders of the Corporation, or, if none, at a
         time and place designated by the Secretary of the Corporation;

                  (f) At any meeting held for the purpose of electing directors
         at which the holders of Series I Preferred Stock shall have the right
         to elect directors as provided in Section 3(d), the presence in person
         or by proxy of the holders of at least 35% of the then outstanding
         shares of Series I Preferred Stock shall be required and be sufficient
         to constitute a quorum of Series I Preferred Stock for the election of
         directors by Series I Preferred Stock, and the vote of the holders of a
         majority of such shares so present in person or by proxy at any such
         meeting at which there shall be such a quorum shall be required and be
         sufficient to elect the members of the Board of Directors which the
         holders of the Series I Preferred Stock are entitled to elect as
         hereinabove provided. At any such meeting or adjournment thereof, (i)
         the absence of a quorum of the holders of Series I Preferred Stock
         shall not prevent the election of directors other than the directors to
         be elected by the holders of Series I Preferred Stock and (ii) in the
         case of holders of Series I Preferred Stock entitled to vote for the
         election of directors, a majority of the holders present in person or
         by proxy of such class, if constituting less than a quorum as
         hereinabove provided, shall have the power to adjourn the meeting for
         the election of the directors that the holders of such class are
         entitled to elect, from time to time until a quorum shall be present,
         and notice of such adjourned meeting need not be given unless otherwise
         required by law, provided that nothing herein shall affect the conduct
         of the meeting with respect to stockholders of any other class;

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                  (g) Any director who shall have been elected or appointed
         pursuant to Section 3(d) shall hold office for a term expiring (subject
         to the earlier termination of the default in quarterly dividends) at
         the next annual meeting of stockholders, and during such term may be
         removed at any time, either with or without cause, only by the
         affirmative vote of the holders of record of a majority of the shares
         of Series I Preferred Stock then outstanding at a special meeting of
         such stockholders called for such purpose. Any vacancy created by such
         removal may also be filled at such meeting; and

                  (h) So long as any shares of Series I Preferred Stock remain
         outstanding, the Corporation shall not, without the vote or written
         consent of the holders of record of two-thirds of the outstanding
         shares of Series I Preferred Stock, amend its articles of
         incorporation, including this Certificate of Designation, Preferences
         and Rights of this Series I Preferred Stock, or bylaws if such
         amendment would materially alter or change the existing terms of the
         Series I Preferred Stock.

Section 4. Reacquired Shares. Any shares of Series I Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
permanently retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new series of Preferred
Stock subject to the conditions and restrictions on issuance set forth herein or
in any certificates of designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.

Section 5. Liquidation, Dissolution or Winding Up. The liquidation value of the
Series I Preferred Stock shall be $1,000.00 per share. Upon any liquidation,
dissolution or winding up of the Corporation, and after paying and providing for
the payment of all creditors of the Corporation, the holders of shares of the
Series I Preferred Stock then outstanding shall be entitled, before any
distribution or payment is made upon any "Junior Securities" (defined to be and
mean the Common Stock and any other equity security of any kind which the
Corporation at any time has issued, issues or is authorized to issue if the
Series I Preferred Stock has priority over such securities as to dividends or
upon liquidation, dissolution or winding up), to receive a liquidation
preference in an amount in cash equal to the Adjusted Liquidation Value as of
the date of such payment, whether such liquidation is voluntary or involuntary
and the holders of the Series I Preferred Stock shall not be entitled to any
other or further distribution of assets. If, upon any liquidation, dissolution
or winding up of the affairs of the Corporation, the net assets available for
distribution shall be insufficient to permit payment to the holders of all
outstanding shares of all series of Preferred Stock of the amount to which they
respectively shall be entitled, then the assets of the Corporation to be
distributed to such holders will be distributed ratably among them based upon
the amounts payable on the shares of each such series of Preferred Stock in the
event of voluntary or involuntary liquidation, dissolution or winding up, as the
case may be, in proportion to the full preferential amounts, together with any
and all arrearages to which they are respectively entitled. Upon any such
liquidation, dissolution or winding up of the Corporation, after the holders of
Preferred Stock have been paid in full the amounts to which they are entitled,
the remaining assets of the Corporation may be distributed to holders of Junior
Securities, including Common Stock, of the Corporation. The Corporation will
mail written notice of such liquidation, dissolution or winding up, not less
than 20 nor more than 50 days prior to the payment date stated therein, to each
record holder of Series I Preferred Stock. Neither the consolidation nor merger
of the Corporation into or with any other corporation or corporations, nor the
sale or transfer by the Corporation of all or any part of its assets, nor a
reduction in the capital stock of the Corporation, nor the purchase or
redemption by the Corporation of any shares of its Preferred Stock or Common
Stock or any other class of its stock will be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
5.

Section 6. Ranking. The Series I Preferred Stock shall rank on a parity as to
dividends and upon liquidation, dissolution or winding up with all other shares
of Preferred Stock issued by the Corporation; provided, however, that the
Corporation shall not issue any shares of Preferred Stock of any series which
are superior to the Series I Preferred Stock as to dividends or rights upon
liquidation, dissolution or winding up of the Corporation as long as any shares
of the Series I Preferred Stock are issued and outstanding, without the prior
written consent of the holders of a majority of such shares of Series I
Preferred Stock then outstanding voting separately as a class.

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Section 7. Redemption at the Option of the Holder. The shares of Series I
Preferred Stock shall not be redeemable at the option of a holder of Series I
Preferred Stock.

Section 8. Redemption at the Option of the Corporation.

                  (a) The Corporation shall have the right to redeem all or a
         portion of the Series I Preferred Stock issued and outstanding at any
         time and from time to time; provided, however, the Corporation must
         provide notice of redemption in accordance with Section 8(b). The
         redemption price of the Series I Preferred Stock shall be an amount per
         share equal to the Liquidation Value (the "Redemption Price").

                  (b) Except as otherwise set forth herein, the Corporation may
         redeem all or a portion of any holder's shares of Series I Preferred
         Stock by giving such holder not less than 45 days nor more than 60 days
         notice thereof prior to the date on which the Corporation desires such
         shares to be redeemed, which date shall be a Business Day (the
         "Redemption Date"). Such notice shall be written and shall be hand
         delivered or mailed, postage prepaid, to the holder (the "Redemption
         Notice"). If mailed, such notice shall be deemed to be delivered when
         deposited in the United States Mail, postage prepaid, addressed to the
         holder of shares of Series I Preferred Stock at his address as it
         appears on the stock transfer records of the Corporation. The
         Redemption Notice shall state:

                  (i)   the total number of shares of Series I Preferred Stock
                        held by such holder;

                  (ii)  the total number of shares of the holder's Series I
                        Preferred Stock that the Corporation intends to redeem;

                  (iii) the Redemption Date and the Redemption Price; and

                  (iv)  the place at which the holder(s) may obtain payment of
                        the applicable Redemption Price upon surrender of the
                        share certificate(s).

                  (c) If fewer than all of the Series I Preferred Stock at any
         time outstanding shall be called for redemption, such shares shall be
         redeemed pro rata, by lot drawn or other manner deemed fair in the sole
         discretion of the Board of Directors to redeem one or more such shares
         without redeeming all such shares of Series I Preferred Stock. If such
         Redemption Notice shall have been so mailed, on or before the
         Redemption Date the Corporation may provide for payment of a sum
         sufficient to redeem the applicable number of shares of Series I
         Preferred Stock called for redemption either by (i) setting aside the
         sum required to be paid as the Redemption Price by the Corporation,
         separate and apart from its other funds, in trust for the account of
         the holder(s) of the shares of Series I Preferred Stock to be redeemed
         or (ii) depositing such sum in a bank or trust company (either located
         in the state where the principal executive office of the Corporation is
         maintained, such bank or trust company having a combined surplus of at
         least $20,000,000 according to its latest statement of condition, or
         such other bank or trust company as may be permitted hereby or by law)
         as a trust fund, with irrevocable instructions and authority to the
         bank or trust company to give or complete the notice of redemption and
         to pay, on or after the Redemption Date, the applicable Redemption
         Price on surrender of certificates evidencing the share(s) of Series I
         Preferred Stock so called for redemption and, in either event, from and
         after the Redemption Date (v) the share(s) of Series I Preferred Stock
         shall be deemed to be redeemed, (w) such setting aside or deposit shall
         be deemed to constitute full payment for such share(s), (x) such
         share(s) so redeemed shall not longer be deemed to be outstanding, (y)
         the holder(s) thereof shall cease to be stockholder of the Corporation
         with respect to such share(s), and (z) such holder(s) shall have no
         rights with respect thereto except the right to receive their
         proportionate share of the funds set aside pursuant hereto or deposited
         upon surrender of their respective certificates. Any interest on the
         funds so deposited shall be paid to the Corporation. Any and all such
         redemption deposits shall be irrevocable except to the following
         extent: any funds so deposited which shall not be required for the
         redemption of any shares of Series


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         I Preferred Stock because of any prior sale or purchase by the
         Corporation other than through the redemption process, subsequent to
         the date of deposit but prior to the Redemption Date, shall be repaid
         to the Corporation forthwith and any balance of the funds so deposited
         and unclaimed by the holder(s) of any shares of Series I Preferred
         Stock entitled thereto at the expiration of one calendar year from the
         Redemption Date shall be repaid to the Corporation upon its request or
         demand therefore, and after any such repayment of the holder(s) of the
         share(s) so called for redemption shall look only to the Corporation
         for payment of the Redemption Price thereof. In addition to the
         redemption under this Section 8, the Corporation may redeem or
         repurchase shares of the Series I Preferred Stock from any holder(s)
         thereof who consents in writing to any such consented redemption. All
         shares of Series I Preferred Stock redeemed shall be canceled and
         retired and no shares shall be issued in place thereof, but such shares
         shall be restored to the status of authorized but unissued shares of
         Preferred Stock.

                  (d) On or before the Redemption Date, the holder who shall
         redeem such Series I Preferred Stock hereunder shall surrender the
         certificate or certificates representing such shares to the Corporation
         by mail, courier or personal delivery at the Corporation's principal
         executive office or other location so designated in the Redemption
         Notice, and upon the Redemption Date the Redemption Price shall be
         payable to the order of the person whose name appears on such
         certificate or certificates as the owner thereof, and each surrendered
         certificate shall be canceled and retired. In the event fewer than all
         of the shares represented by such certificates are redeemed, a new
         certificate shall be issued representing the unredeemed shares.

                  (e) If the Redemption Notice is not withdrawn prior to one
         Business Day before the Redemption Date, and if on or prior to the
         Redemption Date the Redemption Price is either paid or made available
         for payment, then notwithstanding that the certificates evidencing any
         of the shares of the Series I Preferred Stock so called for redemption
         have not been surrendered, (i) all rights with respect to such shares
         shall forthwith after the Redemption Date cease and terminate, to the
         full extent permitted by applicable law, except only the right of the
         holders to receive the Redemption Price without interest upon surrender
         of their certificates therefore, and (ii) to the full extent permitted
         by applicable law, such shares shall no longer be deemed outstanding
         for any purpose.

Section 9. Sinking Fund. The Corporation shall not be required to maintain any
so-called "sinking fund" for the retirement on any basis of the Series I
Preferred Stock.

Section 10. Fractional Shares. Except as otherwise set forth herein, the Series
I Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of shares of Series I Preferred Stock.

Section 11. Notice. Any notice or request made to the Corporation in connection
with the Series I Preferred Stock shall be given, and shall conclusively be
deemed to have been given and received three Business Days following deposit
thereof in writing, in the U.S. mails, certified mail, return receipt requested,
duly stamped and addressed to the Corporation, to the attention of its General
Counsel, at its principal executive offices (which shall be deemed by the
address most recently provided to the SEC at its principal executive offices for
so long as the Corporation is required to file reports with the SEC).

                               * * * * * * * * * *

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         IN WITNESS WHEREOF, said American Realty Investors, Inc. has caused
this Certificate of Designation, Preferences and Rights of Series I Cumulative
Preferred Stock to be duly executed by its Executive Vice President and attested
to by its Secretary this 3rd day of February, 2003.

                                              AMERICAN REALTY INVESTORS, INC.

                                              By:  /s/ Ronald E. Kimbrough
                                              ----------------------------------
                                              Printed Name:  Ronald E. Kimbrough
                                              Title:  Executive Vice President

ATTEST:

/s/ Robert A. Waldman
-------------------------------
Printed Name: Robert A. Waldman
Title:  Secretary


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