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                                                                    EXHIBIT 99.1


                                  PARKWAY NORTH

                              STATEMENT OF REVENUES
                          AND DIRECT OPERATING EXPENSES
                          YEAR ENDED DECEMBER 31, 1997



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                          Independent Auditors' Report


To the Board of Trustees
Transcontinental Realty Investors, Inc.

We have audited the accompanying statement of revenues and direct operating
expenses of Parkway North for the year ended December 31, 1997. This statement
of revenues and direct operating expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
statement of revenues and direct operating expenses based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and direct operating expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
direct operating expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of revenues and direct operating expenses
presentation. We believe that our audit provides a reasonable basis for our
opinion.

The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of Transcontinental Realty Investors, Inc.) and, as
described in Note 1, is not intended to be a complete presentation of the
results of operations.

In our opinion, the statement of revenues and direct operating expenses referred
to above presents fairly, in all material respects, the revenues and direct
operating expenses of Parkway North for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.




FARMER, FUQUA, HUNT & MUNSELLE, P.C.

Dallas, Texas
May 21, 1998

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                                  PARKWAY NORTH
                              STATEMENT OF REVENUES
                          AND DIRECT OPERATING EXPENSES
                          Year Ended December 31, 1997



<TABLE>
<S>                                                                     <C>     
REVENUES
         Net rental revenues                                            $846,076
         Other revenues                                                   91,637
                                                                        --------

                  Total revenues                                         937,713

DIRECT OPERATING EXPENSES
         Utilities                                                       135,646
         Repairs and maintenance                                         125,567
         Property taxes                                                   91,591
         Salaries and benefits                                            25,581
         Insurance                                                        14,756
                                                                        --------

                  Total direct operating expenses                        393,141
                                                                        --------

REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES                         $544,572
                                                                        ========
</TABLE>


         The accompanying notes are an integral part of this statement.
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                                  PARKWAY NORTH
                         NOTES TO STATEMENT OF REVENUES
                          AND DIRECT OPERATING EXPENSES
                                December 31, 1997


NOTE 1:   ORGANIZATION AND BASIS OF PRESENTATION

          Dallas Parkway North is a 71,000 square-foot office building located
          in Dallas, Texas. During 1997, the property was owned by Sandler
          Southwest Corp.

          The accompanying financial statement does not include a provision for
          depreciation and amortization, bad debt expense, interest expense, or
          income taxes. Accordingly, this statement is not intended to be a
          complete presentation of the results of operations.

NOTE 2:   ACCOUNTING ESTIMATES

          The preparation of financial statements in conformity with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of revenues and
          expenses during the reporting period. Actual results could differ from
          those estimates.

NOTE 3:   OTHER REVENUES

          Other revenues consist of the following:

<TABLE>
<S>                                                                    <C>      
          Operating Expense Recapture                                  $  91,196
          Miscellaneous Income                                               441
                                                                       ---------
                                                                       $  91,637
                                                                       =========
</TABLE>

NOTE 4:   SUBSEQUENT EVENT

          The property was sold to Transcontinental Realty Investors, Inc., a
          Nevada corporation, on February 18, 1998.