<PAGE>   1




                                                                    EXHIBIT 3.1

                                    RESTATED
                    ARTICLES OF AMENDMENT OF THE ARTICLES OF
                  INCORPORATION OF AMERICAN REALTY TRUST, INC.
                               Setting Forth the
             CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RELATIVE
             PARTICIPATING OR OPTIONAL OR OTHER SPECIAL RIGHTS, AND
             QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF OF
                                 SPECIAL STOCK
                                       OF
                          AMERICAN REALTY TRUST, INC.

                    SERIES C 10% CUMULATIVE PREFERRED STOCK


                  AMERICAN REALTY TRUST, INC., a corporation organized and
existing under the laws of the State of Georgia,

                  DOES HEREBY CERTIFY:

                  THAT, pursuant to the authority conferred upon the Board of
Directors by the Articles of Incorporation, as amended, of AMERICAN REALTY
TRUST, INC. (the "Corporation"), and pursuant to the provisions of Section
14-2-602 of the Georgia Business Corporation Code (which section provides that
no shareholder action is required in order to effect these Articles of
Amendment), said Board of Directors, by unanimous written consents dated as of
May 23, 1996, and April 21, 1997, adopted certain recitals and resolutions
providing for the designations, preferences and relative participating,
optional or other special rights and qualifications, limitations or
restrictions thereof, of a series of special stock of the Corporation,
specifically the Series C 10% Cumulative Preferred Stock, which recitals and
resolutions are as follows:

                       WHEREAS, Article Five of the Articles of Incorporation,
         as amended, of the Corporation authorizes the Corporation to issue not
         more than 16,666,667 shares of common voting stock, $0.01 par value
         per share (the "Common Stock"), and 20,000,000 shares of a special
         class of stock, $2.00 par value per share (the "Special Stock"), which
         Special Stock may be issued from time to time in one or more series
         and shall be designated as the Board of Directors may determine to
         have such voting powers, preferences, limitations and relative rights
         with respect to the shares of each series of the class of Special
         Stock of the Corporation as expressly provided in a resolution or
         resolutions providing for the issuance of such series adopted by the
         Board of Directors which is vested with the authority in respect
         thereof;

                  WHEREAS, 500,000 shares of such Special Stock has been
         previously designated as the Series A Cumulative Participating
         Preferred Stock prior to the date hereof, none of which are now issued
         and outstanding;

                  WHEREAS, 4,000 shares of such Special Stock has been
         previously designated as the Series B 10% Cumulative Preferred Stock,
         prior to the date hereof, all 4,000 shares of which are now issued and
         outstanding; and






                                      30
<PAGE>   2




                  WHEREAS, the Board of Directors now desires to further amend
         the Articles of Incorporation to designate an additional series of the
         Special Stock;

                  NOW, THEREFORE, BE IT RESOLVED, that pursuant to the
         authority granted to the Board of Directors by Article Five of the
         Articles of Incorporation, as amended, the Board of Directors hereby
         further amends the Articles of Incorporation to provide for the
         issuance of one single series of Special Stock consisting of the
         number of shares in such series as set forth below and, subject to the
         provisions of Article Five of the Articles of Incorporation, as
         amended, of the Corporation, hereby fixes and determines with respect
         to such series the following designations, preferences and relative
         participating, optional or other special rights, if any, and
         qualifications, limitations or restrictions thereof:

                           1. Designation. The distinctive designation of such
                  series shall be the Series C 10% Cumulative Preferred Stock
                  and each share of the Series C 10% Cumulative Preferred Stock
                  shall have a par value of $2.00 per share and a preference on
                  liquidation under paragraph 6 below of up to $100 per share.
                  The Series C 10% Cumulative Preferred Stock is sometimes
                  referred to herein as the "Series C Preferred Stock."

                           2. Number of Shares. The number of shares which
                  shall constitute the Series C Preferred Stock shall be such
                  number as may actually be issued by the Corporation, not to
                  exceed a maximum of 16,681 shares, which number may be
                  decreased (but not below the number then outstanding), from
                  time to time by the Board of Directors, subject to the
                  provisions hereof.

                           3. Dividends and Dividend Rate. Holders of record on
                  the fifteenth day of each March, June, September and December
                  of each year of shares of the Series C Preferred Stock shall
                  be entitled to receive dividends, when and as declared by the
                  Board of Directors of the Corporation and to the extent
                  permitted under the Georgia Business Corporation Code,
                  payable quarterly on each March 31, June 30, September 30 and
                  December 31 of each year, beginning on June 30, 1996 (each a
                  "Dividend Reference Date" and, collectively, the "Dividend
                  Reference Dates"), in preference to and with priority over
                  dividends upon all "Junior Securities" (as defined in
                  paragraph 6 below). The dividends for the first four quarters
                  after issuance of the Series C Preferred Stock shall be paid
                  by issuance of additional shares of Series C Preferred Stock
                  with a face amount equal to each quarterly dividend payment.
                  Except as otherwise provided herein, dividends on each share
                  of Series C Preferred Stock (a "Share") will accrue
                  cumulatively on a daily basis at the rate per share of ten
                  dollars ($10) per annum ($2.50 per calendar quarter) from and
                  including the date of issuance to and






                                      31
<PAGE>   3




                  including the date on which the "Redemption Price" (as
                  defined in paragraph 4 below) of such Share is paid, whether
                  or not such dividends have been declared and whether or not
                  there are profits, surplus or other funds of the Corporation
                  legally available for the payment of such dividends. For
                  purposes of this paragraph 3, the date on which the
                  Corporation initially issues any Share is its date of
                  issuance, regardless of the number of times transfer of such
                  Share is made on the stock records maintained by or for the
                  Corporation and regardless of the number of certificates that
                  may be issued to evidence such Share (whether by reason of
                  transfer of such Share or for any other reason). So long as
                  any Shares of Series C 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 (a) all dividends on the Series
                  C Preferred Stock for all past quarter-yearly dividend
                  periods have been paid in full and the full dividends for the
                  then current quarter-yearly period shall have been paid or
                  declared in a sum sufficient for the payment thereof set
                  apart, and (b) 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 Special Stock and all stock ranking prior to or on a
                  parity with the Series C Preferred Stock as to dividends or
                  assets outstanding after the payment of such dividends, other
                  distributions, purchase or redemption. Dividends shall not be
                  paid or declared and set apart for payment on any series of
                  Special Stock for any dividend period (including the Series C
                  Preferred Stock) unless dividends have been or are,
                  contemporaneously, paid and declared and set apart for
                  payment on all outstanding series of Special Stock entitled
                  thereto for all dividend periods terminating on the same or
                  earlier date. If at any time the Corporation pays less than
                  the total amount of dividends then accrued with respect to
                  the Series C Preferred Stock, such payment will be
                  distributed ratably among the then holders of Series C
                  Preferred Stock so that an amount equal is paid with respect
                  to each outstanding Share.

                           4.       Redemption.  The Corporation may, at any 
                  time after the issuance thereof and from time to time, at the





                                      32
<PAGE>   4




                  election of the Board of Directors of the Corporation redeem
                  any or all of the Series C Preferred Stock then outstanding
                  by written notice given not less than twenty (20) nor more
                  than sixty (60) days before the date fixed for redemption
                  (the "Redemption Date"). 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 C Preferred Stock at his address as it appears on the
                  stock transfer records of the Corporation. Such notice shall
                  set forth (a) the shares to be so redeemed, (b) the date
                  fixed for redemption, (c) the applicable Redemption Price,
                  and (d) the place at which the holder(s) may obtain payment
                  of the applicable Redemption Price upon surrender of the
                  share certificate(s). If less than all shares of Series C
                  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 C Preferred
                  Stock. If such notice of redemption 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 Series C Preferred Stock called for
                  redemption either (i) by 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 C Preferred Stock to be
                  redeemed or (ii) by 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 by
                  the Articles of Incorporation, as amended, 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 C Preferred Stock so called
                  for redemption and, in either event, from and after the
                  Redemption Date (A) the share(s) of Series C Preferred Stock
                  deemed to be redeemed, (B) such setting aside or deposit
                  shall be deemed to constitute full payment for such Share(s),
                  (C) such Share(s) so redeemed shall no longer be deemed to be
                  outstanding, (D) the holder(s) thereof shall cease to be a
                  shareholder of the Corporation with respect to such share(s),
                  and (E) 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





                                      33
<PAGE>   5




                  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 C 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 C 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 therefor and
                  after any such repayment 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 paragraph 4, the Corporation may redeem
                  or repurchase shares of the Series C Preferred Stock from any
                  holder(s) thereof who consents in writing to such redemption
                  and the provisions of this paragraph 4 will not apply to any
                  such consented redemption. All shares of Series C Preferred
                  Stock redeemed shall be can celled 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
                  Special Stock. The "Redemption Price" (herein so called)
                  shall be an amount equal to the "Liquidation Value" (as
                  defined in paragraph 6 below) of $100 per Share plus the
                  amount of all accrued but unpaid dividends thereon to the
                  Redemption Date, which shall include all cumulative dividends
                  in arrears and also the proportionate part of the dividend
                  accrued since the last Dividend Reference Date preceding the
                  Redemption Date and whether or not earned or declared, but
                  without interest.

                           5. Sinking Fund.  The Corporation shall not be
                  required to maintain any so-called "Sinking Fund" for the
                  retirement on any basis of the Series C Preferred Stock.

                           6. Rights on Liquidation. In the event of any
                  liquidation, dissolution or winding-up of the Corpora tion,
                  and after paying and providing for the payment of all
                  creditors of the Corporation, the holders of shares of the
                  Series C 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 C Preferred Stock has priority over such securities as
                  to dividends or upon liquidation), to receive a liquidation
                  preference in an amount in cash equal to the aggregate
                  Liquidation Value of all shares of Series C Preferred Stock
                  then outstanding, whether any such liquidation, dissolution
                  or winding up is voluntary or involuntary and the holders of





                                      34
<PAGE>   6




                  the Series C Preferred Stock shall not be entitled to any
                  other or further distributions of assets. The term
                  "Liquidation Value" shall be and mean, as of any particular
                  date, an amount per Share of Series C Preferred Stock equal
                  to the Redemption Price if such share were so redeemed in
                  accordance with the provisions of paragraph 5 above, but in
                  no event shall exceed $100 per share, plus any accrued and
                  unpaid cumulative dividends. If, upon any dissolution,
                  liquidation 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 Special Stock of the
                  amounts 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 Special
                  Stock in the event of voluntary or involuntary dissolution,
                  liquidation 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 Special Stock have been
                  paid in full the amounts to which they are entitled, the
                  remaining assets of the Corporation may be distributed to the
                  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 twenty
                  (20) nor more than fifty (50) days prior to the payment date
                  stated therein to each record holder of Series C Preferred
                  Stock. Neither the consolidation nor merger of the
                  Corporation into or with any other corpo ration or
                  corporations, nor the sale or transfer by the Corporation of
                  all or any part of its assets, nor a reduction of the capital
                  stock of the Corporation, nor the purchase or redemption by
                  the Corporation of any shares of its Special 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 paragraph 6.

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





                                      35
<PAGE>   7




                           8. Voting Rights. The holders of the shares of
                  Series C Preferred Stock shall only have the voting rights
                  specifically required by law under Section 14-2- 1004 of the
                  Georgia Business Corporation Code, and shall have the
                  following additional voting rights subject to and after
                  compliance with any applicable laws and rules or actual
                  requirements of any exchange upon which any securities of the
                  Corporation are listed:

                                    (a) except as may otherwise be specifically
                           required by law under Section 14-2-1004 of the
                           Georgia Business Corporation Code, the holders of
                           the shares of Series C Preferred Stock shall not
                           have the right to vote such stock, directly or
                           indirectly, at any meeting of the shareholders 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 shareholders;

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

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

                           9. Conversion Rights. The Series C Preferred Stock
                  may be converted at any time at the option of the holders
                  thereof during a ninety (90) calendar day period (the
                  "Conversion Period" as defined below) at the "Conversion
                  Price" (as defined below) in the manner hereinafter provided,
                  into fully paid and nonassessable Common Stock of the
                  Corporation by multiplying the number of Shares of Series C
                  Preferred Stock to be converted by $100 and dividing the
                  result by the Conversion Price; provided, however, that as to
                  any shares of Series C Preferred Stock which shall have been
                  called for redemption, the right of conversion shall
                  terminate at the close of business on the second full
                  business day prior to the date fixed for redemption and that,
                  on the commencement of any liquidation, dissolution or
                  winding up of the Corporation or the adoption by the
                  stockholders of the Corporation of any resolution authorizing
                  the commencement thereof, the right of conversion shall
                  terminate.





                                      36
<PAGE>   8




                                    (a)     For the purposes of this paragraph
                           9, the following terms shall have the meanings
                           ascribed below:

                                            (i) "Conversion Period" shall be a
                                    period in time which commences at 7:00 a.m.
                                    local Dallas, Texas time on the day which
                                    is thirty (30) calendar months after the
                                    date of original issuance of the first
                                    certificate, issued by the Corporation,
                                    representing shares of Series C Preferred
                                    Stock and expire at 3:00 p.m. local Dallas,
                                    Texas time on the nintieth (90th) calendar
                                    day thereafter.

                                            (ii) "Conversion Price" shall be
                                    and mean the amount determined (rounded
                                    upward to the nearest cent) by multiplying
                                    0.9 times the simple average of the daily
                                    closing price of the Common Stock for the
                                    three (3) trading days immediately
                                    preceding the first day of the Conversion
                                    Period on the market where the shares of
                                    Common Stock of the Corporation are then
                                    regularly traded (which is currently the
                                    New York Stock Exchange, Inc.); provided,
                                    however, if the shares of Common Stock of
                                    the Corporation have not traded on such
                                    market for at least thirty (30) days during
                                    the six calendar months preceding the first
                                    day of the Conversion Period, then such
                                    average shall be of the actual number of
                                    trading days in excess of three (3) as may
                                    be available; provided further that if only
                                    three or fewer trading days exist during
                                    the six months immediately preceding the
                                    first day of the Conversion Period, the
                                    Conversion Price shall be equal to the
                                    simple average of the closing prices of the
                                    shares of Common Stock during such shorter
                                    period of three or fewer days on such
                                    market. The Conversion Price shall not be
                                    subject to any adjustment for the issuance
                                    of any shares of Common Stock by the
                                    Corporation for any purpose.

                                    (b) Upon any conversion, fractional shares
                           shall not be issued but any fractions shall be
                           adjusted by the delivery of one additional share of
                           Common Stock in lieu of any cash on the basis of the
                           "closing" market price for Common Stock at the close
                           of business on the date of conversion unless the
                           Board of Directors shall determine to adjust by the
                           issuance of fractional scrip certificates or in some
                           other manner. Upon any conversion, any dividends
                           accrued on the Series C Preferred Stock surrendered
                           for conversion not previously paid shall be paid at
                           the time of conversion. The





                                      37
<PAGE>   9




                           Corporation shall pay all issue taxes, if any,
                           incurred in respect to the issuance of Common Stock
                           on conversion, provided, however, that the
                           Corporation shall not be required to pay any
                           transfer or other taxes incurred by reason of the
                           issuance of such Common Stock in names other than
                           those in which the Series C Preferred Stock
                           surrendered for conversion may stand.

                                    (c) Any conversion of Series C Preferred
                           Stock into Common Stock shall be made by the
                           surrender to the Corporation, at the office of any
                           Transfer Agent for the Common Stock, of the
                           certificate or certificates representing the Series
                           C Preferred Stock to be converted, duly endorsed or
                           assigned (unless such endorsement or assignment be
                           waived by the Corporation), together with a written
                           request for conversion.

                                    (d) All Series C Preferred Stock which
                           shall have been surrendered for conversion as herein
                           provided shall no longer be deemed to be outstanding
                           and all rights with respect to such shares of stock,
                           including the rights, if any, to receive notices and
                           to vote, shall forthwith cease except only the
                           rights of the holders thereof to receive Common
                           Stock in exchange therefor. Any Series C Preferred
                           Stock so converted shall be permanently retired,
                           shall no longer be deemed outstanding and shall not
                           under any circumstances be reissued and the
                           Corporation may from time to time take such
                           appropriate corporate action as may be necessary to
                           reduce the authorized Series C Preferred Stock
                           accordingly.

                                    (e) A number of authorized shares of Common
                           Stock sufficient to provide for the conversion of
                           the Series C Preferred Stock outstanding upon the
                           basis hereinbefore provided shall at all times be
                           reserved for such conversion. If the Corporation
                           shall propose to issue any securities or to make any
                           change in its capital structure which would change
                           the number of shares of Common Stock into which each
                           share of Series C Preferred Stock shall be
                           convertible as herein provided, the Corporation
                           shall at the same time also make proper provision so
                           that thereafter there shall be a sufficient number
                           of shares of Common Stock authorized and reserved
                           for conversion of the outstanding Series C Preferred
                           Stock on the new basis.

                                    (f) The term "Common Stock" as used in this
                           paragraph 9 shall mean stock of the class designated
                           as Common Stock of the Corporation on the date the
                           Series C Preferred Stock is created or





                                      38
<PAGE>   10




                           stock of any class or classes resulting from any
                           reclassification or reclassifications thereof, the
                           right of which to share in distributions of both
                           earnings and assets is without limitation in the
                           Certificate of Incorporation (or other similar
                           documents) of the Corporation as to any fixed amount
                           or percentage and which are not subject to
                           redemption; provided, that if at any time there
                           shall be more than one such resulting class, the
                           shares of each such class then issuable on
                           conversion of the Series C Preferred Stock shall be
                           substantially in the proportion which the total
                           number of shares of stock of each such class
                           resulting from all such reclassifications bears to
                           the total number of shares of stock of all such
                           classes resulting from all such reclassifications.

                                    (g)     In case the Corporation shall
                           propose at any time during the Conversion Period:

                                           (i) to pay any dividend on the
                                    Common Stock outstanding payable in Common
                                    Stock or to make any other distribution,
                                    other than cash dividends, to the holders
                                    of the Common Stock outstanding; or

                                           (ii) to offer for subscription to
                                    the holders of the Common Stock outstanding
                                    any additional shares of any class or any
                                    other rights or option; or

                                           (iii) to effect any
                                    re-classification or recapitalization of
                                    the Common Stock outstanding involving a
                                    change in the Common Stock, other than a
                                    subdivision or combination of the Common
                                    Stock outstanding; or

                                           (iv) to merge or consolidate with or
                                    into any other corporation, or to sell,
                                    lease, or convey all or substantially all
                                    its property or business, or to liquidate,
                                    dissolve or wind up;

                           then, in each such case, the Corporation shall mail
                           to the holders of record of each of the shares of
                           Series C Preferred Stock at their last known post
                           office addresses as shown by the Corporation's
                           records a statement, signed by an officer of the
                           Corporation, with respect to the proposed action,
                           such statement to be so mailed at least ten (10)
                           days prior to the date of the taking of such action
                           or the record date for holders of the Common Stock
                           for the purposes thereof, whichever is earlier. If
                           such statement relates to any proposed action
                           referred to in clauses (iii) or (iv) of this





                                      39
<PAGE>   11




                           subparagraph 9, it shall set forth such facts with
                           respect thereto as shall reasonably be necessary to
                           inform the holders of the Series C Preferred Stock
                           and the holders of such stock as to the effect of
                           such action upon the conversion rights of such
                           holders.

                           10. Reacquired Shares. Any shares of Series C
                  Preferred Stock purchased or otherwise acquired by the
                  Corporation in any manner whatsoever shall be retired and
                  cancelled promptly after the acquisition thereof. All such
                  shares shall, upon cancellation, become authorized but
                  unissued shares of Special Stock and may be re-issued as part
                  of a new series of Special Stock subject to the conditions
                  and restrictions on issuance set forth in the Articles of
                  Incorporation, as amended, or as otherwise required by law.

         IN WITNESS WHEREOF, these Restated Articles of Amendment are executed
on behalf of the Corporation by its President as of the 21st day of April,
1997.



                                                     AMERICAN REALTY TRUST, INC.



                                                     By:  /s/ Karl L. Blaha
                                                        ------------------------
                                                          Karl L. Blaha
                                                          President





                                      40