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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
November 13, 1996
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Date of Report (Date of Earliest Event Reported)
INCOME OPPORTUNITY REALTY INVESTORS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Nevada 1-9525 75- 2615944
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(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Form 8-K/A amends a Form 8-K Current Report dated November 13, 1996 and
filed November 27, 1996 by Income Opportunity Realty Investors, Inc. (the
"Company") and provides required financial statements that were not available
at the date of the original filing.
(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December
31, 1995 and the nine months ended September 30, 1996. A pro forma balance
sheet as of September 30, 1996 is also presented.
A summary of the pro forma transaction follows:
On November 13, 1996, the Company purchased the Olympic Building, a 57,000
square foot office building in Los Angeles, California for $6.0 million,
exclusive of commissions and closing costs.
The Company paid $1.5 million in cash and received mortgage financing of $4.5
million. The mortgage bears interest at a variable rate, currently at 9.25%,
requires monthly principal and interest payments of $38,531 and matures
November 2003. The purchase price is approximately 12.2% of the Company's
assets at December 31, 1995.
In addition to the Olympic Building acquisition discussed above, in September
1996, the Company purchased the Daley Plaza Corporate Center, an office
building in San Diego, California. The property was purchased for $7.1 million
exclusive of commissions and closing costs. The Company paid $3.6 million in
cash and financed the remainder of the purchase price. The mortgage secured by
the property bears interest at 6% per annum and matures in 1997.
These proforma statements of operations present the Company's operations as if
the purchase transactions described above had occurred at the beginning of each
of the periods presented.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Olympic
Actual(1) Building (2) Pro forma
----------- ------------- -----------
Assets (dollars in thousands)
------
<S> <C> <C> <C>
Notes and interest receivable
Performing............................................................... $ 1,995 $ -- $ 1,995
----------- ----------- -----------
1,995 -- 1,995
Less - allowance for estimated losses ..................................... -- -- --
----------- ----------- -----------
1,995 -- 1,995
Foreclosed real estate held for sale, net of accumulated
depreciation ............................................................ 914 -- 914
Less - allowance for estimated losses ..................................... -- -- --
----------- ----------- -----------
914 -- 914
Real estate held for investment, net of accumulated
depreciation ............................................................ 46,352 6,319 52,671
Investments in partnerships ............................................... 2,351 -- 2,351
Cash and cash equivalents ................................................. 4,725 (1,876) 2,849
Other assets .............................................................. 3,185 -- 3,185
----------- ----------- -----------
$ 59,522 $ 4,443 $ 63,965
=========== =========== ===========
Liabilities and Shareholders' Equity
Liabilities
Notes and interest payable ................................................ $ 34,472 $ 4,500 $ 38,972
Other liabilities ......................................................... 2,538 -- 2,538
----------- ----------- -----------
37,010 4,500 41,510
Commitments and contingencies
Shareholders' equity
Shares of Beneficial Interest, no par value; authorized
shares, unlimited; issued and outstanding, 1,519,888 shares ............. 15 -- 15
Paid-in capital ........................................................... 64,804 -- 64,804
Accumulated distributions in excess of accumulated
earnings ................................................................ (42,307) (57) (42,364)
----------- ----------- -----------
22,512 (57) 22,455
----------- ----------- -----------
$ 59,522 $ 4,443 $ 63,965
=========== =========== ===========
</TABLE>
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(1) Includes the Daley Plaza Corporate Center which was acquired in September
1996.
(2) Assumes the acquisition of the Olympic Building
occurred on September 30, 1996.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PRO FORMA
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Olympic Daley Corporate
Actual Building (1) Center (1) Pro forma
----------- ----------- ------------- -----------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C>
Income
Rents ........................... $ 6,149 $ 615 $ 993 $ 7,757
Interest ........................ 248 -- -- 248
----------- ----------- ----------- -----------
6,397 615 993 8,005
Expenses
Property operations ............. 3,198 239 267 3,704
Equity in (income) of
investees .................... (29) -- -- (29)
Interest ........................ 1,803 312 161 2,276
Depreciation .................... 792 95 113 1,000
Advisory fee to affiliate ....... 302 -- -- 302
General and administrative ...... 918 -- -- 918
----------- ----------- ----------- -----------
6,984 646 541 8,171
Net income (loss) ................. $ (587) $ (31) $ 452 $ (166)
=========== =========== =========== ===========
Earnings per share
Net (loss) ...................... $ (.38) $ (.11)
=========== ===========
Weighted average shares of
Common Stock used in
computing earnings per
share ........................ 1,533,406 1,533,406
=========== ===========
</TABLE>
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(1) Assumes acquisition by the Company on January 1,
1996.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Olympic Daley Corporate
Actual Building (1) Center (1) Pro forma
----------- ----------- ----------- -----------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C>
Income
Rents ................................ $ 7,688 $ 820 $ 1,324 $ 9,832
Interest ............................. 231 -- -- 231
----------- ----------- ----------- -----------
7,919 820 1,324 10,063
Expenses
Property operations .................. 4,035 319 356 4,710
Equity in losses of
investees ......................... 744 -- -- 744
Interest ............................. 1,979 416 215 2,610
Depreciation ......................... 1,052 126 150 1,328
Advisory fee to affiliate ............ 316 -- -- 316
General and administrative ........... 699 -- -- 699
----------- ----------- ----------- -----------
8,825 861 721 10,407
Net income (loss) ...................... $ (906) $ (41) $ 603 $ (344)
=========== =========== =========== ===========
Earnings per share
Net (loss) ........................... $ (.57) $ (.22)
=========== ===========
Weighted average shares of
Common Stock used in
computing earnings per
share ................................ 1,582,888 1,582,888
=========== ===========
</TABLE>
(1) Assumes acquisition by the Company on January 1,
1995.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Financial statements of property acquired:
Exhibit
Number Description
99.0 Audited Statement of Revenue and Direct Operating Expenses of
Olympic Building for the year ended December 31, 1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
INCOME OPPORTUNITY REALTY INVESTORS
INC.
Date: January 15, 1997 By: /s/ Thomas A. Holland
------------------------------- -------------------------
Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
EXHIBITS TO
CURRENT REPORT ON FORM 8-K
Dated September 30, 1996
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- - ------ ----------- ------
<S> <C> <C>
99.0 Olympic Building Audited Statement of Revenues 8
and Direct Operating Expenses for the year ended
December 31, 1995.
</TABLE>
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EXHIBIT 99.0
THE OLYMPIC BUILDING
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1995
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Independent Auditors' Report
To the Board of Trustees
Income Opportunity Realty Investors, Inc.
We have audited the accompanying statement of revenues and direct operating
expenses of The Olympic Building for the ended December 31, 1995. 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 Income Opportunity 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 The Olympic Building for the year ended December
31, 1995, in conformity with generally accepted accounting principles.
Farmer, Fuqua, Hunt & Munselle, P.C.
Dallas, Texas
January 10, 1997
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THE OLYMPIC BUILDING
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
REVENUES
Net rental revenues $ 747,484
Parking income 72,410
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Total revenues 819,894
OPERATING EXPENSES
Property taxes 62,682
Utilities 136,002
Repairs and maintenance 106,877
Insurance 13,021
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Total direct operating expenses 318,582
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REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 501,312
==========
</TABLE>
The accompanying notes are an integral part of this statement.
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THE OLYMPIC BUILDING
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
DECEMBER 31, 1995
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
The Olympic Building is a 46,400 square foot office building, located
in Los Angeles, California. During 1995, the property was owned by
Azusa Properties USA, Inc.
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: SUBSEQUENT EVENT
The property was sold to Income Opportunity Realty Investors, Inc., a
Nevada corporation, on November 13, 1996.
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