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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
June 11, 1997
-----------------------------------------------
Date of Report (Date of Earliest Event Reported)
INCOME OPPORTUNITY REALTY INVESTORS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada 1-9525 75-2615944
- - -------------------------------------------------------------------------------
(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
- - -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
--------------
Not Applicable
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 11, 1997, Income Opportunity Realty Investors, Inc. (the "Company")
purchased the Renaissance Parc Apartments, a 256 unit apartment complex in
Dallas, Texas for $15.7 million, approximately 25.4% of the Company's assets at
December 31, 1996. The seller of the property was DMC Realty Parkway Place
Apartments I Joint Venture.
Also, on June 13, 1997, the Company purchased the LaMonte Park Apartments, a
128 unit apartment complex in Houston, Texas for $3.7 million, approximately
6.2% of the Company's assets at December 31, 1996. The seller of the property
was Mike Goodwin, an individual.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Proforma financial information:
Pro forma statements of operations are presented for the year ended December
31, 1996 and the three months ended March 31, 1997. A pro forma balance sheet
as of March 31, 1997 is also presented.
A summary of the pro forma transactions follows:
On June 11, 1997, the Company purchased the Renaissance Parc Apartments in
Dallas, Texas for $15.7 million exclusive of commissions and closing costs.
The Company acquired the property from DMC Parkway Place Apartments I Joint
Venture. The Company paid $3.0 million in cash and obtained new mortgage
financing for the remaining $12.5 million of the purchase price. The mortgage
bears interest at 8.375%, requires monthly payments of principal and interest
of $95,161 and matures in July 2007.
On June 13, 1997, the Company purchased the LaMonte Park Apartments in Houston,
Texas for $3.7 million exclusive of commissions and closing costs. The Company
acquired the property from Mike Goodwin, an individual. The Company paid
$146,000 in cash and obtained new mortgage financing for the remaining $3.5
million of the purchase price. The mortgage bears interest at 8.6%, requires
monthly payments of principal and interest of $30,333 and matures in July 2001.
The seller has informed the Company that audited financial statements for
LaMonte Park Apartments and supporting data relating to the property's
operations are not available. It is, therefore, impracticable to provide the
required audited statement of operations for the property acquired or proforma
financial information. The required information will be filed by amendment of
this Form 8-K as soon as practicable, but not later than August 12, 1997.
In addition to the Renaissance Parc Apartments and LaMonte Park Apartments
acquisitions discussed above, the Company has purchased two office buildings,
one in La Mesa, California, in May 1997, and the other in Chantilly, Virginia,
in January 1997. The properties were purchased for a total of $13.2 million
and represent approximately 21.6% of the Company's consolidated assets at
December 31, 1996. The Company paid a
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
total of $4.1 million in cash and financed the remainder of the purchase
prices. The mortgages secured by the properties bear interest at variable
rates ranging from 9.1875% to 10.75% per annum and mature in 2000 and 2007. As
one of these office building acquisitions occurred prior to March 31, 1997 it
is already reflected in the March 31, 1997 "actual balance sheet" of the
Company, as presented.
In 1997, the Company has also sold two apartment complexes, the Plumtree
Apartments in March 1997 and the Porticos Apartments in June 1997. In
connection with the sales, the Company received cash totaling $7.2 million. As
one of these sales occurred prior to March 31, 1997 it is already reflected in
the Company's "actual balance sheet" as of March 31, 1997, as presented.
These pro forma statements of operations present the Company's operations as if
the purchase and sales 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
MARCH 31, 1997
<TABLE>
<CAPTION>
La Mesa
Village Renaissance Porticos
Actual(1) Plaza(2) Parc(3) Apartments(4) Pro forma
-------- ------- -------- ------- ---------
(dollars in thousands)
Assets
------
<S> <C> <C> <C> <C> <C>
Notes and interest receivable
Performing................................. $ 2,001 $ - $ - $ - $ 2,001
-------- ------- -------- ------- ---------
2,001 - - - 2,001
Less - allowance for estimated losses........ - - - - -
-------- ------- -------- ------- ---------
2,001 - - - 2,001
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................... 51,900 8,545 16,368 (12,971) 63,842
Investments in partnerships.................. 2,351 - - - 2,351
Cash and cash equivalents.................... 2,571 (2,572) (3,716) 5,213 1,496
Other assets................................. 2,655 27 209 (573) 2,318
-------- ------- -------- ------- ---------
$ 62,392 $ 6,000 $ 12,861 $(8,331) $ 72,922
======== ======= ======== ======= =========
</TABLE>
_________________________________
(1) Includes the Chuck Yeager Building which was acquired in January 1997 and
excludes the Plumtree Apartments that were sold in March 1997.
(2) Assumes the acquisition of the La Mesa Village Plaza occurred on January
1, 1997.
(3) Assumes the acquisition of Renaissance Parc Apartments occurred on January
1, 1997.
(4) Assumes the sale of the Porticos Apartments occurred on January 1, 1997.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
<TABLE>
<CAPTION>
La Mesa
Village Renaissance Porticos
Actual(1) Plaza (2) Parc (3) Apartments(4) Pro forma
-------- -------- --------- ------------ ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
- - ------------------------------------
Liabilities
Notes and interest payable................... $ 36,275 $ 6,000 $ 12,520 $(9,627) $ 45,168
Other liabilities............................ 2,355 - 341 (257) 2,439
-------- ------- -------- ------- ---------
38,630 6,000 12,861 (9,884) 47,607
Commitments and contingencies
Shareholders' equity
Common Stock, $.01 par value; 10,000,000
shares; issued and outstanding, 1,519,888
shares.................................... 15 - - - 15
Paid-in capital............................. 64,804 - - - 64,804
Accumulated distributions in excess of
accumulated earnings...................... (41,057) - - 1,553 (39,504)
------- ------- -------- ------- ---------
23,762 - - 1,553 25,315
-------- ------- -------- ------- ---------
$ 62,392 $ 6,000 $ 12,861 $(8,331) $ 72,922
======== ======= ======== ======= =========
</TABLE>
_________________________________
(1) Includes the Chuck Yeager Building which was acquired in January 1997 and
excludes the Plumtree Apartments that were sold in March 1997.
(2) Assumes the acquisition of the La Mesa Village Plaza occurred on January
1, 1997.
(3) Assumes the acquisition of Renaissance Parc Apartments occurred
on January 1, 1997.
(4) Assumes the sale of the Porticos Apartments occurred
on January 1, 1997.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PRO FORMA
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
La Mesa
Village Renaissance Porticos Plumtree
Actual(1) Plaza(2) Parc(2) Apartments(3) Apartments(3) Pro forma
---------- ------- ----------- ---------- ---------- ---------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C> <C>
Income
Rents.......................... $ 2,692 $ 358 $ 594 $ (640) $ (197) $ 2,807
Interest....................... 69 - - - - 69
-------- ------- -------- ------- ---------- ---------
2,761 358 594 (640) (197) 2,876
Expenses
Property operations............ 1,340 108 182 (352) (109) 1,169
Interest....................... 877 141 262 (210) (81) 989
Depreciation................... 365 41 82 (82) (22) 384
Advisory fee to affiliate...... 123 - - - - 123
Net income fee to affiliate.... 124 - - - - 124
General and administrative..... 265 - - - - 265
-------- ------- -------- ------- ---------- ---------
3,094 290 526 (644) (212) 3,054
Net income (loss) from
operations..................... (333) 68 68 4 15 (178)
Equity in income of investees.... 17 - - - - 17
Gain on sale of real estate...... 1,849 - - - - 1,849
-------- ------- -------- ------- ---------- ---------
Net income (loss)................ $ 1,533 $ 68 $ 68 $ 4 $ 15 $ 1,688
======== ======= ======== ======= ========== ==========
Earnings per share
Net (loss)..................... $ 1.01 $ 1.11
======== ==========
Weighted average shares of Common
Stock used in computing
earnings per share........... 1,519,888 1,519,888
========= ==========
</TABLE>
________________________
(1) Includes the Chuck Yeager Building acquired January 8, 1997.
(2) Assumes acquisition by the Company on January 1, 1997.
(3) Assumes sale by the Company on January 1, 1997.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Chuck La Mesa
Yeager Village Renaissance Porticos Plumtree
Actual Building(1) Plaza(1) Parc(1) Apartments(2) Apartments(2) Pro forma
------ -------- ----- ------ ---------- ---------- ---------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C> <C> <C>
Income
Rents................. $ 8,666 $ 879 $ 1,433 $ 2,377 $ (2,565) $(1,053) $ 9,737
Interest.............. 339 - - - - - 339
------- ------- ------- ------- -------- ------- -------
9,005 879 1,433 2,377 (2,565) (1,053) 10,076
Expenses
Property operations... 4,358 119 433 728 (1,508) (440) 3,690
Interest.............. 2,629 335 562 1,048 (847) (444) 3,283
Depreciation.......... 1,128 108 164 327 (323) (132) 1,272
Advisory fee to
affiliate.......... 227 - - - - - 227
General and
administrative...... 1,316 - - - - - 1,316
------- ------- ------- ------- -------- ------- -------
9,658 562 1,159 2,103 (2,678) (1,016) 9,788
Income (loss) from
operations............ (653) 317 274 274 113 (37) 288
Equity in losses of
investees............. 85 - - - - - 85
------- ------- ------- ------- -------- ------- -------
Net income (loss)........... $ (568) $ 317 $ 274 $ 274 $ 113 $ (37) $ 373
======= ======= ======= ======= ======== ======= =======
Earnings per share
Net income (loss)..... $ (.37) $ .24
======= =======
Weighted average shares
of Common Stock used in
computing earnings per
share................. 1,530,008 1,530,008
========= =========
</TABLE>
________________________
(1) Assumes acquisition by the Company on January 1, 1996.
(2) Assumes sale by the Company on January 1, 1996.
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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 La Mesa
Village Plaza for the year ended December 31, 1996 (incorporated by
reference to Exhibit 99.0 to Registrant's Current Report on Form 8-K,
dated May 14, 1997).
99.1 Audited Statement of Revenue and Direct Operating Expenses of Chuck
Yeager Building for the year ended December 31, 1996 (incorporated by
reference to Exhibit 99.1 to Registrant's Current Report on Form 8-K,
dated May 14, 1997).
99.2 Audited Statement of Revenue and Direct Operating Expenses of
Renaissance Parc Apartments for the year ended December 31, 1996.
___________________________________
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: June 27, 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 June 11, 1997
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- - ------- ------------------------------------------------- ------
<S> <C> <C>
99.2 Audited Statement of Revenue and Direct Operating 10
Expenses of Renaissance Parc Apartments for the
year ended December 31, 1996.
</TABLE>
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EXHIBIT 99.2
RENAISSANCE PARC APARTMENTS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
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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 Renaissance Parc Apartments for the year ended December 31, 1996.
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 Renaissance Parc Apartments for the year ended
December 31, 1996, in conformity with generally accepted accounting principles.
FARMER, FUQUA, HUNT & MUNSELLE, P.C.
Dallas, Texas
May 20, 1997
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RENAISSANCE PARC APARTMENTS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
Year Ended December 31, 1996
REVENUES
Net rental revenues $ 2,277,308
Other revenues 99,736
-----------
Total revenues 2,377,044
OPERATING EXPENSES
Property taxes 253,092
Salaries and benefits 215,553
Repairs and maintenance 136,560
Utilities 74,560
Insurance 48,001
-----------
Total direct operating expenses 727,766
-----------
REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 1,649,278
===========
The accompanying notes are an integral part of this statement.
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RENAISSANCE PARC APARTMENTS
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
December 31, 1996
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Renaissance Parc Apartments is a 294-unit apartment complex
located in Dallas, Texas. During 1996, the property was owned
by DMC Parkway Place Apartments I, J.V.
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 consists of the following:
Late charges $ 43,351
Parking revenue 22,494
Laundry, vending and
telephone revenue 17,662
Miscellaneous 16,229
--------
$ 99,736
========
NOTE 4: SUBSEQUENT EVENT
The property was sold to Income Opportunity Realty Investors,
Inc., a Nevada corporation, on June 11, 1997.
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