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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
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
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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
---------------
Not Applicable
-------------------------------------------------------------
(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 the Form 8-K Current Report dated June 11, 1997 and
filed June 27, 1997 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, 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 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 La Monte Park Apartments in
Houston, Texas for $3.7 million exclusive of commissions and closing costs. 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.
In addition to the Renaissance Parc Apartments and La Monte 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 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.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
<TABLE>
<CAPTION>
La Monte La Mesa Renaissance
Park Village Parc Porticos
Actual(1) Apartments(2) Plaza(3) Apartments(4) Apartments(5) Pro forma
---------- ------------- ---------- ------------- ------------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
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 3,921 8,545 16,368 (12,971) 67,763
Investments in partnerships ... 2,351 -- -- -- -- 2,351
Cash and cash equivalents ..... 2,571 (376) (2,572) (3,716) 5,213 1,120
Other assets .................. 2,655 -- 27 209 (573) 2,318
---------- ---------- ---------- ---------- ---------- ----------
$ 62,392 $ 3,545 $ 6,000 $ 12,861 $ (8,331) $ 76,467
========== ========== ========== ========== ========== ==========
</TABLE>
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(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 La Monte Park Apartments occurred on January 1,
1997.
(3) Assumes the acquisition of the La Mesa Village Plaza occurred on January
1, 1997.
(4) Assumes the acquisition of Renaissance Parc Apartments occurred on January
1, 1997.
(5) 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 Monte La Mesa Renaissance
Park Village Parc Porticos
Actual(1) Apartments(2) Plaza(3) Apartments(4) Apartments(5) Pro forma
----------- ------------- ----------- ------------- ------------ -----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
Liabilities
Notes and interest payable ..... $ 36,275 $ 3,470 $ 6,000 $ 12,520 $ (9,627) $ 48,638
Other liabilities .............. 2,355 75 -- 341 (257) 2,514
----------- ----------- ----------- ----------- ----------- -----------
38,630 3,545 6,000 12,861 (9,884) 51,152
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 $ 3,545 $ 6,000 $ 12,861 $ (8,331) $ 76,467
=========== =========== =========== =========== =========== ===========
</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 La Monte Park Apartments occurred on January 1,
1997.
(3) Assumes the acquisition of the La Mesa Village Plaza occurred on January
1, 1997.
(4) Assumes the acquisition of Renaissance Parc Apartments occurred on January
1, 1997.
(5) 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 Monte Renaissance
Park Parc Commercial Apartment
Actual(1) Apartments(2) Apartments(3) Properties(4) Sales(5) Pro forma
------------ ------------- ------------ ------------ ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income
Rents ......................... $ 2,692 $ 197 $ 594 $ 358 $ (837) $ 3,004
Interest ...................... 69 -- -- -- -- 69
------------ ------------ ------------ ------------ ------------ ------------
2,761 197 594 358 (837) 3,073
Expenses
Property operations ........... 1,340 107 182 108 (461) 1,276
Interest ...................... 877 149 262 141 (291) 1,138
Depreciation .................. 365 39 82 41 (104) 423
Advisory fee to affiliate ..... 123 -- -- -- -- 123
Net income fee to affiliate ... 124 -- -- -- -- 124
General and administrative .... 265 -- -- -- -- 265
------------ ------------ ------------ ------------ ------------ ------------
3,094 295 526 290 (856) 3,349
Net income (loss) from
operations .................... (333) (98) 68 68 19 (276)
Equity in income of investees .... 17 -- -- -- -- 17
Gain on sale of real estate ...... 1,849 -- -- -- -- 1,849
------------ ------------ ------------ ------------ ------------ ------------
Net income (loss) ................ $ 1,533 $ (98) $ 68 $ 68 $ 19 $ 1,590
============ ============ ============ ============ ============ ============
Earnings per share
Net (loss) .................... $ 1.01 $ 1.05
============ ============
Weighted average shares of
Common Stock used in
computing earnings
per share .................. 1,519,888 1,519,888
============ ============
</TABLE>
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(1) Includes the Chuck Yeager Building acquired January 8, 1997.
(2) Assumes acquisition of La Monte Park Apartments occurred on January 1,
1997.
(3) Assumes acquisition of Renaissance Parc Apartments occurred on January 1,
1997.
(4) Assumes acquisition of La Mesa Village Plaza occurred on January 1, 1997.
(5) Assumes sale of Porticos Apartments and Plumtree Apartments occurred 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>
La Monte Renaissance
Park Commercial Parc Apartment
Actual Apartments(1) Properties(2) Apartments(3) Sales(4) Pro forma
------------ ------------ ------------ ------------ ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income
Rents ......................... $ 8,666 $ 787 $ 2,312 $ 2,377 $ (3,618) $ 10,524
Interest ...................... 339 -- -- -- -- 339
------------ ------------ ------------ ------------ ------------ ------------
9,005 787 2,312 2,377 (3,618) 10,863
Expenses
Property operations ........... 4,358 428 552 728 (1,948) 4,118
Interest ...................... 2,629 298 897 1,048 (1,291) 3,581
Depreciation .................. 1,128 78 272 327 (455) 1,350
Advisory fee to affiliate ..... 227 -- -- -- -- 227
General and administrative .... 1,316 -- -- -- -- 1,316
------------ ------------ ------------ ------------ ------------ ------------
9,658 804 1,721 2,103 (3,694) 10,592
Income (loss) from operations .... (653) (17) 591 274 76 271
Equity in losses of investees .... 85 -- -- -- -- 85
------------ ------------ ------------ ------------ ------------ ------------
Net income (loss) ................ $ (568) $ (17) $ 591 $ 274 $ 76 $ 356
============ ============ ============ ============ ============ ============
Earnings per share
Net income (loss) ............. $ (.37) $ .23
============ ============
Weighted average shares of
Common Stock used in
computing earnings per
share ......................... 1,530,008 1,530,008
============ ============
</TABLE>
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(1) Assumes acquisition of La Monte Park Apartments occurred on January 1,
1996.
(2) Includes the Chuck Yeager Building and La Mesa Village Plaza, the
acquisitions of which are assumed to have occurred on January 1, 1996 and
whose results of operations are separately presented in the Company's
Current Report on Form 8-K, dated May 14, 1997.
(3) Assumes acquisition of Renaissance Parc Apartments occurred on January 1,
1996.
(4) Assumes sale of Porticos Apartments and Plumtree Apartments occurred on
January 1, 1996.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Financial statements of property acquired:
<TABLE>
<CAPTION>
Exhibit
Number Description
- - ------- -----------------------------------------------------------------------
<S> <C>
99.0 La Mesa Village Plaza, Audited Statement of Revenue and Direct
Operating Expenses for the year ended December 31, 1996 (incorporated
by reference to Exhibit No. 99.0 of the Registrant's Current Report on
Form 8-K, dated May 14, 1997).
99.1 Chuck Yeager Building, Audited Statement of Revenue and Direct
Operating Expenses for the year ended December 31, 1996 (incorporated
by reference to Exhibit No. 99.1 of the Registrant's Current Report on
Form 8-K, dated May 14, 1997).
99.2 Renaissance Parc Apartments, Audited Statement of Revenue and Direct
Operating Expenses for the year ended December 31, 1996 (incorporated
by reference to the Registrant's Current Report on Form 8-K, dated June
11, 1997).
99.3 La Monte Park Apartments, Audited Statement of Revenue and Direct
Operating Expenses for the year ended December 31, 1996, filed
herewith.
</TABLE>
--------------------------
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: August 20, 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>
99.3 La Monte Park Apartments, Audited Statement of Revenue and Direct 9
Operating Expenses for the year ended December 31, 1996.
</TABLE>
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<PAGE> 1
EXHIBIT 99.3
LAMONTE PARK 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 Lamonte Park 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 Lamonte Park Apartments for the year ended
December 31, 1996, in conformity with generally accepted accounting principles.
Farmer, Fuqua, Hunt & Munselle, P.C.
Dallas, Texas
August 7, 1997
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LAMONTE PARK APARTMENTS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
Year Ended December 31, 1996
<TABLE>
<S> <C>
REVENUES
Net rental revenues $ 768,351
Other revenues 18,371
----------
Total revenues 786,722
DIRECT OPERATING EXPENSES
Salaries and benefits 159,612
Repairs and maintenance 109,982
Utilities 69,952
Property taxes 60,898
Insurance 27,325
----------
Total direct operating expenses 427,769
----------
REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 358,953
==========
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE> 4
LAMONTE PARK APARTMENTS
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
December 31, 1996
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Lamonte Park Apartments is a 128-unit apartment complex
located in Houston, Texas. During 1996, the property was
owned by Mike Goodwin, a Texas individual.
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>
Forfeited deposits $ 9,643
Late and NSF charges 8,728
--------
$ 18,371
========
</TABLE>
NOTE 4: SUBSEQUENT EVENT
The property was sold to Income Opportunity Realty Investors,
Inc., a Nevada corporation, on June 13, 1997.
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