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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 19, 1997
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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 19,
1997 and filed December 3, 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 nine months ended September 30, 1997. A pro
forma balance sheet as of September 30, 1997 is also presented.
A summary of the pro forma transactions follows:
On November 19, 1997, the Company purchased the Westlake Village Office
Building in Westlake Village, California, for $3.9 million exclusive of
commissions and closing costs. The Company acquired the property from
RBP #5 Limited. The Company paid $1.0 million in cash and obtained new
mortgage financing for the remaining $2.9 million of the purchase price.
The mortgage bears interest at a variable rate, currently 9.75%,
requires monthly payments of principal and interest of $26,258 and
matures in October 2002.
In addition to the Westlake Village Office Building acquisition
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 and two apartment complexes, one in Houston, Texas, in
June 1997 and the other in Dallas, Texas, also in June 1997. The
properties were purchased for a total of $32.6 million. The Company
paid a total of $7.5 million in cash and financed the remainder of the
purchase prices. The mortgages secured by the properties bear interest
at variable rates ranging from 8.375% to 10.75% per annum and mature in
1999 and 2007. As these acquisitions occurred prior to September 30,
1997 they are already included in the Company's September 30, 1997
Consolidated Balance Sheet, 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 net cash totaling $6.8
million. As these sales occurred prior to September 30, 1997 they are
already excluded from the Company's September 30, 1997 Consolidated
Balance Sheet, as presented.
These pro forma statements of operations present the Company's
operations as if the purchase and sale 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, 1997
<TABLE>
<CAPTION>
Westlake
Village
Office
Assets Actual(1) Building(2) Pro forma
------ --------- ---------- ---------
(dollars in thousands)
<S> <C> <C> <C>
Notes and interest receivable
Performing ...................... $ 2,007 $ -- $ 2,007
-------- -------- --------
2,007 -- 2,007
Less - allowance for estimated
losses .......................... -- -- --
-------- -------- --------
2,007 -- 2,007
Foreclosed real estate held
for sale, net of accumulated
depreciation .................... 1,029 -- 1,029
Less - allowance for estimated
losses .......................... -- -- --
-------- -------- --------
1,029 -- 1,029
Real estate held for
investment, net of
accumulated depreciation ........ 67,873 4,155 72,028
Investments in partnerships ........ 1,729 -- 1,729
Cash and cash equivalents .......... 1,077 (945) 132
Other assets ....................... 2,550 (211) 2,339
-------- -------- --------
$ 76,265 $ 2,999 $ 79,264
======== ======== ========
Liabilities and Shareholders' Equity
- - ------------------------------------
Liabilities
Notes and interest payable ......... $ 48,537 $ 2,925 $ 51,462
Other liabilities .................. 2,923 74 2,997
-------- -------- --------
51,460 2,999 54,459
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 ........................ (40,014) -- (40,014)
-------- -------- --------
24,805 -- 24,805
-------- -------- --------
$ 76,265 $ 2,999 $ 79,264
======== ======== ========
</TABLE>
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(1) Includes the Chuck Yeager Building which was acquired in January 1997,
La Mesa Village Plaza which was acquired in May 1997 and La Monte Park and
Renaissance Parc Apartments which were acquired in June 1997 and excludes
the Plumtree Apartments that were sold in March 1997 and the Porticos
Apartments which were sold in June 1997.
(2) Assumes acquisition by the Company on September 30, 1997.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PRO FORMA
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Westlake
La Mesa Other Village
Village Apartment Office
Actual (1) Plaza (2) Complexes(2)(3) Building(2) Sales(2) Pro forma
---------- ------------- --------------- -------------- ----------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income
Rents ..................... $ 8,759 $ 785 $ 1,832 $ 380 $ (1,969) $ 9,787
Interest .................. 203 -- -- -- (7) 196
---------- ---------- ---------- -------- ---------- ----------
8,962 785 1,832 380 (1,976) 9,983
Expenses
Property operations ....... 4,083 173 652 150 (1,305) 3,753
Interest .................. 2,859 305 805 213 (443) 3,739
Depreciation .............. 1,131 87 248 62 (160) 1,368
Advisory fee to affiliate . 379 -- -- -- -- 379
Net income fee to affiliate 218 -- -- -- -- 218
General and administrative 755 -- -- -- -- 755
--------- ---------- ---------- -------- ---------- ----------
9,425 565 1,705 425 (1,908) 10,212
Net income (loss) from
operations ................ (463) 220 127 (45) (68) (229)
Equity in income of investees .. 21 -- -- -- -- 21
Gain on sale of real estate .... 3,322 -- -- -- -- 3,322
---------- ---------- ---------- -------- ---------- ----------
Net income (loss) .............. $ 2,880 $ 220 $ 127 $ (45) $ (68) $ 3,114
========== ========== ========== ======== ========== ==========
Earnings per share
Net (loss) ................ $ 1.89 $ 2.05
========== ==========
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 purchase or sale by the Company on January 1, 1997. Pro forma
amounts for other property acquisitions are from January 1 through
respective dates of acquisition. Results subsequent to the date of
acquisition are included in the "Actual" column.
(3) Includes the Renaissance Parc and La Monte Park Apartments whose
results of operations are separately presented in the Company's
Current Report on Form 8-K/A, dated June 11, 1997.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Westlake
Other Other Village
Commercial Apartment Office
Actual Properties(1)(2) Complexes(1)(3) Building(1) Sales(1) Pro forma
---------- ---------------- --------------- ----------- ------------ ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income
Rents .......................... $ 8,666 $ 2,312 $ 3,164 $ 507 $ (4,341) $ 10,308
Interest ....................... 339 -- -- -- (15) 324
-------- ------- -------- -------- -------- --------
9,005 2,312 3,164 507 (4,356) 10,632
Expenses
Property operations ............ 4,358 552 1,156 200 (2,515) 3,751
Interest ....................... 2,629 897 1,346 284 (1,291) 3,865
Depreciation ................... 1,128 272 405 83 (454) 1,434
Advisory fee to affiliate ...... 227 -- -- -- -- 227
General and administrative ..... 1,316 -- -- -- -- 1,316
-------- ------- -------- -------- -------- --------
9,658 1,721 2,907 567 (4,260) 10,593
Income (loss) from operations ....... (653) 591 257 (60) (96) 39
Equity in losses of investees ....... 85 -- -- -- -- 85
-------- ------- -------- -------- -------- --------
Net income (loss) ................... $ (568) $ 591 $ 257 $ (60) $ (96) $ 124
======== ======== ======== ======== ======== ========
Earnings per share
Net income (loss).......... $ (.37) $ .08
======== ========
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 purchase or sale by the Company on January 1, 1996.
(2) Includes the Chuck Yeager Office Building and La Mesa Village Plaza
whose results of operations are separately presented in the Company's
Current Report on Form 8-K, dated May 14, 1997.
(3) Includes the Renaissance Parc and La Monte Park Apartments whose
results of operations are separately presented in the Company's
Current Report on Form 8-K/A, dated June 11, 1997.
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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 Exhibit No. 99.2 of 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
(incorporated by reference to Exhibit 99.3 of the Registrant's
Current Report on Form 8-K/A, dated June 11, 1997).
99.4 Westlake Village Office Building, Audited Statement of Revenue
and Direct Operating Expenses for the year ended December 31,
1996, filed herewith.
</TABLE>
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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 14, 1998 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 November 19, 1997
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
<S> <C>
99.4 Westlake Village Office Building, Audited State- 8
ment of Revenue and Direct Operating Expenses
for the year ended December 31, 1996.
</TABLE>
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EXHIBIT 99.4
WESTLAKE VILLAGE OFFICE BUILDING
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 Westlake Village Office Building 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 Westlake Village Office Building for the year ended
December 31, 1996, in conformity with generally accepted accounting principles.
FARMER, FUQUA, HUNT & MUNSELLE, P.C.
Dallas, Texas
January 6, 1998
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WESTLAKE VILLAGE OFFICE BUILDING
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
Year Ended December 31, 1996
<TABLE>
<S> <C>
REVENUES
Net rental revenues $ 504,330
Late fees 3,002
--------------
Total revenues 507,332
OPERATING EXPENSES
Repairs and maintenance 94,746
Utilities 58,527
Property taxes 37,832
Insurance 8,519
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Total direct operating expenses 199,624
REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 307,708
==============
</TABLE>
The accompanying notes are an integral part of this statement.
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WESTLAKE VILLAGE OFFICE BUILDING
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
December 31, 1996
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Westlake Village Office Building is a 45,500 square foot office
building located in Westlake Village, California. During 1996, the
property was owned by RBP #5 Limited.
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 19, 1997.
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