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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
May 25, 2000
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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 1-14784 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 2. ACQUISITION OR DISPOSITION OF ASSETS
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On March 1, 2000, Income Opportunity Realty Investors, Inc. ("IORI") sold the
128 unit La Monte Park Apartments in Houston, Texas, approximately 4.0% of
IORI's assets at December 31, 1999, for $5.0 million. IORI received net cash of
$1.1 million after the payment of various closing costs. The purchaser assumed
the $3.8 million mortgage secured by the property. A gain of $903,000 was
recognized on the sale.
On April 10, 2000, IORI purchased in separate transactions Etheredge and
Fambrough land, 75.0 acre and 75.1 acre parcels of unimproved land in Collin
County, Texas, aggregating approximately 4.2% of IORI's assets at December 31,
1999, for $1.9 million each. IORI paid a total of $689,000 in cash and obtained
seller financing of the remaining $1.4 million of each of the purchase prices.
The seller financing bears interest at 10.0% per annum, requires quarterly
interest only payments, principal paydowns of $125,000 each in October 2000 and
January 2001 and matures in April 2001.
On May 25, 2000, IORI sold the 46,685 sq. ft. Olympic Building in Los Angeles,
California, approximately 9.3% of IORI's assets at December 31, 1999, for $8.5
million. IORI received net cash of $3.8 million after the payment of various
closing costs. A gain of $1.9 million was recognized on the sale.
On May 31, 2000, IORI sold the 89,825 sq. ft. Saratoga Office Building in
Saratoga, California, approximately 12.3% of IORI's assets at December 31, 1999,
for $25.0 million. IORI received net cash of $17.7 million after the payment of
various closing costs. A gain of $13.1 million was recognized on the sale.
On June 19, 2000, IORI sold the 294 unit Renaissance Parc Apartments in Dallas,
Texas, approximately 16.9% of IORI's assets at December 31, 1999, for $17.2
million. IORI received net cash of $4.5 million after the payment of various
closing costs. The purchaser assumed the $12.3 million mortgage secured by the
property.
On June 23, 2000, IORI purchased, in a single transaction, the 60 unit Brighton
Court Apartments, the 92 unit Del Mar Villas Apartments, the 68 unit Enclave
Apartments, the 57 unit Signature Place Apartments and the 114 unit Sinclair
Place Apartments (collectively, the "Frankel Portfolio") in Midland, Texas,
aggregating approximately 16.1% of IORI's assets at December 31, 1999, for $14.0
million. The seller of the property was the Frankel Family Trust. The
properties were constructed in 1982 and 1983 and have a combined rentable area
of 450,000 sq.ft. IORI paid $2.9 million in cash and obtained mortgage financing
of $10.9 million. The mortgage bears interest at a variable rate, with an
initial rate of 9.13% per annum, requires initial monthly payments of principal
and interest of $92,233 and matures in July 2003.
Also on June 23, 2000, IORI purchased Frankel land, a 1.0 acre parcel of
unimproved land in Midland County, Texas, approximately .04% of IORI's assets at
December 31, 1999, for $41,000. The seller of the property was Frankel Family
Trust. IORI paid $43,000 in cash after the payment of various closing costs.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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The purchase and sale of these properties, when aggregated with other property
purchases and sales in 2000, have made IORI exceed 10% of its assets at December
31, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) Proforma financial information
Proforma statements of operations are presented for the year ended December 31,
1999 and the three months ended March 31, 2000. The proforma statements of
operations present IORI's operations as if the transactions described above had
occurred at January 1, of each of the periods presented. A proforma balance
sheet as of March 31, 2000 is also presented. The proforma balance sheet
presents the Frankel Portfolio and Etheredge, Fambrough and Frankel land
purchases, described above, as if they had occurred at January 1, 2000.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
<TABLE>
<CAPTION>
Etheredge Frankel
and Olympic Saratoga Renaissance Portfolio
Fambrough Office Office Parc (Including
Actual/(1)/ Land /(2)/ Building/(2)/ Building/(2)/ Apartments/(2)/ Land) Proforma
----------- ------------ ------------- ------------- --------------- ---------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
------
Real estate held for investment,
net of accumulated depreciation $ 82,314 $ 3,997 $ (6,153) $ (11,235) $ (15,424) $ 14,785 $ 68,284
Investments in partnerships....... 105 -- -- -- -- -- 105
Cash and cash equivalents......... 1,731 (689) 3,811 17,709 4,536 (2,947) 24,151
Other assets...................... 2,980 (400) (36) (140) (164) (258) 1,982
----------- --------- --------- ---------- ----------- ---------- --------
$ 87,130 $ 2,908 $ (2,378) $ 6,344 $ (11,052) $ 11,580 $ 94,522
=========== ========= ========= ========== =========== ========== ========
Liabilities and Shareholders' Equity
------------------------------------
Liabilities
Notes and interest payable........ $ 58,809 $ 2,814 $ (4,443) $ (6,968) $ (12,316) $ 10,853 $ 48,749
Other liabilities................. 3,960 94 215 246 52 727 5,294
----------- --------- --------- ---------- ----------- ---------- --------
62,769 2,908 (4,228) (6,722) (12,264) 11,580 54,043
Commitments and contingencies
Shareholders' equity
Common Stock, $.01 par value;
10,000,000 shares issued and
outstanding, 1,530,500 shares.... 15 -- -- -- -- -- 15
Paid-in capital................... 64,882 -- -- -- -- -- 64,882
Accumulated distributions in
excess of accumulated earnings... (40,536) -- 1,850 13,056 1,212 -- (24,418)
----------- --------- --------- ---------- ----------- ---------- --------
24,361 -- 1,850 13,056 1,212 -- 40,479
----------- --------- --------- ---------- ----------- ---------- --------
$ 87,130 $ 2,908 $ (2,378) $ 6,344 $ (11,052) $ 11,580 $ 94,522
=========== ========= ========= ========== =========== ========== ========
</TABLE>
______________________
(1) Excludes La Monte Park Apartments which was sold in March 2000.
(2) Assumes purchase or sale by IORI on January 1, 2000.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
Etheredge Frankel
and Olympic Saratoga Renaissance Portfolio
Fambrough Office Office Parc (Including
Actual Land Building Building Apartments Land) Proforma
---------- --------- ---------- ---------- ------------ ----------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Property revenue
Rents............................. $ 4,115 $ -- $ (300) $ (642) $ (670) $ 701 $ 3,204
Property expense
Property operations............... 1,848 -- (100) (175) (293) 297 1,577
---------- --------- ---------- ---------- ------------ ----------- ----------
Operating income (loss).......... 2,267 -- (200) (467) (377) 404 1,627
Other income
Interest.......................... 7 -- -- -- -- -- 7
Equity in income/(loss) of
partnerships..................... (46) -- -- -- -- -- (46)
Gain on sale of real estate....... 903 -- -- -- -- -- 903
---------- --------- ---------- ---------- ------------ ----------- ----------
864 -- -- -- -- -- 864
Other expense
Interest.......................... 1,415 70 (106) (159) (260) 248 1,208
Depreciation...................... 711 -- (55) (97) (79) 69 549
Advisory fee to affiliate......... 167 -- -- -- -- -- 167
Net income fee to affiliate....... 48 -- -- -- -- -- 48
General and administrative........ 198 -- -- -- -- -- 198
---------- --------- ---------- ---------- ------------ ----------- ----------
2,539 70 (161) (256) (339) 317 2,170
---------- --------- ---------- ---------- ------------ ----------- ----------
Net income (loss).................. $ 592 $ (70) $ (39) $ (211) $ (38) $ 87 $ 321
========== ========= ========== ========== ============ =========== ==========
Earnings per share
Net income........................ $ .39 $ .39
========== ==========
Weighted average shares of Common
Stock used in computing
earnings per share................ 1,530,413 1,530,413
========== ==========
</TABLE>
The accompanying footnotes are an integral part of this Proforma Combined
Statement of Operations.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
NOTES TO PROFORMA COMBINED
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000
1. The Proforma Combined Statement of Operations assumes that each property
was purchased or sold by IORI on January 1, 2000. Proforma operating
results for property purchases are from January 1 through the respective
dates of purchase only. Results subsequent to the dates of purchase are
included in the "Actual" column.
2. Statements of operations for the twelve months ended December 31, 1999
were obtained for the Frankel Portfolio. Such statements were used as the
basis for estimating their respective operating results for the three
months ended March 31, 2000.
3. No interim financial statements were available for the Frankel Portfolio.
Therefore, the previous years' actual amounts were used to estimate the
interim period January 1 to the respective date of purchase.
4. The proforma interest adjustment is based on the mortgage obtained or
assumed for each property at the date of purchase. The proforma
depreciation adjustment is based on each property's purchase price
depreciated under IORI's established depreciation policies.
5. Operating results for sold properties are their actual operating results
from January 1 to their respective date of sale.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Etheredge Frankel
and Olympic Saratoga Renaissance Portfolio
Fambrough Office Office Parc (Including
Actual Land Building Building Apartments Land) Proforma
--------- --------- ---------- ---------- ------------ ---------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Property revenue
Rents............................ $ 15,968 $ -- $ (1,157) $ (2,729) $ (2,702) $ 2,802 $ 12,182
Property expense
Property operations.............. 6,768 -- (493) (734) (1,150) 1,186 5,577
---------- --------- ---------- ---------- ------------ ---------- ----------
Operating income (loss)......... 9,200 -- (664) (1,995) (1,552) 1,616 6,605
Other income
Interest......................... 29 -- -- (6) -- -- 23
Equity in income/(loss) of
partnerships.................... 148 -- -- -- -- -- 148
Gain on sale of real estate...... 1,525 -- -- -- -- -- 1,525
---------- --------- ---------- ---------- ------------ ---------- ----------
1,702 -- -- (6) -- -- 1,696
Other expense
Interest......................... 5,658 280 (395) (635) (1,062) 993 4,839
Depreciation..................... 2,723 -- (219) (396) (335) 309 2,082
Advisory fee to affiliate........ 371 -- -- -- -- -- 371
Net income fee to affiliate...... 81 -- -- -- -- -- 81
General and administrative....... 747 -- -- -- -- -- 747
---------- --------- ---------- ---------- ------------ ---------- ----------
9,580 280 (614) (103) (1,397) 1,302 8,120
---------- --------- ---------- ---------- ------------ ---------- ----------
Net income (loss)................. $ 1,322 $ (280) $ (50) $ (964) $ (155) $ 314 $ 187
========== ========= ========== ========== ============ ========== ==========
Earnings per share
Net income....................... $ .87 $ .87
========== ==========
Weighted average shares of Common
Stock used in computing
earnings per share............... 1,527,386 1,527,386
========== ==========
</TABLE>
The accompanying footnotes are an integral part of this Proforma Combined
Statement of Operations.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
NOTES TO PROFORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
1. The Proforma Combined Statement of Operations assumes that each property
was purchased or sold by IORI on January 1, 1999.
2. The amounts for the Frankel Portfolio are from their respective audited
statement of operations.
3. The proforma interest adjustments is based on the mortgages obtained or
assumed for each property at the date of purchase. The proforma
depreciation adjustment is based on each property's purchase price
depreciated under IORI's established depreciation policies.
4. Operating results for sold properties are their actual operating results
for the year ended December 31, 1999.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(b) Financial statements of property acquired:
Exhibit
Number Description
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99.0 Frankel Family Trust Apartments, Audited Statement of Revenue and
Direct Operating Expenses for the year ended December 31, 1999, filed
herewith.
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SIGNATURE PAGE
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 2, 2000 By: /s/ Karl L. Blaha
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Karl L. Blaha
President
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
EXHIBITS TO
CURRENT REPORT ON FORM 8-K
Dated May 25, 2000
Exhibit Page
Number Description Number
------- ------------------------------------------------- ------
99.0 Frankel Family Trust Apartments Audited Statement 12
of Revenue and Direct Operating Expenses for the
year ended December 31, 1999.
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