<PAGE>
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
September 22, 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.)
1800 Valley View Lane, Suite 300, Dallas, TX 75234
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (469) 522-4200
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10670 North Central Expressway, Suite 300, Dallas, Texas 75231
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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 September 22, 2000, Income Opportunity Realty Investors, Inc. ("IORI") sold
the 126 unit Eastpoint Apartments in Mesquite, Texas, approximately 3.1% of
IORI's assets at December 31, 1999, for $5.6 million. IORI received net cash of
$1.8 million after the payoff of the $3.2 million mortgage secured by the
property and payment of various closing costs. A gain of $2.2 million was
recognized on the sale.
On September 20 , 2000, IORI sold the 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 $4.8 million. IORI
received net cash of $1.6 million after payoff of $2.9 million in mortgage debt
and the payment of various closing costs. A gain of $436,000 was recognized on
the sale. These parcels were purchased in April 2000.
The 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
-----------------------------------------
(a) Proforma financial information
In addition to the Eastpoint, Etheredge and Fambrough sales discussed above,
IORI has purchased five apartments and three parcels of undeveloped land in
2000. The properties, located in Texas, were purchased for a total of $18.8
million in separate transactions from unaffiliated sellers and represent
approximately 20% of IORI's assets at December 31, 1999. IORI paid a total of
$4.5 million in cash and financed the remainder of the purchase prices. The
mortgages bear interest at 10.0% or variable per annum and mature from 2001 to
2003.
IORI has previously provided audited statements of operations for the apartment
complexes acquired during 2000, totaling $11.0 million or 16.1% of IORI's assets
at December 31, 1999. See IORI's Current Report on Form 8-K dated May 25, 2000.
In addition to the purchases described above, during 2000 IORI has sold two
apartments and two office buildings. In connection with the sales, IORI received
net cash proceeds totaling $27.1 million, after the payoff or assumption of
$16.1 million in existing mortgage debt and the payment of various closing costs
associated with the sales. IORI recognized a total gain on these sales of $17.1
million.
Proforma statements of operations are presented for the year ended December 31,
1999 and the six months ended June 30, 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 June 30, 2000 is also presented. The proforma balance sheet presents
the Eastpoint and Etheredge and Fambrough 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
June 30, 2000
<TABLE>
<CAPTION>
Adjustments
------------------------------
Etheredge
and
Fambrough Eastpoint
Actual /(1)/ Land /(1)/ Apartments /(1)/ Proforma
--------------- ----------------- ------------------- ----------
Assets (dollars in thousands)
------
<S> <C> <C> <C> <C>
Real estate held for investment, net of accumulated
depreciation........................................ $ 67,950 $ (3,997) $ (2,868) $ 61,085
Investments in partnerships.......................... 82 -- -- 82
Cash and cash equivalents............................ 18,297 1,554 1,804 21,655
Other assets......................................... 3,252 64 (6) 3,310
-------- ----------- --------- --------
$ 89,581 $ (2,379) $ (1,070) $ 86,132
======== =========== ========= ========
Liabilities and Shareholders' Equity
------------------------------------
Liabilities
Notes and interest payable........................... $ 48,559 $ (2,814) $ (3,249) $ 42,496
Other liabilities.................................... 2,481 -- -- 2,481
-------- ----------- --------- --------
51,040 (2,814) (3,249) 44,977
Commitments and contingencies
Shareholders' equity
Common Stock, $.01 par value; 10,000,000 shares,
issued and outstanding 1,530,379 shares............. 15 -- -- 15
Paid-in capital...................................... 63,882 -- -- 64,882
Accumulated distributions in excess of accumulated
earnings............................................ (26,321) 435 2,179 (23,707)
Treasury stock at cost............................... (35) -- -- (35)
-------- ----------- --------- --------
38,541 435 2,179 41,155
-------- ----------- --------- --------
$ 89,581 $ (2,379) $ (1,070) $ 86,132
======== =========== ========= ========
</TABLE>
__________________________
(1) Assumes sale by IORI on January 1, 2000.
(2) The balance sheet effect of all other 2000 property purchases and sales are
included in the June 30, 2000 actual balances presented.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Adjustments
----------------------------------------------------------------
Properties
Properties Eliminated Added
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Etheredge
and Apartments
Fambrough Eastpoint and
Actual Land Apartments Sales Land Proforma
----------------- ------------ ------------ ---------- ----------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Property revenue
Rents............................. $ 7,738 $ -- $ 475 $ 1,771 $ 701 $ 6,193
Property expense
Property operations............... 3,619 -- 226 677 297 3,013
---------- --------- ---------- -------- ---------- ----------
Operating income (loss).......... 4,119 -- 249 1,094 404 3,180
Other income
Interest.......................... 98 -- -- -- -- 98
Equity in (loss) of partnerships.. (69) -- -- -- -- (69)
Gain on sale of real estate....... 17,022 -- -- -- -- 17,022
---------- --------- ---------- -------- ---------- ----------
17,051 -- -- -- -- 17,051
Other expenses
Interest.......................... 2,771 70 131 576 248 2,242
Depreciation...................... 1,324 -- 55 246 69 1,092
Advisory fee to affiliate......... 335 -- -- -- -- 335
Net income fee to affiliate....... 1,219 -- -- -- -- 1,219
General and administrative........ 487 -- -- -- -- 487
---------- --------- ---------- -------- ---------- ----------
6,136 70 186 822 317 5,375
---------- --------- ---------- -------- ---------- ----------
Net income (loss).................. $ 15,034 $ 70 $ 63 $ 272 $ 87 $ 14,856
========== ========= ========== ======== ========== ==========
Earnings per share
Net income........................ $ 9.82 $ 9.71
========== ==========
Weighted average shares of Common
Stock used in computing earnings
per share......................... 1,530,379 1,530,379
========== ==========
</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
SIX MONTHS ENDED JUNE 30, 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. 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>
Adjustments
------------------------------------
Properties
Properties Eliminated Added
------------------------ ----------
Apartments
Eastpoint and
Actual Apartments Sales Land Proforma
---------- ------------ --------- ---------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Property revenue
Rents........................................... $ 15,968 $ 921 $ 7,509 $ 2,802 $ 10,340
Property expense
Property operations............................. 6,768 420 2,842 1,186 4,692
---------- ------------ --------- ---------- ----------
Operating income <loss>....................... 9,200 501 4,667 1,616 5,648
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 expenses
Interest........................................ 5,658 256 2,385 993 4,010
Depreciation.................................... 2,723 110 1,039 309 1,883
Advisory fee to affiliate....................... 371 -- -- -- 371
Net income fee to affiliate..................... 81 -- -- -- 81
General and administrative...................... 747 -- -- -- 747
---------- ------------ --------- ---------- ----------
9,580 366 3,424 1,302 7,092
---------- ------------ --------- ---------- ----------
Net income <loss>................................ $ 1,322 $ 135 $ 1,249 $ 314 $ 252
========== ============ ========= ========== ==========
Earnings per share
Net income...................................... $ .87 $ .16
========== ==========
Weighted average shares of Common Stock used in
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 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.
3. 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 (incorporated by reference to Exhibit No. 99.0 to the
Registrant's Current Report on Form 8-K, dated May 25, 2000).
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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: October 12, 2000 By: /s/ Mark W. Branigan
------------------------ -----------------------------------
Mark W. Branigan
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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