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Income Opportunity Realty Investors, Inc. Reports Fourth Quarter and Full Year 2012 Results
DALLAS (April 3, 2013) Income Opportunity Realty Investors, Inc. (NYSE MKT: 10T), a Dallas-based real estate investment company, today reported results of operations for the fourth quarter ended December 31, 2012. The Company reported a net loss of $0.3 million or $0.08 per share for the period ended December 31, 2012, as compared to net income of $3.0 million or $0.73 per share for the same period ended 2011.
For the twelve months ended December 31, 2012, we had net income applicable to common shares of $1.5 million or $0.36 per share for the year ended December 31, 2012, as compared to a net income applicable to common shares of $0.7 million or $0.16 per share for the same period ended 2011.
Our primary business is investing in real estate and mortgage receivables. Land held for development or sale is our sole operating segment and as of December 31, 2012, our land consisted of 178.1 acres of land located in Dallas, Texas. The principal source of revenue for the Company is interest income on over $25.4 million of note receivables due from related parties.
Interest income was $5.2 million for the twelve months ended December 31, 2012. This represents an increase of $0.8 million in the current year, as compared to interest income of $4.4 million in the prior period. The increase is due to the payments received on our notes receivables from Unified Housing Foundation, a related party. The receivables are surplus cash flow notes. Prior to January 1, 2012, on cash flow notes where payments are based upon surplus cash from operations, accrued but unpaid interest income was only recognized to the extent that cash was received. As of January 1, 2012, due to the consistency of cash received on the surplus cash notes, we are recording interest as earned.
Mortgage loan interest expense was $1.3 million for the twelve months ended December 31, 2012. This represents an increase of $73,000 in the current year, as compared to interest expense of $1.2 million in the prior period. The lender for the Travelers land mortgage, which is under a forbearance agreement, was applying 100% of the monthly debt service to principal until the October extension of the forbearance agreement. The lender reallocated the payments to accrued interest, thereby increasing the amount of interest owed. We corrected our accruals to represent the change in allocation between principal and interest made by the lender.
Income tax expense was $876,000 for the twelve months ended December 31, 2012. This represents an increase of $61,000 as compared to the prior period income tax expense of $815,000. The increase was due to the increase in the current period net income, as compared to the prior period. The Company is part of a tax sharing and compensating agreement with respect to federal income taxes between the Company and its parent(s) and their subsidiaries that was entered into in July of 2009 and due to the positive net income in the current period, it used net operating losses from its parent(s) and is required to compensate for those losses used in the current period.
About Income Opportunity Really Investors, Inc.
Income Opportunity Realty Investors, Inc., a Dallas-based real estate investment company, holds a portfolio of equity real estate in Texas, including undeveloped land. The Company invests in real estate through direct equity ownership and partnerships. For more information, visit the Company's website at www.incomeopp-realty.com.
