SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 5, 2002
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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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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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On January 28, 2002, Income Opportunity Realty Investors, Inc. ("IORI") sold the
122,795 sq. ft. Daley Plaza in San Diego, California, for a sales price of $15.5
million to Janey Enterprises, LP. The sale constituted 8.14% of the total assets
of IORI as of December 31, 2001. IORI received $8.1 million in cash after the
payoff of $8.6 million in debt and various closing costs and recognized a gain
on the sale of $7.1 million.
On April 5, 2002, IORI sold all of its residential properties for a sales price
of $26.2 million to Metra Capital, LLC. One of Metra Capital's members is Third
Millenium Partners, LLC ("Third Millenium"). One of Third Millenium's members is
Joseph Mizrachi, a member of the Board of Directors of American Realty
Investors, Inc., a related party. The sale constituted 23.39% of the total
assets of IORI as of December 31, 2001. IORI received $5.4 million in cash after
the payoff of $16.1 million in debt and various closing costs including $262,000
in brokerage commissions to Third Millenium. Due to IORI's relationship with
American Realty Investors and Mr. Mizrachi, management has determined to treat
this sale as a refinancing transaction. The new debt on the properties totals
$21.4 million, bears interest at 7.57% per annum, requires monthly interest only
payments of $135,000 and matures in May 2012. IORI also received $4.0 million of
8% non-recourse, non-convertible Series A Preferred Stock of Innovo Group, Inc.,
a company which has Joseph Mizrachi as a member of the Board of Directors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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Proforma statements of operations are presented for the year ended December 31,
2001, and the year ended December 31, 2000. The proforma statement 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
December 31, 2001, is also presented. The proforma balance sheet presents the
property sales described above, as if they had occurred at January 1, 2001.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2001
Brighton
Actual Court(1) Del Mar(1) Enclave(1) Signature(1) Sinclair(1)
------ -------- ---------- ---------- ------------ -----------
(dollars in thousands)
Assets
Real Estate
Real estate held for investment............. $ 95,190 $ -- $ -- $ -- $ -- $ --
-------- ----- ------- ------ ------- ------
Less - accumulated depreciation............. (7,875) -- -- -- -- --
-------- ----- ------- ------ ------- ------
87,315 -- -- -- -- --
Notes and interest receivable............... 505 -- -- -- -- --
Investments in real estate entities......... 142 -- -- -- -- --
Investment in preferred stock............... -- 550 565 581 520 462
Cash and cash equivalents................... 66 512 544 667 611 562
Other assets................................ 3,805 (68) (66) (66) (54) (54)
------- ----- ------- ------ ------- ------
$ 91,833 $ 994 $ 1,043) $1,182 $ 1,077 $ 970
======== ===== ======= ====== ======= ======
Liabilities and Equity
Notes and interest payable.................. $ 54,426 $ 435 $ 422 $ 582 $ 527 $ 486
Other liabilities........................... 2,185 (94) (102) (124) (85) (88)
-------- ----- ------- ------ ------- ------
56,611 341 320 458 442 398
Commitments and Contingencies
Stockholders' Equity
Common stock................................ 14 -- -- -- -- --
Paid-in capital............................. 63,459 -- -- -- -- --
Accumulated distributions in excess
of accumulated earnings................... (28,251) 653 723 724 635 572
-------- ------ ------- ------ ------- ------
35,222 653 723 724 635 572
-------- ------ ------- ------ ------- ------
$ 91,833 $ 994 $ 1,043 $1,182 $ 1,077 $ 970
======== ====== ======= ====== ======= ======
Meridian(1) Treehouse(1) Daley(1) Proforma
----------- ------------ -------- --------
(dollars in thousands)
$ -- $ -- $ (9,099) $ 86,091
------- ------- -------- ---------
-- -- 1,627 (6,248)
Assets ------- ------- -------- ---------
Real Estate -- -- (7,472) 79,843
Real estate held for investment.............
-- -- -- 505
Less - accumulated depreciation............. -- -- -- 142
767 548 -- 3,993
1,804 1,178 7,819 13,763
(46) (110) (366) 2,975
Notes and interest receivable............... ------- ------- ------- ---------
Investments in real estate entities.........
Investment in preferred stock............... $ 2,525 $ 1,616 $ (19) $101,221
Cash and cash equivalents................... ======= ======= ======= =========
Other assets................................
$1,706 $ 1,200 $(6,636) $ 53,148
(78) (48) 159 1,725
------ ------- ------- ---------
1,628 1,152 (6,477) 54,873
Liabilities and Equity
Notes and interest payable..................
Other liabilities...........................
-- -- -- 14
-- -- -- 63,459
Commitments and Contingencies 897 464 6,458 (17,125)
Stockholders' Equity ------ ------ ------- ---------
Common stock................................ 897 464 6,458 46,348
Paid-in capital............................. ------ ------ ------- ---------
Accumulated distributions in excess
of accumulated earnings................... $2,525 $1,616 $ (19) $ 101,221
====== ====== ======= =========
- -------
(1) Assumes sale by IORI on January 1, 2001.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
STATEMENT OF OPERATIONS(1)(2)
DECEMBER 31, 2001
Brighton
Actual Court Del Mar Enclave Signature Sinclair
---------- -------- ---------- --------- ------------ ----------
(dollars in thousands)
Revenue
Rents.................................. $ 13,001 $ (561) $ (624) $ (574) $ (523) $ (553)
-------- ------- ------ ------ ------ ------
Property operations.................... 6,591 (234) (337) (246) (245) (312)
-------- ------- ------ ------ ------ ------
6,410 (327) (287) (328) (278) (241)
Other Income
Interest and other..................... 194 33 34 35 31 28
Equity (loss) in equity
investees............................ (9) -- -- -- -- --
Gain on sale of real estate............ -- -- -- -- -- --
-------- -------- ------ ------ ------ ------
185 33 34 35 31 28
Other expense
Interest............................... 6,074 33 32 44 40 37
Depreciation........................... 2,427 -- -- -- -- --
Advisory fees.......................... 817 7 8 9 8 7
Net income fee......................... -- (25) (22) (26) (22) (19)
General and administrative............. 739 -- -- -- -- --
--------- -------- ------ ------ ------ ------
10,057 15 18 27 26 25
Net income.............................. $ (3,462) $ (309) $(271) $ (320) $ (273) $ (238)
========= ======== ====== ====== ====== ======
Earnings per share
Net income (loss)...................... $ (2.32)
=========
Weighted average Common Stock used
in computing earnings per share........ 1,493,675
=========
Meridian Treehouse Daley Proforma(1)(2)
---------- ----------- --------- --------------
(dollars in thousands)
Revenue
Rents.................................. $ (1,331) $ (829) $ (2,305) $ 5,701
-------- ------ -------- ---------
Property operations.................... (866) (428) (764) 3,159
-------- ------ --------
(465) (401) (1,541) 2,542
Other Income
Interest and other..................... 46 33 -- 433
Equity (loss) in equity
investees............................ -- -- -- (9)
Gain on sale of real estate............ -- -- 7,105 7,105
------- ------ -------- ---------
46 33 7,105 7,530
Other expense
Interest............................... 129 91 (632) 5,848
Depreciation........................... -- -- (414) 2,013
Advisory fees.......................... 19 12 -- 887
Net income fee......................... (43) (35) 236 44
General and administrative............. -- -- -- 739
------- ------- -------- ---------
105 68 (810) 9,531
Net income.............................. $ (524) $ (436) $ 6,374 $ 541
======= ======= ======== =========
Earnings per share
Net income (loss)...................... $ .36
=========
Weighted average Common Stock used
in computing earnings per share........ 1,493,675
=========
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, 2001
(1) The Proforma Combined Statement of Operations assumes that each property
was sold by IORI on January 1, 2001.
(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 (1)(2)
YEAR ENDED DECEMBER 31, 2000
Brighton
Actual Court Del Mar Enclave Signature Sinclair
---------- -------- ---------- --------- ------------ ----------
(dollars in thousands)
Revenue
Rents.................................. $ 13,731 $ (286) $ (321) $ (296) $ (245) $ (293)
---------- ------ ------ ------ ------ ------
Property operations.................... 6,969 (118) (164) (112) (124) (183)
---------- ------ ------
6,762 (168) (157) (184) (121) (110)
Other Income
Interest and other..................... 319 33 34 35 31 28
Equity (loss) in equity investees...... (61) -- -- -- -- --
Gain on sale of real estate............ 20,878 -- -- -- -- --
---------- ------ ------ ------ ------ ------
21,136 33 34 35 31 28
Other expense
Interest............................... 5,079 33 32 44 40 37
Depreciation........................... 2,450 -- -- -- -- --
Advisory fees.......................... 664 7 8 9 8 7
Net income fee......................... 1,362 (13) (12) (15) (10) (10)
General and administrative............. 1,549 -- -- -- -- --
---------- ------ ------ ------ ------ ------
11,104 27 28 38 38 34
Net income............................. $ 16,794 $ (162) $ (151) $ (187) $ (128) $ (116)
========== ====== ======= ====== ====== ======
Earnings per share
Net income (loss)...................... $ 11.03
==========
Weighted average Common Stock used
in computing earnings per share........ 1,522,510
==========
Meridian Treehouse Daley Proforma(1)(2)
--------- ----------- --------- --------------
(dollars in thousands)
Revenue
Rents.................................. $ (1,176) $ (816) $ (1,533) $ 8,765
-------- ------- -------- ----------
Property operations.................... (996) (381) (643) 4,248
(180) (435) (890) 4,517
Other Income
Interest and other..................... 46 33 -- 559
Equity (loss) in equity investees...... -- -- -- (61)
Gain on sale of real estate............ -- -- 7,105 27,983
-------- -------- -------- ---------
46 33 7,105 28,480
Other expense
Interest............................... 129 91 (758) 4,727
Depreciation........................... -- -- (412) 2,038
Advisory fees.......................... 19 12 57 791
Net income fee......................... (21) (38) 550 1,793
General and administrative............. -- -- -- 1,549
-------- -------- -------- ----------
127 65 (563) 10,898
Net income............................. $ (261) $ (467) $ 6,778 $ 22,099
======== ======== ======== ==========
Earnings per share
Net income (loss)...................... $ 14.52
==========
Weighted average Common Stock used
in computing earnings per share........ 1,522,510
==========
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
NOTES TO PROFORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2000
(1) The Proforma Combined Statement of Operations assumes that each property
was sold by IORI on January 1, 2000.
(2) Operating results for sold properties are their actual operating results
for the year ended December 31, 2000.
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SIGNATURE
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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: April 19, 2002 By: /s/ Ronald E. Kimbrough
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Ronald E. Kimbrough
Executive Vice President and Chief
Financial Officer (Principal)
Financial and Accounting Officer and
Acting Principal Executive Officer)
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