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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 EXCHANGE ACT OF 1934

      

     
October 14, 2003

Date of Report (Date of Earliest Event Reported)
 
 
INCOME OPPORTUNITY REALTY INVESTORS, INC

(Exact Name of Registrant as Specified in its Charter)
         
Nevada   1-14784   75-2615944

 
 
(State of Incorporation)   (Commission
File No.)
  (IRS Employer
Identification No.)
     
1800 Valley View Lane, Suite 300,    Dallas, TX   75234

(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

During October 2003, the Registrant acquired and disposed of a significant amount of assets otherwise than in the ordinary course of business. Both transactions described occurred as a part of a deferred tax free exchange for Encino Executive Plaza, Ltd., a California limited partnership (“Encino”). ART Encino, Inc. is the sole general partner of Encino Executive Plaza, Ltd. (the “Partnership”) and American Realty Trust, Inc. (“ART”) is a limited partner in such partnership. Both ART Encino, Inc. and ART are subsidiaries of American Realty Investors, Inc., a Nevada corporation (“ARL”) which has its common stock listed and traded on the New York Stock Exchange, Inc. (“NYSE”). Prior to the transactions involving the Registrant described below, the Partnership sold its principal asset consisting of certain real property and an office building located thereon in Encino, California for cash, the net proceeds of which were to be the subject of a forward-exchange to be utilized together with certain all inclusive wrap-around notes to acquire from the Registrant substituted property in a like-kind property exchange.

Also on October 14, 2003, Income Opportunity Realty Investors, Inc. ("IORI") sold and conveyed the office building known as One Hickory Centre and 202 acres of unimproved real property known as the Travelers Land in Dallas County, Texas to Encino Executive Plaza, Ltd. The sale price for One Hickory Centre was $12,200,000 and Encino Executive Plaza, Ltd. executed a wrap-around promissory note in the amount of $11,973,025.07 payable to the order of IORI secured by a Deed of Trust encumbering One Hickory Centre. As with the prior transaction, the difference between the purchase price and the promissory note represented adjustments for various prorations. The sale price for the Travelers Land was $25,000,000. At closing, Encino Executive Plaza, Ltd. executed an all inclusive wrap-around promissory note payable to the order of IORI in the principal amount of $22,801,987.03 secured by a Deed of Trust covering the Travelers Land sold and delivered cash to IORI in the amount of $1,946,715,88, the remaining difference of which was as a result of prorations and various expenses paid by IORI in connection with the closing of the transaction. Subsequently, IORI made a loan to Encino Executive Plaza, Ltd. in the amount of $1,567,232 payable upon demand or if no demand is made prior thereto on June 30, 2006 with a market rate of interest. Encino Executive Plaza, Ltd. executed and delivered a promissory note payable to the order of IORI in the stated principal amount of $1,567,232.

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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

This Form 8-K/A amends the Current Report on Form 8-K, dated October 14, 2003 and filed November 14, 2003, by Income Opportunity Realty Investors, Inc (“IORI”) and provides information that was not available at the date of the original filing.

Proforma statements of operations are presented for the nine months ended September 30, 2003 and for the year ended December 31, 2002. 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 September 30, 2003, is also presented. The proforma balance sheet presents the property sales described above, as if they had occurred at January 1, 2002.

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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2003

                           
              Encino        
              Executive        
      Actual     Plaza Ltd     Proforma  
     
   
   
 
      (dollars in thousands)  
 
Assets
                       
Real Estate
                       
Real estate held for investment
  $ 41,001     $     $ 41,001  
Less — accumulated depreciation
    (5,712 )           (5,712 )
 
 
   
   
 
 
    35,289             35,289  
Real Estate held for sale
    32,978       (24,794 )     8,184  
Note and interest receivable
          39,710       39,710  
Investments in real estate partnerships
    586             586  
Cash and cash equivalents
    359       247       606  
Other assets
    14,563       (1,567 )     12,996  
 
 
   
   
 
 
  $ 83,775     $ 13,596     $ 97,371  
 
 
   
   
 
Liabilities and Equity
                       
Notes and interest payable
    31,466       12,379       43,845  
Liabilities related to asset held for sale
    15,077             15,077  
Deferred gain
          202       202  
Other liabilities
    1,268       (252 )     1,016  
 
 
   
   
 
 
    47,811       12,329       60,140  
Commitments and Contingencies
                 
Stockholders’ Equity
                       
Common stock
    14             14  
Paid-in capital
    62,774             62,774  
Accumulated deficit
    (26,824 )     1,267       (25,557 )
 
 
   
   
 
 
  $ 83,775     $ 13,596     $ 97,371  
 
 
   
   
 

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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
STATEMENT OF OPERATIONS(1)(2)
NINE MONTHS ENDED SEPTEMBER 30, 2003

                           
              Encino        
              Executive        
      Actual     Plaza Ltd     Proforma  
     
   
   
 
      (dollars in thousands)  
Property Revenue
                       
 
Rents
  $ 5,871     $     $ 5,871  
Property Expenses
                       
 
Property operations
    3,409       247       3,162  
 
 
   
   
 
 
Operating income
    2,462       247       2,709  
Other Income
                       
 
Interest
    626       1,425       2,051  
 
Equity in income(loss) of equity partnerships
    (28 )           (28 )
 
Recovery of loss provision on receivable from related party
    1,569             1,569  
 
 
   
   
 
 
    2,167       1,425       3,592  
Other expense
                       
 
Interest
    2,863       405       3,268  
 
Depreciation
    909             909  
 
Advisory fee to affiliate
    498             498  
 
Provision for asset impairment
    688             688  
 
General and administrative
    692             692  
 
 
   
   
 
 
    5,650       405       6,055  
Net income (loss)
    (1,021 )     1,267       246  
Earnings per share
                       
 
Net (loss)
    (0.71 )             0.17  
Weighted average Common Stock used in computing earnings per share
    1,438,945               1,438,945  

(1)   The Proforma Combined Statement of Operations assumes that each property was sold by IORI on January 1, 2003.

(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, 2002

                           
              Encino        
              Executive        
      Actual     Plaza, Ltd     Proforma  
     
   
   
 
        (dollars in thousands)  
Property Revenue
                       
 
Rents
    7,739             7,739  
Property Expenses
                       
 
Property operations
    4,180       361       3,819  
 
 
   
   
 
 
Operating income
    3,559       361       3,920  
Other Income
                       
 
Interest
    270       1,900       2,170  
 
Equity in income(loss) of equity partnerships
    862             862  
 
 
   
   
 
 
    1,132       1,900       3,032  
Other expense
                       
 
Interest
    3,820       540       4,360  
 
Depreciation
    1,175             1,175  
 
Advisory fees to affiliate
    714             714  
 
Net income fee to affiliate
    169             169  
 
Provision for loss
    1,568             1,568  
 
General and administrative
    1,037             1,037  
 
 
   
   
 
 
    8,483       540       9,023  
Net loss
    (3,792 )     1,721       2,071  
Earnings per share
                       
 
Net (loss)
    (2.64 )             1.44  
Weighted average Common Stock used
in computing earnings per share
    1,438,945               1,438,945  

(1)   The Proforma Combined Statement of Operations assumes that each property was sold by IORI on January 1, 2002.

(2)   Operating results for sold properties are their actual operating results for the year ended December 31, 2002.

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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: February 3, 2004   By: /s/ Ronald E. Kimbrough
 
   
        Ronald E. Kimbrough
Executive Vice President and Chief Financial Officer (Principal) Financial and Accounting Officer and Acting Principal Executive Officer)

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