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) |
Registrants Telephone Number, Including Area Code: (469) 522-4200
1
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.
2
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 IORIs 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.
3
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 | ||||||||
4
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. |
5
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. |
6
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) |
7