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
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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This Form 8-K/A amends the Current Report on Form 8-K, dated April 5, 2002 and
filed April 19, 2002, by Income Opportunity Realty Investors, Inc. ("IORI") and
provides information that was not available at the date of the original filing.
We have amended the second paragraph on page 2 to correct the relationships
between the parties, to identify the lender, and to correct the amount of
preferred stock IORI received in the transaction. We have added two additional
paragraphs to identify the terms of the preferred stock.
We have amended the proforma statements to present the most recent fiscal year
and interim period.
We have amended the proforma statement of operations for the year ended December
31, 2001, to treat the transaction as a financing and removed the adjustments to
rents and operations. The information regarding the preferred stock was provided
after the original filing, adjustments to interest income were made. Also with
the information that was provided after the filing, adjustments were made to
interest expense, advisory fees and net income fees.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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 to partnerships
controlled by Metra Capital, LLC ("Metra"). These properties include: the 60
unit Brighton Court, the 92 unit Del Mar, the 68 unit Enclave, the 280 unit
Meridian, the 57 unit Signature, the 114 unit Sinclair, located in Midland,
Texas, and the 106 unit Treehouse, located in San Antonio, Texas. Innovo Realty,
Inc., a subsidiary of Innovo Group, Inc. ("Innovo") is a limited partner in the
partnerships that purchased the properties. Joseph Mizrachi, a director of
American Realty Investors, Inc. ("ARI"), a related party, controls approximately
11.67% of the outstanding common stock of Innovo. The sale constituted 23.39% of
the total assets of IORI as of December 31, 2001. The sales price for the
properties totaled $26.2 million. IORI received $5.4 million in cash after the
payoff of $16.1 million in debt and various closing costs. Due to IORI's
relationship with ARI and Mr. Mizrachi, management has determined to treat this
sale as a refinancing transaction. The new debt, funded by Bank of America, 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 $2.9 million of 8% non-recourse, non-convertible Series A Preferred
Stock ("Preferred Shares") of Innovo.
The dividend on the Preferred Shares will be funded entirely and solely through
member distributions from cash flows generated by the operation and subsequent
sale of the sold properties. In the event the cash flows for the properties are
insufficient to cover the 8% annual dividend, Innovo will have no obligation to
cover any shortfall.
The Preferred Shares have a mandatory redemption feature, and are redeemable
from the cash proceeds received by Innovo from the operation and sale of the
properties. All member distributions that are in excess of current and accrued
8% dividends, must be used by Innovo to redeem the Preferred Shares.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Form 8-K/A amends the Form 8-K Current Report dated April 5, 2002 and filed
April 19, 2002 by IORI and provides information that was not available at the
date of the original filing.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
(a) Pro forma financial information:
Proforma statements of operations are presented for the three months ended March
31, 2002, and the year ended December 31, 2001. 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 March 31, 2002, 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
MARCH 31, 2002
Brighton
Actual Court/(1)/ Del Mar/(1)/ Enclave/(1)/ Signature/(1)/ Sinclair/(1)/
------- ------------ ------------- ------------- -------------- -------------
(dollars in thousands)
Assets
Real Estate
Real estate held for investment ................ $ 86,319 $ -- $ -- $ -- $ -- $ --
Less - accumulated depreciation ................ (6,745) -- -- -- -- --
-------- -------- -------- -------- -------- --------
79,574 -- -- -- -- --
Notes and interest receivable .................. 6,847 -- -- -- -- --
Investments in real estate entities ............ 103 -- -- -- -- --
Investment in preferred stock .................. -- 16 49 263 -- 221
Cash and cash equivalents ...................... 59 562 695 531 1,706 464
Other assets ................................... 3,173 -- -- -- -- --
-------- -------- -------- -------- -------- --------
$ 89,756 $ 578 $ 744 $ 794 $ 1,706 $ 685
======== ======== ======== ======== ======== ========
Liabilities and Equity
Notes and interest payable ..................... $ 47,552 $ 542 $ 634 $ 476 $ 1,705 $ 421
Other liabilities .............................. 1,909 49 125 327 43 272
-------- -------- -------- -------- -------- --------
49,461 591 759 803 1,748 693
Commitments and Contingencies
Stockholders' Equity
Common stock ................................... 14 -- -- -- -- --
Paid-in capital ................................ 63,459 -- -- -- -- --
Accumulated distributions in excess
of accumulated earnings .................... (23,178) (13) (15) (9) (42) (8)
-------- -------- -------- -------- -------- --------
40,295 (13) (15) (9) (42) (8)
-------- -------- -------- -------- -------- --------
$ 89,756 $ 578 $ 744 $ 794 $ 1,706 $ 685
======== ======== ======== ======== ======== ========
Meridian/(1)/ Treehouse/(1)/ Proforma
------------- -------------- -----------
Assets
Real Estate
Real estate held for investment ............... $ -- $ -- $ 86,319
Less - accumulated depreciation ............... -- -- (6,745)
-------- -------- ---------
-- -- 79,574
Notes and interest receivable ................. -- -- 6,847
Investments in real estate entities ........... -- -- 103
Investment in preferred stock ................. 197 2,114 2,860
Cash and cash equivalents ..................... 408 924 5,349
Other assets .................................. -- -- 3,173
-------- -------- ---------
$ 605 $ 3,038 $ 97,906
======== ======== =========
Liabilities and Equity
Notes and interest payable .................... $ 379 $ 1,200 $ 52,909
Other liabilities ............................. 233 1,841 4,799
-------- -------- ---------
612 3,041 57,708
Commitments and Contingencies
Stockholders' Equity
Common stock .................................. -- -- 14
Paid-in capital ............................... -- -- 63,459
Accumulated distributions in excess
of accumulated earnings ................... (7) (3) (23,275)
-------- -------- ---------
(7) (3) 40,198
-------- -------- ---------
$ 605 $ 3,038 $ 97,906
======== ======== =========
___________________________
(1) Assumes sale by IORI on January 1, 2002.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
STATEMENT OF OPERATIONS/(1)/
MARCH 31, 2002
Brighton
Actual Court Del Mar Enclave Signature Sinclair Meridian Treehouse Proforma/(1)/
------ ----- ------- ------- --------- -------- -------- --------- -------------
(dollars in thousands)
Revenue
Rents ............................ $ 2,800 $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 2,800
Property operations .............. 1,640 -- -- -- -- -- -- -- 1,640
---------- -------- ------- ------- --------- -------- -------- --------- -----------
1,160 -- -- -- -- -- -- -- 1,160
Other Income
Interest and other ............... 35 -- 1 5 -- 4 4 42 91
Equity (loss) in equity
investees ..................... (17) -- -- -- -- -- -- -- (17)
Gain on sale of real estate ...... 7,105 -- -- -- -- -- -- -- 7,105
---------- -------- ------- ------- --------- -------- -------- --------- -----------
7,123 -- 1 5 -- 4 4 42 7,179
Other expense
Interest ......................... 1,062 10 12 9 32 8 7 23 1,163
Depreciation ..................... 500 -- -- -- -- -- -- -- 500
Advisory fees .................... 186 4 6 6 13 5 5 23 248
Net income fee ................... 411 (1) (1) (1) (3) (1) (1) -- 403
Provision for loss ............... 767 -- -- -- -- -- -- -- 767
General and administrative ....... 285 -- -- -- -- -- -- -- 285
---------- -------- ------- ------- --------- -------- -------- --------- -----------
3,211 13 17 14 42 12 11 46 3,366
Net income ......................... $ 5,072 $ (13) $ (16) $ (9) $ (42) $ (8) $ (7) $ (4) $ 4,973
========== ======== ======= ======= ========= ======== ======== ========= ===========
Earnings per share
Net income (loss) ................ $ 3.52 $ 3.46
========== ===========
Weighted average Common Stock used
in computing earnings per share .. 1,438,945 1,438,945
========== ===========
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
THREE MONTHS ENDED MARCH 31, 2002
(1) The Proforma Combined Statement of Operations assumes that each property
was sold by IORI on January 1, 2002.
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROFORMA COMBINED
STATEMENT OF OPERATIONS/(1)/
DECEMBER 31, 2001
Brighton
Actual Court Del Mar Enclave Signature Sinclair Meridian Treehouse Daley/(2)/Proforma/(1)/
------ ----- ------- ------- --------- -------- -------- --------- -------- -----------
(dollars in thousands)
Revenue
Rents .......................... $ 13,001 $ -- $ -- $ -- $ -- $ -- $ -- $ -- $(2,305) $ 10,696
Property operations ............ 6,591 -- -- -- -- -- -- -- (764) 5,827
---------- ------- ------- ------ -------- ------- ------- -------- ------- -----------
6,410 -- -- -- -- -- -- -- (1,541) 4,869
Other Income
Interest and other ............. 194 1 4 21 -- 18 16 169 -- 423
Equity (loss) in equity
investees .................... (9) -- -- -- -- -- -- -- -- (9)
Gain on sale of real estate .... -- -- -- -- -- -- -- -- 7,105 7,105
---------- ------- ------- ------ -------- ------- ------- -------- ------- -----------
185 1 4 21 -- 18 16 169 7,105 7,519
Other expense
Interest ....................... 6,074 41 48 36 129 32 29 91 (632) 5,848
Depreciation ................... 2,427 -- -- -- -- -- -- -- (414) 2,013
Advisory fees .................. 817 4 6 6 13 5 5 23 -- 879
Net income fee ................. -- (3) (4) (2) (11) (1) (1) 4 236 218
General and administrative ..... 739 -- -- -- -- -- -- -- -- 739
---------- ------- ------- ------ -------- ------- ------- -------- ------- -----------
10,057 42 50 40 136 36 33 118 (810) 9,697
Net income ...................... $ (3,462) $ (41) $ (46) $ (19) $ (131) $ (18) $ (17) $ 51 $ 6,374 $ 2,691
========== ======= ======= ====== ======== ======= ======= ======== ======= ===========
Earnings per share
Net income (loss) .............. $ (2.32) $ 1.80
========== ===========
Weighted average Common Stock
used in computing earnings
per share ...................... 1,493,675 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 Daley Plaza is the actual operating results for the
year ended December 31, 2001.
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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: June 25, 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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