8-K 1 0001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 May 25, 2000 ---------------------------------------------------- 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 (IRS Employer File No.) Identification No.) 10670 North Central Expressway, Suite 300, Dallas, TX 75231 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (214) 692-4700 --------------- Not Applicable ----------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 1 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS --------------------------------------------- On March 1, 2000, Income Opportunity Realty Investors, Inc. ("IORI") sold the 128 unit La Monte Park Apartments in Houston, Texas, approximately 4.0% of IORI's assets at December 31, 1999, for $5.0 million. IORI received net cash of $1.1 million after the payment of various closing costs. The purchaser assumed the $3.8 million mortgage secured by the property. A gain of $903,000 was recognized on the sale. On April 10, 2000, IORI purchased in separate transactions Etheredge and Fambrough land, 75.0 acre and 75.1 acre parcels of unimproved land in Collin County, Texas, aggregating approximately 4.2% of IORI's assets at December 31, 1999, for $1.9 million each. IORI paid a total of $689,000 in cash and obtained seller financing of the remaining $1.4 million of each of the purchase prices. The seller financing bears interest at 10.0% per annum, requires quarterly interest only payments, principal paydowns of $125,000 each in October 2000 and January 2001 and matures in April 2001. On May 25, 2000, IORI sold the 46,685 sq. ft. Olympic Building in Los Angeles, California, approximately 9.3% of IORI's assets at December 31, 1999, for $8.5 million. IORI received net cash of $3.8 million after the payment of various closing costs. A gain of $1.9 million was recognized on the sale. On May 31, 2000, IORI sold the 89,825 sq. ft. Saratoga Office Building in Saratoga, California, approximately 12.3% of IORI's assets at December 31, 1999, for $25.0 million. IORI received net cash of $17.7 million after the payment of various closing costs. A gain of $13.1 million was recognized on the sale. On June 19, 2000, IORI sold the 294 unit Renaissance Parc Apartments in Dallas, Texas, approximately 16.9% of IORI's assets at December 31, 1999, for $17.2 million. IORI received net cash of $4.5 million after the payment of various closing costs. The purchaser assumed the $12.3 million mortgage secured by the property. On June 23, 2000, IORI purchased, in a single transaction, the 60 unit Brighton Court Apartments, the 92 unit Del Mar Villas Apartments, the 68 unit Enclave Apartments, the 57 unit Signature Place Apartments and the 114 unit Sinclair Place Apartments (collectively, the "Frankel Portfolio") in Midland, Texas, aggregating approximately 16.1% of IORI's assets at December 31, 1999, for $14.0 million. The seller of the property was the Frankel Family Trust. The properties were constructed in 1982 and 1983 and have a combined rentable area of 450,000 sq.ft. IORI paid $2.9 million in cash and obtained mortgage financing of $10.9 million. The mortgage bears interest at a variable rate, with an initial rate of 9.13% per annum, requires initial monthly payments of principal and interest of $92,233 and matures in July 2003. Also on June 23, 2000, IORI purchased Frankel land, a 1.0 acre parcel of unimproved land in Midland County, Texas, approximately .04% of IORI's assets at December 31, 1999, for $41,000. The seller of the property was Frankel Family Trust. IORI paid $43,000 in cash after the payment of various closing costs. 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS --------------------------------------------- The purchase and sale of these properties, when aggregated with other property purchases and sales in 2000, have made IORI exceed 10% of its assets at December 31, 1999. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS ------------------------------------------ (a) Proforma financial information Proforma statements of operations are presented for the year ended December 31, 1999 and the three months ended March 31, 2000. The proforma statements 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, 2000 is also presented. The proforma balance sheet presents the Frankel Portfolio and Etheredge, Fambrough and Frankel land purchases, described above, as if they had occurred at January 1, 2000. 3 INCOME OPPORTUNITY REALTY INVESTORS, INC. PROFORMA COMBINED CONSOLIDATED BALANCE SHEET MARCH 31, 2000
Etheredge Frankel and Olympic Saratoga Renaissance Portfolio Fambrough Office Office Parc (Including Actual/(1)/ Land /(2)/ Building/(2)/ Building/(2)/ Apartments/(2)/ Land) Proforma ----------- ------------ ------------- ------------- --------------- ---------- -------- (dollars in thousands) Assets ------ Real estate held for investment, net of accumulated depreciation $ 82,314 $ 3,997 $ (6,153) $ (11,235) $ (15,424) $ 14,785 $ 68,284 Investments in partnerships....... 105 -- -- -- -- -- 105 Cash and cash equivalents......... 1,731 (689) 3,811 17,709 4,536 (2,947) 24,151 Other assets...................... 2,980 (400) (36) (140) (164) (258) 1,982 ----------- --------- --------- ---------- ----------- ---------- -------- $ 87,130 $ 2,908 $ (2,378) $ 6,344 $ (11,052) $ 11,580 $ 94,522 =========== ========= ========= ========== =========== ========== ======== Liabilities and Shareholders' Equity ------------------------------------ Liabilities Notes and interest payable........ $ 58,809 $ 2,814 $ (4,443) $ (6,968) $ (12,316) $ 10,853 $ 48,749 Other liabilities................. 3,960 94 215 246 52 727 5,294 ----------- --------- --------- ---------- ----------- ---------- -------- 62,769 2,908 (4,228) (6,722) (12,264) 11,580 54,043 Commitments and contingencies Shareholders' equity Common Stock, $.01 par value; 10,000,000 shares issued and outstanding, 1,530,500 shares.... 15 -- -- -- -- -- 15 Paid-in capital................... 64,882 -- -- -- -- -- 64,882 Accumulated distributions in excess of accumulated earnings... (40,536) -- 1,850 13,056 1,212 -- (24,418) ----------- --------- --------- ---------- ----------- ---------- -------- 24,361 -- 1,850 13,056 1,212 -- 40,479 ----------- --------- --------- ---------- ----------- ---------- -------- $ 87,130 $ 2,908 $ (2,378) $ 6,344 $ (11,052) $ 11,580 $ 94,522 =========== ========= ========= ========== =========== ========== ========
______________________ (1) Excludes La Monte Park Apartments which was sold in March 2000. (2) Assumes purchase or sale by IORI on January 1, 2000. 4 INCOME OPPORTUNITY REALTY INVESTORS, INC. PROFORMA COMBINED STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2000
Etheredge Frankel and Olympic Saratoga Renaissance Portfolio Fambrough Office Office Parc (Including Actual Land Building Building Apartments Land) Proforma ---------- --------- ---------- ---------- ------------ ----------- ---------- (dollars in thousands) Property revenue Rents............................. $ 4,115 $ -- $ (300) $ (642) $ (670) $ 701 $ 3,204 Property expense Property operations............... 1,848 -- (100) (175) (293) 297 1,577 ---------- --------- ---------- ---------- ------------ ----------- ---------- Operating income (loss).......... 2,267 -- (200) (467) (377) 404 1,627 Other income Interest.......................... 7 -- -- -- -- -- 7 Equity in income/(loss) of partnerships..................... (46) -- -- -- -- -- (46) Gain on sale of real estate....... 903 -- -- -- -- -- 903 ---------- --------- ---------- ---------- ------------ ----------- ---------- 864 -- -- -- -- -- 864 Other expense Interest.......................... 1,415 70 (106) (159) (260) 248 1,208 Depreciation...................... 711 -- (55) (97) (79) 69 549 Advisory fee to affiliate......... 167 -- -- -- -- -- 167 Net income fee to affiliate....... 48 -- -- -- -- -- 48 General and administrative........ 198 -- -- -- -- -- 198 ---------- --------- ---------- ---------- ------------ ----------- ---------- 2,539 70 (161) (256) (339) 317 2,170 ---------- --------- ---------- ---------- ------------ ----------- ---------- Net income (loss).................. $ 592 $ (70) $ (39) $ (211) $ (38) $ 87 $ 321 ========== ========= ========== ========== ============ =========== ========== Earnings per share Net income........................ $ .39 $ .39 ========== ========== Weighted average shares of Common Stock used in computing earnings per share................ 1,530,413 1,530,413 ========== ==========
The accompanying footnotes are an integral part of this Proforma Combined Statement of Operations. 5 INCOME OPPORTUNITY REALTY INVESTORS, INC. NOTES TO PROFORMA COMBINED STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2000 1. The Proforma Combined Statement of Operations assumes that each property was purchased or sold by IORI on January 1, 2000. Proforma operating results for property purchases are from January 1 through the respective dates of purchase only. Results subsequent to the dates of purchase are included in the "Actual" column. 2. Statements of operations for the twelve months ended December 31, 1999 were obtained for the Frankel Portfolio. Such statements were used as the basis for estimating their respective operating results for the three months ended March 31, 2000. 3. No interim financial statements were available for the Frankel Portfolio. Therefore, the previous years' actual amounts were used to estimate the interim period January 1 to the respective date of purchase. 4. The proforma interest adjustment is based on the mortgage obtained or assumed for each property at the date of purchase. The proforma depreciation adjustment is based on each property's purchase price depreciated under IORI's established depreciation policies. 5. Operating results for sold properties are their actual operating results from January 1 to their respective date of sale. 6 INCOME OPPORTUNITY REALTY INVESTORS, INC. PROFORMA COMBINED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1999
Etheredge Frankel and Olympic Saratoga Renaissance Portfolio Fambrough Office Office Parc (Including Actual Land Building Building Apartments Land) Proforma --------- --------- ---------- ---------- ------------ ---------- ---------- (dollars in thousands) Property revenue Rents............................ $ 15,968 $ -- $ (1,157) $ (2,729) $ (2,702) $ 2,802 $ 12,182 Property expense Property operations.............. 6,768 -- (493) (734) (1,150) 1,186 5,577 ---------- --------- ---------- ---------- ------------ ---------- ---------- Operating income (loss)......... 9,200 -- (664) (1,995) (1,552) 1,616 6,605 Other income Interest......................... 29 -- -- (6) -- -- 23 Equity in income/(loss) of partnerships.................... 148 -- -- -- -- -- 148 Gain on sale of real estate...... 1,525 -- -- -- -- -- 1,525 ---------- --------- ---------- ---------- ------------ ---------- ---------- 1,702 -- -- (6) -- -- 1,696 Other expense Interest......................... 5,658 280 (395) (635) (1,062) 993 4,839 Depreciation..................... 2,723 -- (219) (396) (335) 309 2,082 Advisory fee to affiliate........ 371 -- -- -- -- -- 371 Net income fee to affiliate...... 81 -- -- -- -- -- 81 General and administrative....... 747 -- -- -- -- -- 747 ---------- --------- ---------- ---------- ------------ ---------- ---------- 9,580 280 (614) (103) (1,397) 1,302 8,120 ---------- --------- ---------- ---------- ------------ ---------- ---------- Net income (loss)................. $ 1,322 $ (280) $ (50) $ (964) $ (155) $ 314 $ 187 ========== ========= ========== ========== ============ ========== ========== Earnings per share Net income....................... $ .87 $ .87 ========== ========== Weighted average shares of Common Stock used in computing earnings per share............... 1,527,386 1,527,386 ========== ==========
The accompanying footnotes are an integral part of this Proforma Combined Statement of Operations. 7 INCOME OPPORTUNITY REALTY INVESTORS, INC. NOTES TO PROFORMA COMBINED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1999 1. The Proforma Combined Statement of Operations assumes that each property was purchased or sold by IORI on January 1, 1999. 2. The amounts for the Frankel Portfolio are from their respective audited statement of operations. 3. The proforma interest adjustments is based on the mortgages obtained or assumed for each property at the date of purchase. The proforma depreciation adjustment is based on each property's purchase price depreciated under IORI's established depreciation policies. 4. Operating results for sold properties are their actual operating results for the year ended December 31, 1999. 8 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS ------------------------------------------ (b) Financial statements of property acquired: Exhibit Number Description ------- --------------------------------------------------------------------- 99.0 Frankel Family Trust Apartments, Audited Statement of Revenue and Direct Operating Expenses for the year ended December 31, 1999, filed herewith. 9 SIGNATURE PAGE 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: August 2, 2000 By: /s/ Karl L. Blaha ------------------------ -------------------------------------- Karl L. Blaha President 10 INCOME OPPORTUNITY REALTY INVESTORS, INC. EXHIBITS TO CURRENT REPORT ON FORM 8-K Dated May 25, 2000 Exhibit Page Number Description Number ------- ------------------------------------------------- ------ 99.0 Frankel Family Trust Apartments Audited Statement 12 of Revenue and Direct Operating Expenses for the year ended December 31, 1999. 11