8-K 1 d8k.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 EXCHANGE ACT OF 1934 April 5, 2002 ----------------------------------------------- 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.) 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 --------------- 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 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 ----------------------------------------- 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. 2 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. 3 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. 4 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. 5 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 ==========
6 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. 7 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: April 19, 2002 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) 8