8-K/A 1 d8ka.txt FORM 8-K/A 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 ------------- 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 --------------- 1 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. 2 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. 3 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. 4 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. 5 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. 6 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. 7 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. 8 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: June 25, 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) 9