Income Opportunity Realty Investors, Inc. Reports Third Quarter 2009 Results

Income Opportunity Realty Investors, Inc. (AMEX:IOT), a Dallas-based real estate investment company, today reported a net loss applicable to common shares of ($1.2) million or ($0.27) per diluted earnings per share for the nine months ended September 30, 2009, as compared to a net income of $26.2 million or $6.30 per diluted earnings per share which includes a $29.8 million gain on sale from discontinued operations before tax expense for the same period ended 2008.

Our net loss applicable to common shares for the three months ended September 30, 2009 was ($399,000) or ($.09) per diluted earnings per shares as compared to a net income of $6.4 million or $1.54 diluted earnings per share for the same period ended 2008.

Results of operations for the three months ended September 30, 2009 as compared to the same period ended 2008

Rental and other property revenues decreased $47,000 due to an $18,000 decrease within our storage property and in other miscellaneous income fees in 2008 of $29,000.

Property operating expenses increased by $43,000 as compared to the same period ended 2008. The increase is principally due to a third quarter refund of prior year’s real estate taxes in 2008.

Interest income decreased by $121,000 as compared to the same period ended 2008. The decrease is due to the receipt of cash on the receivables from Unified Housing Foundation, Inc. The notes are excess cash flow notes. Interest on the notes is recorded as cash is received. Less cash was received in the current period as compared to the prior period.

Mortgage loan and interest expense decreased by $68,000 as compared to prior year. The decrease is due to the continued pay down on the mortgage balance and thus effectively reducing the interest expense.

Gain on involuntary conversion in 2008 was due to insurance proceeds received from the claim filed for tornado damage incurred.

Discontinued operations relate to seven apartment complexes sold in 2008, an office building and a shopping center held for sale during the three months ended September 30, 2009.

Results of operations for the nine months ended September 30, 2009 as compared to the same period ended 2008

Rental and other property revenues decreased by $39,000 due to an increase of $15,000 within our storage property and a decrease of $54,000 in other miscellaneous fee income.

Property operating expenses decreased by $180,000 as compared to the same period ended 2008. The decrease is principally due to property tax refunds received in 2009 for taxes paid in 2008 and electricity was $10,000 higher in 2008 than 2009.

General and administration expenses decreased by $86,000. The decrease was due to accounting and professional fees less in 2009.

Interest income decreased by $904,000 as compared to the same period ended 2008. The decrease is due to the receipt of cash on the receivables from Unified Housing Foundation, Inc. The notes are excess cash flow notes. Interest on the notes is recorded as cash is received. Less cash was received in the current period as compared to the prior period.

Mortgage loan and interest expense decreased by $787,000 as compared to the prior year. The decrease is due to the continued pay down on the mortgage balance and thus effectively reducing the interest expense.

Net income fee to affiliates for 2008 was due to net income and sale of properties in 2008. No fee is booked in 2009 due to a net loss as of October 2009.

Gain on involuntary conversion in 2008 was due to insurance proceeds received from the claim filed for tornado damage incurred.

Discontinued operations relate to seven apartment complexes sold in 2008 and an office building and a shopping center held for sale during the nine months ended September 30, 2009.

Income Opportunity Realty Investors, Inc., a Dallas-based real estate investment company, holds a portfolio of equity real estate in Texas, including office buildings, and undeveloped land. For more information, go to IOT’s website at www.incomeopp-realty.com .


INCOME OPPORTUNITY REALTY INVESTORS, INC.
BALANCE SHEETS
(unaudited)
			September 30,			December 31,
				2009			2008
			(dollars in thousands, except share and par value amounts)
		Assets
Real estate, at cost			$	29,504		$	31,765
	Less accumulated depreciation			-			(250	)
		Total real estate		29,504			31,515

Real estate held for sale at cost, net of depreciation				5,375			5,427
Notes and interest receivable from related parties				38,971			41,432
	Less allowance for doubtful accounts			(1,826	)		(1,826	)
		Total notes and interest receivable		37,145			39,606
Cash and cash equivalents				108			52
Investments in unconsolidated subsidiaries and investees				74			74
Receivable and accrued interest from related parties				42,082			38,203
Other assets				3,363			676
		Total assets	$	117,651		$	115,553

		Liabilities and Shareholders’ Equity
Liabilities:
	Notes and interest payable		$	37,440		$	37,618
	Liabilities related to assets held for sale			4,646			4,701
	Accounts payable and other liabilities			5,944			2,460
				48,030			44,779
Commitments and contingencies:
Shareholders’ equity:
	Common Stock, $.01 par value, authorized 10,000,000 shares; issued 4,173,675 shares in 2009 and 2008			42			42
	Treasury Stock at cost			(39	)		(39	)
	Paid-in capital			61,955			61,955
	Retained earnings			7,663			8,816
		Total shareholders' equity		69,621			70,774
		Total liabilities and equity	$	117,651		$	115,553


INCOME OPPORTUNITY REALTY INVESTORS, INC
STATEMENTS OF OPERATIONS
(unaudited)
		For the Three Months Ended September 30,						For the Nine Months Ended September 30,
			2009			2008			2009			2008
		(dollars in thousands, except share and per share amounts)
Revenues:
	Rental and other property revenues	$	68		$	115		$	208		$	247

Expenses:
	Property operating expenses		65			22			148			328
	Depreciation and amortization		-			12			40			36
	General and administrative		31			4			189			275
	Advisory fee to affiliates		213			218			660			667
	Total operating expenses		309			256			1,037			1,306
	Operating loss		(241	)		(141	)		(829	)		(1,059	)

Other income (expense):
	Interest income		364			485			1,115			2,019
	Mortgage and loan interest		(507	)		(575	)		(1,608	)		(2,395	)
	Gain on involuntary conversion		-			7,434			-			7,434
	Earnings from unconsolidated subsidiaries and investees		-			(2	)		-			(434	)
	Net income fee to affiliates		-			(1,055	)		-			(873	)
	Total other income (expenses)		(143	)		6,287			(493	)		5,751
	Income (loss) before gain on land sales, non-controlling interest, and taxes		(384	)		6,146			(1,322	)		4,692
	Income (loss) from continuing operations before tax		(384	)		6,146			(1,322	)		4,692
	Income tax benefit (expense)		(5	)		86			66			7,538
	Net income (loss) from continuing operations		(389	)		6,232			(1,256	)		12,230
	Discontinued operations:
	Income (loss) from discontinued operations		(15	)		248			159			(8,251	)
	Gain on sale of real estate from discontinued operations		-			-			-			29,789
	Income tax benefit (expense) from discontinued operations		5			(87	)		(56	)		(7,538	)
	Net income (loss)		(399	)		6,393			(1,153	)		26,230
	Preferred dividend requirement		-			-			-			-
	Net income (loss) applicable to common shares	$	(399	)	$	6,393		$	(1,153	)	$	26,230

	Earnings per share - basic
	Income (loss) from continuing operations	$	(0.09	)	$	1.50		$	(0.29	)	$	2.94
	Discontinued operations		-			0.04			0.02			3.36
	Net income (loss) applicable to common shares	$	(0.09	)	$	1.54		$	(0.27	)	$	6.30

	Earnings per share - diluted
	Income (loss) from continuing operations	$	(0.09	)	$	1.50		$	(0.29	)	$	2.94
	Discontinued operations		-			0.04			0.02			3.36
	Net income (loss) applicable to common shares	$	(0.09	)	$	1.54		$	(0.27	)	$	6.30

	Weighted average common share used in computing earnings per share		4,168,214			4,162,574			4,168,214			4,162,640
	Weighted average common share used in computing diluted earnings per share		4,168,214			4,162,574			4,168,214			4,162,640