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

DALLAS, Nov 13, 2009 (BUSINESS WIRE) -- 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 42 42 4,173,675 shares in 2009 and 2008 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 For the Nine Months Ended September 30, 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, (384 ) 6,146 (1,322 ) 4,692 and taxes 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 4,168,214 4,162,574 4,168,214 4,162,640 share SOURCE: Income Opportunity Realty Investors, Inc.

CONTACT: Income Opportunity Realty Investors, Inc. Investor Relations, 800-400-6407 [e-mail] Copyright Business Wire 2009 -0- KEYWORD: United States

North America

Texas INDUSTRY KEYWORD: REIT

Construction & Property

Commercial Building & Real Estate SUBJECT CODE: Earnings