Income Opportunity Realty Investors, Inc. (NYSE MKT: IOT), a Dallas-based real estate investment company, today reported results of operations for the fourth quarter ended December 31, 2013. The Company reported net income of $3.6 million or $0.85 per share for the period ended December 31, 2013, as compared to net loss of $0.3 million or $0.08 per share for the same period ended 2012.
We had net income of $5.5 million or $1.33 per diluted earnings per share for the year ended December 31, 2013, as compared to a net income applicable to common shares of $1.5 million or $0.36 per diluted earnings per share for the same period ended 2012. The current period net income of $5.5 million includes $0.7 million of general and administrative expenses, $0.7 million of net income fees owed our Advisor and a tax-sharing agreement expense of $3.1 million due to our parent.
Our primary business is investing in real estate and mortgage receivables. The Company has invested in over 150 acres of land held for development or sale in the Mercer Crossing development located in Farmers Branch, Texas. The Mercer Crossing development is a 1,200 acre assembly of properties at the demographic center of the Dallas – Fort Worth Metroplex. Surrounded by three major highways and adjacent to current and future public transportation systems, Mercer Crossing is in a prime location for future growth and development.
The principal source of revenue for the Company is interest income on over $25.4 million of note receivables due from related parties. During the current period, these notes generated $7.1 million of interest income. On January 1, 2013, the Company extended the maturity on the notes receivable for an additional term of five years in exchange for an early termination of the preferred interest rate. The original note gave a five-year period of preferred interest rate at 5.25%, before returning to the original note rate of 12%.
The Company negotiated in conjunction with its parent, a settlement of the Mercer/Travelers land mortgage note with a third party, that resulted in a gain of $5.8 million for the discounted payoff on the shared obligation. The Company also incurred loan charges of $0.8 million relating to extension fees.
About Income Opportunity Realty Investors, Inc.
Income Opportunity Realty Investors, Inc., a Dallas-based real estate investment company, holds a portfolio of equity real estate in Texas, including undeveloped land. The Company invests in real estate through direct equity ownership and partnerships. For more information, visit the Company’s website at www.incomeopp-realty.com.
| INCOME OPPORTUNITY REALTY INVESTORS, INC. | |||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
| For the Years Ended December 31, | |||||||||||||
| 2013 | 2012 | 2011 | |||||||||||
| (dollars in thousands, except share and per share amounts) | |||||||||||||
| Revenues: | |||||||||||||
| Rental and other property revenues | $ | - | $ | - | $ | - | |||||||
| Expenses: | |||||||||||||
| Property operating expenses (including $51, $61 and $8 for the year ended 2013, 2012 and 2011, respectively, from related parties) | 87 | 67 | 38 | ||||||||||
| General and administrative (including $234, $155 and $206 for the year ended 2013, 2012 and 2011, respectively, from related parties) | 734 | 334 | 446 | ||||||||||
| Net income fee to related party | 695 | 180 | 54 | ||||||||||
| Advisory fee to related party | 830 | 815 | 850 | ||||||||||
| Total operating expenses | 2,346 | 1,396 | 1,388 | ||||||||||
| Operating loss | (2,346 | ) | (1,396 | ) | (1,388 | ) | |||||||
| Other income (expense): | |||||||||||||
| Interest income from related parties | 7,129 | 5,183 | 4,447 | ||||||||||
| Other income | 5,804 | - | - | ||||||||||
| Mortgage and loan interest | (1,160 | ) | (1,284 | ) | (1,211 | ) | |||||||
| Loan charges | (830 | ) | - | - | |||||||||
| Earnings from unconsolidated subsidiaries and investees | - | (37 | ) | (52 | ) | ||||||||
| Total other income | 10,943 | 3,862 | 3,184 | ||||||||||
| Income before gain on land sales, non-controlling interest, and taxes | 8,597 | 2,466 | 1,796 | ||||||||||
| Income from continuing operations before tax | 8,597 | 2,466 | 1,796 | ||||||||||
| Income tax expense | (3,063 | ) | (876 | ) | (815 | ) | |||||||
| Net income from continuing operations | 5,534 | 1,590 | 981 | ||||||||||
| Discontinued operations: | |||||||||||||
| Loss from discontinued operations | (24 | ) | (106 | ) | (1,427 | ) | |||||||
| Gain on sale of real estate from discontinued operations | - | - | 947 | ||||||||||
| Income tax benefit from discontinued operations | 8 | 37 | 168 | ||||||||||
| Net loss from discontinued operations | (16 | ) | (69 | ) | (312 | ) | |||||||
| Net income | 5,518 | 1,521 | 669 | ||||||||||
| Earnings per share - basic | |||||||||||||
| Income from continuing operations | $ | 1.33 | $ | 0.38 | $ | 0.24 | |||||||
| Loss from discontinued operations | - | (0.02 | ) | (0.08 | ) | ||||||||
| Net income | $ | 1.33 | $ | 0.36 | $ | 0.16 | |||||||
| Earnings per share - diluted | |||||||||||||
| Income from continuing operations | $ | 1.33 | $ | 0.38 | $ | 0.24 | |||||||
| Loss from discontinued operations | - | (0.02 | ) | (0.08 | ) | ||||||||
| Net income | $ | 1.33 | $ | 0.36 | $ | 0.16 | |||||||
| Weighted average common shares used in computing earnings per share | 4,168,214 | 4,168,214 | 4,168,214 | ||||||||||
| Weighted average common shares used in computing diluted earnings per share | 4,168,214 | 4,168,214 | 4,168,214 | ||||||||||
| INCOME OPPORTUNITY REALTY INVESTORS, INC. | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| December 31, | December 31, | |||||||||
| 2013 | 2012 | |||||||||
| (dollars in thousands, except share and par value amounts) | ||||||||||
| Assets | ||||||||||
| Real estate land holdings, at cost | $ | 24,511 | $ | 24,511 | ||||||
| Total real estate | 24,511 | 24,511 | ||||||||
| Notes and interest receivable from related parties | 30,693 | 27,002 | ||||||||
| Less allowance for doubtful accounts | (1,826 | ) | (1,826 | ) | ||||||
| Total notes and interest receivable | 28,867 | 25,176 | ||||||||
| Cash and cash equivalents | 3 | 2 | ||||||||
| Receivable and accrued interest from related parties | 39,207 | 53,407 | ||||||||
| Other assets | 1,225 | 1,283 | ||||||||
| Total assets | $ | 93,813 | $ | 104,379 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||
| Liabilities: | ||||||||||
| Notes and interest payable | $ | 12,357 | $ | 28,508 | ||||||
| Accounts payable and other liabilities | 216 | 149 | ||||||||
| 12,573 | 28,657 | |||||||||
| Commitments and contingencies: | ||||||||||
| Shareholders’ equity: | ||||||||||
| Common stock, $.01 par value, authorized 10,000,000 shares; issued 4,173,675 shares in 2013 and 2012 | 42 | 42 | ||||||||
| Treasury stock at cost, 5,461 shares in 2013 and 2012 | (39 | ) | (39 | ) | ||||||
| Paid-in capital | 61,955 | 61,955 | ||||||||
| Retained earnings | 19,282 | 13,764 | ||||||||
| Total shareholders' equity | 81,240 | 75,722 | ||||||||
| Total liabilities and shareholders' equity | $ | 93,813 | $ | 104,379 | ||||||
Contacts:
Gene Bertcher,
800-400-6407
investor.relations@incomeopp-realty.com
