Income Opportunity Realty Investors, Inc. Reports Third Quarter 2008 Results

Income Opportunity Realty Investors, Inc, a Dallas-based real estate investment company, reported its third quarter results for the three months ended September 30, 2008. IOT reported a net income applicable to common shares of $6.4 million or $1.54 per share for the three months ended September 30, 2008 as compared to a net income applicable to common shares of $180,000 or $0.04 per share for the same period ended 2007.

In addition, the Company reported its year to date results. IOT reported net income applicable to common shares of $26.2 million or $6.30 per share for the nine months ended September 30, 2008 as compared to net loss applicable to common shares of ($705,000) or ($0.17) per share for the same period ended 2007.

Results of operations for the three months ended September 30, 2008 as compared to the same period ended 2007;

Rental and other property revenues decreased by $62,000 for the three months ended September 30, 2008 as compared to the same period ended 2007, due to a decrease in occupancy within our commercial portfolio.

Property operations expense increased by $15,000 for the three months ended September 30, 2008 as compared to the same period ended 2007, due to a slight increase in operating costs.

Interest income decreased by $657,000 for the three months ended September 30, 2008 as compared to the same period ended 2007, due to no longer accruing interest income on our notes receivables from Unified Housing Foundation, Inc., an affiliated entity.

Mortgage and loan interest expense decreased by $215,000 for the three months ended September 30, 2008 as compared to the same period ended 2007, due to the continued pay down on our existing mortgage balances.

Gain on involuntary conversion of $7.4 million is due to the receipt of insurance proceeds, in excess of the book value of the project, to an apartment complex in Indiana.

Net income fee expense increased by $1.1 million due to an increase in net income as compared to the prior period.

Income from discontinued operations increased by $243,000 as compared to same period ended 2007. Discontinued operations consists of seven apartment complexes.

Results of operations for the nine months ended September 30, 2008 as compared to the same period ended 2007;

Rental and other property revenues decreased by $112,000 for the nine months ended September 30, 2008 as compared to the same period ended 2007, due to a decrease in occupancy within our commercial portfolio.

Property operations increased by $477,000 for the nine months ended September 30, 2008 as compared to the same period ended 2007. The majority of the increase of $360,000 is due to an adjustment to reflect actual real estate taxes paid. The remaining increase is due to an increase in operating costs.

Interest income decreased by $1.5 million for the nine months ended September 30, 2008 as compared to the same period ended 2007, due to no longer accruing interest income on our notes receivables from Unified Housing Foundation, Inc., an affiliated entity.

Other income increased by $230,000 for the nine months ended September 30, 2008 as compared to the same period ended 2007, due to a tax refund received in the second quarter of 2008.

Mortgage and loan interest expense decreased by $348,000 for the nine month period ended September 30, 2008 as compared to same period ended 2007, due to the continued pay down on our existing mortgage balances.

Gain on involuntary conversion of $7.4 million is due to the receipt of insurance proceeds, in excess of the book value of the project, to an apartment complex in Indiana.

Net income fee expense increased by $868,000 due to an increase in net income as compared to the prior period.
Our loss in income from equity investees increased by ($410,000) as compared to the same period ended 2007 due to continued losses incurred on these investments.
Income from discontinued operations increased by $12.5 million for the nine months ended September 30, 2008 as compared to the same period ended 2007. The majority of the increase is from the gain on the sale of six apartment complexes, net of fees, operating losses and taxes on the properties sold.

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 office buildings, apartments and undeveloped land. For more information, go to IOT’s website at www.incomeopp-realty.com.