Income Opportunity Realty Investors (IOR) 10-Q7 Nov 242024 Q3 Quarterly reportFinancial data

Company Profile

Cover

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2024	Nov. 07, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-14784
Entity Registrant Name	INCOME OPPORTUNITY REALTY INVESTORS, INC.
Entity Central Index Key	0000949961
Entity Tax Identification Number	75-2615944
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	1603 Lyndon B. Johnson Freeway
Entity Address, Address Line Two	Suite 800
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75234
City Area Code	(469)
Local Phone Number	522-4200
Title of 12(b) Security	Common Stock
Trading Symbol	IOR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,066,178

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 14	$ 71
Interest receivable from related parties	164	293
Receivable from related parties	109,493	106,541
Total current assets	109,671	106,905
Non-current assets
Notes receivable from related parties	11,146	11,173
Total assets	120,817	118,078
Liabilities:
Accounts payable	3
Shareholders’ equity
Common stock, $0.01 par value, 10,000,000 shares authorized; 4,173,675 shares issued, 4,066,178 and 4,110,714 shares outstanding at September 30, 2024 and December 31, 2023, respectively.	42	42
Treasury stock at cost, 107,497 shares at September 30, 2024 and 62,961 shares at December 31, 2023	(1,749)	(947)
Additional paid-in capital	61,955	61,955
Retained earnings	60,566	57,028
Total shareholders’ equity	120,814	118,078
Total liabilities and equity	$ 120,817	$ 118,078

CONSOLIDATED BALANCE SHEETS (_2

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized	10,000,000	10,000,000
Common stock, issued	4,173,675	4,173,675
Common stock, outstanding	4,066,178	4,110,714
Treasury Stock, Common, Shares	107,497	62,961

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenues:
Other income
Expenses:
General and administrative (including $11 and $54 for the three months ended September 30, 2024 and 2023, respectively, and $34 and $196 for the nine months ended September 30, 2024 and 2023, respectively, from related parties)	71	91	230	385
Advisory fee to related party	26	346	76	1,045
Total operating expenses	97	437	306	1,430
Net operating loss	(97)	(437)	(306)	(1,430)
Interest income from related parties	1,614	2,516	4,785	7,160
Income tax provision	(319)	(436)	(941)	(1,203)
Net income	$ 1,198	$ 1,643	$ 3,538	$ 4,527
Earnings per share - basic	$ 0.29	$ 0.39	$ 0.87	$ 1.09
Earnings per share - diluted	$ 0.29	$ 0.39	$ 0.87	$ 1.09
Weighted average common shares used in computing basic earnings per share	4,070,327	4,168,414	4,085,134	4,168,414
Weighted average common shares used in computing diluted earnings per share	4,070,327	4,168,414	4,085,134	4,168,414

CONSOLIDATED STATEMENTS OF OP_2

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
General and administrative	$ 71	$ 91	$ 230	$ 385
Related Party [Member]
General and administrative	$ 11	$ 54	$ 34	$ 196

CONSOLIDATED STATEMENT OF EQUIT

CONSOLIDATED STATEMENT OF EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Treasury Stock, Common [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]
Beginning balance, value at Dec. 31, 2022	$ 111,985	$ 42	$ (39)	$ 61,955	$ 50,027
Net income	4,527				4,527
Ending balance, value at Sep. 30, 2023	116,512	42	(39)	61,955	54,554
Beginning balance, value at Jun. 30, 2023	114,869	42	(39)	61,955	52,911
Net income	1,643				1,643
Ending balance, value at Sep. 30, 2023	116,512	42	(39)	61,955	54,554
Beginning balance, value at Dec. 31, 2023	118,078	42	(947)	61,955	57,028
Net income	3,538				3,538
Repurchase of common shares	(802)		(802)
Ending balance, value at Sep. 30, 2024	120,814	42	(1,749)	61,955	60,566
Beginning balance, value at Jun. 30, 2024	119,831	42	(1,534)	61,955	59,368
Net income	1,198				1,198
Repurchase of common shares	(215)		(215)
Ending balance, value at Sep. 30, 2024	$ 120,814	$ 42	$ (1,749)	$ 61,955	$ 60,566

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash Flow From Operating Activities:
Net income	$ 3,538	$ 4,527
Changes in assets and liabilities:
Accrued interest on related party notes receivable	129	156
Related party receivables	(2,952)	(4,674)
Accounts payable	3	(3)
Net cash provided by operating activities	718	6
Cash Flow From Investing Activities:
Collection of notes receivable	27
Net cash provided by investing activities	27
Cash Flow From Financing Activities:
Repurchase of common shares	(802)
Net cash used in financing activities	(802)
Net (decrease) increase in cash and cash equivalents	(57)	6
Cash and cash equivalents, beginning of the period	71	6
Cash and cash equivalents, end of the period	$ 14	$ 12

Organization

Organization	9 Months Ended
Organization	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	1. Organization Income Opportunity Investors, Inc. (the “Company”) is an externally managed company that invests in mortgage notes receivables. As used herein, the terms “IOR”, “the Company”, “We”, “Our”, or “Us” refer to the Company. Transcontinental Realty Investors, Inc. (“TCI”), whose common stock is traded on the NYSE under the symbol “TCI”, owns 83.2 89.8 78.4 Our business is managed by Pillar Income Asset Management, Inc. (“Pillar”) in accordance with an Advisory Agreement that is reviewed annually by our Board of Directors. Pillar is considered to be a related party (See Note 4 – Related Party Transactions). Pillar’s duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities. Pillar also arranges our debt and equity financing with third party lenders and investors.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
Summary of Significant Accounting Policies	Sep. 30, 2024
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. The consolidated balance sheet at December 31, 2023 was derived from the audited consolidated financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023. We consolidate entities in which we are considered to be the primary beneficiary of a variable interest entity (“VIE”) or have a majority of the voting interest of the entity. We have determined that we are a primary beneficiary of the VIE when we have (i) the power to direct the activities of a VIE that most significantly impacts its economic performance, and (ii) the obligations to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether we are the primary beneficiary, we consider qualitative and quantitative factors, including ownership interest, management representation, ability to control decision and other contractual rights. We account for entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary under the equity method of accounting. Accordingly, we include our share of the net earnings or losses of these entities in our results of operations.

Notes Receivable

Notes Receivable	9 Months Ended
Notes Receivable	Sep. 30, 2024
Receivables [Abstract]
Notes Receivable	3. Notes Receivable At January 1, 2023, we had four notes receivable issued by Unified Housing Foundation, Inc. (“UHF”) with an aggregate balance of $ 11,173 12.0 December 31, 2032 On October 1, 2023, we amended the four UHF notes, whereby the four notes were consolidated into a single note and the 12.0 December 31, 2032 605 5.33 5.31 UHF is determined to be a related party due to our significant investment in the performance of the collateral secured by the note receivable. Principal and interest payments on the note are funded from surplus cash flow from operations, sale or refinancing of the underlying property and are cross collateralized to the extent that any surplus cash available from any of other property owned by UHF.

Related Party Transactions

Related Party Transactions	9 Months Ended
Related Party Transactions	Sep. 30, 2024
Related Party Transactions [Abstract]
Related Party Transactions	4. Related Party Transactions We engage in certain business transactions with related parties, including investment in notes receivables. Transactions involving related parties cannot be presumed to be carried out on at arm’s length basis due to the absence of free market forces that naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in our best interest. Pillar is a wholly owned by a subsidiary of the May Realty Holdings, Inc., which owns approximately 90.8 78.4 83.2 Advisory fees paid to Pillar were $ 26 346 76 1,045 Notes receivable are amounts held by UHF (See Note 3 – Notes Receivable). UHF is determined to be a related party due to our significant investment in the performance of the collateral secured by the notes receivable. Interest income on these notes was $ 150 $ 338 $ 449 $ 1,003 Receivables from related parties were 109,493 and 106,541 at and , respectively; which represents amounts outstanding advanced to Pillar net of unreimbursed fees (“ ”), which On January 1, 2024, an amendment to the cash management agreement changed the interest rate on the from prime plus one percent to Interest income on related party receivables was $ 1,464 $ 2,178 $ 4,336 6,157

Stockholders_ Equity

Stockholders’ Equity	9 Months Ended
Stockholders’ Equity	Sep. 30, 2024
Equity [Abstract]
Stockholders’ Equity	5. Stockholders’ Equity We have a stock repurchase program that allows for the repurchase of up to 1,650,000 44,536 802 As of September 30, 2024, there are 513,003

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	6. Commitments and Contingencies We believe that we will generate excess cash from property operations in the next twelve months; such excess, however, might not be sufficient to discharge all of our obligations as they become due.

Subsequent Events

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	7. Subsequent Events The date to which events occurring after September 30, 2024, the date of the most recent balance sheet, have been evaluated for possible adjustment to the consolidated financial statements or disclosure is November 7, 2024, which is the date on which the consolidated financial statements were available to be issued.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. The consolidated balance sheet at December 31, 2023 was derived from the audited consolidated financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023. We consolidate entities in which we are considered to be the primary beneficiary of a variable interest entity (“VIE”) or have a majority of the voting interest of the entity. We have determined that we are a primary beneficiary of the VIE when we have (i) the power to direct the activities of a VIE that most significantly impacts its economic performance, and (ii) the obligations to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether we are the primary beneficiary, we consider qualitative and quantitative factors, including ownership interest, management representation, ability to control decision and other contractual rights. We account for entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary under the equity method of accounting. Accordingly, we include our share of the net earnings or losses of these entities in our results of operations.

Organization (Details Narrative

Organization (Details Narrative)	Sep. 30, 2024
Transcontinental Realty Investors, Inc [Member] \| IOR [Member]
Percentage of ownership	83.20%
Transcontinental Realty Investors, Inc. and Affiliates [Member] \| IOR [Member] \| Common Stock [Member]
Percentage of ownership	89.80%
American Realty Investors, Inc. [Member] \| Transcontinental Realty Investors, Inc. [Member]
Percentage of ownership	78.40%

Notes Receivable (Details Narra

Notes Receivable (Details Narrative) - USD ($) $ in Thousands		12 Months Ended
	Oct. 02, 2023	Dec. 31, 2022	Sep. 30, 2024	Dec. 31, 2023
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable from related parties			$ 11,146	$ 11,173
Unified Housing Foundation, Inc. [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable from related parties		$ 11,173
Fixed interest rate		12%
Maturity date	Dec. 31, 2032	Dec. 31, 2032
Accrued Interest forgiven	$ 605
Interest rate			5.33%	5.31%

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Related Party Transaction [Line Items]
Advisory fees paid	$ 26	$ 346	$ 76	$ 1,045
Interest income from related parties	1,614	2,516	4,785	7,160
Related party receivables	$ 109,493		$ 109,493		$ 106,541
May Realty Holdings, Inc. [Member] \| American Realty Investors, Inc. [Member]
Related Party Transaction [Line Items]
Percentage of ownership	90.80%		90.80%
American Realty Investors, Inc. [Member] \| Transcontinental Realty Investors, Inc. [Member]
Related Party Transaction [Line Items]
Percentage of ownership	78.40%		78.40%
Transcontinental Realty Investors, Inc [Member] \| IOR [Member]
Related Party Transaction [Line Items]
Percentage of ownership	83.20%		83.20%
Pillar [Member]
Related Party Transaction [Line Items]
Advisory fees paid	$ 26	346	$ 76	1,045
Interest income from related parties	1,464	2,178	4,336	6,157
Related party receivables	109,493		109,493		$ 106,541
Unified Housing Foundation, Inc. [Member]
Related Party Transaction [Line Items]
Interest income from related parties	$ 150	$ 338	$ 449	$ 1,003

Stockholders_ Equity (Details N

Stockholders’ Equity (Details Narrative) $ in Thousands	3 Months Ended	9 Months Ended
Stockholders’ Equity (Details Narrative) $ in Thousands	Sep. 30, 2024 USD ($) shares	Sep. 30, 2024 USD ($) shares
Equity [Abstract]
Common stock repurchase limit	1,650,000	1,650,000
Common stock repurchased		44,536
Common stock repurchased, value \| $	$ 215	$ 802
Remaining shares for repurchase	513,003	513,003