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<SEC-DOCUMENT>/in/edgar/work/20000802/0000930661-00-001827/0000930661-00-001827.txt : 20000921
<SEC-HEADER>0000930661-00-001827.hdr.sgml : 20000921
ACCESSION NUMBER:		0000930661-00-001827
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20000525
ITEM INFORMATION:		
ITEM INFORMATION:		
FILED AS OF DATE:		20000802

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INCOME OPPORTUNITY REALTY INVESTORS INC /TX/
		CENTRAL INDEX KEY:			0000949961
		STANDARD INDUSTRIAL CLASSIFICATION:	 [6798
]		IRS NUMBER:				752615944
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			1231
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		8-K
			SEC ACT:		
			SEC FILE NUMBER:	001-14784
			FILM NUMBER:		684218
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		10670 N CENTRAL EXPRSWY STE 300
				CITY:			DALLAS
				STATE:			TX
				ZIP:			75231
				BUSINESS PHONE:		2146924700
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		10670 NORTH CENTRAL EXPRESSWAY
					STREET 2:		SUITE 600
					CITY:			DALLAS
					STATE:			TX
					ZIP:			75231
</MAIL-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 8-K
<TEXT>

<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549



                                   FORM 8-K

                                CURRENT REPORT



                    PURSUANT TO SECTION 13 OR 15(d) OF THE

                      SECURITIES AND EXCHANGE ACT OF 1934



                                 May 25, 2000
             ----------------------------------------------------
               Date of Report (Date of Earliest Event Reported)



                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
          ----------------------------------------------------------
            (Exact Name of Registrant as Specified in its Charter)



         Nevada                        1-14784                   75-2615944
- --------------------------------------------------------------------------------
(State of Incorporation)             (Commission                (IRS Employer
                                     File No.)               Identification No.)



10670 North Central Expressway, Suite 300, Dallas, TX                   75231
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)                              (Zip Code)



Registrant's Telephone Number, Including Area Code: (214) 692-4700
                                                   ---------------



                                Not Applicable
       -----------------------------------------------------------------
         (Former Name or Former Address, if Changed Since Last Report)

                                       1
<PAGE>

ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS
- ---------------------------------------------

On March 1, 2000, Income Opportunity Realty Investors, Inc. ("IORI") sold the
128 unit La Monte Park Apartments in Houston, Texas, approximately 4.0% of
IORI's assets at December 31, 1999, for $5.0 million.  IORI received net cash of
$1.1 million after the payment of various closing costs.  The purchaser assumed
the $3.8 million mortgage secured by the property.  A gain of $903,000 was
recognized on the sale.

On April 10, 2000, IORI purchased in separate transactions Etheredge and
Fambrough land, 75.0 acre and 75.1 acre parcels of unimproved land in Collin
County, Texas, aggregating approximately 4.2% of IORI's assets at December 31,
1999, for $1.9 million each. IORI paid a total of $689,000 in cash and obtained
seller financing of the remaining $1.4 million of each of the purchase prices.
The seller financing bears interest at 10.0% per annum, requires quarterly
interest only payments, principal paydowns of $125,000 each in October 2000 and
January 2001 and matures in April 2001.

On May 25, 2000, IORI sold the 46,685 sq. ft. Olympic Building in Los Angeles,
California, approximately 9.3% of IORI's assets at December 31, 1999, for $8.5
million.  IORI received net cash of $3.8 million after the payment of various
closing costs.  A gain of $1.9 million was recognized on the sale.

On May 31, 2000, IORI sold the 89,825 sq. ft. Saratoga Office Building in
Saratoga, California, approximately 12.3% of IORI's assets at December 31, 1999,
for $25.0 million.  IORI received net cash of $17.7 million after the payment of
various closing costs.  A gain of $13.1 million was recognized on the sale.

On June 19, 2000, IORI sold the 294 unit Renaissance Parc Apartments in Dallas,
Texas, approximately 16.9% of IORI's assets at December 31, 1999, for $17.2
million.  IORI received net cash of $4.5 million after the payment of various
closing costs.  The purchaser assumed the $12.3 million mortgage secured by the
property.

On June 23, 2000, IORI purchased, in a single transaction, the 60 unit Brighton
Court Apartments, the 92 unit Del Mar Villas Apartments, the 68 unit Enclave
Apartments, the 57 unit Signature Place Apartments and the 114 unit Sinclair
Place Apartments (collectively, the "Frankel Portfolio") in Midland, Texas,
aggregating approximately 16.1% of IORI's assets at December 31, 1999, for $14.0
million.  The seller of the property was the Frankel Family Trust. The
properties were constructed in 1982 and 1983 and have a combined rentable area
of 450,000 sq.ft. IORI paid $2.9 million in cash and obtained mortgage financing
of $10.9 million.  The mortgage bears interest at a variable rate, with an
initial rate of 9.13% per annum, requires initial monthly payments of principal
and interest of $92,233 and matures in July 2003.

Also on June 23, 2000, IORI purchased Frankel land, a 1.0 acre parcel of
unimproved land in Midland County, Texas, approximately .04% of IORI's assets at
December 31, 1999, for $41,000. The seller of the property was Frankel Family
Trust. IORI paid $43,000 in cash after the payment of various closing costs.

                                       2
<PAGE>

ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS
- ---------------------------------------------


The purchase and sale of these properties, when aggregated with other property
purchases and sales in 2000, have made IORI exceed 10% of its assets at December
31, 1999.


ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------

(a)    Proforma financial information


Proforma statements of operations are presented for the year ended December 31,
1999 and the three months ended March 31, 2000.  The proforma statements of
operations present IORI's operations as if the transactions described above had
occurred at January 1, of each of the periods presented.  A proforma balance
sheet as of March 31, 2000 is also presented.  The proforma balance sheet
presents the Frankel Portfolio and Etheredge, Fambrough and Frankel land
purchases, described above, as if they had occurred at January 1, 2000.

                                       3
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                               PROFORMA COMBINED
                          CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2000
<TABLE>
<CAPTION>
                                                 Etheredge                                                      Frankel
                                                    and          Olympic       Saratoga       Renaissance      Portfolio
                                                 Fambrough       Office        Office           Parc          (Including
                                    Actual/(1)/    Land /(2)/   Building/(2)/  Building/(2)/  Apartments/(2)/    Land)    Proforma
                                    -----------  ------------  -------------   -------------  --------------- ----------  --------
                                                                            (dollars in thousands)
<S>                                 <C>          <C>           <C>             <C>            <C>             <C>         <C>
          Assets
          ------

Real estate held for investment,
 net of accumulated depreciation    $    82,314  $   3,997     $  (6,153)      $  (11,235)    $   (15,424)    $   14,785  $ 68,284
Investments in partnerships.......          105         --            --               --              --             --       105
Cash and cash equivalents.........        1,731       (689)        3,811           17,709           4,536         (2,947)   24,151
Other assets......................        2,980       (400)          (36)            (140)           (164)          (258)    1,982
                                    -----------  ---------     ---------       ----------     -----------     ----------  --------
                                    $    87,130  $   2,908     $  (2,378)      $    6,344     $   (11,052)    $   11,580  $ 94,522
                                    ===========  =========     =========       ==========     ===========     ==========  ========

Liabilities and Shareholders' Equity
- ------------------------------------

Liabilities
Notes and interest payable........  $    58,809  $   2,814     $  (4,443)      $   (6,968)    $   (12,316)    $   10,853  $ 48,749
Other liabilities.................        3,960         94           215              246              52            727     5,294
                                    -----------  ---------     ---------       ----------     -----------     ----------  --------
                                         62,769      2,908        (4,228)          (6,722)        (12,264)        11,580    54,043

Commitments and contingencies

Shareholders' equity
Common Stock, $.01 par value;
 10,000,000 shares issued and
 outstanding, 1,530,500 shares....           15         --            --               --              --             --        15
Paid-in capital...................       64,882         --            --               --              --             --    64,882
Accumulated distributions in
 excess of accumulated earnings...      (40,536)        --         1,850           13,056           1,212             --   (24,418)
                                    -----------  ---------     ---------       ----------     -----------     ----------  --------
                                         24,361         --         1,850           13,056           1,212             --    40,479
                                    -----------  ---------     ---------       ----------     -----------     ----------  --------
                                    $    87,130  $   2,908     $  (2,378)      $    6,344     $   (11,052)    $   11,580  $ 94,522
                                    ===========  =========     =========       ==========     ===========     ==========  ========
</TABLE>

______________________

(1) Excludes La Monte Park Apartments which was sold in March 2000.
(2) Assumes purchase or sale by IORI on January 1, 2000.

                                       4
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                               PROFORMA COMBINED
                            STATEMENT OF OPERATIONS
                       THREE MONTHS ENDED MARCH 31, 2000

<TABLE>
<CAPTION>
                                                  Etheredge                                                 Frankel
                                                     and        Olympic      Saratoga      Renaissance     Portfolio
                                                  Fambrough     Office        Office          Parc        (Including
                                       Actual       Land       Building      Building      Apartments        Land)        Proforma
                                     ----------   ---------   ----------    ----------    ------------    -----------    ----------
                                                                         (dollars in thousands)
<S>                                  <C>          <C>         <C>           <C>           <C>             <C>            <C>
Property revenue
 Rents.............................  $    4,115   $      --   $     (300)   $     (642)   $       (670)   $       701    $    3,204

Property expense
 Property operations...............       1,848          --         (100)         (175)           (293)           297         1,577
                                     ----------   ---------   ----------    ----------    ------------    -----------    ----------
  Operating income (loss)..........       2,267          --         (200)         (467)           (377)           404         1,627

Other income
 Interest..........................           7          --           --            --              --             --             7
 Equity in income/(loss) of
  partnerships.....................         (46)         --           --            --              --             --           (46)
 Gain on sale of real estate.......         903          --           --            --              --             --           903
                                     ----------   ---------   ----------    ----------    ------------    -----------    ----------
                                            864          --           --            --              --             --           864

Other expense
 Interest..........................       1,415          70         (106)         (159)           (260)           248         1,208
 Depreciation......................         711          --          (55)          (97)            (79)            69           549
 Advisory fee to affiliate.........         167          --           --            --              --             --           167
 Net income fee to affiliate.......          48          --           --            --              --             --            48
 General and administrative........         198          --           --            --              --             --           198
                                     ----------   ---------   ----------    ----------    ------------    -----------    ----------
                                          2,539          70         (161)         (256)           (339)           317         2,170
                                     ----------   ---------   ----------    ----------    ------------    -----------    ----------

Net income (loss)..................  $      592   $     (70)  $      (39)   $     (211)   $        (38)   $        87    $      321
                                     ==========   =========   ==========    ==========    ============    ===========    ==========

Earnings per share
 Net income........................  $      .39                                                                          $      .39
                                     ==========                                                                          ==========

Weighted average shares of Common
 Stock used in computing
 earnings per share................   1,530,413                                                                           1,530,413
                                     ==========                                                                          ==========
</TABLE>


   The accompanying footnotes are an integral part of this Proforma Combined
                            Statement of Operations.

                                       5
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                          NOTES TO PROFORMA COMBINED
                            STATEMENT OF OPERATIONS
                       THREE MONTHS ENDED MARCH 31, 2000



1.    The Proforma Combined Statement of Operations assumes that each property
      was purchased or sold by IORI on January 1, 2000. Proforma operating
      results for property purchases are from January 1 through the respective
      dates of purchase only.  Results subsequent to the dates of purchase are
      included in the "Actual" column.


2.    Statements of operations for the twelve months ended December 31, 1999
      were obtained for the Frankel Portfolio.  Such statements were used as the
      basis for estimating their respective operating results for the three
      months ended March 31, 2000.


3.    No interim financial statements were available for the Frankel Portfolio.
      Therefore, the previous years' actual amounts were used to estimate the
      interim period January 1 to the respective date of purchase.


4.    The proforma interest adjustment is based on the mortgage obtained or
      assumed for each property at the date of purchase.  The proforma
      depreciation adjustment is based on each property's purchase price
      depreciated under IORI's established depreciation policies.


5.    Operating results for sold properties are their actual operating results
      from January 1 to their respective date of sale.

                                       6
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                               PROFORMA COMBINED
                            STATEMENT OF OPERATIONS
                         YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                Etheredge                                Frankel
                                                  and        Olympic       Saratoga     Renaissance    Portfolio
                                                Fambrough     Office        Office         Parc        (Including
                                      Actual      Land       Building      Building     Apartments        Land)       Proforma
                                    ---------   ---------   ----------    ----------   ------------    ----------    ----------
                                                                           (dollars in thousands)
<S>                                 <C>         <C>         <C>           <C>          <C>             <C>           <C>
Property revenue
 Rents............................  $   15,968  $      --   $   (1,157)   $   (2,729)  $     (2,702)   $    2,802    $   12,182

Property expense
 Property operations..............       6,768         --         (493)         (734)        (1,150)        1,186         5,577
                                    ----------  ---------   ----------    ----------   ------------    ----------    ----------
  Operating income (loss).........       9,200         --         (664)       (1,995)        (1,552)        1,616         6,605

Other income
 Interest.........................          29         --           --            (6)            --            --            23
 Equity in income/(loss) of
  partnerships....................         148         --           --            --             --            --           148
 Gain on sale of real estate......       1,525         --           --            --             --            --         1,525
                                    ----------  ---------   ----------    ----------   ------------    ----------    ----------
                                         1,702         --           --            (6)            --            --         1,696

Other expense
 Interest.........................       5,658        280         (395)         (635)        (1,062)          993         4,839
 Depreciation.....................       2,723         --         (219)         (396)          (335)          309         2,082
 Advisory fee to affiliate........         371         --           --            --             --            --           371
 Net income fee to affiliate......          81         --           --            --             --            --            81
 General and administrative.......         747         --           --            --             --            --           747
                                    ----------  ---------   ----------    ----------   ------------    ----------    ----------
                                         9,580        280         (614)         (103)        (1,397)        1,302         8,120
                                    ----------  ---------   ----------    ----------   ------------    ----------    ----------
Net income (loss).................  $    1,322  $    (280)  $      (50)   $     (964)  $       (155)   $      314    $      187
                                    ==========  =========   ==========    ==========   ============    ==========    ==========

Earnings per share
 Net income.......................  $      .87                                                                       $      .87
                                    ==========                                                                       ==========

Weighted average shares of Common
 Stock used in computing
 earnings per share...............   1,527,386                                                                        1,527,386
                                    ==========                                                                       ==========
</TABLE>

   The accompanying footnotes are an integral part of this Proforma Combined
                           Statement of Operations.

                                       7
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                          NOTES TO PROFORMA COMBINED
                            STATEMENT OF OPERATIONS
                         YEAR ENDED DECEMBER 31, 1999


1.    The Proforma Combined Statement of Operations assumes that each property
      was purchased or sold by IORI on January 1, 1999.


2.    The amounts for the Frankel Portfolio are from their respective audited
      statement of operations.


3.    The proforma interest adjustments is based on the mortgages obtained or
      assumed for each property at the date of purchase. The proforma
      depreciation adjustment is based on each property's purchase price
      depreciated under IORI's established depreciation policies.


4.    Operating results for sold properties are their actual operating results
      for the year ended December 31, 1999.

                                       8
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------


(b)    Financial statements of property acquired:


Exhibit
Number                                 Description
- -------  ---------------------------------------------------------------------

 99.0    Frankel Family Trust Apartments, Audited Statement of Revenue and
         Direct Operating Expenses for the year ended December 31, 1999, filed
         herewith.

                                       9
<PAGE>

                                SIGNATURE PAGE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.


                                       INCOME OPPORTUNITY REALTY INVESTORS, INC.



Date:  August 2,  2000                 By: /s/ Karl L. Blaha
     ------------------------             --------------------------------------
                                          Karl L. Blaha
                                          President

                                       10
<PAGE>

                   INCOME OPPORTUNITY REALTY INVESTORS, INC.

                                  EXHIBITS TO
                          CURRENT REPORT ON FORM 8-K

                              Dated May 25, 2000



Exhibit                                                             Page
Number                       Description                           Number
- -------   -------------------------------------------------        ------

 99.0     Frankel Family Trust Apartments Audited Statement          12
          of Revenue and Direct Operating Expenses for the
          year ended December 31, 1999.

                                       11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.0
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>STATEMENT OF REVENUE AND DIRECT OPERATING EXPENSES
<TEXT>

<PAGE>

                                                                    EXHIBIT 99.0



                        FRANKEL FAMILY TRUST APARTMENTS

                             STATEMENT OF REVENUES
                         AND DIRECT OPERATING EXPENSES
                         YEAR ENDED DECEMBER 31, 1999
<PAGE>

                         Independent Auditors' Report
                         ----------------------------


To the Board of Trustees
Income Opportunity Realty Investors, Inc.

We have audited the accompanying statement of revenues and direct operating
expenses of the Frankel Family Trust Apartments for the year ended December 31,
1999.  This statement of revenues and direct operating expenses is the
responsibility of the Property's management.  Our responsibility is to express
an opinion on this statement of revenues and direct operating expenses based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and direct operating expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
direct operating expenses.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of revenues and direct operating expenses
presentation. We believe that our audit provides a reasonable basis for our
opinion.

The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of Income Opportunity Realty Trust, Inc.) and, as
described in Note 1, is not intended to be a complete presentation of the
results of operations.

In our opinion, the statement of revenues and direct operating expenses referred
to above presents fairly, in all material respects, the revenues and direct
operating expenses of the Frankel Family Trust Apartments for the year ended
December 31, 1999, in conformity with generally accepted accounting principles.



FARMER, FUQUA, HUNT & MUNSELLE, P.C.

Dallas, Texas
June 22, 2000
<PAGE>

                        FRANKEL FAMILY TRUST APARTMENTS

                             STATEMENT OF REVENUES
                         AND DIRECT OPERATING EXPENSES
                         Year Ended December 31, 1999



REVENUES
    Net rental revenues                                         $2,640,321
    Other revenues                                                 161,997
                                                                ----------

         Total revenues                                          2,802,318


DIRECT OPERATING EXPENSES
    Salaries and benefits                                          413,108
    Repairs and maintenance                                        350,732
    Property taxes                                                 286,140
    Utilities                                                      105,135
    Insurance                                                       30,922
                                                                ----------

         Total direct operating expenses                         1,186,037
                                                                ----------


REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES                 $1,616,281
                                                                ==========

         The accompanying notes are an integral part of this statement.
<PAGE>

                        FRANKEL FAMILY TRUST APARTMENTS

                        NOTES TO STATEMENT OF REVENUES
                         AND DIRECT OPERATING EXPENSES
                               December 31, 1999


NOTE 1:   ORGANIZATION AND BASIS OF PRESENTATION

          The Frankel Family Trust Apartments is a group of five apartment
          complexes located in Midland, Texas. The five complexes are Brighton
          Court (60 units), Delmar Villas (92 units), The Enclave (68 units),
          Signature Place (57 units) and Sinclair Place (114 units). During
          1999, the properties were owned by the Frankel Family Trust.

          The accompanying financial statement does not include a provision for
          depreciation and amortization, bad debt expense, interest expense, or
          income taxes. Accordingly, this statement is not intended to be a
          complete presentation of the results of operations.

NOTE 2:   ACCOUNTING ESTIMATES

          The preparation of financial statements in conformity with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of revenues and
          expenses during the reporting period. Actual results could differ from
          those estimates.


NOTE 3:   OTHER REVENUES

          Other revenues consist of the following:

          Rental income                                               $ 77,119
          Utility reimbursement                                         23,730
          Cleaning fees                                                 23,463
          Damages income                                                12,556
          Other                                                         10,487
          Pet deposit                                                    8,684
          Late charges                                                   5,958
                                                                      --------
                                                                      $161,997
                                                                      ========

NOTE 4:   SUBSEQUENT EVENT

          The property was sold to Income Opportunity Realty Investors, Inc., a
          Nevada corporation, on June 23, 2000.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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