<SEC-DOCUMENT>0001193125-12-164224.txt : 20120416
<SEC-HEADER>0001193125-12-164224.hdr.sgml : 20120416
<ACCEPTANCE-DATETIME>20120416141024
ACCESSION NUMBER:		0001193125-12-164224
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20120509
FILED AS OF DATE:		20120416
DATE AS OF CHANGE:		20120416
EFFECTIVENESS DATE:		20120416

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INCOME OPPORTUNITY REALTY INVESTORS INC /TX/
		CENTRAL INDEX KEY:			0000949961
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				752615944
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14784
		FILM NUMBER:		12760675

	BUSINESS ADDRESS:	
		STREET 1:		1800 VALLEY VIEW LANE
		STREET 2:		SUITE 300
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75234
		BUSINESS PHONE:		4685224200

	MAIL ADDRESS:	
		STREET 1:		1800 VALLEY VIEW LANE
		STREET 2:		SUITE 300
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75234
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>d333311ddef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML><HEAD>
<TITLE>Definitive Proxy Statement</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">UNITED STATES </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2">SECURITIES AND EXCHANGE COMMISSION </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">WASHINGTON, D.C. 20549 </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>SCHEDULE 14A INFORMATION </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Proxy Statement Pursuant to Section 14(a) of the Securities Exchange of 1934 (Amendment No. <U>&nbsp;&nbsp;&nbsp;&nbsp;</U>) </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Filed by the Registrant&nbsp;&nbsp;[&nbsp;X&nbsp;]</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1%; text-indent:-1%"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Filed by a Party other than the Registrant&nbsp;&nbsp;[&nbsp;&nbsp;&nbsp;] </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1%; text-indent:-1%"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Check the appropriate box: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">[&nbsp;&nbsp;&nbsp;]</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Preliminary Proxy Statement.</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">[&nbsp;&nbsp;&nbsp;]</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)).</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">[X]</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Definitive Proxy Statement.</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">[&nbsp;&nbsp;&nbsp;]</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Definitive Additional Materials.</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">[&nbsp;&nbsp;&nbsp;]</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Soliciting Material Pursuant to Section 240.14a-12.</FONT></P></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><BR>INCOME OPPORTUNITY REALTY INVESTORS, INC.</FONT></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1">(Name of Registrant as Specified In Its Charter)</FONT></TD></TR>
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<TD HEIGHT="16" COLSPAN="5"></TD></TR>
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<TD COLSPAN="5" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD></TR>
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<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1">(Name of Person(s) Filing Proxy Statement if other than the Registrant)</FONT></TD></TR>
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<TD HEIGHT="24" COLSPAN="5"></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5"><FONT STYLE="font-family:Times New Roman" SIZE="2">Payment of Filing Fee (Check the appropriate box):</FONT></TD></TR>
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<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">[X]</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">No fee required.</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">[&nbsp;&nbsp;&nbsp;]</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.</FONT></P></TD></TR>
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<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">1)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Title of each class of securities to which transaction applies:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px" align="left">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">2)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Aggregate number of securities to which transaction applies:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px" align="left">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">3)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it was determined):</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px" align="left">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">4)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Proposed maximum aggregate value of transaction:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px" align="left">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">5)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Total fee paid:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px" align="left">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">[&nbsp;&nbsp;&nbsp;]</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fee paid previously with preliminary materials.</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">[&nbsp;&nbsp;&nbsp;]</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.</FONT></P></TD></TR>
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<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">1)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Amount Previously Paid:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px" align="left">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
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<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">2)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Form, Schedule or Registration Statement No.:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px" align="left">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">3)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Filing Party:</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px" align="left">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
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<TD VALIGN="bottom">&nbsp;</TD>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Date Filed:</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
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<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="4"><B>INCOME OPPORTUNITY REALTY INVESTORS, INC. </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="4"><B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="4"><B>TO BE HELD ON MAY 9, 2012 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Income Opportunity Realty
Investors, Inc. will hold its Annual Meeting of Stockholders on Wednesday, May&nbsp;9, 2012, at 11:00 a.m., local Dallas, Texas time, at 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234. The purpose of the meeting is to consider and act upon:
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%;margin-right:9%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149; Election of a Board of four directors to serve until the next Annual
Meeting of Stockholders and until their successors are duly-elected and qualified. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%;margin-right:9%; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">&#149; Ratification of the selection of Swalm&nbsp;&amp; Associates, P.C. as the independent registered public accounting firm. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%;margin-right:9%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149; Such other matters as may properly be presented at the Annual Meeting. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Only Stockholders of record at the close of business on April&nbsp;5, 2012, will be entitled to vote at the meeting.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Your vote is important. Whether or not you plan to attend the meeting, please complete, sign, date and return
the enclosed proxy card in the accompanying envelope provided. Your completed proxy will not prevent you from attending the meeting and voting in person should you choose. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dated: April&nbsp;6, 2012. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">By order of the Board of Directors,</FONT></TD></TR>
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<TD HEIGHT="16"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">/s/ Louis J. Corna</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Louis J. Corna</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President, General Counsel,</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Tax Counsel and Secretary</FONT></TD></TR>
</TABLE></DIV> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center> <P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>This Proxy Statement is available at </B><B><I><U>www.incomeopp-realty.com</U></I></B><B> </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>Among other things, the Proxy Statement contains information regarding </B></FONT></P>
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<TD WIDTH="23%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>&#149;</B></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>The date, time and location of the meeting </B></FONT></P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="23%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>&#149;</B></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>A list of the matters being submitted to Stockholders </B></FONT></P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="23%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>&#149;</B></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>Information concerning voting in person </B></FONT></P></TD></TR></TABLE>

<p Style='page-break-before:always'>
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 <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>INCOME OPPORTUNITY REALTY INVESTORS, INC. </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>PROXY STATEMENT </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="3"><B>FOR THE ANNUAL MEETING OF STOCKHOLDERS </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>TO BE HELD MAY 9, 2012
</B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Board of Directors of Income Opportunity Realty Investors, Inc. (the &#147;Company&#148;or
&#147;we&#148; or &#147;us&#148;) is soliciting proxies to be used at the Annual Meeting of Stockholders following the fiscal year ended December&nbsp;31, 2011 (the &#147;Annual Meeting&#148;). Distribution of this Proxy Statement and a Proxy Form
is scheduled to begin on April&nbsp;16, 2012. The mailing address of the Company&#146;s principal executive offices is 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>About the Meeting </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Who Can Vote </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Record holders of Common Stock of the Company at the close of business on Thursday, April&nbsp;5, 2012 (the &#147;Record
Date&#148;) may vote at the Annual Meeting. On that date, 4,168,214 shares of Common Stock were outstanding. Each share is entitled to cast one vote. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>How Can You Vote </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If you return your signed proxy before
the Annual Meeting, we will vote your shares as you direct. You can specify whether your shares should be voted for all, some or none of the nominees for director. You can also specify whether you approve, disapprove or abstain from the other
proposal to ratify the selection of auditors. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If a proxy is executed and returned but no instructions are
given, the shares will be voted according to the recommendations of the Board of Directors. The Board of Directors recommends a vote <B>FOR</B> Proposals 1 and 2. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Revocation of Proxies </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">You may revoke your proxy at any
time before it is exercised by (a)&nbsp;delivering a written notice of revocation to the Corporate Secretary, (b)&nbsp;delivering another proxy that is dated later than the original proxy, or (c)&nbsp;casting your vote in person at the Annual
Meeting. Your last vote will be the vote that is counted. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Vote Required </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The holders of a majority of the shares entitled to vote who are either present in person or represented by a proxy at
the Annual Meeting will constitute a quorum for the transaction of business at the Annual Meeting. As of April&nbsp;5, 2012, there were 4,168,214 shares of Common Stock issued and outstanding. The presence, in person or by proxy, of stockholders
entitled to cast at least 2,084,108 votes constitutes a quorum for adopting the proposals at the Annual Meeting. If you have properly signed and returned your proxy card by mail, you will be considered part of the quorum, and the persons
</FONT></P>
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named on the proxy card will vote your shares as you have instructed. If the broker holding your shares in &#147;street&#148; name indicates to us on a proxy card that the broker lacks
discretionary authority to vote your shares, we will not consider your shares as present or entitled to vote for any purpose. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">A plurality of the votes cast is required for the election of directors. This means that the director nominee with the most votes for a particular slot is elected to that slot. A proxy that has properly
withheld authority with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">For the other proposal, the affirmative vote of the holders of a majority of the shares represented in person or by proxy
entitled to vote on the proposal will be required for approval. An abstention with respect to such proposal will not be voted, although it will be counted for purposes of determining whether there is a quorum. Accordingly, an abstention will have
the effect of a negative vote. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">As of the Record Date, an affiliate held 3,386,970 shares representing
approximately 81% of the shares outstanding. The affiliate has advised the Company that it currently intends to vote all of the shares it holds in favor of the approval of all proposals. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If you received multiple proxy cards, this indicates that your shares are held in more than one account, such as two
brokerage accounts, and are registered in different names. You should vote each of the proxy cards to ensure that all your shares are voted. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Other Matters to be Acted Upon at the Annual Meeting </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">We do not know of any other matters to be validly presented or acted upon at the Annual Meeting. Under our Bylaws, no business besides that stated in the Annual Meeting Notice may be transacted at any
meeting of stockholders. If any other matter is presented at the Annual Meeting on which a vote may be properly taken, the shares represented by proxies will be voted in accordance with the judgment of the person or persons voting those shares.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Expenses of Solicitation </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Company is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. Some of our directors,
officers and employees may solicit proxies personally, without any additional compensation, by telephone or mail. Proxy materials will also be furnished without cost to brokers and other nominees to forward to the beneficial owners of shares held in
their names. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Available Information </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Our internet website address is <I><U>www.incomeopp-realty.com.</U></I> We make available free of charge through our website our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the Securities and Exchange Commission. In addition, we have posted the Charters of our Audit
Committee, Compensation Committee, and Governance and Nominating Committee, as well as our Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers, Corporate Governance Guidelines and Corporate Governance Guidelines on
Director Independence, all under separate headings. These charters and principles are not incorporated in this </FONT></P>
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instrument by reference. We will also provide a copy of these documents free of charge to stockholders upon written request. The Company issues Annual Reports containing audited financial
statements to its common stockholders. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Multiple Stockholders Sharing the Same Address </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Securities and Exchange Commission (the &#147;SEC&#148;) rules allow for the delivery of a single copy of an annual
report and proxy statement to any household at which two or more stockholders reside, if it is believed the stockholders are members of the same family. Duplicate account mailings will be eliminated by allowing stockholders to consent to such
elimination, or through implied consent if a stockholder does not request continuation of duplicate mailings. Depending upon the practices of your broker, bank or other nominee, you may need to contact them directly to continue duplicate mailings to
your household. If you wish to revoke your consent to householding, you must contact your broker, bank or other nominee. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">If you hold shares of common stock in your own name as a holder of record, householding will not apply to your shares. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If you wish to request extra copies free of charge of any annual report, proxy statement or information statement, please
send your request to Income Opportunity Realty Investors, Inc., Attention: Investor Relations, 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234 or call (800)&nbsp;400-6407. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Questions </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">You may call our Investor Relations Department
at 800-400-6407 if you have any questions. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>PLEASE VOTE - YOUR VOTE IS IMPORTANT </B></FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-3-
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 <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Corporate Governance and Board Matters </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The affairs of the Company are managed by the Board of Directors. The Directors are elected at the annual meeting of
stockholders each year or appointed by the incumbent Board of Directors and serve until the next annual meeting of stockholders or until a successor has been elected or approved. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">During the past three years, a number of changes occurred in the membership of the Board of Directors and the controlling
stock ownership of the Company. On July&nbsp;17, 2009, Transcontinental Realty Investors, Inc., a Nevada corporation (&#147;TCI&#148;) which has its Common Stock listed and traded on the New York Stock Exchange (&#147;NYSE&#148;) acquired from
Syntek West, Inc., a Nevada corporation (&#147;SWI&#148;) in a privately negotiated purchase, 2,518,934 Shares of Common Stock of the Company as a single block, which Shares acquired then constituted approximately 60.4% of the reported outstanding
Shares of Common Stock of the Company. TCI had owned an additional 1,037,184 Shares of Common Stock of the Company (approximately 25% of the outstanding) for a number of years. The acquisition by TCI of the additional Shares brought its then
aggregate ownership to approximately 85% of the Share of Common Stock of the Company outstanding and resulted in a Change in Control of the Company. On February&nbsp;7, 2011, Peter L. Larsen resigned as a director. On February&nbsp;8, 2011, the
Board selected Henry A. Butler and RL S. Lemke as directors and as Vice Presidents of the Company. Effective the close of business on October&nbsp;31, 2011, Martha C. Stephens (a director since February&nbsp;23, 2007 and chair person of the Board
since May&nbsp;21, 2009) resigned and RL S. Lemke (a director since October&nbsp;13, 2011) resigned. On October&nbsp;25, 2011, the Board of Directors elected Sharon Hunt as a director. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Current members of the Board </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The members of the Board of
Directors on the date of this proxy statement, and the committees of the Board on which they serve, are identified below: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="28%"></TD>
<TD VALIGN="bottom" WIDTH="13%"></TD>
<TD WIDTH="24%"></TD>
<TD VALIGN="bottom" WIDTH="13%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="14%"></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; padding-left:8px"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Director</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Audit</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Committee</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Compensation</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Committee</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-right:8px">
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Governance</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>and</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Nominating</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Committee</B></FONT></P></TD></TR>


<TR>
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Henry A. Butler</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="16" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px">&nbsp;</TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sharon Hunt</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">Chair</FONT></TD></TR>
<TR>
<TD HEIGHT="16" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px">&nbsp;</TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Robert A. Jakuszewski</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">Chair</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD></TR>
<TR>
<TD HEIGHT="16" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px">&nbsp;</TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8px"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ted R. Munselle</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">Chair</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Role of the Board&#146;s Committees </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Board of Directors has standing Audit, Compensation and Governance and Nominating Committees. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><I>Audit Committee</I></B>. The functions of the Audit Committee are described below under the heading &#147;<I>Report
of the Audit Committee.</I>&#148; The Audit Committee is an &#147;audit committee&#148; for purposes of Section&nbsp;3(a)(58) of the Securities Exchange Act of 1934, as amended. The charter of the Audit Committee was adopted on February&nbsp;19,
2004, and is available on the Company&#146;s Investor Relations website </FONT></P>
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<I><U>(www.incomeopp-realty.com).</U></I> The Audit Committee was initially formed on February&nbsp;20, 2004. All of the members of the Audit Committee are independent within the meaning of the
SEC regulations, the listing standards of the American Stock Exchange (&#147;AMEX&#148;) and the Company&#146;s <I>Corporate Governance Guidelines</I>. Mr.&nbsp;Munselle, a member and Chair of the Committee, is qualified as an &#147;audit committee
financial expert&#148; within the meaning of SEC regulations and the Board has determined that he has accounting and related financial management expertise within the meaning of the listing standards of the AMEX. All of the members of the Audit
Committee meet the independence and experience requirements of the listing standards of the AMEX. The Audit Committee met eight times in 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B><I>Governance and Nominating Committee</I></B>. The Governance and Nominating Committee is responsible for developing and implementing policies and practices relating to corporate governance, including
reviewing and monitoring implementation of the Company&#146;s <I>Corporate Governance Guidelines</I>. In addition, the Committee develops and reviews background information on candidates for the Board and makes recommendations to the Board regarding
such candidates. The Committee also prepares and supervises the Board&#146;s annual review of director independence and the Board&#146;s performance self-evaluation. The charter of the Governance and Nominating Committee was adopted on
March&nbsp;22, 2004, and is available on the Company&#146;s Investor Relations website <I><U>(www.incomeopp-realty.com).</U></I> The Governance and Nominating Committee was initially formed on March&nbsp;22, 2004. All of the members of the
Governance and Nominating Committee are independent within the meaning of the listing standards of the AMEX and the Company&#146;s <I>Corporate Governance Guidelines.</I> The Governance and Nominating Committee met one time in 2011. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><I>Compensation Committee</I></B>. The Compensation Committee is responsible for overseeing the policies of the
Company relating to compensation to be paid by the Company to the Company&#146;s principal executive officer and any other officers designated by the Board and make recommendations to the Board with respect to such policies, produce necessary
reports on executive compensation for inclusion in the Company&#146;s proxy statement in accordance with applicable rules and regulations and to monitor the development and implementation of succession plans for the principal executive officer and
other key executives and make recommendations to the Board with respect to such plans. The charter of the Compensation Committee was adopted on March&nbsp;22, 2004, and is available on the Company&#146;s Investor Relations website
<U><I>(www.incomeopp-realty.com).</I></U> The Compensation Committee was initially formed on March&nbsp;22, 2004. All of the members of the Compensation Committee are independent within the meaning of the listing standards of the AMEX and the
Company&#146;s <I>Corporate Governance Guidelines</I>. The Compensation Committee is to be comprised of at least three directors who are independent of management and the Company. The Compensation Committee met one time in 2011. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Presiding Director </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">In March 2004, the Board created a new position of presiding director, whose primary responsibility is to preside over periodic executive sessions of the Board in which management directors and other
members of management do not participate. The presiding director also advises the Chairman of the Board and, as appropriate, Committee chairs with respect to agendas and information needs relating to Board and Committee meetings, provides advice
with respect to the selection of Committee chairs and performs other duties that the Board may from time to time delegate to assist the Board in the fulfillment of its responsibilities. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">On February&nbsp;8, 2011, the non-management members of the Board designated Ted R. Munselle to serve in this position
until the Company&#146;s annual meeting of stockholders to be held following the fiscal year ended December&nbsp;31, 2011. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-5-
</FONT></P>


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 <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Selection of Nominees for the Board </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Governance and Nominating Committee will consider candidates for Board membership suggested by its members and other
Board members, as well as management and stockholders. The Committee may also retain a third-party executive search firm to identify candidates upon request of the Committee from time to time. A stockholder who wishes to recommend a prospective
nominee for the Board should notify the Company&#146;s Corporate Secretary or any member of the Governance and Nominating Committee in writing with whatever supporting material the stockholder considers appropriate. The Governance and Nominating
Committee will also consider whether to nominate any person nominated by a stockholder pursuant to the provisions of the Company&#146;s bylaws relating to stockholder nominations. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Once the Governance and Nominating Committee has identified a prospective nominee, the Committee will make an initial
determination as to whether to conduct a full evaluation of the candidate. This initial determination will be based on whatever information is provided to the Committee with the recommendation of the prospective candidate, as well as the
Committee&#146;s own knowledge of the prospective candidate, which may be supplemented by inquiries to the person making the recommendation or others. The preliminary determination will be based primarily on the need for additional Board members to
fill vacancies or expand the size of the Board and the likelihood that the prospective nominee can satisfy the evaluation factors described below. If the Committee determines, in consultation with the Chairman of the Board and other Board members as
appropriate, that additional consideration is warranted, it may request the third-party search firm to gather additional information about the prospective nominee&#146;s background and experience and to report its findings to the Committee. The
Committee will then evaluate the prospective nominee against the standards and qualifications set out in the Company&#146;s <I>Corporate Governance Guidelines, </I>including: </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the ability of the prospective nominee to represent the interests of the stockholders of the Company; </FONT></P></TD>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the prospective nominee&#146;s standards of integrity, commitment and independence of thought and judgment; </FONT></P></TD>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the prospective nominee&#146;s ability to dedicate sufficient time, energy and, attention to the diligent performance of his or her duties,
including the prospective nominee&#146;s service on other public company boards, as specifically set out in the Company&#146;s <I>Corporate Governance Guidelines</I>; </FONT></P></TD>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the extent to which the prospective nominee contributes to the range of talent, skill and expertise appropriate for the Board; </FONT></P></TD>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the extent to which the prospective nominee helps the Board reflect the diversity of the Company&#146;s stockholders, employees, customers, guests
and communities; and </FONT></P></TD>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the willingness of the prospective nominee to meet any minimum equity interest holding guideline. </FONT></P></TD>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Committee also considers such other relevant factors as it deems
appropriate, including the current composition of the Board, the balance of management and independent directors, the need for Audit Committee expertise and the evaluations of other prospective nominees. In connection with this
</FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-6-
</FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
evaluation, the Committee determines whether to interview the prospective nominee, and if warranted, one or more members of the Committee, and others as appropriate, interview prospective
nominees in person or by telephone. After completing this evaluation and interview, the Committee makes a recommendation to the full Board as to the persons who should be nominated by the Board, and the Board determines the nominees after
considering the recommendation and report of the Committee. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Bylaws of the Company provide that any
stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if written notice of such stockholders&#146; intention to make such nomination has been delivered
personally to, or has been mailed to and received by the Secretary at the principal office of the Company not later than 35 nor more than 60 days prior to the date of the meeting. If a stockholder has a suggestion for candidates for election, the
stockholder should follow this procedure. Each notice from a stockholder must set forth (i)&nbsp;the name and address of the stockholder who intends to make the nomination and the name of the person to be nominated, (ii)&nbsp;the class and number of
shares of stock held of record, owned beneficially and represented by proxy by such stockholder as of the record date for the meeting and as of the date of such notice, (iii)&nbsp;a representation that the stockholder intends to appear in person or
by proxy at the meeting to nominate the person specified in the notice, (iv)&nbsp;a description of all arrangements or understandings between such stockholder and each nominee and any other person (naming those persons) pursuant to which the
nomination is to be made by such stockholder, (v)&nbsp;such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules, and (vi)&nbsp;the consent
of each nominee to serve as a director of the Company if so elected. The chairman of the Annual Meeting may refuse to acknowledge the nomination of any person not made in compliance with this procedure. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Determinations of Director Independence </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">In February 2004, the Board enhanced its <I>Corporate Governance Guidelines. </I>The <I>Guidelines </I>adopted by the Board meet or exceed the new listing standards adopted during the year by the American
Stock Exchange. The full text of the <I>Guidelines </I>can be found in the Investor Relations section of the Company&#146;s website <I>(<U>www.incomeopp-realty.com)</U>.</I> A copy may also be obtained upon request from the Company&#146;s Corporate
Secretary. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Pursuant to the <I>Guidelines, </I>the Board undertook its annual review of director independence
in May 2011. During this review, the Board considered transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates, including those reported under
<I>&#147;Certain Relationships and Related Transactions&#148; </I>below. The Board also examined transactions and relationships between directors or their affiliates and members of the Company&#146;s senior management or their affiliates. As
provided in the <I>Guidelines</I>, the purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">As a result of this review, the Board affirmatively determined of the then directors, Messrs. Munselle and Jakuszewski
and Ms.&nbsp;Stephens are each independent of the Company and its management under the standards set forth in the <I>Corporate Governance Guidelines</I>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Board Meetings During Fiscal 2011 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Board met eight
times during fiscal 2011. Each director attended 75% or more of the meetings of the Board and Committees on which he served. Under the Company&#146;s Corporate </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-7-
</FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
<I>Governance Guidelines</I>, each Director is expected to dedicate sufficient time, energy an attention to ensure the diligent performance of his or her duties, including by attending meetings
of the stockholders of the Company, the Board and Committees of which he is a member. In addition, the independent directors met in executive session four times during fiscal 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Directors&#146; Compensation </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Each non-employee director
currently receives an annual retainer of $7,500 plus reimbursement for expenses. The Chairman of the Board does not receive any additional fee. In addition, each independent director receives an additional fee of $1,000 per day for any special
services rendered by him to the Company outside of his or ordinary duties as a director plus reimbursement of expenses. Effective January&nbsp;4, 2010, the Board of Directors reduced their compensation to $7,500 per annum from $15,000 and no Audit
Committee fees, with the Chairman of the Audit Committee to receive a one time annual fee of $500. The Company also reimburses directors for travel expenses incurred in connection with attending Board, committee and stockholder meetings and for
other Company-business related expenses. Directors who are also employees of the Company or its Advisor receive no additional compensation for service as a director. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">During 2011, $27,375.01 was paid to the non-employee directors in total directors&#146; fees for all services, including
the annual fee for service during the period from January&nbsp;1, 2011 through December&nbsp;31, 2011. Those fees received by directors were Robert A. Jakuszewski ($9,375), Peter L. Larsen, who resigned as a director on February&nbsp;7, 2011
($4,166.67), Ted R. Munselle ($9,875) and Martha C. Stephens who resigned as a director on October&nbsp;13, 2011 ($3,958.34). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Stockholders
Communication with the Board </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Stockholders and other parties interested in communicating directly with the
presiding director or with the non-Management directors as a group may do so by writing to Ted R. Munselle, Director, P.O. Box 830163, Richardson, Texas 75083-0163. Effective March&nbsp;22, 2004, the Governance and Nominating Committee of the Board
also approved a process for handling letters received by the Company and addressed to members of the Board but received at the Company. Under that process, the Corporate Secretary of the Company reviews all such correspondence and regularly forwards
to the Board a summary of all such correspondence and copies of all correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or committees thereof or that he otherwise determines requires their attention.
Directors may at any time review a log of all correspondence received by the Company that is addressed to members of the Board and received by the Company and request copies of any such correspondence. Concerns relating to accounting, internal
controls or auditing matters are immediately brought to the attention of the Chairman of the Audit Committee and handled in accordance with procedures established by the Audit Committee with respect to such matters. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Code of Ethics </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Company has adopted a Code of Business Conduct and Ethics, which applies to all directors, officers and employees (including those of the contractual advisor). In addition, on February&nbsp;19, 2004,
the Company adopted a code of ethics entitled &#147;Code of Ethics for Senior Financial Officers&#148; that applies to the principal executive officer, president, principal financial officer, chief financial officer, the principal accounting officer
and controller. The text of both documents is available on the Company&#146;s Investor Relations website (<U><I>www.incomeopp-realty.com</I>).</U> The Company intends to post amendments to or waivers from its Code of Ethics for Senior Financial
Officers (to the extent applicable to the Company&#146;s chief executive officer, principal financial officer or principal accounting officer) at this location on its website. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-8-
</FONT></P>


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 <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Compliance With Section&nbsp;16(a) of Reporting Requirements </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Section&nbsp;16(a) under the Securities Exchange Act of 1934 requires the Company&#146;s directors, executive officers
and any persons holding 10% or more of the Company&#146;s shares of Common Stock are required to report their ownership of the Company&#146;s shares of Common Stock and any changes in that ownership to the SEC on specified report forms. Specific due
dates for these reports have been established, and the Company is required to report any failure to file by these dates during each fiscal year. All of these filing requirements were satisfied by the Company&#146;s directors and executive officers
and holders of more than 10% of the Company&#146;s Common Stock during the fiscal year ended December&nbsp;31, 2010. In making these statements, the Company has relied upon the written representations of its directors and executive officers and the
holders of 10% or more of the Company&#146;s Common Stock and copies of the reports that each has filed with the SEC. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:14%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Security Ownership of Certain Beneficial Owners and Management</B> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Security Ownership of
Certain Beneficial Owners </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The following table sets forth the ownership of the Company&#146;s Common
Stock, both beneficially and of record, both individually and in the aggregate, for those persons or entities known by the Company to be the beneficial owners of more than 5% of its outstanding Common Stock as of the close of business on
April&nbsp;5, 2012. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="54%"></TD>
<TD VALIGN="bottom" WIDTH="18%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="18%"></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name and Address of Beneficial Owner</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Amount&nbsp;and&nbsp;Nature&nbsp;of</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Beneficial Ownership*</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Approximate</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Percent&nbsp;of&nbsp;Class**</B></FONT></P></TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Transcontinental Realty Investors, Inc.</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">1800 Valley View Lane, Suite 300</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dallas, Texas 75234</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Security Ownership of Management </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The following table sets forth the ownership of the Company&#146;s Common Stock, both beneficially and of record, both
individually and in the aggregate for the directors and executive officers of the Company, and for certain deemed beneficial owners, as of the close of business on April&nbsp;5, 2012: </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="54%"></TD>
<TD VALIGN="bottom" WIDTH="19%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="19%"></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name and Address of Beneficial Owner</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Amount and Nature of</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Beneficial Ownership*</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Approximate</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Percent of Class**</B></FONT></P></TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Gene S. Bertcher</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Henry A. Butler</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Louis J. Corna</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Alfred Crozier</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sharon Hunt</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
</TABLE>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-9-
</FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="62%"></TD>
<TD VALIGN="bottom" WIDTH="15%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="15%"></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name and Address of Beneficial Owner</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Amount&nbsp;and&nbsp;Nature&nbsp;of<BR>Beneficial&nbsp;Ownership*</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Approximate<BR>Percent&nbsp;of&nbsp;Class**</B></FONT></TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Robert A. Jakuszewski</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Daniel J. Moos</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ted R. Munselle</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">All directors and executive officers as a group (8 people)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3,386,970(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">81.3%</FONT></TD></TR>
</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="line-height:8px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000;width:21%">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">* &#147;Beneficial Ownership&#148; means the sole or shared power to vote, or to direct the voting of, a security or
investment power with respect to a security, or any combination thereof. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">** Percentages are based upon
4,168,214 shares of Common Stock outstanding at April&nbsp;5, 2012. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(1) Includes 3,386,970 shares owned by
Transcontinental Realty Investors, Inc. (&#147;TCI&#148;), of which the directors and executive officers of TCI may be deemed to be the beneficial owners by virtue of their positions as directors and executive officers. Each of the current directors
(Messrs. Butler, Jakuszewski, Munselle and Ms.&nbsp;Hunt) and executive officers (Messrs. Moos, Bertcher, Corna and Crozier) of TCI disclaim beneficial ownership of such shares. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>PROPOSAL 1 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>ELECTION OF DIRECTORS </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Four directors are to be elected at the Annual Meeting. Each director elected will hold office until the Annual Meeting following the fiscal year ending December&nbsp;31, 2012. All of the nominees for
director are now serving as directors. Each of the nominees has consented to being named in this proxy statement as a nominee and has agreed to serve as a director if elected. The persons named on the proxy card will vote for all of the nominees for
director listed unless you withhold authority to vote for one or more of the nominees. The nominees receiving a plurality of votes cast at the Annual Meeting will be elected as directors. Abstentions and broker non-votes will not be treated as a
vote for or against any particular nominee and will not affect the outcome of the election of directors. Cumulative voting for the election of directors is not permitted. If any director is unable to stand for re-election, the Board will designate a
substitute. If a substitute nominee is named, the persons named on the proxy card will vote for the election of the substitute director. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The nominees for directors are listed below, together with their ages, terms of service, all positions and offices with the Company or the Company&#146;s contractual advisor, Pillar Income Asset
Management, Inc. (&#147;Pillar&#148;), other principal occupations, business experience and directorships with other companies during the last five years or more. The designation &#147;affiliated&#148; when used below with respect to a director
means that the director is an officer, director or employee of the Company or the contractual advisor. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Henry A. Butler, 61
(Affiliated) </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Broker-Land Sales (since April&nbsp;30, 2011) for Pillar and (from July 2003 to
April&nbsp;30, 2011) Prime Income Asset Management, LLC (&#147;Prime&#148;) and (1992 to June 2003) for Basic Capital Management, Inc. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-10-
</FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
(&#147;BCM&#148;); Director (since July 2003) and Chairman of the Board (since May 2009) of American Realty Investors, Inc. (&#147;ARL&#148;), Director (since December 2001) and Chairman of the
Board (since May 2009) of Transcontinental Realty Investors, Inc. (&#147;TCI&#148;) and Director (December 2001 to July&nbsp;1, 2003) and since February&nbsp;8, 2001 of the Company; Owner/Operator (1989-1991) of Butler Interests, Inc. Vice President
(since August&nbsp;3, 2000) of ARL and (since February&nbsp;1, 2011) of TCI and (since February&nbsp;8, 2011) of the Company. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Sharon Hunt, 69 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Ms.&nbsp;Hunt is a Licensed Realtor in Arkansas with Keystone Realty; President and owner of Sharon&#146;s Pretzels, Inc. (until sold in 1997), a Dallas, Texas food products entity; director (1991 to
2000) of a 501(c)(3) non-profit corporation involved in the acquisition, renovation and operation of real estate. She was elected a director of the Company on October&nbsp;25, 2011. Mr.&nbsp;Hunt was a director (February 20, 2004 to January&nbsp;31,
2011) and again (since October&nbsp;25, 2011) of ARL and TCI. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Robert A. Jakuszewski, 49 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Vice President-Sales and Marketing (since September 1998) of New Horizons Communications, Inc. Mr.&nbsp;Jakuszewski was a
Consultant (01/1998-09/1998) for New Horizon Communications, Inc.; Regional Sales Manager (1996-1998) of Continental Funding; Territory Manager (1992-1996) of Sigvaris, Inc.; Senior Sales Representative (1988-1992) of Mead Johnson Nutritional
Division, USPNG; Sales Representative (1986-1987) of Muro Pharmaceutical, Inc. Mr.&nbsp;Jakuszewski was elected a director of the Company on March&nbsp;16, 2004 and has been a director of American Realty Investors, Inc. (&#147;ARL&#148;) and TCI
since November&nbsp;22, 2005. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Ted. R. Munselle, 56 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Vice President and Chief Financial Officer (since October 1998) of Landmark Nurseries, Inc.; President (December 2004 to
August 2007) of Applied Educational Opportunities, LLC, an educational organization which had two career training schools located in Texas; Director (since February 2004) of ARL and TCI; Certified Public Accountant (since 1980) who was employed as
an Audit Partner in two Dallas, Texas based CPA firms (1986 to 1998), as an Audit Manager at Grant Thornton LLP (1983 to 1986) and as Audit Staff to Audit Supervisor at Laventhal&nbsp;&amp; Horwath (1977 to 1983). Mr.&nbsp;Munselle was elected a
director of the Company on May&nbsp;21, 2009. Mr.&nbsp;Munselle is also a director (since February&nbsp;17, 2012) of Spindletop Oil&nbsp;&amp; Gas Company, a publicly held Texas corporation whose stock is traded in the Over-The-Counter
(&#147;OTC&#148;) market. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>The Board of Directors unanimously recommends a vote FOR </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>the election of all of the Nominees named above. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>PROPOSAL 2 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>RATIFICATION OF APPOINTMENT OF </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee has appointed Swalm&nbsp;&amp; Associates, P.C. as the independent registered public accounting firm
for Income Opportunity Realty Investors, Inc. for the 2012 fiscal year and to conduct quarterly reviews through September&nbsp;30, 2012. The Company&#146;s Bylaws do not require that </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-11-
</FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
stockholders ratify the appointment of Swalm&nbsp;&amp; Associates, P.C. as the Company&#146;s independent registered public accounting firm. Swalm&nbsp;&amp; Associates, P.C. has served as the
Company&#146;s independent registered public accounting firm for each of the fiscal years ended December&nbsp;31, 2004, 2005, 2006, 2007, 2008, 2009, 2010 and 2011. The Audit Committee will consider the outcome of this vote in its decision to
appoint an independent registered public accounting firm next year, however, it is not bound by the stockholders&#146; decision. Even if the selection is ratified, the Audit Committee, in its sole discretion, may change the appointment at any time
during the year if it determines that such a change would be in the best interest of the Company and its stockholders. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">A representative of Swalm&nbsp;&amp; Associates, P.C. will attend the Annual Meeting. The representative will have an opportunity to make a statement if he or she desires to do so and will be available to
respond to appropriate questions from the stockholders. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>The Board of Directors recommends a vote FOR the ratification of
the </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>appointment of Swalm&nbsp;&amp; Associates, P.C. as the Company&#146;s </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>independent registered public accounting firm. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Fiscal Years 2010 and 2011 Audit Firm Fee Summary </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The
following table sets forth the aggregate fees for professional services rendered to the Company for the years 2010 and 2011 by the Company&#146;s principal accounting firm, Swalm&nbsp;&amp; Associates, P.C.: </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="76%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="78%"></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Type of Fees</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2010</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2011</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Audit Fees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">45,269</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">52,572</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Audit-Related Fees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Tax Fees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">1,050</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">All Other Fees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Total Fees:</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">46,319</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">52,572</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
</TABLE> <P STYLE="line-height:8px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000;width:21%">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">All services rendered by the principal auditors are permissible under applicable laws and regulations and were pre-approved by either the Board of Directors or the Audit Committee, as required by law. The
fees paid the principal auditors for services as described in the above table fall under the categories listed below: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%;margin-right:4%; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><I>Audit Fees</I>. These are fees for professional services performed by the principal auditor for the audit of the Company&#146;s annual financial statements and review of financial statements included
in the Company&#146;s 10-Q filings and services that are normally provided in connection with statutory and regulatory filing or engagements. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%;margin-right:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>Audit-Related Fees</I>. These are fees for assurance and related services performed by
the principal auditor that are reasonably related to the performance of the audit or review of the Company&#146;s financial statements. These services include attestations by the principal auditor that are not required by statute or regulation and
consulting on financial accounting/reporting standards. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-12-
</FONT></P>


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 <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%;margin-right:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>Tax Fees</I>. These are fees for
professional services performed by the principal auditor with respect to tax compliance, tax planning, tax consultation, returns preparation and review of returns. The review of tax returns includes the Company and its consolidated subsidiaries.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%;margin-right:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>All Other Fees</I>. These are fees for other permissible work performed by
the principal auditor that do not meet the above category descriptions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">These services are actively monitored
(as to both spending level and work content) by the Audit Committee to maintain the appropriate objectivity and independence in the principal auditor&#146;s core work, which is the audit of the Company&#146;s consolidated financial statements.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Report of the Audit Committee </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Of the Board of Directors </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee of the
Board of Directors is composed of three directors, each of whom satisfies the requirements of independence, experience and financial literacy under the requirements of the AMEX and the SEC. The Audit Committee has directed the preparation of this
report and has approved its content and submission to the stockholders. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee is responsible
for, among other things: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">retaining and overseeing the independent registered public accounting firm that serves as our independent auditor and evaluating their performance
and independence; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">reviewing the annual audit plan with management and the independent registered public accounting firm; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">pre-approving any permitted non-audit services provided by our independent registered public accounting firm; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">approving the fees to be paid to our independent registered public accounting firm; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">reviewing the adequacy and effectiveness of our internal controls with management, internal auditors and the independent registered public
accounting firm; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">reviewing and discussing the annual audited financial statements and the interim unaudited financial statements with management and the registered
public accounting firm; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">approving our internal audit plan and reviewing reports of our internal auditors. </FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee operates under a written charter adopted by the Board of Directors. The Committee&#146;s
responsibilities are set forth in this charter which is available on our website at <U><I>www.incomeopprealty-invest.com</I></U>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee assists the Board in fulfilling its responsibilities for general oversight of the integrity of the Company&#146;s financial statements, the adequacy of the Company&#146;s system of
internal </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-13-
</FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
controls, the Company&#146;s risk management, the Company&#146;s compliance with legal and regulatory requirements, the independent auditors&#146; qualifications and independence, and the
performance of the Company&#146;s independent auditors. The Committee has sole authority over the selection of the Company&#146;s independent auditors and manages the Company&#146;s relationship with its independent auditors. The Committee has the
authority to obtain advice and assistance from outside legal, accounting or other advisors as the Committee deems necessary to carry out its duties and receive appropriate funding, as determined by the Committee, from the Company for such advice and
assistance. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Committee met eight times during 2011. The Committee schedules its meetings with a view to
ensuring that it devotes appropriate attention to all of its tasks. The Committee&#146;s meetings include private sessions with the Company&#146;s independent auditors without the presence of the Company&#146;s management, as well as executive
sessions consisting of only Committee members. The Committee also meets senior management from time to time. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Management has the primary responsibility for the Company&#146;s financial reporting process, including its system of
internal control over financial reporting and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The Company&#146;s independent auditors are
responsible for auditing those financial statements in accordance with professional standards and expressing an opinion as to their material conformity with U.S. generally accepted accounting principles and for auditing management&#146;s assessment
of, and the effective operation of, internal control over financial reporting. The Committee&#146;s responsibility is to monitor and review the Company&#146;s financial reporting process and discuss management&#146;s report on the Company&#146;s
internal control over financial reporting. It is not the Committee&#146;s duty or responsibility to conduct audits or accounting reviews or procedures. The Committee has relied, without independent verification, on management&#146;s representation
that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and on the opinion of the independent registered public accountants
included in their report on the Committee&#146;s financial statements. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">As part of its oversight of the
Company&#146;s financial statements, the Committee reviews and discusses with both management and the Company&#146;s independent registered public accountants all annual and quarterly financial statements prior to their issuance. During 2011,
management advised the Committee that each set of financial statements reviewed had been prepared in accordance with accounting principles generally accepted in the United States of America, and reviewed significant accounting and disclosure issues
with the Committee. These reviews include discussions with the independent accountants of the matters required to be discussed pursuant to <I>Statement on Auditing Standards No.&nbsp;61 (Codification of Statements on Auditing Standards),
</I>including the quality (not merely the acceptability) of the Company&#146;s accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the financial statements and disclosures related to critical accounting
practices. The Committee has also discussed with Swalm&nbsp;&amp; Associates, P.C. matters relating to its independence, including a review of audit and non-audit fees, and written disclosures from Swalm&nbsp;&amp; Associates, P.C. to the Company
pursuant to <I>Independence Standards Board Standard No.&nbsp;1 (Independence Discussions with Audit Committees)</I>. The Committee also considered whether non-audit services, provided by the independent accountants are compatible with the
independent accountant&#146;s independence. The Company also received regular updates on the amount of fees and scope of audit, audit-related and tax services provided. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-14-
</FONT></P>


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 <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">In addition, the Committee reviewed key initiatives and programs aimed at
strengthening the effectiveness of the Company&#146;s internal and disclosure control structure. As part of this process, the Committee continued to monitor the scope and adequacy of the Company&#146;s internal controls, reviewed staffing levels and
steps taken to implement recommended improvements in any internal procedures and controls. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Based on the
Committee&#146;s discussion with management and the independent accountants and the Committee&#146;s review of the representation of management and the report of the independent accountants to the Board of Directors, the Audit Committee recommended
to the Board of Directors, and the Board of Directors has approved, that the audited consolidated financial statements be included in the Company&#146;s Annual Report on Form 10-K for the year ended December&nbsp;31, 2011, filed with the SEC. The
Audit Committee and the Board of Directors have also selected Swalm&nbsp;&amp; Associates, P.C. as the Company&#146;s independent registered public accountants and auditors for the fiscal year ending December&nbsp;31, 2012. </FONT></P>
<P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">AUDIT COMMITTEE </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>


<TR>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sharon Hunt</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ted R. Munselle</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Robert A. Jakuszewski</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Pre-Approval Policy for Audit and Non-Audit Services </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Under the Sarbanes-Oxley Act of 2002 (the &#147;SO Act&#148;), and the rules of the SEC, the Audit Committee of the Board
of Directors is responsible for the appointment, compensation and oversight of the work of the independent auditor. The purpose of the provisions of the SO Act and the SEC rules for the Audit Committee role in retaining the independent auditor is
two-fold. First, the authority and responsibility for the appointment, compensation and oversight of the auditors should be with directors who are independent of management. Second, any non-audit work performed by the auditors should be reviewed and
approved by these same independent directors to ensure that any non-audit services performed by the auditor do not impair the independence of the independent auditor. To implement the provisions of the SO Act, the SEC issued rules specifying the
types of services that an independent auditor may not provide to its audit client, and governing the Audit Committee&#146;s administration of the engagement of the independent auditor. As part of this responsibility, the Audit Committee is required
to pre-approve the audit and non-audit services performed by the independent auditor in order to assure that they do not impair the auditor&#146;s independence. Accordingly, the Audit Committee adopted on March&nbsp;22, 2004 a written pre-approval
policy of audit and non-audit services (the &#147;Policy&#148;), which sets forth the procedures and conditions pursuant to which services to be performed by the independent auditor are to be pre-approved. Consistent with the SEC rules establishing
two different approaches to approving non-prohibited services, the policy of the Audit Committee covers pre-approval of audit services, audit-related services, international administration tax services, non-U.S. income tax compliance services,
pension and benefit plan consulting and compliance services, and U.S. tax compliance and planning. At the beginning of each fiscal year, the Audit Committee will evaluate other known potential engagements of the independent auditor, including the
scope of work proposed to be performed and the proposed fees, and approve or reject each service, taking into account whether services are permissible under applicable law and the possible impact of each non-audit service on the independent
auditor&#146;s independence from management. Typically, in addition to the generally pre-approved services, other services would include due diligence for an acquisition that may or may not have been known at the beginning of the year. The Audit
Committee has also delegated to any member of the Audit Committee designated by the Board or the financial expert member of the Audit Committee </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-15-
</FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
responsibilities to pre-approve services to be performed by the independent auditor not exceeding $25,000 in value or cost per engagement of audit and non-audit services, and such authority may
only be exercised when the Audit Committee is not in session. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Executive Compensation </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company has no employees, payroll or benefit plans and pays no compensation to its executive officers. The executive
officers of the Company who are also officers or employees of Prime are compensated by Prime. Such executive officers perform a variety of services for Prime and the amount of their compensation is determined solely by Prime. Prime does not allocate
the cash compensation of its officers among the various entities for which it serves as advisor. See &#147;The Advisor&#148; for a discussion of the compensation payable to Prime under the Advisory Agreement. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Compensation Committee Report </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Compensation Committee of the Board of Directors is comprised of at least two directors who are independent of management and the Company. Each member of the Compensation Committee must be determined
to be independent by the Board under the Corporate Governance Guidelines on Director Independence adopted by the Board and under the AMEX standards for non-employee directors and Rule 16b-3(b)(3)(i) of the rules and regulations promulgated under the
Securities Exchange Act of 1934 and the requirements for &#147;outside directors&#148; set forth in Treasury Regulations, Section&nbsp;27(e)(3). Each member of the Committee is to be free of any relationship that in the judgment of the Board from
time to time may interfere with the exercise of his or her independent judgment. Each Committee member is appointed annually subject to removal at any time by the Board and serves until his or her Committee appointment is terminated by the Board.
The Compensation Committee is composed of three directors, each of whom meets the standards described above. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The purposes of the Compensation Committee are to oversee the policies of the Company relating to compensation to be paid
by the Company to the Company&#146;s principal executive officer (&#147;CEO&#148;) and any other officers designated by the Board and make recommendations to the Board with respect to such policies, produce necessary reports and executive
compensation for inclusion in the Company&#146;s proxy statement, in accordance with applicable rules and regulations, and monitor the development and implementation of succession plans for the CEO and other key executives and make recommendations
to the Board with respect to such plans. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company has no employees, payroll or benefit plans and pays no
compensation to its executive officers. The executive officers of the Company, who are also officers or employees of Prime Income Asset Management LLC (&#147;Prime&#148;), are compensated by Prime. Such executive officers perform a variety of
services for Prime, and the amount of their compensation is determined solely by Prime. Prime does not allocate the cash compensation of its officers among the various entities for which it may serve as advisor or sub-advisor. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The only remuneration paid by the Company is to directors who are not officers or directors of Prime or the Advisor.
These independent directors (i)&nbsp;review the business plan of the Company to determine that it is the best interest of the stockholders, (ii)&nbsp;review the advisory contract and recommend any appropriate changes thereto, (iii)&nbsp;supervise
the performance of the Company&#146;s contractual advisor, and review the reasonableness of the compensation paid to the contractual advisor in terms of the nature and quality of services performed, (iv)&nbsp;review the reasonableness of the total
fees and expenses of the Company, and (v)&nbsp;select, when necessary, a qualified, independent real estate appraiser to appraise properties acquired. See the sub caption &#147;Directors&#146; Compensation&#148; in the Proxy Statement for a
description of the compensation paid. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-16-
</FONT></P>


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 <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The charter of the Compensation Committee was adopted on March&nbsp;22,
2004, and the members of the Compensation Committee, all of whom are independent within the meaning of the listing standards of the AMEX and the Company&#146;s Corporate Governance Guidelines, are listed below. Since its formation on March&nbsp;22,
2004, the Compensation Committee has annually reviewed its existing charter and regularly performed the tasks described above relating to the business plan, advisory contract, reasonableness of compensation paid to the advisor, and the
reasonableness of the total fees and expenses of the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">COMPENSATION COMMITTEE </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="34%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>


<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ted R. Munselle</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sharon Hunt</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Robert A. Jakuszewski</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Compensation Committee Interlocks and Insider Participation </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company&#146;s Compensation Committee is made up of non-employee directors who have never served as officers of, or
been employed by the Company. None of the Company&#146;s executive officers serve on a board of directors of any entity that has a director or officer serving on this Committee. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Executive Officers </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive officers of the Company are
listed below, all of whom are employed by Pillar. None of the executive officers receive any direct remuneration from the Company, nor do any hold any options granted by the Company. Their positions with the Company are not subject to a vote of
stockholders. The ages, terms of service and all positions and offices with the Company, Pillar, Prime, SWI, other affiliated entities, other principal occupations, business experience and directorships with other publicly-held companies during the
last five years or more are set forth below. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Daniel J. Moos, 62 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">President and Chief Operating Officer (effective April&nbsp;5, 2007) of the Company, ARL and TCI (effective March 2007)
of Prime and (effective April&nbsp;30, 2011) of Pillar; Senior Vice President and Business Line Manager for U.S. Bancorp (NYSE;USB) working out of their officers in Houston, Texas from 2003 to April 2007; Executive Vice President and Chief Financial
Officer, Fleetcor Technologies a privately held transaction processing company that was headquartered in New Orleans, Louisiana from 1998 to 2003; Senior Vice President and Chief Financial Officer, ICSA a privately held internet security and
information company headquartered in Carlilse, Pennsylvania from 1996 to 1998; and for more than ten years prior thereto was employed in various financial and operating roles for PhoneTel Technologies, Inc. which was a publicly traded
telecommunication company on the AMEX headquartered in Cleveland, Ohio (1992-1996) and LDI Corporation which was a publicly traded computer equipment sales/service and asset leasing company listed on the NASDAQ and headquartered in Cleveland, Ohio.
</FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-17-
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 <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Gene S. Bertcher, 63 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President (since February 2008) and Chief Financial Officer (since May 2008) of the Company, ARI and TCI.
Prior thereto (from February 2008 to March 2008) he was Executive Vice President and Interim Chief Financial Officer of the Company, ARI and TCI. Mr.&nbsp;Bertcher is (and will continue to be) President and Chief Financial Officer of New Concept
Energy, Inc. (formerly CabelTel International Corporation), a Nevada corporation (&#147;GBR&#148;) which has its common stock listed on the AMEX, a position he has occupied since November&nbsp;1, 2004. From January&nbsp;3, 2003 until
November&nbsp;1, 2004, Mr.&nbsp;Bertcher was also Chief Executive Officer of GBR. He has been a certified public accountant since 1973; Mr.&nbsp;Bertcher has been a director since June 1999 (and was from November 1989 to September 1996) of GBR.
Until November 1989, Mr.&nbsp;Bertcher was a partner in Grant Thornton, LLP having served as the Chairman of its National Real Estate and Construction Committee. Mr.&nbsp;Bertcher is also a director, Vice President and Treasurer (since
March&nbsp;24, 2009) of First Equity Properties, Inc., a Nevada corporation with securities registered under Section&nbsp;12(g) of the Securities Exchange Act of 1934. Executive Vice President and Chief Financial Officer of Pillar (since
April&nbsp;30, 2011). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Louis J. Corna, 64 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President, General Counsel/Tax Counsel and Secretary (since February 2004), Executive Vice President
(October 2001 to February 2004), Executive Vice President and Chief Financial Officer (June 2001 to October 2001) and Senior Vice President&#150;Tax (December 2000 to June 2001) of the Company, TCI, ARL and Prime and (prior to July 2003) of BCM;
Executive Vice President, General Counsel/Tax Counsel and Secretary (since February 2004), Executive Vice President&#150;Tax (July 2003 to February 2004) of Prime and PIAMI; Private Attorney (January 2000 to December 2000); Vice President&#150;Taxes
and Assistant Treasurer (March 1998 to January 2000) of IMC Global, Inc.; Vice President&#150;Taxes (July 1991 to February 1998) of Whitman Corporation. Executive Vice President-General Counsel/Tax Counsel and Secretary of Pillar (since
April&nbsp;30, 2011). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Alfred Crozier, 59 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President-Residential Construction (since November&nbsp;15, 2006) of the Company and of ARL and TCI. Prior
to his selection as an officer of the Company, Mr.&nbsp;Crozier was Managing Director of Development (November 2005 to November 2006) for Woodmont Investment Company GP, LLC, a Dallas, Texas based developer of commercial properties and residential
units. Prior thereto (October 2003 to November 2005) he was President of Sterling Builders, Inc., a Spring, Texas construction and consulting company. Prior thereto (August 2001 through September 2003) he was Vice President of Westchase
Construction, LTD, a Houston, Texas based construction firm and for more than five years prior thereto, he was employed by various firms engaged in the construction industry including Trammel Crow Residential (February 1995 through February 2000)
and The Finger Companies (August 1991 through February 1995). Mr.&nbsp;Crozier is also an architect. Executive Vice President-Residential Construction of Pillar (since April&nbsp;30, 2011). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Officers </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Although not an executive officer of the
Company, Daeho Kim currently serves as Treasurer. His position with the Company is not subject to a vote of stockholders. His age, term of service and all positions and offices with the Company, other principal occupations, business experience and
relationship with other entities during the last five years or more are set forth below. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-18-
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 <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Daeho Kim, 35 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Treasurer (since October&nbsp;29, 2008) of ARL, TCI and the Company. For more than five years prior thereto, Mr.&nbsp;Kim
has been employed by Prime in various financial capacities including Cash Manager and Assistant Director of Capital Markets. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>The Advisor
</B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Although the Board of Directors is directly responsible for managing the affairs of the Company and for
setting the policies which guide it, day-to-day operations are performed by a contractual advisor under the supervision of the Board of Directors. The duties of the advisor include, among other things, locating, investigating, evaluating and
recommending real estate and mortgage note investment and sales opportunities, as well as financing and refinancing sources. The advisor also serves as a consultant to the Board of Directors in connection with the business plan and investment
decisions made by the Board. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Pillar is the contractual advisor to IOT. Pillar is a Nevada corporation
(&#147;PIAMI&#148;) which is 100% owned by Realty Advisors, LLC, a Nevada limited liability company, the sole member of which is Realty Advisors, Inc., a Nevada corporation which is 100% owned by a Trust known as the May Trust. Until early 2009,
Syntek West, Inc., a Nevada corporation (&#147;SWI&#148;) which is owned 100% by Gene E. Phillips owned 20% of PIAMI which SWI exchanged to Realty Advisors, Inc. for certain securities issued by SWI. Gene E. Phillips and SWI are each a &#147;related
party&#148; for financial statement purposes because of the prior ownership arrangement. Prime served as the Company&#146;s advisor under an Advisory Agreement effective July&nbsp;1, 2009 between the Company and Prime through April&nbsp;30, 2011
when such agreement terminated and the Company and Pillar entered into an Advisory Agreement effective April&nbsp;30, 2011 (the &#147;Pillar Advisory Agreement&#148;). </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Under the Pillar Advisory Agreement, Pillar is required to annually formulate and submit for Board approval a budget and
business plan containing a twelve-month forecast of operations and cash flow, a general plan for asset sales and purchases, borrowing activity and other investments. Pillar is required to report quarterly to the Board on the Company&#146;s
performance against the business plan. In addition, all transactions required prior Board approval, unless they are explicitly provided for in the approved plan or were made pursuant to authority expressly delegated to Pillar by the Board.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Pillar Advisory Agreement also required prior approval of the Board for the retention of all consultants
and third party professionals, other than legal counsel. The Pillar Advisory Agreement provides that Pillar is deemed to be in a fiduciary relationship to the stockholders; contains a broad standard governing Pillar&#146;s liability for losses by
the Company; and contains guidelines for Pillar&#146;s allocation of investment opportunities as among itself, the Company and other entities it advises. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Pillar Advisory Agreement provides for Pillar to be responsible for the day-to-day operations of the Company and to receive an advisory fee comprised of a gross asset fee of 0.0625%&nbsp;per month
(0.75% per annum) of the average of the gross asset value (total assets less allowance for amortization, depreciation or depletion and valuation reserves) and an annual net income fee equal to 7.5% of the Company&#146;s net income. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-19-
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 <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Pillar Advisory Agreement also provides for Pillar to receive an annual
incentive sales fee equal to 10% of the amount, if any, by which the aggregate sales consideration for all real estate sold by the Company during the fiscal year exceeds the sum of (1)&nbsp;the cost of each property as originally recorded in the
Company&#146;s books for tax purposes (without deduction for depreciation, amortization or reserve for losses), (2)&nbsp;capital improvements made to such assets during the period owned, and (3)&nbsp;all closing costs (including real estate
commissions) incurred in the sale of such real estate. However, no incentive fee would be paid unless (a)&nbsp;such real estate sold in such fiscal year, in the aggregate, has produced an 8% simple annual return on the net investment, including
capital improvements, calculated over the holding period before depreciation and inclusive of operating income and sales consideration, and (b)&nbsp;the aggregate net operating income from all real estate owned for each of the prior and current
fiscal years shall be at least 5% higher in the current fiscal year than in the prior fiscal year. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Additionally, pursuant to the Pillar Advisory Agreement, Pillar or an affiliate of Pillar is to receive an acquisition
commission for supervising the acquisition, purchase or long-term lease of real estate equal to the lesser of (i)&nbsp;up to 1% of the cost of acquisition, inclusive of commissions, if any, paid to non-affiliated brokers, or (ii)&nbsp;the
compensation customarily charged in arm&#146;s-length transactions by others rendering similar property acquisition services as an ongoing public activity in the same geographical location and for comparable property, provided that the aggregate
purchase price of each property (including acquisition fees and real estate brokerage commissions) could not exceed such property&#146;s appraised value at acquisition. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Pillar Advisory Agreement requires Pillar or any affiliate of Pillar to pay the Company one-half of any compensation
received from third parties with respect to the origination, placement or brokerage of any loan made by the Company. However, the compensation retained by Pillar or any affiliate of Pillar may not exceed the lesser of (i)&nbsp;2% of the amount of
the loan commitment, or (ii)&nbsp;a loan brokerage and commitment fee reasonable and fair under the circumstances. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Pillar Advisory Agreement also provides that Pillar or an affiliate of Pillar is to receive a mortgage or loan acquisition fee with respect to the purchase of any existing mortgage loan equal to the
lesser of (i)&nbsp;1% of the amount of the loan purchased, or (ii)&nbsp;a brokerage or commitment fee reasonable and fair under the circumstances. Such fee will not be paid in connection with the origination or funding of any mortgage loan by the
Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Under the Pillar Advisory Agreement, Pillar or an affiliate of Pillar also is to receive a mortgage
brokerage and equity refinancing fee for obtaining loans or refinancing on properties equal to the lesser of (i)&nbsp;1% of the amount of the loan or the amount refinanced, or (ii)&nbsp;a brokerage or refinancing fee which is reasonable and fair
under the circumstances. However, no such fee is to be paid on loans from Pillar or an affiliate of Pillar without the approval of the Board of Directors. No fee shall be paid on loan extensions. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Pillar Advisory Agreement also provides for all activities in connection with or related to construction for the
Company and its subsidiaries, Pillar can receive a fee equal to 6% of the so-called &#147;hard costs&#148; only of any costs of construction on a completed basis, based upon amounts set forth as approved on any architect certificate issued in
connection with such construction, which fee is payable at such time as the applicable architect certifies other costs for payment to third parties. The phrase &#147;hard costs&#148; means all actual costs of construction paid to contractors,
subcontractors and third parties for materials or labor performed as a part of the construction but does not include items generally regarded as &#147;soft costs&#148; which are consulting fees, attorneys&#146; fees, architectural fees, permit fees
and fees of other professionals. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-20-
</FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Under the Pillar Advisory Agreement, Pillar is to receive reimbursement of
certain expenses incurred by it in the performance of advisory services to the Company; provided, however, all or a portion of the annual advisory fee must be refunded by Pillar if the Operating Expenses of the Company (as defined in the Pillar
Advisory Agreement) exceed certain limits specified in the Pillar Advisory Agreement based on the book value, net asset value and net income of the Company during the fiscal year. Pillar may assign the Pillar Advisory Agreement only with the prior
consent of the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Additionally, if management requests that Pillar render services other than those
required by the Pillar Advisory Agreement, Pillar or an affiliate of Pillar was to be separately compensated for such additional services on terms to be agreed upon from time to time. As discussed below, under Property Management, the Company hired
Triad Realty Services LP (&#147;Triad&#148;), an affiliate of Pillar, to provide management for the Company&#146;s properties and, as discussed below, under &#147;Real Estate Brokerage,&#148; the Company has engaged Regis Realty I LLC (&#147;Regis
I&#148;), a related party, on a non-exclusive basis to provide brokerage services for the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Pillar
also serves as a contractual advisor to TCI and ARL and the principal officers of Pillar are also the principal officers of the Company. The Prime Advisory Agreement between the Company and Prime contained substantially the same terms as the current
Pillar Advisory Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Effective April&nbsp;30, 2011, the Company and Pillar entered into a Cash
Management Agreement (the &#147;Pillar CMA&#148;) under which all funds of the Company are delivered to Pillar which has a deposit liability to the Company and is responsible for payment of all payables and investment of all excess funds which earn
interest at the <I>Wall Street Journal</I> Prime Rate plus 1%&nbsp;per annum, as set quarterly on the first day of each calendar quarter. Borrowings for the benefit of the Company bear the same interest rate. The Pillar CMA may be terminated at any
time without penalty for any reason upon sixty (60)&nbsp;days written notice by either party to the other, but otherwise remains in full force and effect coterminous with that of the Pillar Advisory Agreement and automatically renews from year to
year unless terminated. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The managers and principal officers of Prime are as set forth below: </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="81%"></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Name</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Office(s)</B></FONT></TD></TR>


<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mickey&nbsp;N.&nbsp;Phillips</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Director</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ryan&nbsp;T.&nbsp;Phillips</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Director</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Daniel J. Moos</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">President and Chief Operating Officer</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Gene&nbsp;S.&nbsp;Bertcher</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President and Chief Financial Officer</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Louis J. Corna</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President, General Counsel, Tax Counsel and Secretary</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Alfred Crozier</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President, Residential Construction</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mickey N. Phillips is the brother of Gene E. Phillips, and Ryan T. Phillips is the son of
Gene E. Phillips. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-21-
</FONT></P>


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 <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Property Management </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Triad, an affiliate of Pillar, provides property management services to the Company for a fee of 6% or less of the
monthly gross rents collected on residential properties and 3% or less of the monthly gross rents collected on commercial properties under its management. Triad subcontracts with other entities for the provision of the property-level management
services to the Company at various rates. The general partner of Triad is Prime Income Asset Management, Inc., a Nevada corporation (&#147;PIAMI&#148;) which is the sole member of Prime. The limited partner of Triad is HRS Holdings LLC
(&#147;HRSHLLC&#148;), a related party. Triad subcontracts the property-level management and leasing of five of the Company&#146;s commercial properties to Regis I, a related party, which is a company owned by HRSHLLC. Regis I also received property
and construction management fees and leasing commissions in accordance with its property-level management agreement with Triad. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Real
Estate Brokerage </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Since January&nbsp;1, 2003, Regis I provided real estate brokerage services to the
Company (on a non-exclusive basis). Regis I is entitled to receive a real estate commission for property purchases and sales in accordance with a sliding scale of total fees to be paid (i)&nbsp;maximum fee of 4.5% on the first $2 million of any
purchase or sale transaction of which no more than 3.5% would be paid to Regis I or affiliates; (ii)&nbsp;maximum fee of 3.5% on transaction amounts between $2 million and $5 million, of which no more than 3% would be paid to Regis I or affiliates;
(iii)&nbsp;maximum fee of 2.5% on transaction amounts between $5 million and $10 million, of which no more than 2% would be paid to Regis I; and (iv)&nbsp;maximum fee of 2% on transaction amounts in excess of $10 million, of which no more than 1.5%
would be paid to Regis I or affiliates. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Certain Relationships and Related Transactions </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Certain Business Relationships </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Pillar served as the Company&#146;s advisor since April&nbsp;30, 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Triad provides property management services. The general partner of Triad is PIAMI. The limited partner is HRSHLLC. Triad subcontracts the property-level management and leasing of five of the
Company&#146;s commercial properties to Regis I, a limited liability company, the sole member of which is HRSHLLC. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Regis I also provides brokerage services, on a non-exclusive basis, for the Company and received brokerage commissions in accordance with a brokerage agreement. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Messrs. Daniel J. Moos, Gene S. Bertcher, Louis J. Corna and Alfred Crozier are employed by Pillar which is owned by
Realty Advisors, LLC, a Nevada limited liability company (&#147;RALLC&#148;). The sole member of RALLC is Realty Advisors, Inc., a Nevada corporation. Messrs. Moos, Bertcher, Corna and Crozier, executive officers of the Company, also serve as
executive officers of ARL and TCI, and accordingly owe fiduciary duties to those entities as well as the Company. Mr.&nbsp;Bertcher is also an officer, director and employee of GBR and as such also owes fiduciary duties to GBR as well as the
Company. Messrs. Jakuszewski and Munselle and Ms.&nbsp;Hunt, serve as directors of ARL and TCI and owe fiduciary duties to TCI and ARL, as well as the Company under applicable law. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-22-
</FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Related Party Transactions </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Historically, the Company has engaged in and may continue to engage in business transactions, including real estate
partnerships, with related parties. Management believes that all of the related party transactions represented the best investments available at the time and were at least as advantageous to the Company as could have been obtained from unrelated
third parties. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">On August&nbsp;22, 2005, the Company purchased 10.08 acres of land located in Dallas County,
Texas, from TCI (a related party) for $13 million. The purchase price was paid with cash of $7 million and the conveyance to the seller of $6 million in notes receivable held by the Company. The cash was obtained from financing the land acquired in
the transaction. The agreement includes a put option whereby for the period of fifteen months after the closing, the Company has the right to resell the property to the seller for a price of $13 million plus a preferred return of 9%&nbsp;per annum
accruing from the closing date. Due to the related-party nature of the transaction, including the likelihood that the Company will exercise its put option, this transaction has been treated as a financing transaction. The Company continues to carry
the $6 million of notes as a receivable and has recorded the $7 million as a receivable from TCI. TCI pays the Company interest in an amount equal to what the Company pays for its loan on the property. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company is a partner with TCI in TCI Eton Square, L.P. TCI owns 3,538,775 shares of Common Stock of the Company
(approximately 84.9%). TCI owes $48.6 million to IOT which includes the $19.2 million note assumed from SWI in 2009 and $33.3 million of obligations TCI purchased from IOT&#146;s then Advisor, Prime at April&nbsp;30, 2011. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">In 2011, the Company paid Prime and Pillar $300,000 and $600,000 respectively in advisory fees. In addition, from time to
time, the Company has made advances to Pillar, which generally has not had specific repayment terms and has been reflected in the Company&#146;s financial statements as receivables from or payables to affiliates. Such advances bear interest at 1%
above the prime rate. During 2011, the Company received interest of $600,000 and $300,000 from Prime and Pillar respectively. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">From time to time, the Company and its affiliates have made advances to each other which generally have not had specific repayment terms, did not bear interest, are unsecured and have been reflected in
the Company&#146;s financial statements as other assets or other liabilities. At December&nbsp;31, 2011, the Company had a receivable of $32,400,000 due from TCI. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">On July&nbsp;5, 2011, the Company recognized a September&nbsp;21, 2010 sale of its investment in Transcontinental
Brewery, Inc. to Warren Road Farm, Inc., a related party under common control, for a sales price of $3,800,000. This entity owns a 29,784 square foot storage warehouse and 13 acres of land known as Eagle Crest located in Farmers Branch, Texas. The
purchaser assumed the existing mortgage of $2,400,000 secured by the property. The Company recorded a loss of $500,000 when ownership transferred to the existing lender. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">On July&nbsp;5, 2011, the Company recognized a December&nbsp;24, 2010 sale of approximately 6.6 acres of land known as
Three Hickory Land located in Farmers Branch, Texas to Fenton Real Estate, Inc., a related party under common control, for a sales price of $1,300,000. There was no gain or loss recorded when ownership transferred to the existing lender. </FONT></P>

 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-23-
</FONT></P>


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 <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Restrictions on Related Party Transactions </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Article FOURTEENTH of the Company&#146;s Articles of Incorporation provides that the Company shall not, directly or
indirectly, contract or engage in any transaction with (1)&nbsp;any director, officer or employee of the Company, (2)&nbsp;any director, officer or employee of the advisor, (3)&nbsp;the advisor, or (4)&nbsp;any affiliate or associate (as such terms
are defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) of any of the aforementioned persons, unless (a)&nbsp;the material facts as to the relationship among or financial interest of the relevant individuals or persons and
as to the contract or transaction are disclosed to or are known by the Company&#146;s Board of Directors or the appropriate committee thereof, and (b)&nbsp;the Company&#146;s Board of Directors or appropriate committee thereof determines that such
contract or transaction is fair to the Company and simultaneously authorizes or ratifies such contract or transaction by the affirmative vote of a majority of independent directors of the Company entitled to vote thereon. Article FOURTEENTH defines
an &#147;Independent Director&#148; as one who is neither an officer or an employee of the Company, nor a director, officer or employee of the Company&#146;s advisor. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>OTHER MATTERS </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Board of Directors knows of no other
matters that may be properly or should be brought before the Annual Meeting. However, if any other matters are properly brought before the Annual Meeting, the persons named in the enclosed proxy or their substitutes will vote in accordance with
their best judgment on such matters. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>FINANCIAL STATEMENTS </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The audited financial statements of the Company, in comparative form for the years ended December&nbsp;31, 2010 and 2011
are contained in the 2011 Annual Report to Stockholders, which is being mailed to stockholders in April 2011 at the same time as the mailing of this proxy statement. However, such report and the financial statements contained therein are not to be
considered part of this solicitation. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>SOLICITATION OF PROXIES </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>THIS PROXY STATEMENT IS FURNISHED TO STOCKHOLDERS TO SOLICIT PROXIES ON BEHALF OF THE BOARD OF DIRECTORS OF INCOME
OPPORTUNITY REALTY INVESTORS, INC. </B>The cost of soliciting proxies will be born by the Company. Directors and officers of the Company may, without additional compensation, solicit by mail, in person or by telecommunication. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>FUTURE PROPOSALS OF STOCKHOLDERS </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Stockholder proposals for our Annual Meeting to be held in 2013 must be received by us by December&nbsp;31, 2012, and must otherwise comply with the rules promulgated by the Securities and Exchange
Commission to be considered for inclusion in our proxy statement for that year. Any stockholder proposal, whether or not to be included in our proxy materials, must be sent to our Corporate Secretary at 1603 LBJ Freeway, Suite 800, Dallas, Texas
75234. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center> <P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-24-
</FONT></P>


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 <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>COPIES OF INCOME OPPORTUNITY REALTY INVESTORS, INC.&#146;S ANNUAL REPORT
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010 TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (WITHOUT EXHIBITS) ARE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE THROUGH OUR WEBSITE AT
</B><B><I><U>WWW.INCOMEOPP-REALTY.COM</U></I></B><B> OR UPON WRITTEN REQUEST TO INCOME OPPORTUNITY REALTY INVESTORS, INC., 1603 LBJ FREEWAY, SUITE 800, DALLAS, TEXAS 75234, ATTN: DIRECTOR OF INVESTOR RELATIONS. </B></FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD VALIGN="top"> <P STYLE="text-indent:2.00em" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dated: April&nbsp;6, 2012.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">By order of the Board of Directors,</FONT></TD></TR>
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<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">/s/ Louis J. Corna&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P></TD></TR>
<TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Louis J. Corna, Executive Vice President,</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">General Counsel, Tax Counsel and Secretary</FONT></TD></TR>
</TABLE>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-25-
</FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="3"><B>ANNUAL MEETING OF STOCKHOLDERS OF </B></FONT></P>
<P STYLE="margin-top:20px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="5"><B>INCOME OPPORTUNITY REALTY INVESTORS, INC. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:ARIAL" SIZE="3"><B>May 9, 2012 </B></FONT></P> <P STYLE="margin-top:36px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="3"><B><U>NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL</U>: </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2">The Notice of Meeting, Proxy Statement, Proxy Card </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:ARIAL" SIZE="2">are available at www.incomeopp-realty.com </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:ARIAL" SIZE="5"><B>Please sign, date and mail </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="5"><B>your proxy card in the </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="5"><B>envelope provided as soon </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="5"><B>as possible. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT><FONT
STYLE="font-family:ARIAL" SIZE="5"><FONT STYLE="font-family:Times New Roman" SIZE="5"><FONT STYLE="FONT-FAMILY:WINGDINGS 3">&#105;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="5"></FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;
&nbsp;Please detach along perforated line and mail in the envelope provided.&nbsp;&nbsp;</FONT><FONT STYLE="font-family:ARIAL" SIZE="5"><FONT STYLE="font-family:Times New Roman" SIZE="5"><FONT STYLE="FONT-FAMILY:WINGDINGS 3">&#105;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="5"></FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"> </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top" BGCOLOR="#ffffff">
<P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#110;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></P></TD>
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<TD VALIGN="top" COLSPAN="5"> <P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;20430000000000000000&nbsp;&nbsp;&nbsp;&nbsp;8</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-left:16.80em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="2">050912</FONT></P></TD>
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<TD VALIGN="top" COLSPAN="17" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="1"><B></B><B>The Board of Directors
of Income Opportunity Realty Investors, Inc. recommends approval of all nominees for election as directors, and</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>a vote FOR
ratification of the appointment of Swaim &amp; Associates, P.C. as the Independent registered public accounting firm.</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>PLEASE SIGN,
DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE</B>&nbsp;<FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="1"></FONT></FONT></P></TD></TR></TABLE>
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<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="1">FOR</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="1">AGAINST</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="1">ABSTAIN</FONT></TD></TR>
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<TD VALIGN="top" COLSPAN="7"> <P STYLE="margin-left:1.00em; text-indent:-1.00em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">1.&nbsp;&nbsp;&nbsp;Election of Directors:</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">2.&nbsp;&nbsp;Ratification of the Appointment of Swalm &amp; Associates, P.C. as the
independent registered public accounting firm</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px" align="left">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em" ALIGN="justify"><FONT
STYLE="font-family:ARIAL" SIZE="1">3.&nbsp;&nbsp;In their discretion on any other matters which may properly come before the meeting or any adjournment(s) thereof.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="7"> <P STYLE="margin-left:9.75em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>NOMINEES:</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD VALIGN="top" ROWSPAN="2"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px" align="left">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="4"><FONT
STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ROWSPAN="2"> <P STYLE="font-size:4px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>FOR ALL NOMINEES</B></FONT></P>
<P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px" align="left">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>WITHHOLD&nbsp;AUTHORITY</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>FOR&nbsp;ALL&nbsp;NOMINEES</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ROWSPAN="2"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2.00em; text-indent:-2.00em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">O&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Henry A. Butler</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2.00em; text-indent:-2.00em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">O&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sharon Hunt</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2.00em; text-indent:-2.00em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">O&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert A. Jakuszewski</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:2.00em; text-indent:-2.00em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">O&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ted R. Munselle</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="7" ROWSPAN="5"> <P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>The Board of Directors of Income Opportunity Realty Investors, Inc. recommends approval of all nominees for election as directors, and a vote
FOR ratification of the appointment of Swalm &amp; Associates, P.C. as the Independent registered public accounting firm.</B></FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="middle">
<P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="middle"> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>FOR ALL EXCEPT</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>(See instructions below)</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="middle"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="middle"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="middle"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="middle"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom" COLSPAN="7"> <P STYLE="margin-left:5.00em; text-indent:-5.00em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"><B><U>INSTRUCTIONS:</U></B>&nbsp;To&nbsp;withhold authority to vote for any individual nominee(s), mark
<B>&#147;FOR ALL EXCEPT&#148;</B> and fill in the circle next to each nominee you wish to withhold, as Shown here:&nbsp;&nbsp;</FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT><FONT STYLE="font-family:ARIAL" SIZE="5"></FONT><FONT
STYLE="font-family:ARIAL" SIZE="2"></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT><FONT
STYLE="font-family:ARIAL" SIZE="5"></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"><FONT STYLE="font-family:Times New Roman" SIZE="1"></FONT><FONT STYLE="font-family:WINGDINGS" SIZE="1" COLOR="#000000">&#108;
</FONT><FONT STYLE="font-family:Times New Roman" SIZE="1"></FONT><FONT STYLE="font-family:ARIAL" SIZE="1"></FONT></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD COLSPAN="7" VALIGN="top"></TD></TR>
<TR>
<TD HEIGHT="40" STYLE="BORDER-TOP:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="40" COLSPAN="2" STYLE="BORDER-TOP:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="40" COLSPAN="2" STYLE="BORDER-TOP:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="40" COLSPAN="2" STYLE="BORDER-TOP:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="40" COLSPAN="8" STYLE="BORDER-LEFT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="middle"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="middle"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD COLSPAN="7" VALIGN="top"></TD></TR>
<TR>
<TD HEIGHT="40"></TD>
<TD HEIGHT="40" COLSPAN="2"></TD>
<TD HEIGHT="40" COLSPAN="2"></TD>
<TD HEIGHT="40" COLSPAN="2"></TD>
<TD HEIGHT="40" COLSPAN="8" STYLE="BORDER-LEFT:1px solid #000000">&nbsp;</TD></TR>
<TR>
<TD VALIGN="middle"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD COLSPAN="7" VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="5" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">To change the address on your account, please check the box at right and indicate your
new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:ARIAL" SIZE="5"><FONT STYLE="font-family:Times New Roman" SIZE="5"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT>
<FONT STYLE="font-family:ARIAL" SIZE="5"></FONT>&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD COLSPAN="7" VALIGN="top"></TD></TR>
</TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
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<TD WIDTH="11%"></TD></TR>


<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"> <P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">Signature&nbsp;of&nbsp;Stockholder&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">Date:&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">
<P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"></FONT><FONT STYLE="font-family:ARIAL" SIZE="4">&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT STYLE="font-family:ARIAL" SIZE="1"></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">Signature of Stockholder&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1">Date:&nbsp;&nbsp;</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8px"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
</TABLE>
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<TR>
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<P ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#110;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="13"> <P STYLE="margin-left:2.50em; text-indent:-2.50em" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="1"><B>Note:</B><B></B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please sign exactly as your name or names appear on this
Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#110;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT></TD></TR>
</TABLE>

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<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:120px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:48px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="3"><FONT STYLE="font-family:Times New Roman" SIZE="3"><FONT
STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#162;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">
</FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:48px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="4"><B>INCOME OPPORTUNITY REALTY INVESTORS, INC. </B></FONT></P>
<P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="3"><B>THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:ARIAL" SIZE="3"><B>ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 9, 2012. </B></FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:ARIAL" SIZE="2">The undersigned
stockholder of INCOME OPPORTUNITY REALTY INVESTORS, INC. hereby appoints HENRY A. BUTLER and LOUIS J. CORNA, and each of them proxies with full power of substitution in each of them, in the name, place and stead of the undersigned, as attorneys and
proxies to vote all shares of Common Stock, par value $0.01 per share, of INCOME OPPORTUNITY REALTY INVESTORS, INC. which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on Wednesday, May 9, 2012, at 11:00 a.m.,
local Dallas, Texas time, at 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234, or any adjournment(s) thereof, with all powers the undersigned would possess if personally present, as indicated below, for the transaction of such business as may
properly come before said meeting or any adjournment(s) thereof, all as set forth in the April 6, 2012 Proxy Statement for said meeting. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="3"><B>(Continued and to be signed and dated on the reverse side) </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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STYLE="FONT-FAMILY:WINGDINGS 2">&#162;</FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="4"></FONT></FONT><FONT STYLE="font-family:ARIAL" SIZE="2"></FONT></P></TD>
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<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="3"><B>14475&nbsp;&nbsp;<FONT STYLE="font-family:ARIAL" SIZE="4"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS 2">&#162;</FONT></FONT><FONT
STYLE="font-family:ARIAL" SIZE="4"><B></B></FONT><B><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT></B><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT></FONT></B></FONT></TD></TR>
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