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

In addition, IOT's results of operations for the three months ended December 31, 2008 were a net income applicable to common shares of $479,000 or $0.12 per diluted earnings per shares as compared to a net loss applicable to common shares of ($18,000) or ($0.01) per diluted earnings per share as compared for the same period ended 2007.

Results of the year ended December 31, 2008 as compared to the same period ended 2007;

Interest income decreased $1.7 million as compared to prior year. The decrease is due to no longer accruing interest income on our notes receivables from Unified Housing Foundation, an affiliated entity.

Mortgage loan interest expense decreased $1.2 million primarily due to paying off the mortgages on the six Midland/Odessa properties that were sold in January of this year.

Earnings from unconsolidated subsidiaries and investees decreased $0.5 million due to writing off the majority of the value of our investment in Nakash Income Associates.

Income from involuntary conversion of $7.4 million is due to insurance proceeds received from the tornado damage incurred on the Falcon Point apartments.

Net income due to affiliate of $1.0 million was due to the overall positive income in the current year, not applicable in prior year.

Income from discontinued operations was $14.1 million in 2008. Our discontinued operations consist of seven apartment complexes. Included in discontinued operations for 2008 is a gain on sale of $29.8 million, net of minority interest and before taxes.

Results of the year ended December 31, 2007 as compared to the same period ended 2006;

General and administrative expense increased $0.3 million in 2007 as compared to 2006. The increase was attributable to an overall increase in costs and additional repairs and maintenance incurred during the year.

Advisory fees increased $0.5 million in 2007 as compared to 2006 as our base assets increase in 2007.

Interest income increased $1.3 million in 2007 as compared to 2006. This increase is due to the additional interest income accrued on the transfer of $9.4 million to the advisor.

Mortgage and loan interest increased by $0.4 million in 2007 as compared to 2006 due to the additional interest expense associated with the mortgage on the purchase of Falcon Point in 2006.

Net loss from discontinued operations was ($0.2 million) in 2007. Discontinued operations relates to seven apartment complexes sold subsequent to the year ended December 31, 2007.

Income Opportunity Realty Investors, Inc., a Dallas-based real estate investment company, holds a portfolio of equity real estate in Texas, including office buildings, and undeveloped land. For more information, go to IOT's website at www.incomeopp-realty.com.

INCOME OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
                                                                                                December 31,         December 31,
                                                                                                2008                 2007
                                                                                                (dollars in thousands, except share and par value amounts)
                                                     Assets
Real estate, at cost                                                                            $        39,255      $        43,027
Real estate held for sale at cost, net of depreciation                                                   -                    17,032
                   Less accumulated depreciation                                                         (2,313   )           (2,456   )
                                                     Total real estate                                   36,942               57,603
Notes and interest receivable                                                                            41,432               27,441
                   Less allowance for doubtful accounts                                                  (1,826   )           -
                                                     Total notes and interest receivable                 39,606               27,441
Cash and cash equivalents                                                                                52                   267
Investments in unconsolidated subsidiaries and investees                                                 74                   532
Receivables from affiliates                                                                              38,203               27,802
Other assets                                                                                             676                  2,662
                                                     Total assets                               $        115,553     $        116,307
                                                     Liabilities and Shareholders' Equity
Liabilities:
                   Notes and interest payable                                                   $        42,319      $        44,354
                   Notes related to assets held-for-sale                                                 -                    25,152
                   Accounts payable and other liabilities                                                2,460                2,057
                                                                                                         44,779               71,563
Commitments and contingencies:
Minority interest                                                                                        -                    677
Shareholders' equity:
                   Common Stock, $.01 par value, authorized 10,000,000 shares; issued                    42                   42
                   4,173,675 shares in 2008 and 2007
                   Treasury stock at cost                                                                (39      )           (37      )
                   Paid-in capital                                                                       61,955               61,955
                   Retained earnings                                                                     8,816                (17,893  )
                                                     Total shareholders' equity                          70,774               44,067
                                                     Total liabilities and shareholders' equity $        115,553     $        116,307

INCOME OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                   For the Years Ended December 31,
                                                                                         2008           2007           2006
                                                                                   (dollars in thousands, except share and per share amounts)
Revenues:
            Rental and other property revenues                                     $     1,291        $ 1,329        $ 1,316
Expenses:
            Property operating expenses                                                  962            743            844
            Depreciation and amortization                                                206            230            218
            General and administrative                                                   606            756            461
            Advisory fee to affiliate                                                    895            1,034          496
            Total operating expenses                                                     2,669          2,763          2,019
            Operating loss                                                               (1,378    )    (1,434    )    (703      )
Other income (expense):
            Interest income                                                              2,993          4,716          3,395
            Mortgage and loan interest                                                   (2,410    )    (3,640    )    (3,248    )
            Earnings from unconsolidated subsidiaries and investees                      (458      )    17             (33       )
            Involuntary conversion                                                       7,356          -              -
            Net income to affiliate                                                      (1,011    )    -              (9        )
            Total other income                                                           6,470          1,093          105
            Income (loss) before gain on land sales, minority interest, and taxes        5,092          (341      )    (598      )
            Gain on land sales                                                           -              -              -
            Minority interest                                                            -              (72       )    (92       )
            Income (loss) from continuing operations before income tax benefit           5,092          (413      )    (690      )
            Income tax benefit (expense)                                                 7,566          (113      )    302
            Net income (loss) from continuing operations                                 12,658         (526      )    (388      )
            Income (loss) from discontinued operations, net of minority interest         21,617         (322      )    862
            before income tax expense
            Income tax benefit (expense)                                                 (7,566    )    113            (302      )
            Net income (loss) from discontinuing operations, net of minority             14,051         (209      )    560
            interest
            Net income (loss) applicable to common shares                          $     26,709       $ (735      )  $ 172
            Earnings per share - basic
            Income (loss) from continuing operations                               $     3.04         $ (0.13     )  $ (0.09     )
            Discontinued operations                                                      3.37           (0.05     )    0.13
            Net income (loss) applicable to common shares                          $     6.41         $ (0.18     )  $ 0.04
            Earnings per share - diluted
            Income (loss) from continuing operations                               $     3.04         $ (0.13     )  $ (0.09     )
            Discontinued operations                                                      3.37           (0.05     )    0.13
            Net income (loss) applicable to common shares                          $     6.41         $ (0.18     )  $ 0.04
            Weighted average common share used in computing earnings per share           4,168,264      4,168,414      4,173,675
            Weighted average common share used in computing diluted earnings per         4,168,264      4,168,414      4,173,675
            share

SOURCE: Income Opportunity Realty Investors, Inc.

Income Opportunity Realty Investors, Inc. 
Investor Relations, 800-400-6407 
investor.relations@primeasset.com