8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act

Date of Report (Date of earliest event reported): September 30, 2006

INCOME OPPORTUNITY REALTY INVESTORS, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada	001-14784	75-2615944
(State or other	(Commission	(I.R.S. Employer
jurisdiction of incorporation)	File No.)	Identification No.)
1755 Wittington Place, Suite 300
Dallas, Texas		75234
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code 214-750-5800

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 — Financial Information

Item 2.02. Results of Operations and Financial Condition

     On November 14, 2006, Income Opportunity Realty Investors, Inc. (“IOT” or the “Company”) announced its operational results for the quarter year ended September 30, 2006. A copy of the announcement is attached as Exhibit “99.1.”

     The information furnished pursuant to Item 2.02 in this Form 8-K, including Exhibit “99.1” attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless we specifically incorporate it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. We undertake no duty or obligation to publicly-update or revise the information furnished pursuant to Item 2.02 of this Current Report on
Form 8-k.

Section 9 — Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits

     (c) Exhibits.

     The following exhibit is furnished with this Report:

Exhibit
Designation	Description of Exhibit
99.1*	Press Release dated November 14, 2006

*Furnished herewith.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly-caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly-authorized.

Dated: November 15, 2006	INCOME OPPORTUNITY REALTY
	INVESTORS, INC.
	By:	/s/ Steven A. Abney
		Steven A. Abney, Executive Vice President,
		Chief Financial Officer and Acting Principal
		Executive Officer

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EX-99.1

EXHIBIT 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE Contact:
Income Opportunity Realty Investors, Inc.
Investors Relations
(800) 400-6407
investor.relations@primeasset.com

Income Opportunity Realty Investors, Inc. Reports Quarterly Results

DALLAS (November 14, 2006) — Income Opportunity Realty Investors, Inc. (AMEX: IOT), a Dallas-based real estate investment company, today reported a net loss of $(229,000) or $(0.06) per share for the three months ended September 30, 2006 compared to net income of $280,000 or $0.07 per share for the same period in 2005. For the nine months ended September 30, 2006, net income was $430,000 or $0.10 per share compared to $1.113 million or $0.27 per share for the same period in 2005. Compared to the same period in 2005, the Company’s financial results for the third quarter 2006 swung to a loss due principally to a combination of higher interest expense and lower interest income.

Key items for the nine months ended September 30, 2006, compared to the same period in 2005 included:

• Rents and other property revenues for the three and nine months ended September 30, 2006 were $2.0 million and $5.6 million as compared to $1.7 million and $4.8 million in the corresponding periods in 2005. The increase is primarily due to rental increases and the March 2006 purchase of the Falcon Point apartment community in Indianapolis, Indiana.

• Property operations expense for the three and nine months ended September 30, 2006 was $1.2 million and $3.0 million as compared to $870,000 and $2.5 million for the corresponding periods in 2005. The increase is primarily due to operating expenses from the Falcon Point Apartments.

• Interest income for the three and nine months ended September 30, 2006 was $707,000 and $2.7 million compared to $979,000 and $2.9 million for the corresponding periods in 2005. Decreases were due to the overall reduction in notes receivable held by the Company.

• Interest expense for the three and nine months ended September 30, 2006 was $1.3 million and $3.3 million compared to $989,000 and $2.5 million for the corresponding periods in 2005. The increase was primarily due to the additional debt incurred by IORI during 2005 and 2006 due to new loans, refinancings and the acquisition of Falcon Point. The increase was also due to increased interest rates for IORI’s variable interest rate debt.

Exhibit 99.1 — Page 1

• Advisory fees for the three and nine months ended September 30, 2006 were $261,000 and $678,000 compared to $165,000 and $502,000 for the corresponding periods in 2005. The increase was due to a net increase in gross assets which is the basis of the advisory fee. The increase was also due to fees for refinancing certain mortgage obligations. These increases were offset by interest paid by the advisor to IORI under a cash management agreement between the advisor and IORI.

• General and administrative expenses for the three and nine months ended September 30, 2006 were $109,000 and $391,000 as compared to $132,000 and $473,000 in the corresponding periods in 2005.

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

######

Exhibit 99.1 — Page 2

INCOME OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2006			2005
	(Unaudited)
	(dollars in thousands)
Assets
Real estate held for investment	$	63,230		$	35,083
Less—accumulated depreciation		(4,867	)		(4,311	)
		58,363			30,772
Notes and interest receivable		27,368			63,230
Investment in real estate partnerships		657			547
Cash and cash equivalents		57			201
Due from affiliates		17,627			1,853
Other assets		3,954			2,738
	$	108,026		$	99,341
Liabilities and Stockholders’ Equity
Liabilities:
Notes and interest payable	$	60,903		$	52,817
Other liabilities		1,473			1,344
		62,376			54,161
Commitments and contingencies
Minority interest		553			513
Stockholders’ equity:
Common Stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding 4,168,035 shares at September 30, 2006 and December 31, 2005		42			42
Additional paid-in capital		61,955			61,955
Accumulated deficit		(16,900	)		(17,330	)
		45,097			44,667
	$	108,026		$	99,341

INCOME OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2006			2005			2006			2005
	(dollars in thousands, except per share)
Property revenue
Rents and other property revenues	$	2,028		$	1,688		$	5,648		$	4,830
Operating expenses
Property operations		1,196			870			3,032			2,516
Depreciation		191			189			551			539
General and administrative		109			132			391			473
Advisory fees		261			165			678			502
Total operating expenses		1,757			1,356			4,652			4,030
Operating income (loss)		271			332			996			800
Other income (expense):
Interest income		707			979			2,705			2,937
Mortgage and loan interest		(1,255	)		(989	)		(3,303	)		(2,487	)
Net income fee		17			(25	)		(38	)		(92	)
Total other income (expense)		(531	)		(35	)		(636	)		358
Income before equity in earnings of investees and minority interest		(260	)		297			360			1,158
Equity in earnings (loss) of investees		29			(17	)		110			(45	)
Minority interest		2			—			(40	)		—
Net income	$	(229	)	$	280		$	430		$	1,113
Earnings per share:
Net earnings from continuing operations	$	(0.06	)	$	0.07		$	0.10		$	0.27
Weighted average common shares used in computing earnings per share		4,168,035			4,168,035			4,168,035			4,168,035

Earnings per share reflect a 3-for-1 forward split of the stock in the form of a 200 percent stock
dividend declared in May 2005.