Income Opportunity Realty Investors, Inc. Reports Fourth Quarter 2007 Results

DALLAS--(Business Wire)--
Income Opportunity Realty Investors, Inc. (AMEX: IOT) , a
Dallas-based real estate investment company, today reported net income
for the year ended December 31, 2007. The Company is aware of the
challenges that are currently facing the real estate industry. Despite
these issues, given the quality of the underlying assets and our
attention to details, management remains highly focused on its
operations, development projects and investment strategy.

IOT today reported net loss applicable to common shares of
($735,000) or ($.18) per share for the twelve months ended December
31, 2007 as compared to a net income applicable to common share of
$172,000 or $.04 per share for the same period ended 2006.

In addition, income applicable to common shares for the three
months ended December 31, 2007 was ($18,000) or ($.01) per share as
compared to a net loss applicable to common share of ($258,000) or
($.07) per share for the same period ended 2006.

Subsequent to year end on January 25, 2008, we sold six apartment
complexes, totaling 621 units which were all located in Midland,
Texas, for an aggregate sales price of $49.6 million. We received
$20.7 million in cash after paying off $25.0 million in debt and
related closing costs. We recorded a gain of sale of $31.0 million
upon the sale of these properties.

Results for the twelve months ended December 31, 2007

Rental income increased from $2.0 million in 2006 to $2.3 million
in 2007, an increase of $300,000 due to the acquisition of Falcon
Point in March of 2006.

Property operations expense increased from $1.5 million in 2006 to
$1.9 million in 2007, an increase of $400,000 due to the acquisition
of Falcon Point apartments in March of 2006.

Advisory fees increase from $496, 000 in 2006 to $1.0 million in
2007 due to the purchase of Falcon Point and Travelers land in 2006,
as the total assets are a component of the advisory fee.

Interest income increased from $3.4 million in 2006 to $4.7
million in 2007, an increase of $1.3 million due to the transfer of
$6.1 million to the advisor in the current year and the additional
income received from interest. Per the management agreement, the
advisor receives excess cash which pays interest at prime plus 1%.

Income from discontinued operations decreased from $649,000 in
2006 as compared to $37,000 in 2007 due to refinancing two mortgages
in 2007, which increased the debt obligation by $8.3 million and the
associate interest expense.

Results for the three months ended December 31, 2007

Rental income was $558,000 for the quarter ended December 31, 2006
as compared to $474,000 for the same period ended 2007, a decrease of
$91,000. The decrease was due to overall lower occupancies.

Property operations expense increased from $565,000 for the three
months ended 2006 to $1.2 million for the same period ended 2007, an
increase of approximately $600,000. The increase is due to an increase
in maintenance costs and improvements to the properties.

Other income increased from a loss of ($402,000) for the fourth
quarter ended 2006 to an income of $556,000 for the same period ended
2007, an increase of $958,000. The increase is due to the interest
income from the transfer of $6.1 million dollars to the advisor.

Income from discontinued was $225,000 for the fourth quarter ended
2006 as compared to $56,000 for the same period ended 2007 a decrease
of $169,000. The decrease is due to the net effect of repositioning 6
apartments with declining revenues to held for sale in the current
year. These properties were sold subsequent to year-end.

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

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INCOME OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS

December 31, December 31,
2007 2006
------------ ------------
(dollars in thousands)

Assets
Real estate held for investment $ 43,027 $ 63,682
Less--accumulated depreciation (2,456) (5,061)
------------ ------------
40,571 58,621

Real estate held for sale 17,032 -

Notes and interest receivable 27,441 27,777
Investment in real estate partnerships 532 515
Cash and cash equivalents 267 80
Receivables from affiliates 27,801 17,766
Other assets 2,663 4,152
------------ ------------
$ 116,307 $ 108,911
============ ============

Liabilities and Stockholders' Equity
Liabilities:
Notes and interest payable $ 44,354 $ 61,546
Liabilities related to assets held for sale 25,152 -
Other liabilities 2,057 1,921
------------ ------------
71,563 63,467

Commitments and contingencies - -

Minority interest 677 605

Stockholders' equity:
Common Stock, $.01 par value, authorized
10,000,000 shares; issued and outstanding
4,162,774 and 4,168,035 shares in 2007 and
in 2006, respectively. 42 42
Treasury stock (37) -
Paid-in capital 61,955 61,955
Accumulated deficit (17,893) (17,158)
------------ ------------
44,067 44,839
------------ ------------
$ 116,307 $ 108,911
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31,
2007 2006 2005

(dollars in thousands)
Property revenue
Rents and other property
revenues $ 2,298 $ 2,034 $ 1,424

Operating expenses:
Property operations 1,861 1,476 824
Depreciation 348 303 246
General and administrative 759 472 642
Advisory fees 1,034 496 738
----------- ----------- -----------
Total operating expenses 4,002 2,747 2,450
----------- ----------- -----------
Operating income (loss) (1,704) (713) (1,026)

Other income (expense):
Interest income 4,735 3,395 4,135
Mortgage and loan interest (3,768) (3,375) (2,005)
Net income fee - (9) (109)
----------- ----------- -----------
Total other income 967 11 2,021

Income (loss) before gain on land
sales, equity in earnings of
investees and minority interest (737) (702) 995
Equity in earnings (loss) of
investees (72) (92) (38)
Minority interests 17 (33) (57)
Income tax benefit 20 350 167
----------- ----------- -----------
Net income (loss) from continuing
operations (772) (477) 1,067

Discontinued operations 57 999 477
Income tax expense (20) (350) (167)
----------- ----------- -----------
Net income from discontinued
operations 37 649 310

----------- ----------- -----------
Net income applicable to common
shares $ (735) $ 172 $ 1,377
=========== =========== ===========

Earnings per share
Net income (loss) from
continuing operations (0.19) (0.11) 0.26
Net income from discontinued
operations 0.01 0.15 0.07
----------- ----------- -----------
Net income applicable to
common shares $ (0.18) $ 0.04 $ 0.33
=========== =========== ===========

Weighted average Common
shares used in computing
earnings per share 4,168,035 4,168,035 4,168,035
----------- ----------- -----------
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Income Opportunity Realty Investors, Inc.
Investor Relations, 800-400-6407
investor.relations@primeasset.com

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