UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange of 1934 (Amendment No. ___)
Filed
by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary
Proxy Statement. |
| ☐ | CONFIDENTIAL,
FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)). |
| ☒ | Definitive
Proxy Statement. |
| ☐ | Definitive
Additional Materials. |
| ☐ | Soliciting
Material Pursuant to Section 240.14a-12. |
INCOME
OPPORTUNITY REALTY INVESTORS, INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
| ☐
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computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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of each class of securities to which transaction applies: |
| | | |
| 2) | Aggregate
number of securities to which transaction applies: |
| | | |
| 3) | 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): |
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maximum aggregate value of transaction: |
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| ☐ | Fee
paid previously with preliminary materials. |
| ☐ | 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. |
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INCOME OPPORTUNITY REALTY
INVESTORS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 13, 2023
Income Opportunity Realty Investors, Inc.
will hold its Annual Meeting of Stockholders on Wednesday, December 13, 2023, at 10:30 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:
● 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.
● Ratification of the selection of Swalm & Associates, P.C. as the independent registered public accounting firm.
● Voting on a proposed Amendment to ARTICLE TENTH of the Articles of Incorporation.
● Voting on a Stockholder Proposal to initiate windup and liquidation of the Company, if properly presented at the meeting and not
previously withdrawn.
●
Such other matters as may properly be presented at the Annual Meeting.
Only Stockholders of record at
the close of business on Wednesday, November 8, 2023, will be entitled to vote at the meeting.
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.
| Dated: November 9, 2023 |
|
| |
|
| |
By order of the Board of Directors, |
| |
|
| |
Louis J. Corna |
| |
Executive Vice President, General Counsel, Tax |
| |
Counsel and Secretary |
This Proxy Statement is available at
www.incomeopp-realty.com.
Among other things, the Proxy Statement
contains information regarding:
| • | The date, time and location of the meeting |
| • | A list of the matters being submitted to Stockholders |
| • | Information concerning voting in person |
INCOME OPPORTUNITY REALTY INVESTORS,
INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 13, 2023
The Board of Directors
of Income Opportunity Realty Investors, Inc. (the “Company”or “we” or “us”) is soliciting proxies
to be used at the Annual Meeting of Stockholders following the fiscal year ended December 31, 2022 (the “Annual Meeting”).
Distribution of this Proxy Statement and a Proxy Form is scheduled to begin on November 14, 2023. The mailing address of the Company’s
principal executive offices is 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234.
About the Meeting
Who Can Vote
Record holders of Common
Stock of the Company at the close of business on Wednesday, November 8, 2023 (the “Record Date”), 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.
How Can You Vote
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.
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 FOR Proposals 1, 2 and 3 and AGAINST the Stockholder Proposal
4.
Revocation of Proxies
You may revoke
your proxy at any time before it is exercised by (a) delivering a written notice of revocation to the Corporate Secretary, (b)
delivering another proxy that is dated later than the original proxy, or (c) casting your vote in person at the Annual Meeting.
Your last vote will be the vote that is counted.
Vote Required
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 November 8, 2023, 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 named on the proxy card will
vote your shares as you have instructed. If the broker holding your shares in “street” 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.
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.
For proposals 2 and
4, 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. Proposal 3 requires for approval the affirmative vote of a majority of the outstanding shares (i.e.
2,089,108 shares). 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.
As of the Record Date,
one affiliate held 3,386,570 shares representing approximately 81.12% 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 Proposals 1, 2 and 3 and against
Proposal 4.
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 proxy card to ensure that all your shares are voted.
Other Matters to be Acted Upon at the Annual Meeting
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.
Expenses of Solicitation
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.
Available Information
Our internet website
address is www.incomeopp-realty.com. 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 (the
“SEC”). 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 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.
Multiple Stockholders Sharing the Same Address
SEC 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 house holding, you must contact your broker, bank or other nominee.
If you hold shares
of common stock in your own name as a holder of record, house holding will not apply to your shares.
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)
400-6407.
Questions
You may call our Investor Relations Department at
800-400-6407 if you have any questions.
PLEASE VOTE - YOUR VOTE IS IMPORTANT
Corporate Governance and Board Matters
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.
During the past several
years, a number of changes occurred in the membership of the Board of Directors and the controlling stock ownership of the Company.
On July 17, 2009, Transcontinental Realty Investors, Inc., a Nevada corporation (“TCI”) which has its Common Stock
listed and traded on the New York Stock Exchange (“NYSE”) acquired from Syntek West, Inc., a Nevada corporation (“SWI”)
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 81% of the shares of Common Stock of the Company
outstanding and resulted in a Change in Control of the Company. On February 8, 2011, the Board selected Henry A. Butler as a director.
Effective the close of business on October 31, 2011, Martha C. Stephens (a director since February 23, 2007, and chairperson of
the Board since May 7, 2009) resigned. On October 25, 2011, the Board of Directors elected Sharon Hunt as a director; she resigned
due to health reasons on May 3, 2016, and passed away on June 5, 2016. On June 2, 2016, the Board of Directors elected Raymond
D. Roberts, Sr. as a director to replace Ms. Hunt. On October 10, 2023, Raymond D. Roberts, Sr. resigned as a director and from
all committees. Effective October 11, 2023, Fernando Victor Lara Celis was elected a director to fill the vacancy created by Roberts
resignation.
Current members of the Board
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:
| |
|
|
Governance |
| |
|
|
and |
| |
Audit |
Compensation |
Nominating |
| Director |
Committee |
Committee |
Committee |
| |
|
|
|
| Henry A. Butler |
|
|
|
| |
|
|
|
| Robert A. Jakuszewski |
✓ |
✓ |
Chair |
| |
|
|
|
| Ted R. Munselle |
Chair |
✓ |
✓ |
| |
|
|
|
| Fernando Victor Lara Celis |
✓ |
Chair |
✓ |
Role
of the Board’s Committees
The Board of Directors has standing Audit,
Compensation and Governance and Nominating Committees.
Audit Committee.
The functions of the Audit Committee are described below under the heading “Report of the Audit Committee.”
The Audit Committee is an “audit committee” for purposes of Section 3(a)(58) of the Securities Exchange Act of 1934,
as amended. The charter of the Audit Committee was adopted on February 19, 2004, and is available on the Company’s Investor
Relations website (www.incomeopp-realty.com). The Audit Committee was initially formed on February 20, 2004.
All of the members of the Audit Committee are independent within the meaning of the SEC regulations, the listing standards of
the NYSE American and the Company’s Corporate Governance Guidelines. Mr. Munselle, a member and Chair of the Audit
Committee, is qualified as an “audit committee financial expert” 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 NYSE American. All of the members of the Audit Committee meet the independence and experience requirements of the listing
standards of the NYSE American. The Audit Committee met five times in 2022.
Governance and
Nominating Committee. 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’s Corporate
Governance Guidelines. In addition, the Governance and Nominating Committee develops and reviews background information on
candidates for the Board and makes recommendations to the Board regarding such candidates. The Governance and Nominating Committee
also prepares and supervises the Board’s annual review of director independence and the Board’s performance of self-evaluation.
The charter of the Governance and Nominating Committee was adopted on March 22, 2004, and is available on the Company’s
Investor Relations website (www.incomeopp-realty.com). The Governance and Nominating
Committee was initially formed on March 22, 2004. All of the members of the Governance and Nominating Committee are independent
within the meaning of the listing standards of the NYSE American and the Company’s Corporate Governance Guidelines. The
Governance and Nominating Committee met two times in 2022.
Compensation
Committee. The Compensation Committee is responsible for overseeing the policies of the Company relating to compensation
to be paid by the Company to the Company’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’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 22, 2004, and is available on
the Company’s Investor Relations website (www.incomeopp-realty.com). The Compensation
Committee was initially formed on March 22, 2004. All of the members of the Compensation Committee are independent within the
meaning of the listing standards of the NYSE American and the Company’s Corporate Governance Guidelines. The Compensation
Committee is to be comprised of at least three directors who are independent of management and the Company. The Compensation Committee
met two times in 2022.
Presiding Director
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.
In December 2022, the
nonmanagement members of the Board designated Ted R. Munselle to serve in this position until the Company’s Annual Meeting
of Stockholders, to be held following the fiscal year ended December 31, 2022 (i.e., this meeting).
Selection of Nominees for the Board
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 Governance and Nominating Committee may also retain a third party executive search firm to identify
candidates upon request of the Governance and Nominating Committee from time to time. A stockholder who wishes to recommend a prospective
nominee for the Board should notify the Company’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’s bylaws relating
to stockholder nominations.
Once the Governance
and Nominating Committee has identified a prospective nominee, the Governance and Nominating 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 Governance and Nominating Committee with the recommendation of the prospective candidate, as well as the Governance
and Nominating Committee’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 Governance and Nominating 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’s background and experience and to report its findings to the Governance and
Nominating Committee. The Governance and Nominating Committee will then evaluate the prospective nominee against the standards
and qualifications set out in the Company’s Corporate Governance Guidelines, including:
● the ability of the prospective nominee to represent the interests of the stockholders of the Company;
● the prospective nominee’s standards of integrity, commitment and independence of thought and judgment;
● the prospective nominee’s ability to dedicate sufficient time, energy and, attention to the diligent performance of his or her
duties, including the prospective nominee’s service on other public company boards, as specifically set out in the Company’s Corporate
Governance Guidelines;
● the extent to which the prospective nominee contributes to the range of talent, skill and expertise appropriate for the Board;
● the extent to which the prospective nominee helps the Board reflect the diversity of the Company’s stockholders, employees, customers,
guests and communities; and
● the willingness of the prospective nominee to meet any minimum equity interest holding guideline.
The Governance and Nominating 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 evaluation, the Governance and Nominating Committee determines whether to interview the prospective nominee,
and if warranted, one or more members of the Governance and Nominating Committee, and others as appropriate, interview prospective
nominees in person or by telephone. After completing this evaluation and interview, the Governance and Nominating 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 Governance and Nominating Committee.
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’ 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) the name and address of the stockholder
who intends to make the nomination and the name of the person to be nominated, (ii) 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) 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) 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) 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) 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.
Determinations of Director Independence
In February 2004,
the Board enhanced its Corporate Governance Guidelines. The Guidelines 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 Guidelines can be found
in the Investor Relations section of the Company’s website (www.incomeopp-realty.com). A copy may also be
obtained upon request from the Company’s Corporate Secretary.
Pursuant to the Guidelines,
the Board undertook its annual review of director independence in March 2023. 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 “Certain Relationships and Related Transactions” below. The Board also examined
transactions and relationships between directors or their affiliates and members of the Company’s senior management or their affiliates.
As provided in the Guidelines, the purpose of this review was to determine whether any such relationships or transactions
were inconsistent with a determination that the director is independent.
As a result of this
review, the Board affirmatively determined that Directors Henry A. Butler, Ted R. Munselle, Robert A. Jakuszewski and Raymond D.
Roberts, Sr. were, and are each independent of the Company and its management under the standards set forth in the Corporate
Governance Guidelines. At the time of his election to the Board, the Board affirmatively determined that Fernando Victor Lara
Celis was, and is, independent of the Company and its Management under the same standards.
Board Meetings During
The Board met five
times during fiscal 2022. Each director attended 75% or more of the meetings of the Board and Committees on which he served. Under
the Company’s Corporate Governance Guidelines, each Director is expected to dedicate sufficient time, energy and 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 or she is a member. In addition, the independent directors met in executive session four times
during fiscal 2022.
Directors’ Compensation
Except for Henry A.
Butler, Chairman of the Board, who is paid a fee per meeting attended, each nonemployee director currently receives an annual retainer
of $5,000 plus reimbursement for expenses. The Chairman of the Board does not currently receive any additional fee per year. In
addition, each independent director receives an additional fee of $1,000 per day for any special services rendered to the Company
outside of his or her ordinary duties as a director plus reimbursement of expenses. Effective January 4, 2010, the Board of Directors
reduced their compensation to $5,000 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.
During 2022, $17,930 was
paid to the nonemployee directors in total directors’ fees for all services, including the annual fee for service during the period
from January 1, 2022, through December 31, 2022. Those fees received by directors were Robert A. Jakuszewski ($5,000), Ted R. Munselle
($5,500), Raymond D. Roberts, Sr. ($5,000) and Henry A. Butler ($2,430).
Stockholders’ Communication with the Board
Stockholders and other
parties interested in communicating directly with the presiding director or with the nonmanagement directors as a group may do
so by writing to Ted R. Munselle, Director, P.O. Box 830163, Richardson, Texas 75083-0163. Effective March 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.
Code of Ethics
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 19, 2004, the Company adopted a code of ethics entitled “Code of Ethics for Senior Financial Officers”
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’s Investor Relations website (www.incomeopp-realty.com).
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’s chief executive officer, principal financial officer or principal accounting officer) at this location on its
website.
Compliance With Section 16(a) of Reporting Requirements
Section 16(a) under
the Securities Exchange Act of 1934 requires the Company’s directors, executive officers and any persons holding 10% or more
of the Company’s shares of Common Stock to report their ownership of the Company’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’s directors and executive officers and holders of more than 10% of the Company’s Common Stock during
the fiscal year ended December 31, 2022. 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’s Common Stock and copies of the reports
that each has filed with the SEC.
Security Ownership of Certain Beneficial
Owners and Management
Security Ownership of Certain Beneficial Owners
The following table
sets forth the ownership of the Company’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 November 8, 2023.
| |
Amount and Nature of |
Approximate |
| Name and Address of Beneficial Owner |
Beneficial Ownership* |
Percent of Class** |
| |
|
|
| Transcontinental Realty Investors, Inc.(a) |
3,386,570 |
81.12% |
| 1603 LBJ Freeway, Suite 800 |
|
|
| Dallas, Texas 75234 |
|
|
| |
|
|
| Realty Advisors, Inc.(a) |
269,311 |
6.46% |
| 1603 LBJ Freeway, Suite 800 |
|
|
| Dallas, Texas 75234 |
|
|
(a) TCI is one of the “Reporting Persons” in Amendment No. 29 to Schedule 13D, filed with the SEC. The other three entities,
Arcadian Energy, Inc. (owns 170,984 Shares or 4.10%), Realty Advisors, Inc. (owns 32,452 Shares or 0.78%) and Realty Advisors
LLC (owns 65,875 Shares or 1.58%), collectively own approximately 6.46%. Arcadian Energy, Inc. and Realty Advisors LLC are each
wholly owned by Realty Advisors, Inc.
Security Ownership of Management
The following table
sets forth the ownership of the Company’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 November 8, 2023:
| |
Amount and Nature of |
Approximate Percent |
| Name and Address of Beneficial Owner |
Beneficial Ownership* |
of Class** |
| |
|
|
Henry A. Butler
|
3,386,570(1) |
81.12% |
| Louis J. Corna |
3,386,570(1) |
81.12% |
| |
|
|
Robert A. Jakuszewski
|
3,386,570(1) |
81.12% |
| Erik L. Johnson |
3,386,570(1) |
81.12% |
| |
|
|
| Ted R. Munselle |
3,386,570(1) |
81.12% |
| |
|
|
| Fernando Victor Lara Celis |
3,386,570(1) |
81.12% |
| |
|
|
| All directors and executive officers as a group |
3,386,570(1) |
81.12% |
| (6 people) |
|
|
* “Beneficial Ownership” 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.
**
Percentages are based upon 4,168,214 shares of Common Stock outstanding at November
8, 2023.
(1) Includes 3,386,570 shares owned by TCI, of which the six 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 six current directors of TCI, four of which
are also four of the directors of IOR (Messrs. Butler, Jakuszewski, Munselle and Celis), and the executive officers (Messrs. Corna
and Johnson) of TCI disclaim beneficial ownership of such shares.
PROPOSAL 1
ELECTION OF DIRECTORS
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 31, 2023. All of the nominees for director were previously elected at the last Annual Meeting and 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 reelection, 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.
The nominees for directors
are listed below, together with their ages, terms of service, all positions and offices with the Company or the Company’s
contractual advisor, Pillar Income Asset Management, Inc. (“Pillar”), other principal occupations, business experience,
and directorships with other companies during the last five years or more. The designation “affiliated” 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.
Henry A. Butler, 73
Retired Broker-Land
Sales (April 30, 2011 to April 30, 2019) for Pillar and (from July 2003 to April 30, 2011) Prime Income Asset Management, LLC (“Prime”)
and (1992 to June 2003) for Basic Capital Management, Inc. (“BCM”); Director (since July 2003) and Chairman of the
Board (since May 2009) of American Realty Investors, Inc. (“ARL”), Director (since November 2005) and Chairman of the
Board (since May 2009) of TCI and Director since February 8, 2011 of the Company; Owner/Operator (1989-1991) of Butler Interests,
Inc.; Vice President (January 21, 1994 to April 30, 2019) of ARL and (February 1, 2011 to April 30, 2019) of TCI and (February
8, 2011 to April 30, 2019) of the Company.
Robert A. Jakuszewski, 61
Territory Manager for
Artesa Labs (since April 2015). He was a medical specialist (from January 2014 to April 2015) for VAYA Pharma, Inc.; Senior Medical
Liaison for Vein Clinics of America (January 2013 to July 2013); Vice President of Sales and Marketing (September 1998 to December
2012) for New Horizons Communications, Inc.; Consultant (01/1998-09/1998) for New Horizon Communications, Inc.; Regional Sales
Manager (1996-1998) for Continental Funding; Territory Manager (1992-1996) for Sigvaris, Inc.; Senior Sales Representative (1988-1992)
for Mead Johnson Nutritional Division, USPNG; and Sales Representative (1986-1987) for Muro Pharmaceutical, Inc. Mr. Jakuszewski
was elected a director of the Company on March 16, 2004 and has been a director of ARL and TCI since November 22, 2005.
Ted. R. Munselle, 68
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
& Horwath (1977 to 1983). Mr. Munselle was elected a director of the Company on May 21, 2009. Mr. Munselle is also a director
(since February 17, 2012) of Spindletop Oil & Gas Company, a publicly held Texas corporation whose stock is traded in the Over-The-Counter
(“OTC”) market.
Fernando Victor Lara Celis, 57
Mr. Lara is an entrepreneur
and (since March 2006) the General Manager and President of FYA Project, LLC, a Schlotzsky’s Deli Franchise (Restaurant and
Fast Food) which owns and operates seven locations in the North Dallas, Texas area. He was also instrumental in 2010 in establishing
the first commissary bakery for a group of Schlotzky’s franchisees in the DFW area and in 2012 organized and led all DFW
area Schlotzsky’s franchisees to establish the current local marketing efforts, the largest of all Schlotzsky’s - Cinnabon
systems in the USA. Also, since April 2009, Mr. Lara has been General Manager and President of UDF de Mexico S. de R.L. de C.V.,
a Dallas, Texas based independent contractor which manages real estate projects Loma Bonita and la Laguna in Tampico, Mexico, which
are owned by Liberty Bankers Life Insurance Company. Prior to March 2006 and for more than five years, Mr. Lara was employed by
the Mexico State Superior Control Authority in Veracruz, Mexico as a General Auditor and/or Information Manager. Although born
in Mexico, Mr. Lara is a United States citizen. Mr. Lara was elected as a director of the Company effective October 11, 2023 to
fill the vacancy created by the resignation on October 10, 2023 of Raymond D. Roberts, Sr. Mr. Lara was also elected a director
effective October 11, 2023 of ARL and TCI.
The Board of Directors unanimously
recommends a vote FOR
the election of all of the Nominees
named above.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee
has appointed Swalm & Associates, P.C. as the independent registered public accounting firm for Income Opportunity Realty Investors,
Inc. for the 2023 fiscal year and to conduct quarterly reviews through September 30, 2024. The Company’s Bylaws do not require
that stockholders ratify the appointment of Swalm & Associates, P.C. as the Company’s independent registered public accounting
firm. Swalm & Associates, P.C. has served as the Company’s independent registered public accounting firm for each of
the fiscal years ended December 31, 2004 through 2022. 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’ 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.
A representative of
Swalm & 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.
The Board of Directors recommends a vote
FOR the ratification of the
appointment of Swalm & Associates, P.C. as the Company’s
independent registered public accounting
firm.
Fiscal Years 2022 and 2021 Audit Firm
Fee Summary
The following table sets
forth the aggregate fees for professional services rendered to or for the Company for the years 2022 and 2021 by the Company’s
principal accounting firm, Swalm & Associates, P.C.:
| Type of Fees | |
2022 | | |
2021 | |
| Audit Fees | |
$ | 37,750 | | |
$ | 45,135 | |
| Audit Related Fees | |
| — | | |
| — | |
| Tax Fees | |
| — | | |
| — | |
| All Other Fees | |
| — | | |
| — | |
| Total Fees: | |
$ | 37,750 | | |
$ | 45,135 | |
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:
Audit
Fees. These are fees for professional services performed by the principal auditor for the audit of the Company’s annual
financial statements and review of financial statements included in the Company’s 10-Q filings and services that are normally
provided in connection with statutory and regulatory filing or engagements.
Audit
Related Fees. 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’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.
Tax Fees.
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.
All Other
Fees. These are fees for other permissible work performed by the principal auditor that do not meet the above category descriptions.
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’s core work, which is the audit of the Company’s consolidated financial statements.
Report of the Audit Committee
Of the Board of Directors
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 NYSE American and the SEC. The Audit Committee has directed the preparation of
this report and has approved its content and submission to the stockholders.
The Audit Committee is responsible for, among other
things:
● retaining and overseeing the independent registered public accounting firm that serves as our independent auditor and evaluating
their performance and independence;
● reviewing the annual audit plan with management and the independent registered public accounting firm;
● pre-approving any permitted non-audit services provided by our independent registered public accounting firm;
●
approving the fees to be paid to our independent registered public accounting firm;
● reviewing the adequacy and effectiveness of our internal controls with management, internal auditors and the independent registered
public accounting firm;
● reviewing and discussing the annual audited financial statements and the interim unaudited financial statements with management
and the registered public accounting firm; and
●
approving our internal audit plan and reviewing reports of our internal auditors.
The Audit Committee
operates under a written charter adopted by the Board of Directors. The Committee’s responsibilities are set forth in this
charter which is available on our website at www.incomeopprealty-invest.com.
The Audit Committee
assists the Board in fulfilling its responsibilities for general oversight of the integrity of the Company’s financial statements,
the adequacy of the Company’s system of internal controls, the Company’s risk management, the Company’s compliance
with legal and regulatory requirements, the independent auditors’ qualifications and independence, and the performance of
the Company’s independent auditors. The Audit Committee has sole authority over the selection of the Company’s independent
auditors and manages the Company’s relationship with its independent auditors. The Audit Committee has the authority to obtain
advice and assistance from outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its
duties and receive appropriate funding, as determined by the Audit Committee, from the Company for such advice and assistance.
The Audit Committee
met five times during 2022. The Audit Committee schedules its meetings with a view to ensuring that it devotes appropriate attention
to all of its tasks. The Audit Committee’s meetings include private sessions with the Company’s independent auditors
without the presence of the Company’s management, as well as executive sessions consisting of only Audit Committee members.
The Audit Committee also meets senior management from time to time.
Management has the
primary responsibility for the Company’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’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’s assessment of, and the effective operation of, internal control over
financial reporting. The Audit Committee’s responsibility is to monitor and review the Company’s financial reporting
process and discuss management’s report on the Company’s internal control over financial reporting. It is not the
Audit Committee’s duty or responsibility to conduct audits or accounting reviews or procedures. The Audit Committee has
relied, without independent verification, on management’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 Audit Committee’s financial
statements.
As part of its oversight
of the Company’s financial statements, the Audit Committee reviews and discusses with both management and the Company’s
independent registered public accountants all annual and quarterly financial statements prior to their issuance. During 2021, management
advised the Audit 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 Audit Committee.
These reviews include discussions with the independent accountants of the matters required to be discussed pursuant to Statement
on Auditing Standards No. 61 (Codification of Statements on Auditing Standards), including the quality (not merely the acceptability)
of the Company’s accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the financial
statements and disclosures related to critical accounting practices. The Audit Committee has also discussed with Swalm & Associates,
P.C. matters relating to its independence, including a review of audit and non-audit fees, and written disclosures from Swalm &
Associates, P.C. to the Company pursuant to Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). The Audit Committee also considered whether non-audit services, provided by the independent accountants are compatible
with the independent accountant’s independence. The Company also received regular updates on the amount of fees and scope
of audit, audit related and tax services provided.
In addition, the Audit
Committee reviewed key initiatives and programs aimed at strengthening the effectiveness of the Company’s internal and disclosure
control structure. As part of this process, the Audit Committee continued to monitor the scope and adequacy of the Company’s
internal controls, reviewed staffing levels and steps taken to implement recommended improvements in any internal procedures and
controls.
Based on the Audit
Committee’s discussion with management and the independent accountants and the Audit Committee’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’s
Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC. The Audit Committee and the Board of Directors
have also selected Swalm & Associates, P.C. as the Company’s independent registered public accountants and auditors for
the fiscal year ending December 31, 2022.
| August 10, 2023 |
AUDIT COMMITTEE |
|
| |
|
|
| Raymond D. Roberts, Sr.1 |
Ted R. Munselle |
Robert A. Jakuszewski |
The members of the
Audit Committee discussed the fact that Ted Munselle serves as the Chairman of the Audit Committee and the qualified Audit Committee
financial expert within the meaning of SEC Regulations and that he has the accounting and related financial management expertise
within the meaning of the listing standards of the NYSE with respect to this corporation, as well as two other corporations which
are part of a consolidated group for financial statement purposes, and that he serves in a similar capacity for an unrelated corporation
involved in another industry, the Common Stock of which is available for trading in the Over-the-Counter (“OTC”) Market,
thus making four entities for which he serves in a similar capacity. The Audit Committee has determined, after discussion, that
the fact that three entities are part of a consolidated group requires Mr. Munselle
to be familiar with the financial reporting requirements and standards of each of those entities due to the fact of consolidation
and does not create an additional burden upon Mr. Munselle but, in fact, confers a benefit on each of the entities, as it may well
save on Mr. Munselle’s time and responsibility. While this entity and the other two consolidated entities have no specific
policy or prohibition upon Mr. Munselle or any other person’s service to other publicly held entities, the members of this
Committee periodically review other relationships among Committee and Board members with other independent entities to ensure that
no conflict exists and, in fact, have confirmed that service to other entities in other industries benefits the expertise of the
individuals involved.
1Raymond D. Roberts,
Sr. resigned as a director on October 10, 2023. The Audit Committee report was rendered August 10, 2023.
Pre-Approval Policy for Audit and Non-Audit Services
Under the Sarbanes-Oxley
Act of 2002 (the “SO Act”), 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 twofold. 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’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’s independence. Accordingly, the Audit Committee adopted on March 22, 2004 a written
pre-approval policy of audit and non-audit services (the “Policy”), 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’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 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.
Executive Compensation
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 Pillar are compensated by Pillar. Such executive officers perform a variety of services for Pillar,
and the amount of their compensation is determined solely by Pillar. Pillar does not allocate the cash compensation of its officers
among the various entities for which it serves as advisor. See “The Advisor” for a discussion of the compensation payable
to Pillar under the Advisory Agreement.
Compensation Committee Report
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 NYSE American standards for nonemployee 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 “outside directors”
set forth in Treasury Regulations, Section 27(e)(3). Each member of the Compensation 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 Compensation
Committee member is appointed annually subject to removal at any time by the Board and serves until his or her Compensation Committee
appointment is terminated by the Board. The Compensation Committee is composed of three directors, each of whom meets the standards
described above.
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’s
principal executive officer (“CEO”) 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’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.
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 Pillar are compensated by Pillar. Such executive officers perform a variety of services for
Pillar, and the amount of their compensation is determined solely by Pillar. Pillar does not allocate the cash compensation of
its officers among the various entities for which it may serve as advisor or sub-advisor.
The only remuneration
paid by the Company is to directors who are not officers or directors of Pillar or the Advisor. These independent directors (i)
review the business plan of the Company to determine that it is the best interest of the stockholders, (ii) review the advisory
contract and recommend any appropriate changes thereto, (iii) supervise the performance of the Company’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) review the reasonableness of the total fees and expenses of the Company, and (v) select, when necessary, a qualified,
independent real estate appraiser to appraise properties acquired. See the sub caption “Directors’ Compensation”
in the Proxy Statement for a description of the compensation paid.
The charter of the
Compensation Committee was adopted on March 22, 2004, and the members of the Compensation Committee, all of whom are independent
within the meaning of the listing standards of the NYSE American and the Company’s Corporate Governance Guidelines, are listed
below. Since its formation on March 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.
August 10, 2023
COMPENSATION COMMITTEE
| Ted R. Munselle |
Raymond D. Roberts, Sr.2 |
Robert A. Jakuszewski |
Compensation Committee Interlocks and Insider Participation
The Company’s
Compensation Committee is made up of nonemployee directors who have never served as officers of, or been employed by the Company.
None of the Company’s executive officers serve on a board of directors of any entity that has a director or officer serving
on this Compensation Committee.
Executive Officers
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, and 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.
Louis J. Corna, 76
Executive Vice President,
General Counsel, Tax Counsel and Secretary (since January 31, 2004) of the Company, TCI and ARL; Executive Vice President and Chief
Financial Officer (June 2001 to October 2001) and Senior Vice President–Tax (April 2001 to June 2001) of ARL and (prior to
July 2003) of BCM; Executive Vice President, General Counsel/Tax Counsel and Secretary (February 2004 to June 2011) of Prime Income
Asset Management, Inc. (“PIAMI”); Private Attorney (January 2000 to December 2000); Vice President–Taxes and
Assistant Treasurer (March 1998 to January 2000) of IMC Global, Inc.; Vice President–Taxes (July 1991 to February 1998) of
Whitman Corporation; Executive Vice President-General Counsel/Tax Counsel (since March 31, 2011) and Secretary (since December
17, 2010) of Pillar.
Erik L. Johnson, 55
Executive Vice President
and Chief Financial Officer (since December 16, 2021) of the Company and (since August 17, 2020) of ARL and TCI; Chief Financial
Officer (since July 1, 2020) of Pillar. Mr. Johnson, a Certified Public Accountant, was Vice President of Financial Reporting of
The Macerich Company (NYSE: MAC) in Santa Monica, California, a position he held for more than the prior five years, from 2005
through June 2020. Mr. Johnson was, from 2001-2005, Controller/Chief Accounting Officer of North American Scientific, Inc. (NASDAQ:
NASI), based in Los Angeles, California, and from 2000-2001, he was the Controller of Launch Media, Inc. (NASDAQ: LAUN) in Santa
Monica, California.
In addition to the
foregoing executive officers, the Company has several vice presidents and assistant secretaries who are not listed herein. Since
the April 14, 2023 resignation of Bradley J. Muth, age 63, the offices of President and Chief Executive Officer of the Company
have been vacant. Mr. Muth was President and Chief Executive Officer (from December 16, 2021 until April 14, 2023) of the Company.
At the time of his resignation, Mr. Muth advised that his resignation was not the result of any disagreement with the Company,
its management, the Board of Directors or any Committee of the Board with respect to procedures, policies or operations of the
Company.
2Raymond D. Roberts,
Sr. resigned as a director October 10, 2023. The Compensation Committee report was rendered August 10, 2023.
The Advisor
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.
Pillar is the contractual
advisor to the Company. Pillar is a Nevada corporation, the sole shareholder of which is Realty Advisors, LLC, a Nevada limited
liability company (“RALLC”), the sole member of which is Realty Advisors, Inc., a Nevada corporation (“RAI”),
which is 100% owned by May Realty Holdings, Inc., a Nevada corporation (“MRHI”), the controlling stockholder of which
is a Trust known as the May Trust. The Company and Pillar entered into an Advisory Agreement effective April 30, 2011 (the “Pillar
Advisory Agreement”).
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’s performance against the business plan. In addition, all transactions
require 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.
The Pillar Advisory
Agreement also requires 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’s liability for losses by the Company; and contains guidelines for Pillar’s
allocation of investment opportunities as among itself, the Company and other entities it advises.
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% 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’s
net income.
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) the cost of each property
as originally recorded in the Company’s books for tax purposes (without deduction for depreciation, amortization or reserve
for losses), (2) capital improvements made to such assets during the period owned, and (3) all closing costs (including
real estate commissions) incurred in the sale of such real estate. However, no incentive fee would be paid unless (a) 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) 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.
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) up to 1% of the cost of acquisition, inclusive
of commissions, if any, paid to nonaffiliated brokers, or (ii) the compensation customarily charged in arm’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’s appraised value at acquisition.
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) 2% of the amount of the loan commitment, or (ii) a loan brokerage
and commitment fee reasonable and fair under the circumstances.
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) 1% of the amount of the loan purchased, or (ii) 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.
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) 1% of the amount of the loan or the amount refinanced, or
(ii) 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.
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 “hard costs” 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 “hard
costs” 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 “soft costs” which are consulting
fees, attorneys’ fees, architectural fees, permit fees and fees of other professionals.
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.
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 currently utilizes the services of Regis Realty Prime, LLC d/b/a Regis Property Management,
LLC, a Nevada limited liability company (“Regis”), for property management and real estate brokerage.
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.
Effective April 30,
2011, the Company and Pillar entered into a Cash Management Agreement (the “Pillar CMA”) 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 Wall Street Journal Prime Rate plus 1% 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) 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.
The current managers and principal executive officers
of Pillar are as set forth below:
| |
Name |
Office(s) |
| |
Erik L. Johnson |
Executive Vice President and Chief Financial Officer |
| |
Gina H. Kay |
Executive Vice President and Chief Accounting Officer |
| |
Louis J. Corna |
Executive Vice President, General Counsel, Tax Counsel and Secretary |
| |
Gene S. Bertcher |
Director |
Property Management
Effective January 1,
2011, Regis Realty Prime LLC d/b/a Regis Property Management LLC, a Nevada limited liability company (“Regis”), the
sole member of which is RALLC, has managed the Company’s Commercial Properties for a fee of 3% or less of the monthly gross
rents collected on any commercial properties Regis manages and leasing commissions of 6% or less in accordance with the terms of
a property level management agreement.
Real Estate Brokerage
Regis also provides
real estate brokerage services to the Company (on a nonexclusive basis). Regis 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) 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 or affiliates; (ii) 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 or affiliates;
(iii) 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; and (iv) maximum fee of 2% on transaction amounts in excess of $10 million, of which no more than 1.5% would be paid to
Regis or affiliates.
Certain Relationships and Related
Transactions
Certain Business Relationships
Pillar has served as the Company’s advisor since
April 30, 2011.
Regis provides property
management services and subcontracts the property level management and leasing of the Company’s commercial properties. Regis
also provides brokerage services, on a nonexclusive basis, for the Company and receives brokerage commissions in accordance with
a brokerage agreement.
Messrs. Erik L. Johnson,
and Louis J. Corna are employed by Pillar, which is owned by RALLC. The sole member of RALLC is RAI. Messrs. Johnson and Corna,
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. Messrs. Butler, Celis, Jakuszewski and Munselle serve as directors of ARL and TCI and owe fiduciary
duties to TCI and ARL, as well as the Company, under applicable law.
Tax Sharing Agreement
For tax periods ending
before August 31, 2012, the Company was part of the ARL consolidated federal return. After that date, the Company and the rest
of the ARL group joined the MRHI consolidated group for tax purposes. The income tax expense (benefit) for 2010 and 2011 tax periods
was calculated under a tax sharing and compensating agreement among ARL, TCI, and the Company. That agreement continued until August
31, 2012, at which time a new tax sharing and compensating agreement was entered into among ARL, TCI, the Company, and MRHI for
the remainder of 2012. For 2013, ARL, TCI, and the Company had a combined net taxable loss. The benefit or expense under such arrangements
is calculated based on the amount of losses absorbed by taxable income multiplied by the statutory rate of 35% per the tax sharing
and compensating agreements.
Related Party Transactions
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.
TCI owns 3,386,270 shares of Common Stock of the Company
(approximately 81.1%).
In 2022, the Company
paid Pillar $1.2 million in advisory fees, and $300,00 in cost reimbursements. 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’s financial
statements as receivables from or payables to affiliates. Such advances bear interest at 1% above the prime rate. During 2022,
the Company received interest of $1 million from related parties and had receivables from elected parties at December 31, 2022
of $100.1 million.
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’s financial statements as other assets or other liabilities.
At December 31, 2022, the Company had notes and interest receivables of $11.2 million due from related parties. During 2022, the
Company recognized $1 million in interest income from these related party receivables.
Restrictions on Related Party Transactions
Article FOURTEENTH
of the Company’s Articles of Incorporation provides that the Company shall not, directly or indirectly, contract or engage
in any transaction with (1) any director, officer or employee of the Company, (2) any director, officer or employee of the advisor,
(3) the advisor, or (4) 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) 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’s
Board of Directors or the appropriate committee thereof, and (b) the Company’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 “Independent Director” as one who is neither an officer or an employee of the Company, nor a
director, officer or employee of the Company’s advisor.
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE ARTICLES
OF INCORPORATION TO MAKE ARTICLE TENTH NOT APPLICABLE TO A BUSINESS COMBINATION OF THE COMPANY AND TRANSCONTINENTAL REALTY INVESTORS,
INC.
TCI has owned more
than 81% of the outstanding common stock of the Company since 2009. Affiliates of TCI own at least an additional 6.46% of the outstanding
common stock of the Company. All of the current directors of the Company are also four out of the six directors of TCI. Although
the Company has no current information suggesting that any Business Combination is imminent, the Company has received from at least
one stockholder (See Proposal 4) a suggestion that the Company liquidate and dissolve which might be interpreted to be a Business
Combination involving the Company and TCI. The Board of Directors and Management of the Company while reviewing with counsel the
possible interpretations of the Articles of Incorporation and Nevada law requirements has concluded it will be in the best interests
of the Company and its minority stockholders to exempt TCI and its affiliates from any confusion under Article TENTH of the Articles
of Incorporation. The Board of Directors has unanimously approved and recommends that the stockholders adopt an amendment to Article
TENTH, Part C to the Articles of Incorporation that would exempt TCI and its Affiliates from that provision (the “TCI Amendment”).
As amended, pursuant to the TCI Amendment, Article Tenth, Part C, of the Articles of Incorporation would read in its entirety as
follows (new language underlined):
“C. The provisions of Part B of this Article
TENTH shall not be applicable to a Business Combination of the Corporation and Transcontinental Realty Investors, Inc. (or any
successor toTranscontinental Realty Investors,Inc.) which such Business Combination shall require only the affirmative vote, if
any, as is required by applicable law or by any other provision of these Articles of Incorporation or the Bylaws of the Corporation
or any agreement with any national securities exchange. The provisions of Part B of this Article TENTH shall not be applicable
to any particular Business Combination, and such Business Combination shall require only such affirmative vote, if any, as is required
by applicable law or by any other provision of these Article of Incorporation or the Bylaws of the Corporation, or any agreement
with any national securities exchange if such Business Combination shall have been approved, either specifically or as a transaction
which is within an approval category of transactions by a majority of the Board of Directors (including any directors that may
be affiliated in any manner with Transcontinental Realty Investors, Inc.) or, in the case of such Business Combination involving
any Person (as hereinafter defined) that is an Affiliate (as hereinafter defined, and except Transcontinental Realty Investors,
Inc. or any of its directors) of the Corporation, by a majority of the Board of Directors including a majority of the members
of the Board of Directors who at the time are neither officers or employees of the Corporation nor directors, officers or employees
of any Advisor (as defined in Article THIRTEENTH), prior to the Acquisition Date (as hereinafter defined) with respect to any Person
involved in such Business Combination.”
Background and Reasons
The Board of Directors
believes that the change pursuant to the TCI Amendment is desirable to provide greater flexibility with respect to the consideration
of potential future actions involving the Company and its controlling stockholder. The Company currently does not have any specific
agreements or plans that would involve a Business Combination involving the Company and TCI, although the Company intends to consider
transactions in the future from time to time that might involve the Company and TCI or one of TCI’s affiliates.
Potential Effect
Authorizing the Company
to effectuate the TCI Amendment will not affect materially any substantive rights, powers or privileges of holders of shares of
Common Stock of the Company. The TCI Amendment could make it easier (and less confusing) for TCI to propose and/or engage in a
transaction or Business Combination with the Company.
Vote Required for Approval
Under NRS 78.390 a
vote in favor of the TCI Amendment by the holders of a two-thirds majority of the shares of common stock outstanding is required
for approval. The Board of Directors unanimously recommends a vote FOR approval of the TCI Amendment.
STOCKHOLDER PROPOSAL 4
Gregory Greenberg (beneficial
owner of more than $2,000 in market value) submitted the following for inclusion in this Proxy Statement to be used at the Annual
Meeting and Mr. Greenberg advised that he intends to introduce such proposed resolution at the Annual Meeting:
“Gregory
C.B. Greenberg, 8312 W. 99th Street Overland Park , KS 66212, who beneficially owns 4,656 Shares of Income Opportunity
Realty Investors, Inc. (“IOR” or the “Company”), submits the following proposal:
RESOLVED: that the shareholders
of IOR, assembled at the annual meeting in person and by proxy hereby request that the Board of Directors promptly initiate the
windup and liquidation of the company.
Supporting Statement:
* As of August 22, 2018, the Company had no real estate holdings, after selling the remaining acres to Transcontinental Realty Investors
(TCI), its controlling shareholder.
*
The Company has no employees.
*
As of September 30, 2022, the Company had no debt.
*
As of September 30, 2022, book value per share was $26.56.
*
As of December 19, 2022, the price per share was $12, a 54.8% discount to book value.
* As of November 10, 2022, TCI owned 81.25% of the outstanding shares of IOR and other affiliated companies owned an additional 6.46%.
*
As of September 30, 2022, IOR held $11,173,000 of mortgage loans similar to loans owned by TCI.
*
TCI should be willing to purchase these loans at a fair market value.
* As of September 30, 2022, the Company had loaned $99,205,000 to TCI and this is reflected as a receivable on the Company’s
balance sheet. Pillar/TCI pays a reasonable interest rate on these balances of Prime plus 0.5%.
* During the first 9 months of 2022, Pillar Income and TCI charged fees to IOR totaling $1,198,000.
Income Opportunities has sold
all of its long held real estate, has no operating business, no employees and there is no reason for it to continue to exist. Minority
shareholders should be allowed to realize the full value of their holdings via a liquidation distribution.”
Position of the Board
Our Board recommends
a vote AGAINST this proposal, which is identified as Item 4 on the proxy card, for the following reasons:
The Board and Management
have long recognized that the stock market may not recognize the “real value” of the Company’s stock and, in
effect, probably undervalues the Company’s stock. While the Book Value per share, on a purely mathematical basis, may appear
to exceed the current share price in the market, the Company has assets which generate income in excess of its expenses and are
expected to continue to do so in the future. Further, until opportunities arise in the future to either acquire land or multifamily
apartments at attractive prices, the Company expects to continue to invest in mortgage loans for the foreseeable future and has
no present plans to wind up, liquidate and dissolve.
While the presenting
stockholder has suggested a number of values in its supporting statement, it is presumptive to suggest that another entity should
be willing to purchase loans at any price, and, in fact, the Company hopes to expand its portfolio of mortgage loans in the future.
With respect to the
purported mathematical discount of the market share price to calculated book value, neither the Board nor Management of the Company
is in a position to influence the share price in the stock market, nor does either intend to engage in any activity which would
unduly influence such market price.
Also, the holder of
in excess of 81% of the Common Stock of the Company has advised that it would be voting AGAINST this stockholder Proposal.
OTHER MATTERS
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.
FINANCIAL STATEMENTS
The audited financial
statements of the Company, in comparative form for the years ended December 31, 2021 and 2022, are contained in the 2022 Annual
Report to Stockholders, which was mailed to stockholders in April 2023. However, such report and the financial statements contained
therein are not to be considered part of this solicitation.
SOLICITATION OF PROXIES
THIS PROXY STATEMENT
IS FURNISHED TO STOCKHOLDERS TO SOLICIT PROXIES ON BEHALF OF THE BOARD OF DIRECTORS OF INCOME OPPORTUNITY REALTY INVESTORS, INC.
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.
FUTURE PROPOSALS OF STOCKHOLDERS
Stockholder proposals
for our Annual Meeting to be held in 2024 must be received by us by December 31, 2023, and must otherwise comply with the rules
promulgated by the SEC 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.
COPIES OF INCOME
OPPORTUNITY REALTY INVESTORS, INC.’S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022, 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 WWW.INCOMEOPP-REALTY.COM OR UPON WRITTEN REQUEST TO INCOME OPPORTUNITY REALTY
INVESTORS, INC., 1603 LBJ FREEWAY, SUITE 800, DALLAS, TEXAS 75234, ATTN:
| Dated: November 9, 2023 |
|
| |
|
| |
By order of the Board of Directors, |
| |
|
| |
Louis J. Corna, Executive Vice President, General |
| |
Counsel, Tax Counsel and Secretary |
PROXY
INCOME OPPORTUNITY REALTY INVESTORS,
INC.
This Proxy is solicited
on behalf of the Board of Directors for the Annual Meeting of Stockholders to be held December 13, 2023.
NOTICE OF INTERNET AVAILABILITY OF
PROXY MATERIAL:
The Notice of Meeting, Proxy Statement,
and Proxy Card
are available at www.incomeopp-realty.com.
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, December 13, 2023, at 10:30 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 November 8, 2023, Proxy Statement for said meeting.
|
[INSERT ADDRESS LABEL]
|
Please Sign Here
|
____________________________________________________________
____________________________________________________________
Dated: _____________________, 2023
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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.
☐
|
Note: Please sign exactly as your name
or names appear hereon. When there is more than one owner, each must sign. When signing as an agent, attorney, administrator, executor,
guardian or trustee, please indicate your title as such. If executed by a corporation, the proxy should be signed by a duly authorized
officer who should indicate his title. If a partnership, please sign in partnership name by an authorized person. Please date,
sign and mail this proxy card in the enclosed envelope for which no postage is required if mailed in the United States.
|
(Continued and to be Completed on the Other
Side)
THIS PROXY WILL
BE VOTED AS DIRECTED BUT IF NO DIRECTION IS INDICATED, IT WILL BE VOTED FOR ALL NOMINEES AND FOR RATIFICATION OF THE APPOINTMENT
OF SWALM & ASSOCIATES, P.C. AS INDEPENDENT AUDITORS. ON OTHER MATTERS THAT MAY COME BEFORE SAID MEETING, THIS PROXY WILL BE
VOTED IN THE DISCRETION OF THE ABOVE-NAMED PERSONS.
| 1. | Election of Directors |
☐ For All Nominees (except
or marked to the contrary) |
| | | |
☐ Withhold Authority
for All Nominees listed below |
Henry A. Butler, Fernando
Victor Lara Celis, Robert A. Jakuszewski, Ted R. Munselle
Instruction:
To withhold authority to vote for any individual nominee, strike a line through the nominee=s name listed above.
| 2. | Ratification of the Appointment of Swalm & Associates, P.C. as the
independent registered public accounting firm |
☐ For ☐ Against ☐ Abstain
| 3. | Vote on a proposed Amendment to ARTICLE TENTH of the
Articles of Incorporation. |
☐ For ☐ Against ☐ Abstain
| 4. | Vote on a Stockholder Proposal to initiate windup
and liquidation of the Company. |
☐ For ☐ Against ☐ Abstain
| 5. | In their discretion on any other matters which may properly come before the meeting or any adjournment(s)
thereof. |
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 & Associates, P.C. as the independent registered public accounting firm.
Please sign, date and return promptly
in the enclosed envelope.
(Continued and to be Signed and Dated on
the Other Side)
