Income Opportunity Realty Investors, Inc. Reports Quarterly Results

Business Wire, August 14, 2006

DALLAS -- Income Opportunity Realty Investors, Inc. (AMEX: IOT), a Dallas-based real estate investment company, today reported net income of $659,000 or $0.16 per share for the six months ended June 30, 2006, compared to $833,000 and $0.20 per share for the same period in 2005.

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

--Rental income for the three and six months ended June 30, 2006 were $1.9 million and $3.6 million as compared to $1.6 million and $3.1 million in the corresponding periods in 2005. The increase is primarily due to rental increases and the purchase of Falcon Point Apartments in Indianapolis, Indiana.

--Property operating expenses for the three and six months ended June 30, 2006 were $1.0 million and $1.8 million as compared to $825,000 and $1.6 million for the corresponding periods in 2005.

--Interest income for the three and six months ended June 30, 2006 was $844,000 and $2.0 million compared to $984,000 and $2.0 million for the corresponding periods in 2005. Increases were due to interest earned from additional notes receivable obtained from affiliates of IORI. These increases were offset by the cancellation of certain notes.

--Interest expense for the three and six months ended June 30, 2006 was $1.1 million and $2.1 million compared to $562,000 and $1.5 million for the corresponding periods in 2005. The increase was primarily due to the additional debt incurred by IORI during 2005 and 2006 due to refinancings and the acquisition of Falcon Point apartments. The increase was also due to increased interest rates for IORI's variable interest rate debt.

--Depreciation expense for the three and six months ended June 30, 2006 was $190,000 and $360,000 compared to $173,000 and $350,000 for the corresponding periods in 2005. The increase was due principally to the acquisition of Falcon Point.

--Advisory fees to affiliate for the three and six months ended June 30, 2006 were $243,000 and $417,000 compared to $170,000 and $337,000 for the corresponding periods in 2005. The increase was due primarily to a net increase in gross assets which is the basis of the advisory fee and a fee for refinancing certain mortgage obligations.

--The net income fee to affiliates for the three and six months ended June 30, 2006 was $5,000 and $55,000 as compared to $55,000 and $67,000 in the corresponding periods in 2005. The net income fee is based on 7 1/2% of IORI's net income.

--General and administrative expenses for the three and six months ended June 30, 2006 were $132,000 and $282,000 as compared to $199,000 and $341,000 in the corresponding periods in 2005.

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

INCOME OPPORTUNITY REALTY INVESTORS, INC.
                      CONSOLIDATED BALANCE SHEETS
                        (dollars in thousands)

                                              June 30,    December 31,
                                               2006          2005
                                           ------------- -------------
                                            (Unaudited)

                  Assets
Real estate held for investment            $     62,992  $     35,083
Less--accumulated depreciation                   (4,670)       (4,311)
                                           ------------- -------------
                                                 58,322        30,772

Related party receivable (including
 accrued interest of $2,444 and $2,391 in
 2006 and 2005, respectively)                    26,941        63,230
Investment in real estate partnerships              628           547
Cash and cash equivalents                           766           201
Due from affiliates                                 308         1,853
Other assets                                      3,438         2,738
                                           ------------- -------------
                                           $     90,403  $     99,341

   Liabilities and Stockholders' Equity

Liabilities:
Notes payable (including accrued interest
 of $176 and $228 for 2006 and 2005,
 respectively)                             $     42,854  $     52,817
Due to affiliates                                   542            --
Other liabilities                                 1,126         1,344
                                           ------------- -------------
                                                 44,522        54,161

Commitments and contingencies

Minority interest                                   555           513

Stockholders' equity:
Common Stock, $.01 par value; authorized,
 100,000,000 shares; issued and
 outstanding 4,168,035 shares at June 30,
 2006 and December 31, 2005                          42            42
Additional paid-in capital                       61,955        61,955
Accumulated deficit                             (16,671)      (17,330)
                                           ------------- -------------
                                                 45,326        44,667
                                           ------------- -------------
                                           $     90,403  $     99,341
                                           ============= =============



               INCOME OPPORTUNITY REALTY INVESTORS, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
               (dollars per thousand, except share data)
                              (Unaudited)

                           For the Three Months   For the Six Months
                               Ended June 30,        Ended June 30,
                              2006       2005       2006       2005
                           ---------- ---------- ---------- ----------

Property Revenue
  Rents and other property
   revenues                $   1,923  $   1,613  $   3,620  $   3,142

Operating expenses
  Property operations          1,032        825      1,836      1,646
  Depreciation                   190        173        360        350
  General and
   administrative                132        199        282        341
  Advisory fees                  243        170        417        337
                           ---------- ---------- ---------- ----------
Total operating expenses       1,597      1,367      2,895      2,674
                           ---------- ---------- ---------- ----------

Operating income                 326        246        725        468

Other income (expense):
  Interest income                844        984      1,998      1,958
  Mortgage and loan
   interest                   (1,152)      (562)    (2,048)    (1,498)
  Net income fee                  (5)       (55)       (55)       (67)
                           ---------- ---------- ---------- ----------
Total other income
 (expense)                      (313)       367       (105)       393
                           ---------- ---------- ---------- ----------

Income before equity in
 earnings of investees and
 minority interest                13        613        620        861

Equity in earnings (loss)
 of investees                     81        (19)        81        (28)

Minority interest                (29)        --        (42)        --
                           ---------- ---------- ---------- ----------

Net income                 $      65  $     594  $     659  $     833
                           ========== ========== ========== ==========

Earnings per share:
  Net earnings from
   continuing operations   $    0.02  $    0.14  $    0.16  $    0.20
                           ========== ========== ========== ==========


Weighted average common
 shares used in computing
 earnings per share        4,168,035  4,168,035  4,168,035  4,168,035