Income Opportunity Realty Investors, Inc. (NYSE MKT:IOT), a Dallas-based real estate investment company, today reported results of operations for the third quarter ended September 30, 2012. IOT announced today that the Company reported net income of $0.4 million or $0.08 per diluted earnings per share for the period ended September 30, 2012, as compared to a net loss of $0.5 million or $0.13 per diluted earnings per share for the same period ended 2011.
Land held for development or sale is our sole operating segment, holding 178 acres of land in Texas. There was no income generated from this segment for the three months ended September 30, 2012, nor for the prior period ended September 30, 2011. Our primary source of revenue is from interest income on $26.3 million of note receivables from related parties.
Interest income was $972,000 for the three months ended September 30, 2012. This represents an increase of $429,000 as compared to the prior period interest income of $543,000. The increase was related to the note receivables from Unified Housing Foundation, Inc., a related party. Prior to January 1, 2012, on cash flow notes where payments are based upon surplus cash from operations, accrued but unpaid interest income was only recognized to the extent that cash was received. As of January 1, 2012, due to the consistency of cash received on the surplus cash notes, we are recording interest as earned.
Property operating expenses were $12,000 for the three months ended September 30, 2012. This represents an increase of $6,000, as compared to the prior period operating expenses of $6,000. There was an increase in property operating expenses related to the land portfolio of $6,000 which was due to an increase in POA fees billed for third quarter of 2012.General and administrative expenses were $65,000 for the three months ended September 30, 2012. This represents a decrease of $29,000, as compared to the prior period general and administrative services of $94,000. There was a decrease in general and administrative expenses related to the other portfolio which consisted of a decrease of $11,000 in professional fees and a decrease of $18,000 in cost reimbursements to our Advisor.