U.S SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
- -----------------------------------------------------------
FORM 10-Q/A
AMENDMENT TO FORM 10-Q
Filed Pursuant to
THE SECURITIES EXCHANGE ACT OF 1934
EASTGROUP PROPERTIES
- ----------------------------------------------------------
(Exact name of Registrant specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Form 10-Q for the quarter
ended June 30, 1995 as set forth in the pages attached hereto:
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: February 21, 1996 EASTGROUP PROPERTIES
By: \s\ N. Keith McKey
-------------------
N. Keith McKey
Executive Vice President
and Secretary
EASTGROUP PROPERTIES
FORM 10-Q/A
TABLE OF CONTENTS
FOR THE QUARTER ENDED JUNE 30, 1995
- -----------------------------------------------------------------
Pages
Part I. Financial Information
Item 1. Consolidated financial statements
Consolidated balance sheets, June 30, 1995
and December 31, 1994
Consolidated statements of income for the
three months and six months ended
June 30, 1995 and 1994
Consolidated statements of cash flow for the
six months ended June 30, 1995 and 1994
Consolidated statements of changes in
shareholders' equity for the six months
ended June 30, 1995 and 1994
Notes to consolidated financial statements
Item 2. Management's discussion and analysis of
financial condition and results of operations
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, December 31,
1995 1994
----------- -----------
Assets
Real estate properties
Industrial $ 70,629 $ 69,214
Apartments 52,718 51,076
Office Buildings 35,614 35,500
----------- -----------
158,961 155,790
Less accumulated depreciation (18,458) (15,888)
----------- -----------
140,503 139,902
Mortgage loans 7,192 8,817
Land and land purchase-leasebacks 1,327 2,320
Investment in real estate
investment trusts 6,097 954
Cash and cash equivalents 90 301
Other assets 2,538 2,566
----------- -----------
157,747 $ 154,860
=========== ===========
Liabilities and Shareholders'Equity
Liabilities
Mortgage notes payable 41,604 $ 39,558
Notes payable to banks 29,681 28,671
Accounts payable and accrued expenses
1,487 1,167
Minority interests in joint ventures
2,331 2,848
Other liabilities 370 440
----------- -----------
75,473 72,684
----------- -----------
Shareholders' Equity
Shares of beneficial interest, par
value $1.00 per share; authorized
10,000,000 shares; issued 4,226,656
shares in 1995 and 4,221,669 in
1994 4,227 4,222
Additional paid-in-capital 68,269 68,210
Unrealized gain on securities 105 21
Undistributed earnings 9,673 9,723
----------- -----------
82,274 82,176
----------- -----------
157,747 $ 154,860
=========== ===========
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- -------------------
1995 1994 1995 1994
--------- --------- --------- ---------
Revenues
Income from real estate operations $ 7,233 5,582 14,128 10,392
Land rents 57 69 137 232
Equity in earnings of real estate
investment trust 144 13 153 131
Interest:
Mortgage loans 269 256 545 519
Other interest - 1 - 12
Other 77 44 100 74
--------- -------- -------- --------
7,780 5,965 15,063 11,360
--------- -------- -------- --------
Expenses
Operating expenses from
real estate operations 2,943 2,292 5,693 4,390
Interest expense 1,552 704 3,003 1,435
Depreciation and amortization 1,442 1,040 2,835 1,974
Minority interests in joint ventures 72 45 145 65
General and administrative expense 560 548 1,086 1,007
Stock appreciation rights
(recovery) expense - 5 - (136)
--------- -------- -------- --------
6,569 4,634 12,762 8,735
--------- -------- -------- --------
Income from operations 1,211 1,331 2,301 2,625
--------- -------- -------- --------
Gain on investments
Real estate 1,039 2,494 1,451 2,494
--------- -------- -------- --------
Net Income $ 2,250 3,825 3,752 5,119
========= ======== ======== ========
Net Income per share of
beneficial interest .53 .91 .89 1.28
========= ======== ======== ========
Weighted average shares outstanding 4,225 4,211 4,223 4,008
========= ======== ======== ========
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
(In thousands)
Six Months Ended
June 30,
-----------------------
1995 1994
---------- ----------
Operating Activities
Net Income $ 3,752 $ 5,119
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,835 1,974
Stock appreciation rights - (136)
Gain on investments, net (1,451) (2,494)
Real estate investments trust:
Equity in earnings (153) (131)
Dividends received from operations 58 36
Other (59) (20)
Changes in operating assets
and liabilities:
Accrued income and other assets 561 (22)
Accrued payable, accrued expenses
and prepaid rent (132) (103)
--------- ---------
Net cash provided by operating activities 5,411 4,223
--------- ---------
Investing Activities
Payments on mortgage loans receivable 616 (675)
Advances on mortgage loans receivable - 30
Sale of real estate investments 2,357 3,491
Purchase of real estate - (20,224)
Purchase of real estate investment trusts
shares (5,062) -
Purchases of real estate improvements (2,080) (2,542)
Return of capital dividends 87 -
Change in other assets and
other liabilities (857) (514)
--------- ---------
Net cash used in investing activities (4,939) ( 20,434)
--------- ---------
Financing Activities
Proceeds from mortgage notes payables 2,500 6,000
Proceeds from bank borrowings 13,586 8,945
Principal payments on bank borrowings (12,576) (23,734)
Principal payments on mortgage notes
payable (455) (5,776)
Distributions paid to shareholders (3,802) (3,622)
Net proceeds from issuance of stock - 32,169
Proceeds on exercise of options 160 -
Purchases of shares of beneficial
interest (96) -
--------- ---------
Net cash provided by (used in)
financing activities (683) 13,982
--------- ---------
Decrease in cash and cash equivalents (211) (2,229)
Cash and cash equivalents at
beginning of period 301 2,690
--------- ---------
Cash and cash equivalent at end of period 90 461
========= =========
Supplemental Cash Flow Information:
Cash paid for interest 3,011 1,489
Debt assumed by Trust in purchase of
real estate - 493
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(In thousands, except for per share data)
Six Months Ended
June 30,
-----------------------
1995 1994
---------- ----------
Shares of beneficial interest,
$1.00 par value
Balance at beginning $ 4,222 2,461
Issuance of shares 5 1,750
--------- ---------
Balance at end of period 4,227 4,211
--------- ---------
Additional paid-in-capital
Balance at beginning 68,210 38,257
Issuance of shares 59 30,419
--------- ---------
Balance at end of period 68,269 68,676
--------- ---------
Undistributed earnings
Balance at beginning of period 9,723 8,083
Net income 3,752 5,119
Cash dividends declared:
$.90 per share in 1995, and
$.86 per share in 1994 (3,802) (3,622)
--------- ---------
Balance at end of period 9,673 9,580
--------- ---------
Unrealized gain on securities
Balance at beginning of period 21 -
Change in unrealized gain 84 28
--------- ---------
Balance at end of period 105 28
--------- ---------
Total shareholders' equity $ 82,274 82,495
========= =========
See accompanying notes to consolidated financial statements
Notes to Consolidated Financial Statements (Unaudited)
(1) Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
The financial statements should be read in conjunction with the
annual report and the notes thereto.
(2) Reclassifications
Certain reclassifications have been made in the fiscal 1994
financial statements to conform to the fiscal 1995
classifications.
(3) Subsequent Events
On July 12, 1995, the interest rates on the bank credit
facilities were reduced from the prime rate to the London
Interbank Offered Rate ("LIBOR") plus 2.0%, currently 7.875%.
There is also a .25% fee on the unused amount of the $7 million
credit line and the acquisition credit line. The acquisition
credit line was reduced from $45 million to $27 million effective
July 12, 1995 and will be reduced to $15 million effective
September 1, 1995. The Trust owes $18,860,000 on the acquisition
line as of August 10, 1995. The Trust is currently in the
process of obtaining an additional $26 million of nonrecourse,
fixed rate financing.
On July 28, 1995, the Trust received $3,350,000 from the
first mortgage on WestPort Commerce Center ("WestPort"), the
terms of the first mortgage on WestPort provide for a 8.0%
interest rate, monthly principal and interest payments of $21,016
beginning September 1, 1995 and a final maturity on August 1,
2005. The Trust used $3,087,500 of the proceeds to pay down the
acquisition line of credit and the balance after escrows and
settlement costs to reduce the working capital line of credit.
Also, the Trust received a paydown of $813,000 on the WestPort
mortgage loan made by the Trust to the co-owner of WestPort.
On August 3, 1995, the Trust received $5,950,000 from the
first mortgage on the LaVista Crossing Apartments ("LaVista").
The terms of the first mortgage on LaVista provide for a 8.688%
interest rate, monthly principal and interest payments of $48,667
beginning October 1, 1995 and a final maturity on September 1,
2005. The Trust used $3,380,000 of the proceeds to pay down the
acquisition line of credit and the balance of the proceeds after
escrows and settlement costs and borrowings of $510,000 on the
bank line to pay off the Country Club mortgage note of
$2,267,000.
The Trust has a contract for the sale of its Cascade VII
office building in Columbus, Ohio (which has a carrying value of
$1,500,000) for cash of $1,300,000 and a note receivable of
$200,000 with an interest rate of 10% and a five year maturity.
The contract is scheduled to close August 15, 1995. Also, the
Trust has a contract for the sale of the Sunchase Apartments in
Corpus Christi, Texas. The closing of this transaction is
subject to several contingencies and is tentatively scheduled for
September 15, 1995.
(4) Marketable Equity Securities
On January 1, 1995, the Trust adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" and classified its investment in
cost securities as securities available-for-sale. Accordingly,
as of June 30, 1995, investment in cost securities are carried at
fair value with the unrealized gain of $64,000, presented as a
separate component of shareholders' equity.
EASTGROUP PROPERTIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
(Comments are for the balance sheet dated June 30, 1995, compared
to December 31, 1994.)
Real estate properties increased $3,171,000 during the first
six months of 1995 as a result of capital improvements on
existing Trust properties of $1,316,000, development costs for
the construction of a 34,600 square foot distribution building at
the Phillips Distribution Center in southeastern Jacksonville of
$764,000, and the acquisition by foreclosure of the leasehold
improvements at the 108 unit EastGate Apartments for $1,227,000.
In April 1995, the Trust accepted a deed in lieu of foreclosure
on the EastGate Apartments leasehold improvements in Wichita,
Kansas after the owners defaulted on payments to the Trust.
These increases were offset by the writedown of the Cascade VII
office building in Columbus, Ohio of $136,000 to its net
realizable value. Accumulated depreciation increased $2,570,000
due to recent purchases of real estate properties.
Mortgage loans receivable decreased $1,625,000 during the
first six months of 1995. This decrease in mortgage loans
receivable was the result of scheduled principal payments
received of $83,000, the acceptance of a deed in lieu of
foreclosure on the EastGate Apartments mortgage loan with a
carrying value of $1,009,000, and the repayment of $591,000 in
loans made to the Trust's joint venture partner on the Exchange
Distribution Center warehouse ("Exchange"). These decreases were
offset by amortization of loan discounts of $58,000.
Land and land purchase-leaseback investments decreased
$993,000 during the first six months of 1995, as a result of the
sale of the Winchester Ranch ("Winchester") land purchase-
leaseback investment, the sale of the Iroquois land purchase-
leaseback investment and the acceptance of a deed in lieu of
foreclosure on the EastGate Apartments leasehold improvements
(described above). In February 1995, the Trust sold its
Winchester land purchase-leaseback investment in Dallas, Texas
for $862,000 and recognized a gain for financial reporting
purposes of $412,000. In June 1995, the Trust sold its Iroquois
land purchase-leaseback investment in Nashville, Tennessee for
$1,495,000 and recognized a gain for financial reporting purposes
of $1,175,000.
Investments in real estate investment trusts increased
$5,143,000 from $954,000 at December 31, 1994 to $6,097,000 at
June 30, 1995. In April 1995, the Trust purchased 383,775 shares
(17.4%) of LNH REIT, Inc. ("LNH") and the other 50% of LNH REIT
Managers, a partnership which provided management services to
LNH. These purchases were made from Walker Investments, L.P.,
and related entities for a total of $3,070,000. As a result of
this purchase, the Trust owns 515,200 shares (23.4%) of LNH.
Also, the Trust purchased 189,000 shares (5.27%) of Copley
Properties, Inc., ("Copley"), a real estate investment trust for
$1,992,000. During the first six months of 1995, the Trust
recognized $153,000 of equity in earnings of LNH, $20,000 of
unrealized gains of LNH, offset by $145,000 of LNH dividends
received. The Trust also recognized an unrealized gain of
$64,000 recorded on the Trust's available-for-sale securities in
accordance with the implementation of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities". The shares of Copley common
stock have a book value of $10.54 per share and a market value of
$10.88 per share at June 30, 1995.
Other assets decreased $28,000 during the first six months
of 1995. Major items recorded in other assets were capitalizing
leasing costs of $403,000 and capitalizing financing costs of
$487,000. These increases were offset by $264,000 in
amortization and the receipt of $422,000 from a bankruptcy
settlement related to the motel loans that was accrued at
December 31,1994.
Mortgage notes payable increased $2,046,000 during the first
six months of 1995, primarily as a result of the $2,500,000
received from the first mortgage on Exchange in June 1995. The
terms of the first mortgage provide for a 8.375% interest rate,
monthly principal and interest payments of $21,498 beginning
September 1, 1995 and a final maturity on August 1, 2005. This
increase was offset by scheduled principal repayments of $454,000
during the first six months of 1995.
Notes payable to banks increased from $28,671,000 at
December 31, 1994 to $29,681,000 at June 30, 1995. On April 3,
1995, the Trust borrowed $3,000,000 from a bank to finance the
acquisition of the LNH shares and the other 50% of LNH REIT
Managers. The loan which matures April 5, 1996 was reduced from
the prime rate of interest (currently 8.75%) to the LIBOR plus
2.0% (currently 7.875%).
The Trust's total working capital line available was
increased to $7,000,000 to acquire the additional shares of
Copley. The working capital line matures April 30, 1996 and was
reduced from the prime rate of interest (currently 8.75%) to
LIBOR plus 2% (currently 7.875%). The line had a $3,270,000 net
reduction in the six months ended June 30, 1995. The acquisition
line was increased during the six months ended June 30, 1995 due
to advances of $1,280,000. The interest rate was reduced from
the prime rate to LIBOR plus 2.0% on July 12, 1995.
Unrealized gain on securities increased as a result of
$64,000 recorded on the Trust's available for sale securities in
accordance with the implementation of Statement of Financial
Accounting Standards No. 115 "Accounting for Certain Investments
in Debt and Equity Securities". Also, the Trust recorded $20,000
in unrealized gains through equity in earnings of LNH.
Undistributed earnings decreased from $9,723,000 at December
31, 1994 to $9,673,000 at June 30, 1995 as a result of dividends
declared of $3,802,000 exceeding net income for financial
reporting purposes of $3,752,000.
RESULTS OF OPERATIONS
(Comments are for the three months and six months ended June 30,
1995, compared to the three months and six months ended June 30,
1994.)
Property net operating income (PNOI) from real estate
properties, defined as income from real estate operations less
property operating expenses (before interest expense and
depreciation) increased by $1,000,000 or 30% for the three months
ended June 30, 1995 compared to the three months ended June 30,
1994. For the six months ended June 30, 1995, net operating
income increased by $2,433,000 or 41% for the six months ended
June 30, 1995 compared to the six months ended June 30, 1994.
Property net operating income (loss) and percentage leased
by property type were as follows:
PNOI PNOI
Three Months Ended Six Months Ended Percent
June 30 June 30 Leased
------------------- --------------- --------
1995 1994 1995 1994 1995
------- ------ ------ ------ -----
(In thousands)
Industrial $ 1,870 1,120 3,685 2,083 98%
Apartments 1,498 1,103 2,936 2,031 96%
Office Buildings 930 1,075 1,830 1,904 92%
Other (8) (8) (16) (16) -
------- ------ ------ ------
Total PNOI $ 4,290 3,290 8,435 6,002
======= ====== ====== ======
PNOI from industrial properties increased $750,000 and
$1,602,000 for the three months and six months ended June 30,
1995, compared to June 30, 1994. This is primarily the result of
the acquisition of Exchange in May 1994, Jetport 516 Commerce
Park ("JetPort 516") in May 1994, Phillips Distribution Center
("Phillips") in July 1994, Northwest Point Business Park
("Northwest") in September 1994, Westport in October 1994 and
Baxter Warehouse ("Baxter") in December 1994. Industrial
properties held throughout the three months and six months ended
June 30, 1995 and 1994, showed an increase in PNOI of 14% for the
three months ended June 30, 1995 and 19% for the six months ended
June 30, 1995. Contributing to this increase in PNOI from
industrial properties was improved operations at Rampart
Distribution Center ("Rampart"), 56th Street Commerce Park ("56th
Street") and Lake Pointe Business Park ("Lake Pointe"). PNOI for
the Trust's apartment properties increased $395,000 and $905,000
for the three months and six months ended June 30, 1995 compared
to the three months and six months ended June 30, 1994. This
increase is primarily attributable to the acquisition of
Plantations at Killearn ("Plantations") in April 1994, Hampton
House Apartments ("Hampton") in August 1994, Grande Pointe
Apartments ("Grande Pointe") in September 1994 and the deed in
lieu of foreclosure on the EastGate Apartments in April 1995.
PNOI from the Trust's office buildings decreased $145,000 and
$74,000 for the three months and six months ended June 30, 1995
compared to June 30, 1994. This is primarily the result of
reduced occupancy at 8150 Leesburg Pike ("Leesburg Pike"), offset
by the acquisition of the Santa Fe Energy Building ("Santa Fe")
in February 1994.
Land rents decreased $12,000 and $95,000 for the three
months and six months ended June 30, 1995 compared to June 30,
1994, primarily as a result of the sale of the Parklane on
Peachtree and Winchester Ranch land purchase-leaseback
investments and the deed in lieu of foreclosure on the EastGate
Apartments land purchase-leaseback investment. These decreases
were offset by the acquisition in 1994 of two small parcels at a
foreclosure sale. The Trust held mortgages on two commercial
parcels which were additional collateral for our Madison Square
land purchase-leaseback investment written off in 1992.
Equity in earnings from LNH of $144,000 and $153,000 was
recorded during the quarter and six months ended June 30, 1995,
compared to $13,000 and $131,000 for the same period of 1994.
Interest income on mortgage loans increased $13,000 and
$26,000 for the three months and six months ended June 30, 1995
compared to 1994. The following is a breakdown of interest
income for the three months and six months ended June 30, 1995
compared to 1994:
Three Months Ended Six Months Ended
June 30 June 30
------------------- ---------------
1995 1994 1995 1994
------- ------ ------ ------
(In thousands)
Interest income from:
25% joint venture
mortgage loans $ 54 31 123 59
Motel mortgage loans 80 46 149 105
Wrap mortgage loans 134 177 271 352
Other mortgage loans 1 1 2 1
------- ------ ------ ------
$ 269 255 545 517
======= ====== ====== ======
Interest income from the 25% joint venture mortgage loans
increased as a result of income from additional mortgage loans
made by the Trust to the co-owner of WestPort and Exchange in
October 1994 and May 1994. On June 30, 1995, the Trust received
a repayment of $591,000 on the Exchange mortgage loans, and on
July 28, 1995, the Trust received a payment of $813,000 on the
WestPort mortgage loan. Interest income from the motel mortgage
loans is recorded as received, and the notes have been written
down to their net realizable value. Interest income from the
wrap mortgage loans decreased as a result of the foreclosure in
April 1995 of the EastGate mortgage.
Interest expense increased $848,000 and $1,568,000 for the
three months and six months ended June 30, 1995 compared to June
30, 1994. This increase is primarily the result of higher
average bank borrowings on the Trust's credit line and
acquisition credit line, and the three million line of credit
used to acquire the LNH shares. Also, the prime rate of interest
increased from 6% at January 1, 1994 to 9% at June 30, 1995.
Interest expense on real estate properties increased as a result
of the acquisition of Northwest in September 1994, with a
mortgage of $4,321,000 which was assumed, and the new mortgages
of $6,000,000 on Sutton House Apartments ("Sutton House") on May
25, 1994 and $2,400,000 on 56th Street on July 21, 1994.
At the Trust's annual meeting on December 16, 1994, the
shareholders voted to implement a new incentive compensation plan
which eliminated stock appreciation rights and incentive
compensation units. Stock appreciation rights expense
(recovery), which was adjusted quarterly based on fluctuations in
the Trust's quoted share price, was $5,000 for the three months
ended June 30, 1994 and ($136,000) for the six months ended June
30, 1994.
As discussed above, the Trust sold its Winchester Ranch land
purchase-leaseback investment in February 1995 and its Iroquois
land purchase-leaseback investment in June 1995. Also, the Trust
wrote down its investment in the Cascade VII office building in
Columbus, Ohio by $136,000 to its estimated net realizable value.
In April 1994, the Trust sold its Parklane on Peachtree land
purchase-leaseback investment for $3,500,000 and used the
proceeds to acquire the Plantations at Killearn Apartments
through a tax deferred exchange. For financial reporting
purposes, the Trust recognized a gain of $2,494,000 on the sale.
The real estate investment trust industry has recommended
supplemental disclosures concerning capital expenditures, leasing
costs, financing costs and straight-line rents.
The Trust expenses apartment unit turnover cost such as
carpet, painting and small appliances. Capital expenditures in
the six months ended June 30, 1995 by category are as follows (in
thousands):
Upgrades on acquisitions $ 444
New Development costs 764
Major Renovation 49
Tenant improvements:
New tenants 554
Renewal tenants 89
Other 180
-------
$ 2,080
=======
For the three months and six months ended June 30, 1995, the
Trust capitalized $197,000 and $403,000 of leasing costs, which
included $78,000 and $282,000 related to new tenants and $119,000
and $121,000 related to renewal tenants, and $446,000 and
$487,000 of financing costs and included these amounts in other
assets. For the three months and six months ended June 30, 1995,
the Trust amortized $75,000 and $149,000 related to capitalized
leasing costs and $60,000 and $115,000 related to financing costs
and included these amounts in depreciation and amortization
expense. Leasing costs are amortized over the life of the lease
and financing costs are amortized over the life of the loan.
Rental income included straight-line rent of $22,000 and
$43,000 for the three months and six months ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $5,411,000 for
the six months ended June 30, 1995. The Trust distributed $3,802,000
of this amount in dividends which left $1,609,000 for other purposes.
Other sources of cash were collections on mortgage loan
receivables, sale of real estate investments, mortgage
borrowings, bank borrowings on the $7,000,000 working capital
line, the $3,000,000 line and the acquisition line. Primary uses
of cash were for capital improvements at the various
properties, bank debt payments, mortgage note payments and
purchases of real estate investment trust shares. Total debt at
June 30, 1995 is as follows (in thousands):
Mortgage notes payable - fixed rate $ 39,334
Mortgage notes payable - floating rate 2,270
Bank notes payable - floating rate 29,681
--------
Total debt $ 71,285
========
Effective July 12, 1995 the interest rates on the bank notes
payable were changed from the prime rate to LIBOR plus 2.0%,
currently 7.875%. There is also a .25% fee on the unused amount
of the $7 million credit line and the acquisition credit line.
The acquisition credit line was reduced from $45 million to $27
million effective July 12, 1995 and will be reduced to $15
million effective September 1, 1995. The Trust owes $18,860,000
on the acquisition line as of August 10, 1995. The Trust is
currently in the process of obtaining an additional $26 million
of nonrecourse, fixed rate financing.
On July 28, 1995, the Trust received $3,350,000 from the
first mortgage on WestPort, the terms of the first mortgage on
WestPort provide for a 8.0% interest rate, monthly principal and
interest payments of $21,016 beginning September 1, 1995 and a
final maturity on August 1, 2005. The Trust used $3,087,500 of
the proceeds to pay down the acquisition line of credit and the
balance after escrows and settlement costs to reduce the working
capital line of credit. Also, the Trust received a paydown of
$813,000 on the WestPort mortgage loan made by the Trust to the
co-owner of WestPort.
On August 3, 1995, the Trust received $5,950,000 from the
first mortgage on the LaVista. The terms of the first mortgage
on LaVista provide for a 8.688% interest rate, monthly principal
and interest payments of $48,667 beginning October 1, 1995 and a
final maturity on September 1, 2005. The Trust used $3,380,000
of the proceeds to pay down the acquisition line of credit and
the balance of the proceeds after escrows and settlement costs
and borrowings of $510,000 on the bank line to pay off the
Country Club mortgage note of $2,267,000.
The Trust has a contract for the sale of its Cascade VII
office building in Columbus, Ohio with a carrying value of
$1,500,000 for cash of $1,300,000 and a note receivable of
$200,000 with an interest rate of 10% and a five year maturity.
The contract is scheduled to close August 15, 1995. Also, the
Trust has a contract for the sale of the Sunchase Apartments in
Corpus Christi, Texas. The close of this transaction is subject
to several contingency items and is tentatively scheduled to
close September 15, 1995.
Budgeted capital expenditures for the year ending December
31, 1995 are as follows (in thousands):
Upgrades on acquisitions $ 1,082
New development costs 1,108
Major Renovation 926
Tenant Improvements:
New Tenants 995
Renewal Tenants 282
Other 457
-------------
$ 4,850
=============
The Trust anticipates that its current cash balance,
operating cash flow, proceeds from dispositions of properties and
borrowings (including borrowings under the revolving line of
credit) will be adequate to pay the Trust's (i) operating and
administrative expenses, (ii) debt service obligations, (iii)
distributions to shareholders, (iv) capital improvements, and (v)
normal repair and maintenance expenses at its properties both in
the short and long term.