SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ending December 31, 1999 Commission file number 0-13693
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 13-6850434
------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3111 Paces Mill Road, Suite A-200, Atlanta, GA 30339
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 984-9500
--------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares of Beneficial Interest without par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. __
Based on the average bid and asking price on March 1, 2000 the aggregate market
value of the Registrant's common shares of beneficial interest held by
non-affiliates of the Registrant was $1,353,638.
The number of shares outstanding as of March 15, 2000 was 1,100,491.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Trust's Proxy Statement relating to its 2000 Annual Meeting
of Shareholders are incorporated by reference into Part III.
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
INDEX TO FORM 10-K
----------------------------------
PART I........................................................................3
ITEM 1 - Business......................................................3
ITEM 2 - Properties....................................................6
ITEM 3 - Legal Proceedings.............................................7
ITEM 4 - Submission of Matters to a Vote of Shareholders...............7
PART II.......................................................................8
ITEM 5 - Market for Registrant's Shares of Beneficial Interest.........8
ITEM 6 - Selected Financial Information................................9
ITEM 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................10
ITEM 7A - Quantitative and Qualitative Disclosures About Market Risk ...15
ITEM 8 - Financial Statements and Supplementary Data...................16
ITEM 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...........................16
PART III......................................................................17
ITEM 10 - Directors and Executive Officers of the Registrant.............17
ITEM 11 - Executive Compensation.........................................17
ITEM 12 - Security Ownership of Certain Beneficial Owners
and Management.................................................17
ITEM 13 - Certain Relationships and Related Transactions.................17
PART IV.......................................................................18
ITEM 14 - Exhibits, Financial Statements and Schedule and
Reports on Form 8-K............................................18
Signatures ...................................................................21
This Form 10-K contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The Trust's actual results could differ materially from those projected
in the forward-looking statements. Certain factors that might cause such a
difference are set forth in the section entitled "Certain Factors Affecting
Future Operating Results," in the relevant paragraphs of "Management's
Discussion and Analysis of Results of Operations and Financial Condition," and
elsewhere in this report.
PART I
------
ITEM 1 - BUSINESS
- -----------------
General Development of Business
- -------------------------------
Vinings Investment Properties Trust ("Vinings" or the "Trust") was organized on
December 7, 1984 as a mortgage real estate investment trust ("REIT") whose
original plan was to liquidate within approximately ten years. On February 28,
1996, Vinings Investment Properties, Inc. completed a tender offer to acquire
control of the Trust in order to rebuild Vinings assets by expanding into the
multifamily real estate markets through the acquisition of garden style
apartment communities which are leased to middle-income residents. Current
management believes that these investments have the potential to provide
attractive sources of income to Vinings which will not only increase net income
and provide cash available for future distributions, but will increase the value
of Vinings' real estate portfolio as well.
Currently Vinings conducts all of its operations through Vinings Investment
Properties, L.P. (the "Operating Partnership"), a Delaware limited partnership.
As of December 31, 1999, the Trust was the sole 1% general partner and an 80.94%
limited partner in the Operating Partnership. (This structure is commonly
referred to as an umbrella partnership REIT or an "UPREIT").
On April 29, 1999, the Operating Partnership offered, in a private transaction
pursuant to a Securities Purchase Agreement, Series A Convertible Preferred
Partnership interests (the "Preferred Units"), the proceeds from which were used
to acquire thirteen multifamily communities (collectively, the "Portfolio
Properties") from seventeen limited partnerships and limited liability
companies. Eight of the Portfolio Properties were purchased through subsidiary
partnerships of the Operating Partnership. The remaining Portfolio Properties
were purchased through a joint venture structure. (See Notes 3 and 4 to Vinings'
December 31, 1999 Consolidated Financial Statements.) As of December 31, 1999, a
total of 1,988,235 Preferred Units had been issued for an aggregate purchase
price of $8,450,000. (See Note 5 to Vinings' December 31, 1999 Consolidated
Financial Statements.) On March 15, 2000 the Board of Trustees voted to convert
the Preferred Units into a newly created class of preferred shares of beneficial
interest in Vinings, and consequently authorized the issuance of 1,988,235
preferred shares with the same rights, preferences and privileges as the
Preferred Units (the "Preferred Shares"). (See Note 15 to Vinings' December 31,
1999 Consolidated Financial Statements.)
Vinings currently owns, through wholly owned subsidiaries, ten apartment
communities totaling 1,520 units and a 75,000 square foot, single story business
park. In addition, Vinings holds a 20% interest in and is the general partner of
an unconsolidated joint venture, which owns through subsidiary partnerships five
additional apartment communities totaling 968 units. (See Note 4 to Vinings'
December 31, 1999 Consolidated Financial Statements.) At December 31, 1999, the
average occupancy of Vinings' portfolio, including the communities held by the
unconsolidated joint venture, was 94%.
Effective March 1, 2000, 628,927 shares of Vinings were purchased in a privately
negotiated transaction by the officers, one of their affiliates and an affiliate
of one of the Trustees from a limited number of shareholders, which included
three of the Trustees and certain of their affiliates (the "Stock Transaction").
In connection with the transaction, the three selling Trustees -- James D. Ross,
Martin H. Petersen and Gilbert H. Watts, Jr. -- resigned from the Board of
Trustees.
Vinings has elected to be taxed as a REIT under the Internal Revenue Code of
1986, as amended. As a REIT, Vinings will generally not be subject to federal
income taxation on that portion of its income that qualifies as REIT taxable
income to the extent that it distributes at least 95% of its taxable income to
its shareholders and satisfies certain other requirements.
As a result of the Stock Transaction, fewer than five shareholders own in excess
of 50% of the equity in Vinings. On March 15, 2000, the Board of Trustees voted
to waive the ownership limitations in Vinings' Declaration of Trust with respect
to shareholders acquiring shares in the Stock Transaction as well as with
respect to certain holders of Preferred Units who will be acquiring Preferred
Shares. The Board is currently considering whether it is in the best interests
of shareholders for Vinings to continue to qualify as a REIT for federal income
tax purposes in light of the restrictions imposed on Vinings in order for it to
qualify as a REIT. To maintain its REIT status, Vinings would be required to
effect a change in its ownership structure prior to June 30, 2000. However,
there can be no assurances that the Trust will be successful in effecting such a
change prior to June 30, 2000.
Presently, the Board does not believe that there would be negative tax
consequences to the shareholders should Vinings lose its REIT status due to the
fact that the Trust is not currently generating taxable income. However,
management is continuing to investigate all alternatives for maintaining REIT
status as well as all consequences to the shareholders should Vinings lose its
REIT status.
Vinings' executive offices are located at 3111 Paces Mill Road, Suite A-200,
Atlanta, Georgia 30339, and its phone number is (770) 984-9500.
Financial Information About Industry Segments
- ---------------------------------------------
Vinings' operations and identifiable long-term assets have been attributed to
the real estate industry for the entirety of its existence. While investments
prior to the tender offer were primarily mortgage loans, currently Vinings'
assets are equity investments. Management plans to continue making equity
investments in the multifamily real estate markets.
Narrative Description of Business
- ---------------------------------
Vinings' primary objective is to continue to expand into the multifamily real
estate markets through the acquisition of garden style apartment communities,
which are leased to middle-income residents. The middle-income resident is a
more stable and broader based market, often referred to as "the renter by
necessity." Management believes that middle market properties provide greater
potential for appreciation through increased revenues and cash flows than the
more expensive high-end apartment communities, which cater to "the renter by
choice."
Management believes that these investments will provide attractive sources of
income to Vinings, which will not only provide cash available for future
distributions, but will increase the value of Vinings' real estate portfolio as
well.
In the past, Vinings has reviewed each real estate investment in its portfolio
on a quarterly basis. Management plans to continue this review as well as to
carefully review each acquisition to insure that Vinings makes sound investments
on behalf of its shareholders. In this regard, Vinings' Board has established an
Acquisition Committee that must review and approve each potential acquisition
based on certain investment criteria before it is presented to the Board for
final approval.
Growth and Expansion Strategy
- -----------------------------
Management intends to implement its growth and expansion strategy by targeting
properties that have been under managed and/or under maintained, and purchase
such properties at a price which is below replacement cost. Through strategic
value added and return oriented capital improvements and intensive property
management, the Trust believes that cash flow, and in turn value, will be
increased. These properties may be acquired either for cash, through debt
financing, in exchange for shares of beneficial interest in the Trust or for
partnership units in its Operating Partnership or any combination thereof. In
addition, the Trust may seek to raise capital through private offerings for
specific acquisitions or may seek to grow through mergers or combinations with
other real estate companies whose objectives and goals are similar to its own.
Competition
- -----------
Vinings competes with a number of housing alternatives for its residents
including other multifamily communities and single family homes available for
rent as well as purchase. This competition varies greatly from market to market
depending on the location of each community and the alternative housing
available in that particular area. This competition could have an effect not
only on the properties' ability to lease rental units but also on the rents
charged.
Vinings also competes with other investors for potential acquisitions, including
other REITs as well as other private real estate companies, some of which may
have greater resources with which to purchase projects that the Trust may be
interested in acquiring. Vinings also competes with these companies for its
source of equity, whether from the public markets or from private investors,
which could have an impact on Vinings' ability to acquire property in the
future.
Advisory and Property Management Services
- -----------------------------------------
On January 1, 1999, Vinings entered into management agreements with VIP
Management, LLC ("VIP"), an affiliate of the officers, who are also Trustees of
Vinings, to provide property management services for a fee equal to varying
percentages ranging from three and one half to six percent of gross revenues,
plus a fee for data processing. Prior to January 1, 1999, Vinings had entered
into management agreements with Vinings Properties, Inc., also an affiliate of
the officers of Vinings, to provide property management services on
substantially the same terms as the current agreements. Up until December 31,
1998, Peachtree was managed by a third-party property management firm not
affiliated with management.
In addition, as a commitment to the rebuilding of Vinings, prior to 1998 The
Vinings Group, Inc., the parent corporation of Vinings Properties, Inc.
(collectively with VIP, "The Vinings Group"), provided numerous services at no
cost to Vinings relating to administration, acquisition, and capital and asset
advisory services. Certain direct costs paid on Vinings' behalf were reimbursed
to The Vinings Group. Beginning January 1, 1998, The Vinings Group has charged
Vinings for certain overhead charges. Beginning August 1, 1999, the Trust has
also paid for its pro-rata share of rent, administrative and other overhead
charges, which includes reimbursing The Vinings Group for a pro-rata portion of
salaries and benefits for the officers and other employees providing services to
Vinings.
Employees
- ---------
Vinings does not currently hire its own employees, as The Vinings Group has been
providing services to the Trust as described above. In addition, The Vinings
Group, as managing agent, provides on-site property management services for the
Trust and during fiscal 1999, the Trust paid a total of $265,280 to The Vinings
Group for these services. At December 31, 1999, Vinings, through its managing
agent, had engaged 43 associates who performed on-site management services for
the communities and were paid with funds generated from the properties.
Environmental Policy
- --------------------
Investments in real property create a potential for environmental liability on
the part of the Trust. Owners of real property may be held liable for all costs
and liabilities relating to hazardous substances present on or emanating from
their properties. Current management assesses on an as needed basis, measures
that may need to be taken to comply with environmental laws and regulations. In
the event that there is a potential of environmental responsibility, the costs
to comply with environmental laws and regulations would be estimated at that
time. At December 31, 1999, Vinings was not aware of any potential environmental
contamination relating to investments in its portfolio.
ITEM 2 - PROPERTIES
- -------------------
As of December 31, 1999, Vinings directly owned ten apartment communities and a
single-story business park, Peachtree. While Vinings still owns Peachtree, it
intends to continue investing only in multifamily communities. Vinings' directly
owned real estate investments are summarized below by property:
Date No. Amount of Occupancy at
Owned Properties Acquired Units Investment 12/31/99
---------------- -------- ----- -------- ------------
Cottonwood Apartments 05/01/99 120 $ 4,915,643 96%
Delta Bluff Apartments 05/01/99 152 7,147,327 92%
Foxgate Apartments 05/01/99 160 7,527,293 94%
Hampton House Apartments 05/01/99 128 5,869,095 96%
Heritage Place Apartments 05/01/99 80 3,314,055 95%
Northwood Place Apartments 05/01/99 136 5,741,989 90%
River Pointe Apartments 05/01/99 152 7,156,034 100%
Trace Ridge Apartments 05/01/99 136 5,479,482 94%
The Thicket Apartments 06/28/96 254 7,713,183 97%
Windrush Apartments 12/19/97 202 7,378,876 98%
Peachtree Business Center 04/12/90 N/A 2,167,217 100%
----- ----------- ------------
Totals 1,520 $64,410,194 96%
===== =========== ============
In addition as of December 31, 1999, Vinings was the general partner of and
owned a 20% interest in an unconsolidated Joint Venture, which owned five
apartment communities summarized as follows:
Joint Venture Date No. Amount of Occupancy at
Properties Acquired Units Investment 12/31/99
------------------------- -------- ----- ----------- ------------
Bradford Place Apartments 05/01/99 240 $11,242,296 96%
Cambridge Apartments 05/01/99 120 5,778,944 83%
The Landings Apartments 05/01/99 120 6,245,084 75%
Riverchase Apartments 05/01/99 280 14,420,506 92%
Southwind Apartments 05/01/99 208 8,529,058 94%
---- ----------- ------------
Totals 968 $46,215,888 90%
==== =========== ============
The above investment amounts are net of accumulated depreciation. All of the
properties are encumbered by fixed rate mortgage loans, except for Peachtree
Business Center, which serves as security for the line of credit. Vinings
incorporates herein by reference the description of owned real property on
Schedule III and the notes thereto.
ITEM 3 - LEGAL PROCEEDINGS
- --------------------------
None of Vinings' properties are presently subject to any material litigation
nor, to Vinings' knowledge, is any material litigation threatened against the
Trust or any of its properties, other than routine actions or claims and
administrative proceedings arising in the ordinary course of business. Some of
these claims are expected to be covered by insurance and all of which
collectively are not expected to have a material adverse effect on the business,
the financial condition, or the results of operations of Vinings.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
- --------------------------------------------------------
No matters were submitted to a vote of the Trust's shareholders during the
fourth quarter of fiscal 1999.
PART II
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ITEM 5 - MARKET FOR REGISTRANT'S COMMON SHARES OF BENEFICIAL INTEREST
- ---------------------------------------------------------------------
Stock Quotation
- ---------------
Vinings' common shares of beneficial interest are currently traded on the
over-the-counter Bulletin Board under the symbol "VIPIS." On March 1, 2000, the
closing sales price for Vinings' common shares, as reported on the
over-the-counter Bulletin Board, was $4.97.
Market Information
- ------------------
The high and low sales prices for each quarterly period during fiscal 1999 and
fiscal 1998, which reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions,
are as follows:
------------------ ------------------
1999 1998
------------------ ------------------
Quarter Ended High Low High Low
- ------------- ------ ------ ------- -----
March 31 4 5/16 3 1/2 5 3 1/4
June 30 4 3/8 3 9/16 5 3
September 30 4 3/8 4 5 7/8 3 3/4
December 31 4 5/8 4 4 3/4 3 7/8
Dividends
- ---------
Vinings intends to pay distributions to shareholders in amounts at least
sufficient to enable the Trust to qualify as a REIT. For fiscal year 1999, the
Trust declared cash distributions per share as shown below. Vinings did not
declare or pay any cash distributions during fiscal 1998. For a discussion of
the federal income tax consequences of these distributions, refer to Note 8 of
Vinings' December 31, 1999, Consolidated Financial Statements.
- ----------- ------------ ------------
Record Payment Dividend
Date Date Amount
- ----------- ------------ ------------
8/16/99 9/1/99 $0.05
11/26/99 12/8/99 $0.05
Sales of Unregistered Securities
- --------------------------------
On April 29, 1999, the Operating Partnership offered Preferred Units in a
private transaction. The holders of Preferred Units are entitled to receive
cumulative preferential cash distributions at the per annum rate of $0.4675 per
Preferred Unit. Under certain circumstances, the holders of Preferred Units may
convert any part or all of such Preferred Units into common units, common
shares, or shares of preferred interests of Vinings. As of December 31, 1999, a
total of 1,988,235 Preferred Units had been issued for an aggregate purchase
price of $8,450,000. On March 15, 2000, the Board of Trustees voted to convert
the Preferred Units and concurrently authorized the issuance of 1,988,235
Preferred Shares. For more information with respect to such sale, refer to our
current report on Form 8-K, filed on May 10, 1999. (See Note 15 to Vinings'
December 31, 1999, Consolidated Financial Statements.)
Holders
- -------
Vinings had 660 holders of record of its common shares of beneficial interest as
of March 21, 2000.
ITEM 6 - SELECTED FINANCIAL INFORMATION
The following table sets forth selected financial information for Vinings and
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," as well as Vinings' December 31,
1999 Consolidated Financial Statements, which are made a part of this report.
All share and per share information have been restated to reflect the 1-for-8
reverse share split on July 1, 1996.
For the year ended December 31,
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- ------------- ------------ ------------ ------------
Revenues $ 9,341,144 $ 4,102,003 $ 2,478,824 $ 1,796,917 $ 3,244,908
Expenses 9,898,237 3,998,110 3,146,005 2,580,195 1,779,475
-------------- ------------- ------------ ------------ ------------
Income (loss) before loss on
real estate investments (557,093) 103,893 (667,181) (783,278) 1,465,433
Loss on real estate investments - - - (26,800) (886,887)
-------------- ------------- ------------ ------------ ------------
Income (loss) before equity in loss of
unconsolidated Joint Venture and minority
interests (557,093) 103,893 (667,181) (810,078) 578,546
Equity in loss of unconsolidated Joint Venture (137,366) - - - -
-------------- ------------- ------------ ------------ ------------
Income (loss) before minority interests (694,459) 103,893 (667,181) (810,078) 578,546
Less Minority interests in Operating Partnership:
Preferred partnership interests (903,344) - - - -
Common partnership interests 288,553 (18,900) 5,464 - -
-------------- ------------- ------------ ------------- ------------
Net income (loss) $(1,309,250) $ 84,993 $ (661,717) $ (810,078) $ 578,546
============== ============= ============= ============ ============
Net income (loss) per share - basic and diluted $(1.19) $0.08 $(0.61) $(0.75) $ 0.54
============== ============= ============ ============ ============
Weighted average shares outstanding - basic 1,100,501 1,090,701 1,080,513 1,080,528 1,080,625
============== ============= ============ ============ ============
Weighted average shares outstanding - diluted 1,343,047 1,336,391 1,089,435 1,080,528 1,080,625
============== ============= ============ ============ ============
Dividends declared and paid:
Ordinary income $ - $ - $ - $ - $ -
Return of capital 0.10 - - 16.88 12.24
-------------- ------------- ------------ ------------ ------------
Total dividends declared and paid $0.10 $ - $ - $16.88 $12.24
============== ============= ============ ============ ============
Total assets $69,114,314 $19,148,178 $18,989,558 $11,519,469 $21,878,357
============== ============= ============ ============ ============
Shareholders' equity $ 1,007,617 $ 2,426,972 $ 2,268,803 $ 2,232,548 $21,284,112
============== ============= ============ ============ ============
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- ----------------------------------------------------------
OVERVIEW
- --------
Vinings Investment Properties Trust ("Vinings" or the "Trust") was organized on
December 7, 1984 as a mortgage real estate investment trust ("REIT") whose
original plan was to liquidate within approximately ten years. On February 28,
1996, Vinings Investment Properties, Inc. completed a tender offer to acquire
control of the Trust and to rebuild Vinings' assets by expanding into the
multifamily real estate markets through the acquisition of garden style
apartment communities which are leased to middle-income residents. Current
management believes that these investments will provide attractive sources of
income to Vinings that will not only increase net income and provide cash
available for future distributions, but will increase the value of Vinings' real
estate portfolio as well.
Currently Vinings conducts all of its operations through Vinings Investment
Properties, L.P. (the "Operating Partnership"). As of December 31, 1999, the
Trust was the sole 1% general partner and an 80.94% limited partner in the
Operating Partnership. (This structure is commonly referred to as an umbrella
partnership REIT or an "UPREIT").
On April 29, 1999, the Operating Partnership offered, in a private transaction
pursuant to a Securities Purchase Agreement, Series A Preferred Partnership
interests (the "Preferred Units"). See Note 5 to Vinings' December 31, 1999
Consolidated Financial Statements. As of December 31, 1999, a total of 1,988,235
Preferred Units had been issued for an aggregate purchase price of $8,450,000,
the proceeds from which were used to acquire thirteen multifamily communities
(collectively, the "Portfolio Properties") from seventeen limited partnerships
and limited liability companies. Eight of the Portfolio Properties (the
"Mississippi Properties") were purchased through subsidiary partnerships of the
Operating Partnership. The remaining Portfolio Properties (the "Joint Venture
Properties") were purchased through a joint venture in which the Operating
Partnership has a 20% limited partner interest and is the general partner (the
"Joint Venture"). See Notes 3 and 4 to Vinings' December 31, 1999 Consolidated
Financial Statements.
The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with the accompanying consolidated
financial statements of Vinings and the notes thereto.
RESULTS OF OPERATIONS
- ---------------------
Comparison of Operating Results of 1999 to Operating Results of 1998
- --------------------------------------------------------------------
Total revenues increased $5,239,141 or 128%, from $4,102,003 to $9,341,144, due
primarily to the fact that Vinings continued its growth and expansion with the
acquisition of the Mississippi Properties on May 1, 1999.
Rental and other property revenues increased $5,209,287, or 127%, from
$4,099,920 to $9,309,207. $5,123,614 of this increase was due to the revenues
generated in connection with the Trust's ownership of the Mississippi Properties
for the eight months ended December 31, 1999, which were not in Vinings'
portfolio during 1998. There were also increases to Windrush and Thicket's
rental and other property revenues of $56,616 and $26,068, respectively.
Interest and other income increased $29,854 from $2,083 to $31,937. This
increase was due primarily to interest earned on earnest money deposits held in
escrow in connection with the acquisition of the Mississippi Properties, and
interest earned on replacement reserve accounts.
Property operating and maintenance expense increased by $1,961,172, or 119%,
from $1,652,207 to $3,613,379. Of this increase, $2,037,188 was due to expenses
generated in connection with the Trust's ownership of the Mississippi Properties
for the eight months ended December 31, 1999, which were not in Vinings'
portfolio during 1998. This increase was offset by decreases in operating
expenses totaling $76,016, of which $47,651 was due primarily to savings in
Thicket's cable TV expense and salary and benefits expense and $23,736 was due
to reduced maintenance expense, utilities and commissions at Peachtree.
Depreciation and amortization increased by $1,065,753, or 165%, from $647,760 to
$1,713,513. This increase is due primarily to depreciation generated in
connection with the Trust's ownership of the Mississippi Properties for the
eight months ended December 31, 1999, which were not in Vinings' portfolio
during 1998. There was a slight increase in Windrush and Thicket's depreciation
due to capital additions.
Amortization of deferred financing costs increased by $19,495, or 63%, from
$30,903 to $50,398, due to costs incurred in connection with the refinancing of
the line of credit.
Interest expense increased $2,503,241, or 188%, from $1,329,277 to $3,832,518,
due primarily to the mortgage interest generated in connection with the Trust's
ownership of the Mississippi Properties for the eight months ended December 31,
1999, which were not in the Vinings' portfolio during 1998. In addition,
interest on Vinings' line of credit decreased slightly due to the reduced
balance on the line of credit during fiscal 1999. Windrush and Thicket had
slight decreases in interest expense due to principal amortization.
General and administrative expense increased $89,556, or 15%, from $598,873 to
$688,429. This increase consists of: (1) overhead allocations paid to The
Vinings Group totaling $58,902; (2) accounting and audit fees totaling $45,624;
(3) office expense totaling $23,750; (3) legal expense totaling $7,769; and (4)
trustee expense totaling $5,866. These increases are offset by the following
decreases: (1) abandoned project expense totaling $34,531; (2) travel expense
totaling $11,285; and (3) investor relations expense totaling $5,866.
The Unusual item, net totaling ($260,910) in 1998, relates to costs incurred,
net of settlement proceeds, in connection with litigation involving an
acquisition in which the seller breached its contract with the Trust.
There were no costs incurred in this regard during 1999.
Vinings had a loss before equity in loss of unconsolidated Joint Venture and
minority interests of $557,903 for fiscal 1999, as compared to income of
$103,893 for fiscal 1998-representing a decrease of $661,796. The majority of
this decrease is due to the loss generated in connection with the Trusts'
ownership of the Mississippi Properties for the eight months ended December 31,
1999, which were not in the Vinings' portfolio during fiscal 1998.
Vinings had equity in loss of unconsolidated Joint Venture of $137,366 for
fiscal 1999. This loss is due to the Trust's equity ownership in the
unconsolidated Joint Venture for the eight months ended December 31, 1999, which
was not held by Vinings' portfolio during fiscal 1998. (See Note 4 to Vinings'
December 31, 1999 Consolidated Financial Statements.)
The minority interest of common partnership interests for fiscal 1999 totals
($288,553), as compared to ($18,900) for fiscal 1998. The minority interest of
preferred partnership interests represents the accrued preferred 11% return on
the Preferred Units ($623,341) and the accrued pro rata liquidation preference
of $0.21 per Preferred Unit ($280,003) for fiscal 1999. The Preferred Units had
not been issued during fiscal 1998 (See Note 5).
Comparison of Operating Results of 1998 to Operating Results of 1997
- --------------------------------------------------------------------
Total revenues increased $1,623,179, or 65%, from $2,478,824 to $4,102,003
primarily due to the fact that Vinings continued to implement its growth and
expansion strategy with the acquisition of Windrush in December, 1997.
Rental and other property revenues increased $1,623,174, or 66%, from $2,476,746
to $4,099,920 due primarily to the revenues generated in connection with
Vinings' ownership of Windrush for an entire year during fiscal 1998 as compared
to less than one month during fiscal 1997. Revenues from Thicket and Peachtree
also increased by $122,340 and $29,190, respectively.
Property operating and maintenance expense increased $659,281, or 66%, from
$992,926 to $1,652,207. Of this increase, $633,662 represents expenses generated
in connection with Vinings' ownership of Windrush for an entire year during
fiscal 1998 as compared to less than one month during fiscal 1997. Peachtree's
operating and maintenance expense increased $24,889 from fiscal 1997 to fiscal
1998 due to various maintenance and repair items, while Thicket's remained
constant.
Depreciation and amortization increased $214,749, or 50%, from $433,011 to
$647,760. Of this increase, $193,541 relates to Vinings' ownership of Windrush
for an entire year during fiscal 1998 as compared to less than one month during
fiscal 1997. Depreciation on Thicket and Peachtree increased only slightly due
to additional improvements made during fiscal 1998.
Interest expense increased $512,726, or 63% from $816,551 to $1,329,277
primarily due to Vinings' ownership of Windrush for an entire year during fiscal
1998 as compared to less than one month during fiscal 1997. Interest expense on
the line of credit increased $22,894 due to the increased balance during fiscal
1998.
General and administrative expense increased $262,498 or 78%, from $336,375 to
$598,873. Of this increase, $105,000 represents overhead reimbursements to The
Vinings Group (see Note 7 to Vinings' December 31, 1999 Consolidated Financial
Statements); $80,000 represents compensation expense relating to the Restricted
Stock awarded on July 1, 1998 (see Note 13 to Vinings' December 31, 1999
Consolidated Financial Statements); $51,589 represents legal and accounting
fees; and $23,628 relates to travel and abandoned pursuit costs.
The unusual item, net totaling ($260,910) included in operating expenses for
fiscal 1998 relates to the costs incurred, net of the settlement proceeds, in
connection with litigation involving an acquisition in which the seller breached
its contract with the Trust. The costs incurred during fiscal 1997 of $532,185
include due diligence costs incurred in connection with the proposed acquisition
such as environmental and engineering reports, independent financial analysis,
investor appraisal costs and legal contract negotiations. The net cost to
Vinings in connection with the entire transaction totaled $271,275. (See Note 14
to Vinings' December 31, 1999 Consolidated Financial Statements).
Vinings had income before minority interest of $103,893 for fiscal 1998 as
compared to a loss of $667,181 for fiscal 1997, representing an increase of
$771,074. The minority interest of ($5,464) for fiscal 1997 represents the
allocation of losses for the short period in December 1997 during which Units in
the Operating Partnership were held. The minority interest for fiscal 1998
totaled $18,900.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net cash provided by operating activities increased $524,478, or 85%, from
$614,612 to $1,139,090 for fiscal 1999. This increase is due primarily to the
Trust's ownership of the Mississippi Properties for the eight months ended
December 31, 1999, which were not in the Trust's portfolio during fiscal 1998.
Cash flows used in investing activities are made up of the following items: (1)
cash used to purchase the Mississippi Properties during the second quarter of
1999 totaling $6,066,073; (2) cash investment in the Joint Venture totaling
$1,705,100 during the second quarter of 1999; (3) cash used for capital
expenditures at the properties, which increased $247,352, or 169%, from $146,420
to $393,772 due primarily to Vinings' ownership of the Mississippi Properties
for the eight months ended December 31, 1999, which were not in Trust's
portfolio during fiscal 1998 and (4) distributions received from the Joint
Venture in the third quarter of fiscal 1999 totaling $15,760.
Cash flows provided by financing activities increased by $7,630,656 for fiscal
1999, as compared to the same period in fiscal 1998. Of this increase,
$8,450,000 was provided by the Operating Partnership's issuance of the Preferred
Units, which was offset by cash used for: (1) deferred financing costs totaling
$29,242 relating to the refinancing of the line of credit during the second
quarter of fiscal 1999; (2) cash used to make principal repayments on the line
of credit totaling $285,000 during fiscal 1999 as compared to draw downs on the
line of credit totaling $281,896 for the same period during fiscal 1998; (3)
cash used to make principal repayments on mortgage notes payable totaling
$257,645 during fiscal 1999 as compared to principal repayments on mortgage
notes payable totaling $144,501 for the same period during fiscal 1998; and (4)
distributions to common shareholders totaling $110,042 during fiscal 1999.
The cash held by Vinings at December 31, 1999, plus the cash flow from Vinings'
assets, including the investment in the Joint Venture, is expected to provide
sources of liquidity to allow Vinings to meet all current operating obligations.
Management plans to continue ongoing discussions with capital sources, both
public and private, as well as explore financing alternatives, so as to allow
the Trust to continue to expand and grow its income producing investments.
RECENT ACCOUNTING PRONOUNCEMENTS
- --------------------------------
Vinings adopted Statements of Financial Accounting Standards ("SFAS") No. 130,
"Reporting of Comprehensive Income," during 1998, which establishes a standard
for reporting and display of comprehensive income and its components.
Comprehensive income is the total of net income and all other nonowner changes
in shareholders' equity. As of December 31, 1999 and 1998, Vinings had no items
of other comprehensive income.
Vinings also adopted SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information," during 1998, which establishes new standards for
disclosure of segment information on the so called "management approach." The
management approach is based on the way that the chief operating decision maker
organizes segments within a company for making operating decisions and assessing
performance. Since Vinings' real estate portfolio has similar economic
characteristics, customers, and products and services, Vinings evaluates the
operating performance of its real estate portfolio as one reportable segment, on
the same basis of presentation for internal and external reporting. Therefore,
no additional segment information is presented herein.
YEAR 2000
- ---------
The statements in the following section include "Year 2000 readiness disclosure"
within the meaning of the Year 2000 Information and Readiness Disclosure Act of
1998.
The "Year 2000 issue" is the phrase used to describe the various problems caused
from the improper processing of dates and date sensitive information by
computers and other machinery and equipment. The Year 2000 issue is the result
of many computer programs recognizing a date ending with "00" as the year 1900
rather than the year 2000, causing potential system failures or miscalculations
which could result in disruptions of normal business operations.
Vinings has assessed the potential impact Year 2000 may have on its operations
and has implemented a requisite course of action internally to minimize its
impact and to ensure that neither significant costs nor disruption of normal
business operations are encountered. However, there is no guarantee that the
business of the Trust with outside vendors and other associated entities, which
affect the Trust, will be Year 2000 compliant, and therefore, Vinings remains
susceptible to consequences of the Year 2000 issue. As of the date of this
report, Vinings has not encountered any Year 2000 disruptions of normal business
operations.
During fiscal 1999 Vinings incurred costs to purchase computer hardware and
related software for its on-site resident management systems at the Mississippi
Properties. These systems were Year 2000 compliant when purchased and would have
been purchased regardless of the Year 2000 issue. The costs to implement the
resident management systems totaled approximately $38,200.
The financial and accounting systems Vinings uses are shared with The Vinings
Group. The costs incurred to upgrade these systems totaled approximately $70,000
and are in the form of monthly lease payments of $1,178, which expire in
November 2002. Currently these lease payments are a shared cost between the
Trust and The Vinings Group. Vinings does not anticipate additional costs to
upgrade or modify any of its systems for Year 2000 compliance.
The information provided above regarding Vinings' Year 2000 compliance includes
forward-looking statements based on management's best estimates of future
events. Such forward-looking statements involve risks and uncertainties
including the possibility of future Year 2000 problems, the ability to correct
any future Year 2000 issues that could have a serious impact on operations and
the possibility that third party suppliers may have future Year 2000 problems.
There can be no assurance that any of the factors or statements regarding the
Trust's Year 2000 compliance will not change and that any change will not affect
the accuracy of the Trust's forward-looking statements.
OTHER MATTERS
- -------------
Effective March 1, 2000, 628,927 shares of Vinings were purchased in a privately
negotiated transaction by the officers, one of their affiliates and an affiliate
of one of the Trustees from a limited number of shareholders, which included
three of the Trustees and certain of their affiliates (the "Stock Transaction").
In connection with the Stock Transaction, the three selling Trustees -- James D.
Ross, Martin H. Petersen and Gilbert H. Watts, Jr.-- resigned from the Board of
Trustees.
As a result of the Stock Transaction, fewer than five shareholders own in excess
of 50% of the equity in Vinings. On March 15, 2000, the Board of Trustees voted
to waive the ownership limitations in Vinings' Declaration of Trust with respect
to shareholders acquiring shares in the Stock Transaction, as well as with
respect to certain holders of Preferred Units who will be acquiring Preferred
Shares. The Board is currently considering whether it is in the best interests
of shareholders for Vinings to continue to qualify as a REIT for federal income
tax purposes in light of the restrictions imposed on Vinings in order for it to
qualify as a REIT. To maintain its REIT status, Vinings would be required to
effect a change in its ownership structure prior to June 30, 2000. However,
there can be no assurances that the Trust will be successful in effecting such a
change prior to June 30, 2000.
Presently, the Board does not believe that there would be negative tax
consequences to the shareholders should Vinings lose its REIT status due to the
fact that the Trust is not currently generating taxable income. However,
management is continuing to investigate all alternatives for maintaining REIT
status as well as all consequences to the shareholders should Vinings lose its
REIT status.
This Form 10-K contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Vinings' actual results could differ materially from those set forth in
the forward-looking statements. Certain factors that might cause such a
difference include the following: the inability of Vinings to identify
properties for acquisition; the inability of Vinings to continue to acquire
properties in the future; the less than satisfactory performance of any property
which might be acquired by Vinings; the inability to access the capital markets
in order to fund Vinings' present growth and expansion strategy; the cyclical
nature of the real estate market generally and locally in Georgia, Mississippi
and the surrounding southeastern states; the national economic climate; the
local economic climate in Georgia, Mississippi and the surrounding southeastern
states; the local real estate conditions and competition in Georgia, Mississippi
and the surrounding southeastern states; the ability of Vinings to correct any
future Year 2000 sensitive problems; and the inability of Vinings to continue to
qualify as a REIT. There can be no assurance that, as a result of the foregoing
factors, Vinings' growth and expansion strategy will be successful or that the
business and operations of Vinings will not be adversely affected thereby.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Vinings is exposed to market risk from changes in interest rates, which may
adversely affect its financial position, results of operations and cash flows.
In seeking to minimize the risks from interest rate fluctuations, Vinings
manages exposures through its regular operating and financing activities.
Vinings does not use financial instruments for trading or other speculative
purposes. Vinings is exposed to interest rate risk primarily through its
borrowing activities, which are described in Note 6 to Vinings' December 31,
1999 Consolidated Financial Statements. All of Vinings' borrowings are under
fixed rate instruments, except the line of credit, which is at prime plus 1%. As
of December 31, 1999, Vinings' exposure to market risk has changed due to the
acquisition of the Mississippi Properties and the assumption of the related
mortgage indebtedness. However, Vinings has determined that there is no material
market risk exposure to its consolidated financial position, results of
operations or cash flows due to changes in interest rates because of the fixed
rate nature of its long-term debt.
The following table presents principal reductions and related weighted average
interest rates by year of expected maturity for Vinings' debt obligations as of
December 31, 1999:
Fair Value
There- December
(In Thousands) 2000 2001 2002 2003 2004 after Total 31, 1999
- -------------------------------------------------------------------------------------------------------
Principal Reductions
In Mortgage Notes $ 333 $362 $393 $7,315 $367 $46,305 $55,075 $55,075
Average Interest Rates 8.63% 8.63% 8.63% 8.63% 8.58% 8.58% 8.63% 8.63%
Line Of Credit $1,715 - - - - - $ 1,715 $ 1,715
Interest Rate 9.75% - - - - - 9.75% 9.75%
- -------------------------------------------------------------------------------------------------------
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data are listed under
Item 14(a) and filed as part of this report on the pages indicated.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The information required by this Item 9 was previously reported in a Current
Report on Form 8-K filed with the Securities and Exchange Commission on February
23, 2000 and is incorporated herein by reference.
PART III
--------
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The information concerning the Trustees and Executive Officers of the Registrant
required by Item 10 shall be included in the Proxy Statement to be filed
relating to the 2000 Annual Meeting of the Registrant's shareholders and is
incorporated herein by reference.
ITEM 11 - EXECUTIVE COMPENSATION
- --------------------------------
The information concerning the Trustees and Executive Officers of the Registrant
required by Item 11 shall be included in the Proxy Statement to be filed
relating to the 2000 Annual Meeting of the Registrant's shareholders and is
incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The information concerning Ownership of Certain Beneficial Owners and Management
required by Item 12 shall be included in the Proxy Statement to be filed
relating to the 2000 Annual Meeting of the Registrant's shareholders and is
incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
The information concerning Certain Relationships and Related Transactions
required by Item 13 shall be included in the Proxy Statement to be filed
relating to the 2000 Annual Meeting of the Registrant's shareholders and is
incorporated herein by reference.
PART IV
-------
ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULE AND REPORTS ON FORM 8-K
14(a) (1) and (2) Index to Consolidated Financial Statements and Schedule
Page
----
Report of Independent Public Accountants.....................................22
Report of Independent Public Accountants.....................................23
Consolidated Balance Sheets--As of December 31, 1999 and 1998................24
Consolidated Statements of Operations--For the years ended
December 31, 1999, 1998 and 1997.............................................25
Consolidated Statements of Shareholders' Equity--For the years ended
December 31, 1999, 1998 and 1997.............................................26
Consolidated Statements of Cash Flows--For the years ended
December 31, 1999, 1998 and 1997.............................................27
Notes to Consolidated Financial Statements--For the years ended
December 31, 1999, 1998 and 1997.............................................28
Schedule III - Real Estate and Accumulated Depreciation......................43
14(a) (3) Exhibits
Exhibit No. Description
- ---------- -----------
3.1 Third Amended and Restated Declaration of Trust of Vinings (incorporated by reference as
Exhibit 3.1 to Vinings' Quarterly Report on Form 10-Q for the quarter ended September 30,
1999, No. 0-13693).
3.2 Amended and Restated Bylaws of the Trust (incorporated by reference as Exhibit 3.2 to
Vinings' Registration Statement on Form S-11, No. 2-94776).
10.1 Vinings Investment Properties Trust 1997 Stock Option and Incentive Plan as approved by the
Shareholders on July 1, 1997 (incorporated by reference as Exhibit A to Vinings' report on
Form Schedule 14A filed on May 28, 1997).
10.2 Amended and Restated Agreement of Limited Partnership of Vinings Investment Properties, L.P.
(incorporated by reference as Exhibit 10.1 to Vinings' Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, No. 0-13693).
10.3 First Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.2 to the Vinings'
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, No. 0-13693).
10.4 Second Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.3 to the Vinings'
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, No. 0-13693).
10.5 Third Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.4 on Form 10-K for year
ended December 31, 1998).
10.6 Fourth Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.5 on Form 10-K for year
ended December 31, 1998).
10.7 Fifth Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.6 on Form 10-K for year
ended December 31, 1998).
10.8 Sixth Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P., dated as of April 29, 1999 (incorporated by reference as
Exhibit 4.1 to the Trust's report on Form 8-K filed on May 7, 1999).
10.9 Promissory Note dated April 27, 1999 between Vinings Investment Properties, L.P., and Bank
Atlanta (filed herewith).
10.10 Deed to Secure Debt and Security Agreement dated April 27, 1999 between Vinings Investment
Properties, L.P. and Bank Atlanta (filed herewith).
10.11 Form of Management Contract dated May 1, 1999 between certain subsidiaries of Vinings and
VIP Management, LLC for the Mississippi Properties (filed herewith).
10.12 Management Contract dated January 1, 1999, between Thicket Apartments, L.P. and VIP
Management, LLC (incorporated by reference as Exhibit 10.11 on Form 10-K for the year ended
December 31, 1998).
10.13 Management Contract dated January 1, 1999, between Vinings Communities, L.P. and VIP
Management, LLC (incorporated by reference as Exhibit 10.12 on Form 10-K for the year ended
December 31, 1998).
10.14 Management Contract dated January 1, 1999, between Vinings Investment Properties, L.P. and
VIP Management, LLC (incorporated by reference as Exhibit 10.13 on Form 10-K for the year
ended December 31, 1998).
10.15 Form of Amended and Restated Agreement of Purchase and Sale with attached Revised Schedule
of Material Differences For Properties Acquired May 1, 1999 (filed herewith).
10.16 Securities Purchase Agreement, dated as of April 29, 1999, Relating to Series A Convertible
Preferred Units of Vinings Investment Properties, L.P., by and among Vinings Investment
Properties Trust, Vinings Investment Properties, L.P. and the Purchasers named therein
(incorporated by reference as Exhibit 10.1 to Vinings' report on Form 8-K filed on May 7,
1999).
10.17 Form of Registration Rights and Lock Up Agreement, dated as of April 29, 1999 (incorporated
by reference as Exhibit 10.2 to Vinings' report on Form 8-K filed on May 7, 1999).
10.18 Vinings/CMS Master Partnership, L.P., Agreement of Limited Partnership (incorporated by
reference as Exhibit 10.1 to Vinings' report on Form 8-K/A filed on July 15, 1999).
21.1 Subsidiaries of the Trust (filed herewith).
23.1 Consent of Independent Public Accountants (filed herewith).
23.2 Consent of Independent Public Accountants (filed herewith).
27.1 Financial Data Schedule for the fiscal year ended December 31, 1999 (filed herewith).
14(b) Reports on Form 8-K
- -------------------------
Vinings did not file any current reports on Form 8-K during the fourth quarter
of 1999.
14(c) Index to Exhibits
- -----------------------
See Item 14(a)(3) above.
SIGNATURES
----------
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Vinings Investment Properties Trust
By: /s/ Peter D. Anzo
------------------------------
Peter D. Anzo
President and
Chief Executive Officer
Dated: March 30, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ Peter D. Anzo Chief Executive Officer, March 30, 2000
- ------------------------- President and Trustee
Peter D. Anzo
/s/ Stephanie A. Reed Vice President, Treasurer, March 30, 2000
- ------------------------- Secretary and Trustee
Stephanie A. Reed (Principal Financial and
Accounting Officer)
/s/ Phill D. Greenblatt Trustee March 30, 2000
- -------------------------
Phill D. Greenblatt
/s/ Henry Hirsch Trustee March 30, 2000
- -------------------------
Henry Hirsch
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To Vinings Investment Properties Trust:
We have audited the accompanying consolidated balance sheet of Vinings
Investment Properties Trust and subsidiaries (the "Trust") as of December 31,
1999 and the related consolidated statements of operations, shareholders'
equity, and cash flows for the year ended December 31, 1999. These consolidated
financial statements and the schedule referred to below are the responsibility
of the Trust's management. Our responsibility is to express an opinion on these
consolidated financial statements and schedule based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Vinings Investment
Properties Trust and subsidiaries as of December 31, 1999, and the results of
their operations and their cash flows for the year ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
HABIF, AROGETI & WYNNE, LLP
/s/ HABIF, AROTETI & WYNNE, LLP
Atlanta, Georgia
March 17, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Vinings Investment Properties Trust:
We have audited the accompanying consolidated balance sheet of Vinings
Investment Properties Trust and subsidiaries (the "Trust") as of December 31,
1998 and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the two years in the period ended December
31, 1998. These consolidated financial statements and the schedule referred to
below are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these consolidated financial statements and schedule based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Vinings Investment
Properties Trust and subsidiaries as of December 31, 1998, and the results of
their operations and their cash flows for each of the two years in the period
ended December 31, 1998 in conformity with accounting principles generally
accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule, as it relates to the financial data for the years
ended December 31, 1998 and 1997, has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 26, 1999
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31,
----------------------------------------
1999 1998
----------------- ----------------
ASSETS
Real estate assets:
Land $ 8,247,900 $ 2,884,500
Buildings and improvements 55,545,257 15,399,690
Furniture, fixtures & equipment 3,968,848 1,025,222
Less: accumulated depreciation (3,351,811) (1,664,678)
----------------- ----------------
Net real estate assets 64,410,194 17,644,734
Investment in unconsolidated Joint Venture 1,551,974 -
Cash and cash equivalents 916,215 158,302
Restricted cash 1,816,102 458,877
Receivable from Joint Venture 27,356 -
Receivables and other assets 236,900 694,998
Deferred financing costs, less accumulated amortization of $127,656 and
$77,258 at December 31, 1999 and December 31, 1998, respectively 117,908 139,064
Deferred leasing costs, less accumulated amortization of $59,240 and
$32,861 at December 31, 1999 and December 31, 1998, respectively 37,665 52,203
----------------- ----------------
Total assets $69,114,314 $19,148,178
================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $55,074,923 $13,640,065
Line of credit 1,715,000 2,000,000
Accounts payable and accrued liabilities 1,899,937 546,249
Distributions payable to Preferred Unitholders 464,750 -
----------------- ----------------
Total liabilities 59,154,610 16,186,314
----------------- ----------------
Minority interests of unitholders in Operating Partnership:
Preferred partnership interests 8,730,003 -
Common partnership interests 222,084 534,892
----------------- ----------------
Total minority interests 8,952,087 534,892
----------------- ----------------
Shareholders' equity:
Common shares of beneficial interest, without par or stated value,
25,000,000 authorized, 1,100,493 and 1,100,505 shares issued and
outstanding at December 31, 1999 and December 31, 1998, respectively - -
Additional paid in capital 3,295,998 3,406,103
Accumulated deficit (2,288,381) (979,131)
----------------- ----------------
Total shareholders' equity 1,007,617 2,426,972
----------------- ----------------
Total liabilities and shareholders' equity $69,114,314 $19,148,178
================= ================
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31,
--------------------------------------------------
1999 1998 1997
-------------- ------------- ------------
REVENUES
Rental revenues $ 8,815,240 $3,946,828 $2,392,072
Other property revenues 493,967 153,092 84,674
Interest income 30,937 1,519 2,078
Other income 1,000 564 -
-------------- ------------- ------------
9,341,144 4,102,003 2,478,824
-------------- ------------- ------------
EXPENSES
Property operating and maintenance 3,613,379 1,652,207 992,926
Depreciation and amortization 1,713,513 647,760 433,011
Amortization of deferred financing costs 50,398 30,903 34,957
Interest expense 3,832,518 1,329,277 816,551
General and administrative 688,429 598,873 336,375
Unusual item, net - (260,910) 532,185
-------------- ------------- ------------
9,898,237 3,998,110 3,146,005
-------------- ------------- ------------
Income (loss) before equity in loss of unconsolidated
Joint Venture and minority interests (557,093) 103,893 (667,181)
Equity in loss of unconsolidated Joint Venture (137,366) - -
-------------- ------------- ------------
Income (loss) before minority interests (694,459) 103,893 (667,181)
Less minority interests in Operating Partnership:
Preferred partnership interests (903,344) - -
Common partnership interests 288,553 (18,900) 5,464
-------------- ------------- ------------
Net income (loss) $(1,309,250) $ 84,993 $ (661,717)
============== ============= ============
NET INCOME (LOSS) PER SHARE - BASIC $ (1.19) $ 0.08 $ (0.61)
============== ============= ============
NET INCOME (LOSS) PER SHARE - DILUTED $ (1.19) $ 0.08 $ (0.61)
============== ============= ============
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 1,100,501 1,090,701 1,080,513
============== ============= ============
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 1,343,047 1,336,391 1,089,435
============== ============= ============
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended December 31, 1997, 1998 and 1999
Additional Total
paid in Accumulated shareholders'
capital deficit equity
------------- --------------- ----------------
BALANCE AT JANUARY 1, 1997 $2,634,955 $ (402,407) $ 2,232,548
Net loss - (661,717) (661,717)
Retirement of shares (84) - (84)
Adjustment for minority interest of unitholders
and issuance of units in Operating Partnership 698,056 - 698,056
------------- --------------- ----------------
BALANCE AT DECEMBER 31, 1997 3,332,927 (1,064,124) 2,268,803
Net income - 84,993 84,993
Retirement of shares (43) - (43)
Adjustment for minority interest of
unitholders in Operating Partnership (6,781) - (6,781)
Issuance of shares to officers and directors 80,000 - 80,000
------------- --------------- ----------------
BALANCE AT DECEMBER 31, 1998 3,406,103 (979,131) 2,426,972
Net loss - (1,309,250) (1,309,250)
Retirement of shares (63) - (63)
Distributions (110,042) - (110,042)
------------- --------------- ----------------
BALANCE AT DECEMBER 31, 1999 $3,295,998 $(2,288,381) $ 1,007,617
============= =============== ================
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the twelve months ended December 31,
-------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1999 1998 1997
------------- ------------ -------------
Net income (loss) $(1,309,250) $ 84,993 $(661,717)
------------- ------------ -------------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,713,513 647,760 433,011
Amortization of deferred financing costs 50,398 30,903 34,957
Equity in loss of unconsolidated Joint Venture 137,366 - -
Minority interests in Operating Partnership:
Preferred partnership interests 903,344 - -
Common partnership interests (288,553) 18,900 (5,464)
Distributions to common unitholders (24,255) - -
Distributions to preferred unitholders (158,591) - -
Noncash compensation expense - 80,000 -
Changes in assets and liabilities, net of the effect
of real estate assets acquired
Restricted cash (331,754) (26,185) 26,738
Receivable from Joint Venture (27,356) - -
Receivables and other assets (68,493) (19,511) 22,600
Capitalized leasing costs (11,842) (39,621) (36,931)
Accounts payable and accrued liabilities 554,563 (162,627) 290,335
------------- ------------ -------------
Total adjustments 2,448,340 529,619 765,246
------------- ------------ -------------
Net cash provided by operating activities 1,139,090 614,612 103,529
------------- ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of real estate assets (6,066,073) - -
Capital expenditures (393,772) (146,420) (139,329)
Refundable deposits and acquisition costs - (612,085) -
Investment in unconsolidated Joint Venture (1,705,100) - -
Distributions from Joint Venture 15,760 - -
------------- ------------ -------------
Net cash used in investing activities (8,149,185) (758,505) (139,329)
------------- ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred financing costs (29,242) - -
Net proceeds (repayments) on line of credit (285,000) 281,896 150,000
Principal repayments on mortgage notes payable (257,645) (144,501) (52,008)
Purchase of retired shares (63) (43) (84)
Proceeds from issuance of preferred partnership interests 8,450,000 - -
Distributions to shareholders (110,042) - -
------------- ------------ -------------
Net cash provided by financing activities 7,768,008 137,352 97,908
------------- ------------ -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 757,913 (6,541) 62,108
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 158,302 164,843 102,735
------------- ------------ -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 916,215 $158,302 $ 164,843
============= ============ =============
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE 1 - FORMATION AND ORGANIZATION
- -----------------------------------
Vinings Investment Properties Trust ("Vinings" or the "Trust") was
organized on December 7, 1984 as a mortgage real estate investment
trust ("REIT") whose original plan was to liquidate within
approximately ten years. On February 28, 1996, Vinings Investment
Properties, Inc. completed a tender offer to acquire control of the
Trust in order to rebuild Vinings assets by expanding into the
multifamily real estate markets through the acquisition of garden style
apartment communities which are leased to middle-income residents.
Current management believes that these investments will provide
attractive sources of income to Vinings which will not only increase
net income and provide cash available for future distributions, but
will increase the value of Vinings' real estate portfolio as well.
Currently Vinings conducts all of its operations through Vinings
Investment Properties, L.P. (the "Operating Partnership"), a Delaware
limited partnership. As of December 31, 1999, the Trust was the sole 1%
general partner and an 80.94% limited partner in the Operating
Partnership. (This structure is commonly referred to as an umbrella
partnership REIT or an "UPREIT").
On April 29, 1999, the Operating Partnership offered, in a private
transaction pursuant to a Securities Purchase Agreement, Series A
Convertible Preferred Partnership interests (the "Preferred Units"),
the proceeds from which were used to acquire thirteen multifamily
communities (collectively, the "Portfolio Properties") from seventeen
limited partnerships and limited liability companies. Eight of the
Portfolio Properties were purchased through subsidiary partnerships of
the Operating Partnership. The remaining Portfolio Properties were
purchased through a joint venture structure. (See Notes 3 and 4.) As of
December 31, 1999, a total of 1,988,235 Preferred Units had been issued
for an aggregate purchase price of $8,450,000 (See Note 5). On March
15, 2000 the Board of Trustees voted to convert the Preferred Units
into a newly created class of preferred shares of beneficial interest
in Vinings and consequently authorized the issuance of 1,988,235
preferred shares with the same rights, preferences and privileges as
the Preferred Units (the "Preferred Shares") (See Notes 5 and 15).
Vinings currently owns, through wholly owned subsidiaries, ten
apartment communities totaling 1,520 units and a 75,000 square foot,
single story business park. In addition, Vinings holds a 20% interest
in and is the general partner of an unconsolidated joint venture, which
owns through subsidiary partnerships five additional apartment
communities totaling 968 units (See Note 4). At December 31, 1999, the
average occupancy of Vinings' portfolio, including the communities held
by the unconsolidated joint venture, was 94 %.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Basis of Presentation
---------------------
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles and with the instructions
to Form 10-K and Article 10 of Regulation S-X.
The accompanying consolidated financial statements of Vinings include
the consolidated accounts of the Trust and its subsidiaries. All
significant intercompany balances and transactions have been eliminated
in consolidation. Vinings accounts for its investment in the
unconsolidated joint venture using the equity method of accounting. The
term "Vinings" or "Trust" hereinafter refers to Vinings Investment
Properties Trust and its subsidiaries, including the Operating
Partnership.
The minority interests of the common unitholders in the Operating
Partnership (the "Common Units") reflected on the accompanying balance
sheets are calculated based on the common unitholders' minority
interest ownership percentage (18.06% as of December 31, 1999)
multiplied by the Operating Partnership's net assets. The minority
interests of the preferred unitholders on the accompanying balance
sheet represent cash contributed in exchange for those units and the
accrued liquidation preference of $0.21 per Preferred Unit ($280,003 at
December 31, 1999). The minority interests of the common unitholders in
the income or loss of the Operating Partnership on the accompanying
statements of operations is calculated based on the weighted average
minority interest ownership percentage (approximately 18% for all
periods presented) multiplied by income (loss) before minority
interests after subtracting income allocated to the preferred
partnership interests. The minority interests of the preferred
unitholders on the statements of operations represents the accrued
preferred 11% return on the Preferred Units ($623,341 for the period
ended December 31, 1999) and the accrued pro rata liquidation
preference of $0.21 per Preferred Unit ($280,003 for the period ended
December 31, 1999) (See Note 5).
Income Taxes
------------
Vinings has elected to be taxed as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"). As a result, Vinings will
generally not be subject to federal income taxation on that portion of
its income that qualifies as REIT taxable income to the extent that
Vinings distributes at least 95% of its taxable income to its
shareholders and satisfies certain other requirements. Accordingly, no
provision for federal income taxes has been included in the
accompanying consolidated financial statements.
As a result of the Stock Transaction, fewer than five shareholders own
in excess of 50% of the equity in Vinings (See Note 15). On March 15,
2000, the Board of Trustees voted to waive the ownership limitations in
Vinings' Declaration of Trust with respect to shareholders acquiring
shares in the Stock Transaction, as well as with respect to certain
holders of Preferred Units who will be acquiring Preferred Shares. The
Board is currently considering whether it is in the best interests of
shareholders for Vinings to continue to qualify as a REIT for federal
income tax purposes in light of the restrictions imposed on Vinings in
order for it to qualify as a REIT. To maintain its REIT status, Vinings
would be required to effect a change in its ownership structure prior
to June 30, 2000. However, there can be no assurances that the Trust
will be successful in effecting such a change prior to June 30, 2000.
Presently, the Board does not believe that there would be negative tax
consequences to the shareholders should Vinings lose its REIT status
due to the fact that the Trust is not currently generating taxable
income. However, management is continuing to investigate all
alternatives for maintaining REIT status as well as all consequences to
the shareholders should Vinings lose its REIT status.
Cash and Cash Equivalents
-------------------------
Vinings considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Restricted Cash
---------------
Restricted cash consists of real estate tax, insurance and replacement
reserve escrows held by mortgagees, which are funded monthly from
property operations and released solely for the purpose for which they
were established. Restricted cash also includes security deposits
collected and held on behalf of the residents and tenants.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Real Estate Assets
------------------
Real estate assets are stated at depreciated cost less reductions for
impairment, if any. In identifying potential impairment, management
considers such factors as declines in a property's operating
performance or market value, a change in use, or adverse changes in
general market conditions. In determining whether an asset is impaired,
management estimates the future cash flows expected to be generated
from the asset's use and its eventual disposition. If the sum of these
estimated future cash flows on an undiscounted basis is less than the
asset's carrying cost, the asset is written down to its fair value. In
management's opinion, there has been no impairment of Vinings' real
estate assets as of December 31, 1999.
Ordinary repairs and maintenance are expensed as incurred. Major
improvements and replacements are capitalized and depreciated over
their estimated useful lives when they extend the useful life, increase
capacity or improve efficiency of the related asset. Depreciation is
computed on a straight-line basis over the useful lives of the real
estate assets (buildings and improvements, 5-40 years; furniture,
fixtures and equipment, 3-7 years; and tenant improvements, generally
over the life of the related lease).
Revenue Recognition
-------------------
All leases are classified as operating leases and rental income is
recognized when earned which materially approximates revenue
recognition on a straight-line basis.
Deferred Financing Costs and Amortization
-----------------------------------------
Deferred financing costs include fees and costs incurred to obtain
financing and are capitalized and amortized over the term of the
related debt.
Net Income (Loss) Per Share
---------------------------
The following is a reconciliation of net income (loss) available to the
common shareholders and the weighted average shares used in Vinings'
basic and diluted net income (loss) per share computations:
----------------------------------------
1999 1998 1997
----------------------------------------
Net income (loss) - basic $(1,309,250) $ 84,993 $(661,717)
Minority interests in Operating Partnership:
Preferred partnership interests - - -
Common partnership interests (288,553) 18,900 (5,464)
---------------------------------------
Total minority interest (288,553) 18,900 (5,464)
---------------------------------------
Net income (loss) - diluted $(1,597,803) $103,893 $(667,181)
========================================
Weighted average shares - basic 1,100,501 1,090,701 1,080,513
Dilutive Securities:
Weighted average Common Units 242,546 242,546 8,922
Weighted average Preferred Units - - -
Share options - 3,144 -
========================================
Weighted average shares - diluted 1,343,047 1,336,391 1,089,435
========================================
Both common and preferred units in the Operating Partnership held by
the minority unitholders are redeemable for shares of beneficial
interest of the Trust ("Shares") on a one-for-one basis, or for cash,
at the option of the Trust. For the twelve months ended December 31,
1999, 1998 and 1997, options to purchase 107,750 shares, 27,500 shares
and 26,000 shares, respectively were excluded as the impact of such
options was antidilutive. For the twelve months ended December 31, 1999
the Preferred Units totaling 1,988,235 were also excluded as the impact
of such units was antidilutive. On March 15, 2000, the Board of
Trustees voted to convert the Preferred Units into Preferred Shares
(See Notes 5 and 15).
Recent Accounting Pronouncement
-------------------------------
Vinings adopted Statements of Financial Accounting Standards ("SFAS")
No. 130, "Reporting of Comprehensive Income," during 1998, which
establishes a standard for reporting and display of comprehensive
income and its components. Comprehensive income is the total of net
income and all other nonowner changes in shareholders' equity. As of
December 31, 1999 and 1998, Vinings had no items of other comprehensive
income.
Vinings also adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information," during 1998, which establishes new
standards for disclosure of segment information on the so called
"management approach." The management approach is based on the way that
the chief operating decision maker organizes segments within a company
for making operating decisions and assessing performance. Since
Vinings' real estate portfolio has similar economic characteristics,
customers, and products and services, Vinings evaluates the operating
performance of its real estate portfolio as one reportable segment, on
the same basis of presentation for internal and external reporting.
Therefore, no additional segment information is presented herein.
Reclassifications
-----------------
Certain 1998 and 1997 financial statement amounts have been
reclassified to conform with the current year presentation.
NOTE 3 - REAL ESTATE ASSETS
- ---------------------------
On May 1, 1999, Vinings, through its subsidiaries, completed the
acquisition of the Portfolio Properties from seventeen limited
partnerships and limited liability companies. Eight of the Portfolio
Properties (the "Mississippi Properties") were purchased through
subsidiary partnerships of the Operating Partnership. The remaining
Portfolio Properties (the "Joint Venture Properties") were purchased
through a joint venture structure. (See Note 4.)
The Mississippi Properties, totaling 1,064 units, were purchased by
eight individual partnerships in each of which Vinings Holdings, Inc.,
a wholly owned subsidiary of the Trust, owns a .1% general partnership
interest and the Operating Partnership owns a 99.9% limited partnership
interest. The aggregate purchase price for the Mississippi Properties
was $47,665,396 (excluding closing costs), which included the
assumption of debt of approximately $41,693,000 with the balance paid
in cash, which was funded by the issuance of the Preferred Units. A
total of approximately $749,200 in escrows held by the mortgagees was
also purchased.
In addition Vinings owns, also through subsidiary partnerships of the
Operating Partnership, two additional multifamily communities in the
metropolitan Atlanta area for a total of 1,520 units in ten
communities, as well as a 75,000 square foot business center. All of
the multifamily communities are encumbered by fixed rate mortgage
financing and the business center is security for the line of credit.
For more detailed information see Schedule III attached hereto.
NOTE 4 - INVESTMENT IN UNCONSOLIDATED JOINT VENTURE
- ---------------------------------------------------
On May 1, 1999, Vinings also purchased, through a joint venture
structure, five apartment communities, totaling 968 units (the "Joint
Venture Properties"). The Joint Venture Properties were purchased by
nine individual partnerships in each of which Vinings Holdings, Inc., a
wholly owned subsidiary of the Trust, owns a .1% general partnership
interest and Vinings/CMS Master Partnership, L.P. (collectively, the
"Joint Venture"), a Delaware limited partnership, owns a 99.9% limited
partnership interest. The Operating Partnership has a .1% general
partner interest and a 19.98% limited partner interest in the Joint
Venture, for which it paid $1,705,100. This investment was funded by
the issuance of the Preferred Units. The remaining limited partnership
interests in the Joint Venture are held by an unaffiliated third party.
The Joint Venture was formed on March 22, 1999, primarily to acquire
the limited partner interest in limited partnerships that acquire,
operate, manage, hold and sell certain real property, specifically the
Joint Venture Properties. The aggregate purchase price paid by the
property partnerships for the Joint Venture Properties was $46,634,603
(excluding closing costs), which included the assumption of
approximately $39,265,000 of debt with the balance paid in cash. A
total of approximately $716,400 in escrows held by the mortgagees was
also purchased.
Vinings accounts for its investment in the Joint Venture using the
equity method of accounting. The following is a summary of the results
of operations of the Joint Venture and Vinings' share of the equity in
the loss from the Joint Venture for the eight month period from May 1,
1999 to December 31, 1999:
For the eight
months ended
December 31, 1999
------------------
Revenues $ 4,642,957
------------
Expenses:
Property operating and maintenance 1,971,574
General and administrative 55,894
Depreciation and amortization 995,872
Interest expense 2,306,447
------------
Total Expenses 5,329,787
------------
Net loss (686,830
Vinings' equity percentage 20%
------------
Vinings' equity in loss of unconsolidated Joint Venture $ (137,366
============
Distributions received by Vinings from Joint Venture $ 15,760
============
Cash flows provided by operating activities $ 441,635
============
Cash flows used in investing activities $(8,251,050
============
Cash flows provided by financing activities $ 8,315,729
============
The following summarizes the balance sheet of the Joint Venture as of
December 31, 1999:
Real estates assets, net of accumulated depreciation $46,215,888
Cash and other assets 2,066,983
------------
Total assets $48,282,871
============
Mortgage notes payable $39,136,338
Other liabilities 1,387,062
------------
Total liabilities 40,523,400
------------
Capital - Vinings 1,551,974
Capital - Other 6,207,497
------------
Total capital 7,759,471
------------
Total liabilities and capital $48,282,871
============
Mortgage notes payable held by the Joint Venture are non-recourse fixed
rate notes secured by the individual properties. All of the notes
except one are insured by the U.S. Department of Housing and Urban
Development ("HUD") and, therefore, distributions from the properties
are subject to "surplus cash" as defined by HUD. The maturity dates of
the notes payable range from June 2007 to November 2037 and interest
rates range from 8.00% to 8.75%.
NOTE 5 - SHAREHOLDERS' EQUITY AND PREFERRED PARTNERSHIP INTERESTS
- -----------------------------------------------------------------
On April 29, 1999, the Operating Partnership offered in a private
transaction Preferred Units. The holders of Preferred Units are
entitled to receive cumulative preferential cash distributions at the
per annum rate of $0.4675 per Preferred Unit. Upon the occurrence of
certain triggering events, the holders of Preferred Units are entitled
to receive, in addition to an amount equal to any accumulated and
unpaid distributions on such holder's Preferred Units, a liquidation
preference of $4.46 per Preferred Unit, or, if any such triggering
event occurs prior to one year from the date of issuance $4.25 per
Preferred Unit.
Under certain circumstances, the holders of Preferred Units may convert
any part or all of such Preferred Units into common partnership units,
common shares, or Preferred Shares. In lieu of converting Preferred
Units into common shares, the Operating Partnership, in its sole
discretion, may satisfy its conversion obligations through certain cash
payments, as further set forth in the partnership agreement of the
Operating Partnership.
Generally, the holders of Preferred Units do not have the right to vote
on any matter on which any general or limited partner of the Operating
Partnership may vote. The holders of Preferred Units do, however, have
the right to vote as a separate class of Partnership Interests on
certain transactions including, without limitation, certain
authorizations and issuances of preferred units of partnership
interests designated as ranking senior to the Preferred Units, certain
amendments to the Partnership Agreement, and certain sales or other
dispositions of assets of the Operating Partnership, certain mergers or
consolidations of the Operating Partnership, and transactions which
result in the liquidation of the Partnership.
As of December 31, 1999, a total of 1,988,235 Preferred Units had been
issued for an aggregate purchase price of $8,450,000. The Operating
Partnership used the proceeds of such sales of Preferred Units to pay
the cash consideration for the Operating Partnership's interests in the
property partnerships that acquired the Mississippi Properties, and its
interest in the Joint Venture. (See Notes 3 and 4.)
At the annual meeting of shareholders held on June 29, 1999, Vinings'
shareholders approved proposals to amend the Trust's Declaration of
Trust to decrease the total number of common shares of beneficial
interest authorized from an unlimited amount to 25,000,000 and to
authorize a new class of 7,050,000 preferred shares of beneficial
interest which, upon the affirmative vote of two-thirds of the Board of
Trustees, may be issued in such amounts, in one or more series, and
with such designations, preferences, limitations and relative rights
for each series as the Board of Trustees shall determine.
On March 15, 2000, the Board of Trustees voted to convert the Preferred
Units into Preferred Shares (See Note 15).
NOTE 6 - NOTES PAYABLE
- ----------------------
Mortgage Notes Payable
----------------------
Mortgage notes payable were secured by the following apartment
communities at December 31, 1999 and December 31, 1998, as follows:
Fixed interest
rate as of Principal balance as of
Maturity 12/31/99 12/31/99 12/31/98
--------------------------------------------------------------------------
Cottonwood 10/01/2036 8.875% $ 4,683,888 $ -
Delta Bluff 08/01/2036 9.25 % 6,203,591 -
Foxgate I 06/01/2037 8.50 % 6,598,549 -
Hampton House 08/01/2037 8.50 % 5,169,167 -
Heritage Place 10/01/2036 8.75 % 3,141,865 -
Northwood 06/01/2034 8.75 % 4,482,862 -
River Pointe 01/01/2037 8.625% 5,981,475 -
Trace Ridge 07/01/2036 8.50 % 5,330,125 -
The Thicket 07/01/2003 9.04 % 7,200,487 7,262,759
Windrush 07/01/2024 7.50 % 6,282,914 6,377,306
------------ --------------
Total $55,074,923 $13,640,065
============ ==============
All of the notes except that secured by The Thicket are insured by HUD
and therefore distributions from the properties are subject to "surplus
cash" as defined by HUD.
Scheduled maturities of the mortgage notes payable as of December 31,
1999 are as follows:
2000 $ 332,715
2001 361,792
2002 393,425
2003 7,314,761
2004 367,596
Thereafter 46,304,634
-----------
Total $55,074,923
===========
Line of Credit
--------------
On June 28, 1998, Vinings renewed its line of credit in the amount of
$2,000,000 for six months, which expired on December 28, 1998. Vinings
did not renew the line of credit and on February 4, 1999, one of the
independent Trustees purchased the line of credit from the bank and
Vinings paid interest to the Trustee monthly at the annual rate of
8.50% from such date through April 27, 1999, at which time Vinings
obtained a new line of credit in the amount of $2,000,000 from a
financial institution. The independent Trustee who purchased the line
of credit was repaid in full on April 27, 1999. The interest rate on
the line of credit is one percent over prime as posted in The Wall
Street Journal, which was 9.50% at December 31, 1999. The principal
balance of the line of credit as of December 31, 1999 was $1,715,000
and the maturity date is April 27, 2000. Vinings has received a
commitment from the lender to renew the line of credit until April 30,
2001.
NOTE 7 - RELATED PARTY TRANSACTIONS
- -----------------------------------
On January 1, 1999, Vinings entered into management agreements with VIP
Management, LLC ("VIP"), an affiliate of the officers, who are also
Trustees of Vinings, to provide property management services for a fee
equal to varying percentages ranging from three and one half to six
percent of gross revenues, plus a fee for data processing. Prior to
January 1, 1999, Vinings had entered into management agreements with
Vinings Properties, Inc., also an affiliate of the officers of Vinings,
to provide property management services on substantially the same terms
as the current agreements. In addition, as a commitment to the
rebuilding of Vinings, prior to 1998 The Vinings Group, Inc., the
parent corporation of Vinings Properties, Inc. (collectively with VIP,
"The Vinings Group"), provided numerous services at no cost to Vinings
relating to administration, acquisition, and capital and asset advisory
services. Certain direct costs paid on Vinings' behalf were reimbursed
to The Vinings Group. Beginning January 1, 1998 the Vinings Group has
charged Vinings for certain overhead charges. Beginning August 1, 1999,
the Trust has also paid for its pro-rata share of rent, administrative
and other overhead charges, which includes reimbursing The Vinings
Group for a pro-rata portion of salaries and benefits for the officers
and other employees providing services to Vinings. At December 31,
1999, the Trust owed The Vinings Group $53,358, which was subsequently
paid.
The following table reflects payments made to The Vinings Group:
Twelve months ended
---------------------------------------------
1999 1998 1997
------------- ------------ ------------
Vinings
Management fees $402,551 $188,032 $ 93,235
Data processing fees 52,896 27,360 15,240
Overhead reimbursements 265,280 150,000 45,000
============= ============ ============
Total $720,727 $365,392 $153,475
============= ============ ============
Joint Venture
Management fees $197,539 $ - $ -
Data processing fees 38,720 - -
============= ============ =============
Total $236,259 $ - $ -
============= ============ =============
On December 19, 1997, the Trust acquired Windrush from Windrush
Partners, Ltd, a Georgia limited partnership, whose general partner was
Hallmark Group Services Corp ("Hallmark"). At the time of the
transaction, Hallmark was an affiliate of the officers and certain
trustees of the Trust. In connection with the acquisition of Windrush,
an advisor's fee of $75,550 was paid by the seller to MFI Realty,
Inc.("MFI"), a wholly owned subsidiary of The Vinings Group, Inc.
On February 4, 1999 one of the independent Trustees purchased the
Trust's line of credit, which expired on December 28, 1998 and Vinings
paid interest to the Trustee monthly at the annual rate of 8.50%
through April 27, 1999, at which time the Trustee was repaid in full.
For more information regarding the line of credit see Note 6.
In connection with the acquisition of the Portfolio Properties, MFI
received fees totaling $400,276 of which $167,103 was paid by the
Operating Partnership and $233,173 was paid by the Joint Venture.
Effective March 1, 2000, 628,927 shares of Vinings were purchased by
the Officers, VIP and an affiliate of one of the Trustees in a
privately negotiated transaction from a limited number of shareholders,
which included three of the Trustees and certain of their affiliates
(See Note 15).
NOTE 8 - DISTRIBUTIONS
- ----------------------
Vinings declared two dividends of five cents per share each, which were
paid September 1, 1999 and December 8, 1999, respectively to
shareholders of record on August 16, 1999 and November 26, 1999,
respectively. No dividends were declared or paid during 1998. For
federal income tax purposes these distributions represented a return of
capital. Vinings intends to continue to pay distributions to
shareholders in amounts at least sufficient to enable the Trust to
qualify as a REIT (See Note 2).
NOTE 9 - LEASING ACTIVITY
- -------------------------
The following is a schedule of future minimum rents due under operating
leases that have initial or remaining noncancellable lease terms in
excess of one year as of December 31, 1999, at Peachtree:
2000 $403,412
2001 391,065
2002 148,236
--------
Total $942,713
========
One tenant generated 49% of Peachtree's revenues for the period ended
December 31, 1999. The same tenant accounts for 73% of the future
minimum lease payments.
NOTE 10 - CONTINGENCIES
- -----------------------
Vinings is, from time to time, subject to various claims that arise in
the ordinary course of business. These matters are generally covered by
insurance. While the resolution of these matters cannot be predicted
with certainty, management believes that the final outcome of such
matters will not have a material adverse effect on the financial
position or results of operations of Vinings.
NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION
- --------------------------------------------
Vinings paid interest of $3,667,542, $1,299,005 and $800,388 during
1999, 1998 and 1997, respectively. In connection with the Windrush
acquisition, Vinings assumed a mortgage note payable in the amount of
$6,464,898 and related cash escrow accounts. In addition, 242,546
limited partnership units in the Operating Partnership were issued
during 1997 valued at $1,212,729. In connection with the acquisition of
the Mississippi Properties, Vinings assumed mortgage indebtedness
totaling $41,692,503 and related cash escrow accounts.
NOTE 12 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
- --------------------------------------------------------------
Based on interest rates and other pertinent information available to
Vinings as of December 31, 1999 and 1998, the Trust estimates that the
carrying value of cash and cash equivalents, the mortgage notes
payable, the line of credit, and other liabilities approximate their
fair values when compared to instruments of similar type, terms and
maturity.
Disclosure about fair value of financial instruments is based on
pertinent information available to management as of December 31, 1999
and 1998. Although management is not aware of any factors that would
significantly affect its estimated fair value amounts, such amounts
have not been comprehensively revalued for purposes of these financial
statements since December 31, 1999.
NOTE 13 - 1997 STOCK OPTION AND INCENTIVE PLAN
- ----------------------------------------------
Vinings' 1997 Stock Option and Incentive Plan (the "Plan") provides
incentives to officers, employees, Trustees, and other key persons
including the grant of share options, share appreciation rights,
restricted and unrestricted share awards, performance share awards, and
dividend equivalent rights.
Under the Plan, the maximum number of shares that may be reserved and
available for issuance is 10% of the total number of outstanding shares
at any time plus 10% of the number of Units outstanding at any time
that are subject to redemption rights. At December 31, 1999 the total
number of shares available for issuance under the Plan was 134,305.
Options granted under the Plan expire ten years from the date of grant.
During 1998 and 1997, Vinings granted non-qualified share options to
the officers, Trustees and certain key persons. The options vest in
full after one year from the date of the grant. Of the options granted
in 1998, 81,250 have an exercise price of $4.00 per share as compared
to a fair value of $3.63 on the date of the grant and 1,500 have an
exercise price of $4.75 per share, which was equal to the fair value on
the date of grant. The options granted in 1997 have an exercise price
of $5.00 per share as compared to a fair value of $4.56 per share on
the date of the grant. There were no options granted during 1999.
On July 1, 1998 Vinings awarded 20,000 shares of restricted stock to
the officers and certain trustees (the "Restricted Stock"),
representing a total value of $80,000 (based on the fair market value
of a share of the Trust on the award date) which was reflected in
compensation expense and shareholders' equity in 1998. The Restricted
Stock was awarded as compensation for services to the Trust provided by
such officers and trustees as well as by The Vinings Group.
The Trust accounts for share options issued under the Plan in
accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees," under which no compensation cost has been recognized since
all options have been granted with an exercise price equal to or above
the fair value of the Trust's shares on the date of grant.
In accordance with SFAS No. 123 "Accounting for Stock-Based
Compensation," the Trust has estimated the fair value of the options
using a binomial option pricing model with the following weighted
average assumptions:
1999 1998 1997
----------- ---------- -----------
Risk free rate 5.36% 5.50% 6.12%
Expected life 5 years 5 years 5 years
Expected volatility 30% 30% 30%
Expected dividend yield 3.6% 3.6% 3.6%
Using these assumptions, the estimated fair value of the options
granted were $0, $87,112 and $38,000 for 1999, 1998 and 1997,
respectively, which would be included in compensation expense over the
life of the vesting period. Accordingly, had Vinings accounted for the
Plan under SFAS 123, Vinings' pro forma net income (loss) and net
income (loss) per share for the year ended December 31, 1999, 1998 and
1997 would have been as follows:
1999 1998 1997
------------- ---------- -------------
Net income:
As reported ($1,309,250) $84,993 ($661,717)
============= ========== ============
Pro forma ($1,341,004) $29,799 ($680,717)
============= ========== ============
Net income per share:
As reported ($1.19) $0.08 ($0.61)
============= ========== ============
Pro forma ($1.22) $0.03 ($0.63)
============= ========== ============
The pro forma annual compensation cost included in determining pro
forma net income may not be representative of future pro forma annual
compensation cost since the estimated fair value of stock options is
included in compensation expense over the vesting period, and
additional stock options may be granted in future years.
A summary of stock option activity under the Plan is presented in the
following table:
1999 1998 1997
----------------------------- ----------------------------- ----------------------------
Weighted Average Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
----------------------------- ----------------------------- ----------------------------
Options outstanding,
Beginning of year 108,750 $4.25 26,000 $5.00 - -
Granted - - 82,750 $4.01 26,000 $5.00
-------------------------- ----------------------------- ----------------------------
Options outstanding,
end of year 108,750 $4.25 108,750 $4.25 26,000 $5.00
========================== ============================= ============================
Options exercisable,
end of year 108,750 $4.25 26,000 $5.00 - -
========================== ============================= ============================
Weighted average per
share value of
options granted - $1.05 $1.46
============== ================ =================
Options outstanding:
Exercise price range $4.00-$5.00 $4.00-$5.00 $5.00
============== ================ =================
Weighted average
Remaining life 8.11 9.11 9.5
============== ================ =================
NOTE 14 - UNUSUAL ITEM
In August 1997, Vinings, through the Operating Partnership, began
contract negotiations for the acquisition of a 2,365-unit portfolio of
16 multifamily properties. The sellers, which were 16 individual
partnerships (the "Sellers"), were to contribute the properties to the
Operating Partnership in exchange for a combination of Units and/or
cash and the assumption of existing mortgage indebtedness (the
"Portfolio Transaction"). The officers of Vinings spent substantial
amounts of time and the Trust spent substantial amounts of money in its
due diligence on the properties and in contract negotiations
specifically for this portfolio. Vinings believes that it secured a
binding commitment from the Sellers for the Portfolio Transaction.
Conditional commitments for equity financing were obtained and Vinings
was prepared to close on the transaction in early 1998. Within thirty
days of closing, the general partner of the Sellers terminated the
contract for reasons Vinings believes to be pretextual, in breach of
the contract and not in the best interests of the partners of the
selling partnerships or the shareholders of the Trust.
On February 3, 1998, Vinings commenced an action against the Sellers,
their general partners and a related property management company
seeking specific enforcement of the contract and damages for the
defendant's willful breach of contract, lack of good faith negotiation
and tortious interference in connection with the breach and termination
of the contract. In a related case, the Sellers filed an action on
January 29, 1998 seeking a declaratory judgement that the contract was
not valid, binding and enforceable against them. Because of the
uncertainty of the legal action at December 31, 1997, Vinings expensed
as unrecoverable due diligence, contract negotiation and other
acquisition costs totaling $532,185 which has been shown as Unusual
item, net on the Statement of Operations for 1997.
On June 3, 1998, a settlement was agreed to between the parties
pursuant to a Settlement Agreement and Mutual Release, the terms of
which are confidential. All pending claims have been dismissed. Amounts
received under the Settlement Agreement and Mutual Release, net of
legal fees incurred in connection with the litigation, totaled
$260,910, which has been shown as Unusual item, net on the Statement of
Operations for 1998.
NOTE 15 - SUBSEQUENT EVENT
- --------------------------
Effective March 1, 2000, 628,927 shares of Vinings were purchased in a
privately negotiated transaction by the Officers, one of their
affiliates and an affiliate of one of the Trustees from a limited
number of shareholders, which included three of the Trustees and
certain of their affiliates (the "Stock Transaction"). In connection
with the Stock Transaction, the three selling Trustees -- James D.
Ross, Martin H. Petersen and Gilbert H. Watts, Jr. -- resigned from the
Board of Trustees.
In addition, on March 15, 2000, the Board of Trustees voted to convert
the Preferred Units of its operating partnership into a newly created
class of preferred shares of beneficial interest in Vinings, and
consequently authorized the issuance of 1,988,235 preferred shares with
the same rights, preferences and privileges as the existing Preferred
Units. The issuance of preferred shares had been approved by
shareholders at the last annual meeting.
As a result of the Stock Transaction, fewer than five shareholders own
in excess of 50% of the equity in Vinings. On March 15, 2000, the Board
of Trustees voted to waive the ownership limitations in Vinings'
Declaration of Trust with respect to shareholders acquiring shares in
the Stock Transaction, as well as with respect to certain holders of
Preferred Units who will be acquiring Preferred Shares. The Board is
currently considering whether it is in the best interests of
shareholders for Vinings to continue to qualify as a REIT for federal
income tax purposes in light of the restrictions imposed on Vinings in
order for it to qualify as a REIT. To maintain its REIT status, Vinings
would be required to effect a change in its ownership structure prior
to June 30, 2000. However, there can be no assurances that the Trust
will be successful in effecting such a change prior to June 30, 2000.
Presently, the Board does not believe that there would be negative tax
consequences to the shareholders should Vinings lose its REIT status
due to the fact that the Trust is not currently generating taxable
income. However, management is continuing to investigate all
alternatives for maintaining REIT status as well as all consequences to
the shareholders should Vinings lose its REIT status.
VININGS INVESTMENT PROPERTIES TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
Initial Cost to Trust Improvements
--------------------------- Capitalized
Buildings and Subsequent to
Description Encumbrance Land Improvements Acquisition
- -------------------------------------------------------------------------------------------
Cottonwood Apartments $ 4,683,888 $ 605,300 $ 4,401,715 $ 18,339
Delta Bluff Apartments 6,203,591 765,700 6,519,178 16,635
Foxgate Apartments 6,598,549 805,700 6,872,119 11,795
Hampton House Apartments 5,169,167 645,200 5,334,988 16,536
Heritage Place Apartments 3,141,865 404,100 2,971,124 12,812
Northwood Place Apartments 4,482,862 685,700 5,171,264 11,671
River Pointe Apartments 5,981,475 765,700 6,516,567 28,570
Trace Ridge Apartments 5,330,125 686,000 4,908,464 7,007
The Thicket Apartments 7,200,487 1,070,500 7,590,400 293,673
Windrush Apartments 6,282,914 1,414,000 6,141,000 229,089
Peachtree Business Center 1,715,000 400,000 1,300,000 1,141,159
------------------------------------------------------------
$56,789,923 $8,247,900 $57,726,819 $1,787,286
============================================================
Gross amounts at which
carried at close of period Life on
-------------------------------------------------------- which Date of
Buildings and Accumulated Depreciation Date Original
Description Land Improvements Total Depreciation is Computed Acquired Construction
- ------------------------------------------------------------------------------------------------------------------------------------
Cottonwood Apartments $ 605,300 $ 4,420,054 $ 5,025,354 $ 109,711 5-40 Years 5/99 1997
Delta Bluff Apartments 765,700 6,535,813 7,301,513 154,186 5-40 Years 5/99 1996
Foxgate Apartments 805,700 6,883,914 7,689,614 162,320 5-40 Years 5/99 1997
Hampton House Apartments 645,200 5,351,524 5,996,724 127,630 5-40 Years 5/99 1997
Heritage Place Apartments 404,100 2,983,936 3,388,036 73,981 5-40 Years 5/99 1996
Northwood Place Apartments 685,700 5,182,935 5,868,635 126,646 5-40 Years 5/99 1994
River Pointe Apartments 765,700 6,545,137 7,310,837 154,802 5-40 Years 5/99 1996
Trace Ridge Apartments 686,000 4,915,471 5,601,471 121,989 5-40 Years 5/99 1996
The Thicket Apartments 1,070,500 7,884,073 8,954,573 1,241,390 5-40 Years 6/96 1989
Windrush Apartments 1,414,000 6,370,089 7,784,089 405,213 5-40 Years 12/97 1983
Peachtree Business Center 400,000 2,441,159 2,841,159 673,943 5-40 Years 4/90 1982
- ------------------------------------------------------------------------------------------------------------------------------------
$8,247,900 $59,514,105 $67,762,005 $3,351,811
==========================================================================================
<FN>
The accompanying notes are an integral part of this schedule.
</FN>
VININGS INVESTMENT PROPERTIES TRUST
NOTES TO SCHEDULE III
December 31, 1999
(A) The Peachtree investment was acquired through a deed in-lieu of
foreclosure of an original mortgage note investment. In June 1996, the
Trust obtained a $2,000,000 line of credit, which is secured by
Peachtree. At December 31, 1999, $1,715,000 was outstanding on the
line.
(B) The Thicket Apartments was acquired on June 28, 1996 for a purchase
price of $8,650,000. It was financed by a mortgage loan in the original
amount of $7,392,000 and borrowings from the Trust's line of credit,
which is secured by Peachtree.
(C) Windrush Apartments was acquired on December 19, 1997, for a purchase
price of $7,555,000 consisting of the assumption of an existing
mortgage loan in the amount of $6,464,898 and other liabilities and the
issuance of 224,330 limited partnership units in the Operating
Partnership.
(D) The Mississippi Properties were acquired on May 1, 1999, for an
aggregate purchase price $47,665,396 (excluding closing costs), which
included the assumption of debt of approximately $41,693,000 and the
balance being paid in cash, which was funded by the issuance of the
Preferred Units.
(E) Gross capitalized costs of real estate assets are summarized as
follows:
----------------------------------------------------------
1999 1998 1997
----------------------------------------------------------
Balance at beginning of period $19,309,412 $19,162,992 $11,472,454
----------------- ----------------- -----------------
Additions during period:
Additions 48,058,819 - 7,555,000
Improvements 393,774 146,420 135,538
----------------- ----------------- -----------------
48,452,593 146,420 7,690,538
----------------- ----------------- -----------------
Balance at close of period $67,762,005 $19,309,412 $19,162,992
================= ================= =================
(F) Accumulated depreciation on real estate assets is as follows:
----------------------------------------------------------
1999 1998 1997
----------------------------------------------------------
Balance at beginning of period $1,664,678 $1,036,311 $ 613,918
Additions during period 1,687,133 628,367 422,393
----------------- ----------------- -----------------
Balance at close of period $3,351,811 $1,664,678 $1,036,311
================= ================= =================
Index to Exhibits
-----------------
Exhibit No. Description
- ---------- -----------
3.1 Third Amended and Restated Declaration of Trust of Vinings (incorporated by reference as
Exhibit 3.1 to Vinings' Quarterly Report on Form 10-Q for the quarter ended September 30,
1999, No. 0-13693).
3.2 Amended and Restated Bylaws of the Trust (incorporated by reference as Exhibit 3.2 to
Vinings' Registration Statement on Form S-11, No. 2-94776).
10.1 Vinings Investment Properties Trust 1997 Stock Option and Incentive Plan as approved by the
Shareholders on July 1, 1997 (incorporated by reference as Exhibit A to Vinings' report on
Form Schedule 14A filed on May 28, 1997).
10.2 Amended and Restated Agreement of Limited Partnership of Vinings Investment Properties, L.P.
(incorporated by reference as Exhibit 10.1 to Vinings' Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, No. 0-13693).
10.3 First Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.2 to the Vinings'
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, No. 0-13693).
10.4 Second Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.3 to the Vinings'
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, No. 0-13693).
10.5 Third Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.4 on Form 10-K for year
ended December 31, 1998).
10.6 Fourth Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.5 on Form 10-K for year
ended December 31, 1998).
10.7 Fifth Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P. (incorporated by reference as Exhibit 10.6 on Form 10-K for year
ended December 31, 1998).
10.8 Sixth Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings
Investment Properties, L.P., dated as of April 29, 1999 (incorporated by reference as
Exhibit 4.1 to the Trust's report on Form 8-K filed on May 7, 1999).
10.9 Promissory Note dated April 27, 1999 between Vinings Investment Properties, L.P., and Bank
Atlanta (filed herewith).
10.10 Deed to Secure Debt and Security Agreement dated April 27, 1999 between Vinings Investment
Properties, L.P. and Bank Atlanta (filed herewith).
10.11 Form of Management Contract dated May 1, 1999 between certain subsidiaries of Vinings and
VIP Management, LLC for the Mississippi Properties (filed herewith).
10.12 Management Contract dated January 1, 1999, between Thicket Apartments, L.P. and VIP
Management, LLC (incorporated by reference as Exhibit 10.11 on Form 10-K for the year ended
December 31, 1998).
10.13 Management Contract dated January 1, 1999, between Vinings Communities, L.P. and VIP
Management, LLC (incorporated by reference as Exhibit 10.12 on Form 10-K for the year ended
December 31, 1998).
10.14 Management Contract dated January 1, 1999, between Vinings Investment Properties, L.P. and
VIP Management, LLC (incorporated by reference as Exhibit 10.13 on Form 10-K for the year
ended December 31, 1998).
10.15 Form of Amended and Restated Agreement of Purchase and Sale with attached Revised Schedule
of Material Differences For Properties Acquired May 1, 1999 (filed herewith).
10.16 Securities Purchase Agreement, dated as of April 29, 1999, Relating to Series A Convertible
Preferred Units of Vinings Investment Properties, L.P., by and among Vinings Investment
Properties Trust, Vinings Investment Properties, L.P. and the Purchasers named therein
(incorporated by reference as Exhibit 10.1 to Vinings' report on Form 8-K filed on May 7,
1999).
10.17 Form of Registration Rights and Lock Up Agreement, dated as of April 29, 1999 (incorporated
by reference as Exhibit 10.2 to Vinings' report on Form 8-K filed on May 7, 1999).
10.18 Vinings/CMS Master Partnership, L.P., Agreement of Limited Partnership (incorporated by
reference as Exhibit 10.1 to Vinings' report on Form 8-K/A filed on July 15, 1999).
21.1 Subsidiaries of the Trust (filed herewith).
23.1 Consent of Independent Public Accountants (filed herewith).
23.2 Consent of Independent Public Accountants (filed herewith).
27.1 Financial Data Schedule for the fiscal year ended December 31, 1999 (filed herewith).