Exhibit (c)(2)
VININGS INVESTMENT PROPERTIES TRUST
-----------------------------------
Presentation to the Board of Directors
valuation of shares for tender offer
December 15, 2000
RONALD WHITMAN WEISS
OPINION OF THE ADVISOR
- ----------------------
As financial advisor to Vinings Investment Properties Trust ("Vinings"),
Ronald Whitman Weiss (RWW) is rendering a fairness opinion relating to the
valuation of the common stock of Vinings in connection with any tender offer or
other transaction, as of the date of this opinion. RWW's opinion relates only to
the value of the common shares and does not constitute a recommendation to any
shareholder, as to how such shareholder should vote or act.
As set forth in its opinion, RWW relied on the accuracy and completeness of
the publicly available information and such information provided to it by
Vinings, and has not assumed any responsibility for any independent verification
of such information. RWW further relied on the assurance of management that they
were unaware of any facts that would make such information incomplete or
misleading. The opinion is necessarily based upon the economic, market and other
considerations and conditions existing on the date of the opinion.
In rendering its opinion RWW, among other things, has reviewed publicly
available information regarding Vinings, including annual reports of form 10-K
and quarterly reports on form 10-Q, reviewed historic price and trading volume
information regarding the common stock of Vinings, reviewed certain internal
financial information and forecasts prepared by Vinings and other financial and
market data information.
THE OPINION
- -----------
RWW was retained by Vinings to provide our opinion regarding the fairness,
from a financial point of view, of the value of its common stock, for a
potential tender offer for the outstanding common stock of the company.
Our analysis has been formed as of December 15, 2000. This booklet has been
prepared to assist Vinings in its review of the engagement and is not to be
construed as a report to any outside parties, nor as a recommendation upon which
the Trustees, Board of Directors or any shareholders of Vinings should make any
decisions regarding the subject of this transaction.
Much of the data required for our work was based upon documents and
information provided by Vinings. Other data was obtained from industry
publications or documents available to the general public.
This report serves to further explain the procedure followed and to provide
support for our fairness opinion.
In connection with our opinion we reviewed and examined, among other
things;
1) certain historical and proforma financial and operating information;
2) discussed with management the historic and current operating results
prospects;
3) management contracts and other agreements;
4) certain publicly available information, of selected transactions that
we deemed generally comparable;
5) recent market price and dividend information as related to the
proposed transaction;
6) certain information provided to us by management regarding the
proposed transaction;
7) the financial statements of Vinings;
8) the publicly filed reports and statements of Vinings;
9) certain internal financial analyses and forecasts of Vinings;
10) any appraisals or estimated values of individual or groups of
properties;
11) and conducted such other financial studies, analyses, and
investigations as we deemed appropriate.
We considered the financial performance of a group of selected publicly
traded companies and reviewed selected recent transactions involving purchase,
repurchase or tender offerings, which we deemed reasonably comparable. The
companies and transactions analyzed were deemed to be reasonably comparable in
certain relevant respects for the purpose of this analysis. However, an analysis
of these judgments concerning differences in the financial and operating
characteristics of the comparable companies and transactions, must be, and were
considered.
In reaching its conclusions, RWW broadly considered all of the discussed
analyses and did not assign specific weights to any particular analysis. RWW did
not consider any single analysis as a threshold measurement for rendering its
opinion. In addition, RWW considered other factors, as discussed above,
including historical market and trading volume of the common stock, past and
current business prospects and management's prepared projections. Based upon the
foregoing, RWW concluded that the valuation herein stipulated was a fair and
reasonable value as indicated by the above analyses as considered in the
aggregate.
The analysis conducted by RWW in arriving at its opinion involved numerous
macroeconomic, operating and financial assumptions and involved the application
of complex methodologies and educated judgment. Such analysis involves complex
considerations and judgments concerning differences in financial operating
characteristics of comparable companies and transactions and other factors that
could affect the valuations of the companies to which they are being compared.
As indicated above, in preparing its opinion, RWW relied on the accuracy and
completeness of all information supplied or otherwise made available to it by
Vinings, and assumed without independent verification, that financial
projections had been reasonably prepared and reflected the best currently
available estimates and judgements. RWW also made numerous assumptions regarding
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Vinings.
Any estimates incorporated in this analysis performed by RWW are not
necessarily significantly more or less favorable than such estimates prepared by
Vinings. Estimates of value do not purport to be appraisals and do not
necessarily reflect the prices at which Vinings, or another entity including
Vinings, may be sold in the future.
RWW is an investment banker and investment advisor engaged on a regular
basis to provide a range of investment banking, investment and financial
advisory services, including, but not limited to, the valuation of businesses
and their securities in connection with mergers and acquisitions, buy-sell
agreements, tender offers and refinancing. It has been selected on the basis of
its background, experience and reputation.
VININGS INVESTMENT PROPERTIES TRUST
TABLE OF CONTENTS
Section
1. Analysis of publicy traded share prices and dividends
2. Analysis of Book Value per share, Balance Sheet and Shareholders Equity
3. Analysis of Earning per share and price/earnings ratio
4. Analysis of cash flow and funds from operations
5. Analysis of net asset value based upon estimated market value of the
properties owned
6. Conclusion and estimate of fair tender offer price as of December 15, 2000
7. Copy of Fairness Opinion Letter
1. Analysis of publicy traded share prices and dividends
During the most recent time period, year to date, Vinings Investment
Properties Trust stock has been priced as high as $4.00 per share on February
18, 2000, to a low of $1.93 on August 18, 2000. Current market price of Vinings
Properties Trust stock on December 1, 2000 is $2.06. Taking into consideration
the fluctuation in value during this year and the small float of stock
availability, we would estimate the fair value, under market pricing, would
range between the current price of $2.06 and $2.35, per share.
VIPIS US DESCRIPTION
VININGS INVESTMENT PROPERTIES TRUST
REITS-Apartments 12) CN All News/Research
CUSIP 927428201 13) CWP Company Web Page
Vinings Investment Properties Trust and Subsidiaries is a self-administered real
estate investment trust that primarily owns and manages multifamily properties.
The Trust operates properties throughout the southeastern United States.
STOCK DATA
1)GPO Price 11/ 6 USD 2 3/16
52WK High 3/1/2000 USD 5
52WK Low 8/10/2000 USD 1 7/8
YTD Chng (-45.31%) USD -1 13/16
2)TRA 1 YR Total Return -45.31%
3)CH1 Shares out 11/7/2000 1.100M
Market Cap USD 2.41 M
Float .14M
Marginable
=========================================================
8)DVD DIVIDENDS - Irregular
Indicated Gross Yld 2.29%
Dividend Growth
Ex-Date Type Amt
==========================================================
EARNINGS
9)ERN Trailing 12mo EPS USD -1.820
Est EPS n.a.
P/E
EPS Yr change
N/C FROM MELLON PARTICIPATING MORTGAGE TRUST EFF 3/26/96 1 FOR 8 REV SPLIT 7/96
MOVED FROM NASDAQ/NATL MKT EFF 5/13/96. DELISTED NASDAQ/SM CAP EFF 4/29/98.
Copyright 2000 BLOOMBERG L.P.
RATIOS
VIPIS US VININGS INVESTMENT PROPERTIES TRUST
FY END DEC 1999 * = Trailing 12 month ~ = Last Quarter Q2:2000
- --------------------------------------------------------------------------------------------------
ISSUE DATE PER SHARE DATA CASH FLOW ANALYSIS
- --------------------------------------------------------------------------------------------------
Price $ 2 3/16 Basic EPS -1.19 ~FFO/Tot Revenue 0.00%
P/E neg. Trailing 12m EPS -1.82 ~FFO/Net income 0.00
Div Yld 2.29% ~Trailing 12m DPS 0.05 ~Dividends/FFO
~Price/Book 42.31 Revenue/share 8.48 ~Payout ratio 0.00
Price/Revenue 0.20 FAD/share Deprec&amort/FFO
Price/FFO EBITDA/share 4.58 Cap expense/FFO
~Market cap 2.41M ~Shares out 1.1 ~Net income/Rev -4.23%
FFO yield ~EBITDA/Int exp 1.32
- --------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
GROWTH POTENTIAL PROFITABILITY FINANCIAL STABILITY
- ------------------------------------------------------------------------------------------------------------
FFO growth FFO Return 0.00% ~Tot liab/Sh eqty 103280.20%
EBITDA growth 172.29% EBITDA return 293.45% ~Tot debt/Tot cap 86.42%
FFO/dil shr gr Return on assets -2.97% ~Mtg debt/RE inv 87.56%
Revenue growth 127.72% OI/Revenue Cap exp/RE inv 15.45%
Oper exp growth 118.70% EBITDA/Revenue 53.96% Mtg debt/T debt 100.00%
Liab growth 265.47% G&A xpns/Txpns 6.95% Var rate/T debt 3.52%
Asset Yr change 260.95% Return on equity -76.22% ~FFO/T debt 0.00%
BVPS Yr change -58.43% OI/RE inv 13.70% Int exp/T debts 10.58%
- ------------------------------------------------------------------------------------------------------------
Currency: US DOLLAR
Copyright 2000 BLOOMBERG L.P.
AVG PRICE LINE GRAPH for VIPIS US
------------------------------
Range: 1/7/00 - 11/10/00 Period: Weekly Market Type: Trade
---------------------------------
Comp/Close/Trade/USD
---------------------------------
Last 2.1880 on 11/10/00
High 4.0000 on 02/18/00
Ave 3.0559
Low 1.9380 on 08/18/00
---------------------------------
Reflects the weekly average price for VIPIS for the period 1/7/00 through
11/10/00. Graph obtained from Bloomberg Professional on-line services. The graph
was not accompanied by a tabular representation of the data.
Copyright 2000 BLOOMBERG L.P.
AVG PRICE LINE GRAPH for VIPIS US
------------------------------
Range: 6/7/96 - 11/10/00 Period: Weekly Market Type: Trade
----------------------------------
Comp/Close/Trade/USD
----------------------------------
Last 2.1880 on 11/10/00
High 5.7000 on 06/14/96
Ave 4.1001
Low 1.9380 on 08/18/00
----------------------------------
Reflects the weekly average price for VIPIS for the period 6/7/96 through
11/10/00. Graph obtained from Bloomberg Professional on-line services. The graph
was not accompanied by a tabular representation of the data.
Copyright 2000 BLOOMBERG L.P.
TRADE LINE GRAPH for VIPIS US EQUITY
-------------------------
Range: 1/1/00 - 11/6/00 Period: Daily Base Currency: USD
-------------------------------------
Comp/Close/Trade/USD
-------------------------------------
Last 2.1875
High 03/01/00 4.9700
Ave 3.0599
Low 08/10/00 1.8750
-------------------------------------
Reflects the daily trading price for VIPIS for the period 1/1/00 through
11/6/00. Graph obtained from Bloomberg Professional on-line services. The graph
was not accompanied by a tabular representation of the data.
Copyright 2000 BLOOMBERG L.P.
TRADE LINE GRAPH for VIPIS US Equity
--------------------------
Range: 5/30/00 - 11/6/00 Period: Daily Base Currency: USD
-----------------------------------
Comp/Close/Trade/USD
-----------------------------------
Last 2.1875
High 06/19/00 3.1875
Ave 2.4458
Low 08/10/00 1.8750
-----------------------------------
Reflects the daily trading price for VIPIS for the period 5/30/00 through
11/6/00. Graph obtained from Bloomberg Professional on-line services. The graph
was not accompanied by a tabular representation of the data.
Copyright 2000 BLOOMBERG L.P.
DIVIDEND/SPLIT SUMMARY
VIPIS US VININGS INVESTMENT PROPERTIES TRUST CURRENCY
- -------------------------------------- ----------------------------
12 Month Yield n.a. Graph Selections
----------------------------
Indicated Yield 2.29% 1-Yield
- -------------------------------------- G-Gross Yield
Y-Adjust for Splits
----------------------------
RANGE: 1993 TO 1999 Type: All Frequency: Irregular
- --------------------------------------------------------------------------------------------
Declared Ex-Date Record Payable Amount Type
- --------------------------------------------------------------------------------------------
1) 11/17/99 11/23/99 11/26/99 12/08/99 USD 0.05 Regular Cash
2) 08/06/99 08/12/99 08/16/99 09/01/99 USD 0.05 Regular Cash
3) 06/27/96 07/01/96 06/28/96 06/28/96 1 for 8 Stock Split
4) 01/31/96 03/11/96 02/27/96 03/08/96 USD 1.28 Final
5) 01/16/96 02/05/96 01/26/96 02/02/96 USD 15.6 Special Cash
6) 11/30/95 12/11/95 11/30/95 12/08/95 1 for 5 Stock Split
7) 08/01/93 09/15/93 09/15/93 09/15/93 1 per 1 Rights Issue
8) 08/19/93 09/09/93 09/15/93 10/15/93 USD 10 Misc
- ---------------------------------------------------------------------------------------------
Copyright 2000 BLOOMBERG L.P.
DIVIDEND/SPLIT SUMMARY
VIPIS US VININGS INVESTMENT PROPERTIES TRUST CURRENCY
- -------------------------------------- ----------------------------
12 Month Yield n.a. Graph Selections
----------------------------
Indicated Yield 2.29% 2-Dividends
- -------------------------------------- G-Gross Yield
Y-Adjust for Splits
----------------------------
RANGE: 1993 TO 1999 Type: All Frequency: Irregular
- --------------------------------------------------------------------------------------------
Declared Ex-Date Record Payable Amount Type
- --------------------------------------------------------------------------------------------
1) 11/17/99 11/23/99 11/26/99 12/08/99 USD 0.05 Regular Cash
2) 08/06/99 08/12/99 08/16/99 09/01/99 USD 0.05 Regular Cash
3) 06/27/96 07/01/96 06/28/96 06/28/96 1 for 8 Stock Split
4) 01/31/96 03/11/96 02/27/96 03/08/96 USD 1.28 Final
5) 01/16/96 02/05/96 01/26/96 02/02/96 USD 15.6 Special Cash
6) 11/30/95 12/11/95 11/30/95 12/08/95 1 for 5 Stock Split
7) 08/01/93 09/15/93 09/15/93 09/15/93 1 per 1 Rights Issue
8) 08/19/93 09/09/93 09/15/93 10/15/93 USD 10 Misc
- ---------------------------------------------------------------------------------------------
Copyright 2000 BLOOMBERG L.P.
2. Analysis of Book Value per share, Balance Sheet and Shareholders Equity
Using shareholders equity calculated at the end of 1999 @ $1,007,617.00 divided
by the total outstanding common shares/units of 1,343,035 would equal $0.75 per
common share/unit adding back accumulated depreciation and amortization of
$3,351,811.00, produces a value of $3.25 per share value.
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 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>
BALANCE SHEET (Mil of USD)
VIPIS US VININGS INVESTMENT PROPERTIES TRUST
- --------------------------------------------- -------------------------------------------
12/1998 12/1999 12/1998 12/1999
- --------------------------------------------- -------------------------------------------
RE Inv hld resale 0.0 0.0 A/P & accruals 0.5 1.9
RE eqty interest 0.0 1.6 ST liabilities 0.0 0.5
RE properties 19.3 67.8 Mortgage debt 15.6 56.8
Accum depreciation 1.7 3.4 Note/other debt 0.0 0.0
Net real estate 17.6 66.0 Other LT liab 0.0 0.0
Mtg backed invsts 0.0 0.0 Total liabilities 16.2 59.2
Mtg/secured notes 0.0 0.0
Notes receivable 0.0 0.0 Min/part interest 0.5 9.0
Allowance 0.0 0.0 Preferred equity 0.0 0.0
Tot mtgs/notes 0.0 0.0 Share cap & APIC 19.5 3.3
Total RE invest 17.6 66.0 Retained earnings -17.1 -2.3
Cash & equivalents 0.3 0.9 Shareholder equity 2.4 1.0
Receivables 0.7 0.3
Other assets 0.2 0.2 Tot liab & equity 19.1 69.1
Other investments 0 0 Variable rate debt 2.0 2.0
Restricted assets 0.3 1.8 Fixed rate debt 13.6 54.8
Total assets 19.1 69.1
# treasury shares 0.0 0.0 Shares out 1.1 1.1
Amt treasury stock 0.0 0.0 Par value 0.0 0.0
Copyright 2000 BLOOMBERG L.P.
VIPIS US VININGS INVESTMENT PROPERTIES TRUST Currency: USD
- --------------------------------------------------------------------------
Millions 6/00 3/00 12/99 9/99 6/99 5Q GeoGr
- --------------------------------------------------------------------------
RE inv hld resale 0.0 0.0 0.0 0.0 0.0 NA
RE eqty interest 1.4 1.5 1.6 1.6 1.7 NA
RE properties 67.9 67.8 67.8 67.7 67.6 28.4
Accum depreciation 4.5 3.9 3.4 2.8 2.2 19.6
Net real estate 64.8 65.4 66.0 66.5 67.0 29.8
Mtg/secured notes 0.0 0.0 0.0 0.0 0.0 NA
Mtg backed invsts 0.0 0.0 0.0 0.0 0.0 NA
Notes receivable 0.0 0.0 0.0 0.0 0.0 NA
Allowance 0.0 0.0 0.0 0.0 0.0 NA
Tot mtgs/notes 0.0 0.0 0.0 0.0 0.0 NA
Total RE invest 64.8 65.4 66.0 66.5 67.0 29.8
Cash & equivalents 0.8 0.6 0.9 0.2 0.4 26.3
Other investments 0.0 0.0 0.0 0.0 0.0 NA
Other assets 0.1 0.1 0.2 0.2 0.2 -7.0
Receivables 0.2 0.3 0.3 0.4 0.2 -21.5
Restricted assets 1.7 1.4 1.8 1.9 1.7 29.8
Total assets 67.7 67.8 69.1 69.2 69.5 28.7
- -------------------------------------------------------------------------
Copyright 2000 BLOOMBERG L.P.
VIPIS US VININGS INVESTMENT PROPERTIES TRUST Currency: USD
- -----------------------------------------------------------------------------
Revenue/Assets 6/00 3/00 12/99 9/99 6/99 5Q GeoGr
- -----------------------------------------------------------------------------
RE inv hld resale NA NA NA NA NA NA
RE eqty interest 2.08 1.93 1.90 1.90 1.35 NA
RE properties 0.04 0.04 0.04 0.05 0.03 -4.0
Accum depreciation 0.67 0.74 0.88 1.09 1.02 3.0
Net real estate 0.05 0.04 0.04 0.05 0.03 -5.0
Mtg/secured notes NA NA NA NA NA NA
Mtg backed invsts NA NA NA NA NA NA
Notes receivable NA NA NA NA NA NA
Allowance NA NA NA NA NA NA
Tot mtgs/notes NA NA NA NA NA NA
Total RE invest 0.05 0.04 0.04 0.05 0.03 -5.0
Cash & equivalents 3.81 5.03 3.21 12.83 5.76 -2.4
Other investments NA NA NA NA NA NA
Other assets 22.76 21.09 18.86 17.32 11.47 32.6
Receivables 14.59 10.58 11.14 8.45 13.11 57.1
Restricted assets 1.72 1.99 1.62 1.62 1.33 -5.0
Total assets 0.04 0.04 0.04 0.04 0.03 -4.2
- ----------------------------------------------------------------------------
Copyright 2000 BLOOMBERG L.P.
VIPIS US VININGS INVESTMENT PROPERTIES TRUST Currency: USD
- -----------------------------------------------------------------------------
% of total 6/00 3/00 12/99 9/99 6/99 5Q GeoGr
- -----------------------------------------------------------------------------
RE inv hld resale NA NA NA NA NA NA
RE eqty interest 2.12 2.19 2.25 2.34 2.43 NA
RE properties 100.26 99.99 98.04 97.85 97.22 -0.2
Accum depreciation 6.60 5.76 4.85 4.05 3.23 -7.0
Net real estate 95.78 96.42 95.44 96.13 96.42 0.9
Mtg/secured notes NA NA NA NA NA NA
Mtg backed invsts NA NA NA NA NA NA
Notes receivable NA NA NA NA NA NA
Allowance NA NA NA NA NA NA
Tot mtgs/notes NA NA NA NA NA NA
Total RE invest 95.78 96.42 95.44 96.13 96.42 0.9
Cash & equivalents 1.16 0.84 1.33 0.35 0.57 -1.9
Other investments NA NA NA NA NA NA
Other assets 0.19 0.20 0.23 0.26 0.29 -27.7
Receivables 0.30 0.40 0.38 0.52 0.25 -39.0
Restricted assets 2.57 2.14 2.63 2.74 2.48 0.9
Total assets 100.00 100.00 100.00 100.00 100.00 0.0
- ----------------------------------------------------------------------------
Copyright 2000 BLOOMBERG L.P.
3. Analysis of Earnings per share and price/earnings ratio
Net Income per share or a multiple times net income per share, is clearly not an
appropriate, accurate or representative measure for valuing Vinings' shares.
Vinings has been reporting a net loss per share. Even if we add back
depreciation and amortization this is not a reasonable or viable representation
of true stock value. We are, therefore, not giving any weight to this measure of
value. We will use a price/FFO multiple, instead of a price/earnings multiple.
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>
VIPIS US VININGS INVESTMENT PROPERTIES TRUST Currency: USD
- ----------------------------------------------------------------------------
In Millions 6/00 3/00 12/99 9/99 6/99 5Q GeoGr
- ----------------------------------------------------------------------------
Rental Income 2.81 2.72 2.78 2.87 2.17 22.98
Mtg/Note income 0.00 0.00 0.00 0.00 0.00 NM
RE eqty interest NA NA NA NA NA NM
Comm & fees earned 0.00 0.00 0.00 0.00 0.00 NM
Other income 0.18 0.16 0.16 0.20 0.11 28.12
Total revenue 2.99 2.88 2.94 3.07 2.28 23.23
Real est oper exp 1.10 1.10 1.16 1.20 0.85 22.65
Interest expense 1.29 1.29 1.24 1.29 0.97 30.64
Deprec & amort 0.58 0.58 0.61 0.56 0.43 28.26
Other expenses 0.18 0.19 0.25 0.18 0.12 4.34
(Inc)L uncon eqty inv 0.04 0.06 0.06 0.06 0.02 NM
(G)L sale of RE assets 0.00 0.00 0.00 0.00 0.00 NM
Min/part interest -0.09 0.21 0.20 0.24 0.17 NM
Income bef XO items -0.21 -0.35 -0.38 -0.22 -0.10 NM
XO loss (gain) 0.00 0.00 0.00 0.00 0.00 NM
Net income (loss) -0.13 -0.56 -0.59 -0.46 -0.27 NM
Net Inc avail to com -0.39 -0.56 -0.59 -0.46 -0.27 NM
FFO NA NA NA NA NA NM
- ---------------------------------------------------------------------------
Copyright 2000 BLOOMBERG L.P.
VIPIS US VININGS INVESTMENT PROPERTIES TRUST Currency: USD
- --------------------------------------------------------------------------------
% of Total Revenue 6/00 3/00 12/99 9/99 6/99 5Q GeoGr
- --------------------------------------------------------------------------------
Rental Income 100.00 100.00 100.00 100.00 100.00 0.00
Mtg/Note income NA NA NA NA NA NM
RE eqty interest NA NA NA NA NA NM
Comm & fees earned NA NA NA NA NA NM
Other income 6.39 5.93 5.83 6.98 5.16 4.18
Total revenue 106.39 105.93 105.79 106.98 105.16 0.20
Real est oper exp 39.35 40.59 41.89 41.97 39.03 -0.27
Interest expense 46.08 47.43 44.52 44.87 44.65 6.23
Deprec & amort 20.65 21.37 21.83 19.64 19.68 4.29
Other expenses 6.34 6.91 8.92 6.21 5.44 -15.16
(Inc)L uncon eqty inv 1.53 2.34 2.27 1.95 0.83 NM
(G)L sale of RE assets NA NA NA NA NA NM
Min/part interest -3.06 7.87 7.37 8.30 7.88 NM
Income bef XO items -7.56 -12.72 -13.70 -7.64 -4.47 NM
XO loss (gain) NA NA NA NA NA NM
Net income (loss) -4.50 -20.56 -21.11 -15.95 -12.35 NM
Net Inc avail to com -13.95 -20.56 -21.11 -15.95 -12.35 NM
FFO 12.00 12.40 12.12 11.76 15.53 -18.69
- --------------------------------------------------------------------------------
Copyright 2000 BLOOMBERG L.P.
4. Analysis of cash flow and funds from operations
Adjusted funds from operations, calculated from the last year end, December 31,
1999, was $0.36 AFFO per share. Estimated AFFO per share as of December 31,
2000, would be approximately $0.37 per share. Representatives AFFO multiples for
comparable apartment-multifamily housing REITs, range between a low of 7.5 times
AFFO and 12.1 times AFFO.* This would establish a range of common stock value
based upon AFFO multiples, of between $2.78 and $4.48 per share. Because of the
small volume of Vinings shares in the market place and the thin trading volume,
we estimate an approximate value as calculated by this method of $3.25 per share
for Vinings stock.
* Sources: Realty Stock Review and SNL Securities Monthly
Vinings Investment Properties Trust
Adjusted Funds From Operations
Estimated
December 31, December 31, December 31,
1998 1999 2000
------------------------------------------------------
Income (loss) before minority
interests & Joint Venture 103,893 (557,093) (896,889)
Add back depreciation & amortization 647,760 1,713,513 2,256,855
--------------------------------------------------
Funds From Operations 751,653 1,156,420 1,359,965
Less recurring capital (74,507) (241,819) (185,900)
--------------------------------------------------
Adjusted Funds From Operations 677,146 914,601 1,174,065
Add Equity in Joint Venture AFFO - 48,243 70,380
--------------------------------------------------
Total AFFO 677,146 962,843 1,244,445
==================================================
Weighted Average Common Shares 1,090,701 1,100,501 1,100,490
Weighted Average Preferred Shares
(assumes converted) - 1,354,015 1,988,235
Weighted Average Common Units 242,546 242,546 242,546
In the money Options 3,144 - -
--------------------------------------------------
Total 1,336,391 2,697,062 3,331,271
==================================================
AFFO per Share 0.51 0.36 0.37
==================================================
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>
CASH FLOW SUMMARY (Mil of USD)
VIPIS US VININGS INVESTMENT PROPERTIES TRUST
- -----------------------------------------------------------------------
12/1996 12/1997 12/1998 12/1999
- -----------------------------------------------------------------------
Net income (loss) -0.8 -0.7 0.1 -1.3
Deprec & amort 0.2 0.4 0.6 1.7
Prov doubtful A/C's 0.0 0.0 0.0 0.0
Other non cash 0.0 0.0 0.1 0.6
Chges in oper A/L -0.2 0.4 -0.2 0.1
Cashflow-operating act -0.7 0.2 0.6 1.1
Sales of property 0.0 0.0 0.0 0.0
Real Estate Adds/Improv -8.74 -0.14 -0.15 -6.46
Dec(inc) invsts 0.0 0.0 0.0 0.0
Dec(inc) notes rec 0.0 0.0 0.0 0.0
Dec(inc) mtg invsts 0.7 0.0 0.0 0.0
Dec(inc) other 0.0 0.0 -0.6 0.0
Cashflow-investing act -8.1 -0.1 -0.8 -8.1
Common dividends -18.2 0.0 0.0 0.0
Pref Dvds/Other Dist 0.0 0.0 0.0 -0.1
Inc(dec)debt 8.9 0.1 0.1 -0.5
Inc(dec) captial 0.0 0.0 0.0 8.4
Other financing acts -0.2 0.0 0.0 0.0
Cashflow-financing act -9.5 0.1 0.1 7.8
Net changes in cash -18.3 0.1 0.0 0.8
- -----------------------------------------------------------------------
Copyright 2000 BLOOMBERG L.P.
VIPIS US VININGS INVESTMENT PROPERTIES TRUST Currency: USD
- -----------------------------------------------------------------------------
In Millions 12/99 12/98 12/97 12/96 12/95 5Y GeoGR
- -----------------------------------------------------------------------------
Net income (loss) -1.31 0.09 -0.66 -0.81 0.58 NM
Deprec & amort 1.71 0.65 0.43 0.24 0.41 31.25
Prov doubtful A/C's 0.00 0.00 0.00 0.00 2.54 NM
Other non cash 0.62 0.13 0.03 0.05 -1.76 NM
Chges in oper A/L 0.12 -0.24 0.35 -0.19 0.05 NM
Cashflow-operating 1.14 0.63 0.15 -0.70 1.82 -29.89
FFO NA NA -0.23 -0.54 1.87 NM
FAD/share NA NA NA NA NA NM
EBITDA 5.04 1.85 1.15 -0.11 1.83 19.39
- -----------------------------------------------------------------------------
Copyright 2000 BLOOMBERG L.P.
VIPIS US VININGS INVESTMENT PROPERTIES TRUST Source: Bloomberg
Data: Cash Flow Summary Ending 1999 (Dec)
Display: Ascending Period: Yearly Currency: USD US DOLLAR
- ----------------------------------------------------------------------------
Cash Flow Summary 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------
Net income (loss) 0.58 -0.81 -0.66 0.09 -1.31
Cashflow-operating act 1.82 -0.70 0.15 0.63 1.14
1) Cashflow-investing act 27.32 -8.07 -0.14 -0.76 -8.15
2) Cashflow-financing act -13.23 -9.53 0.10 0.14 7.77
Net changes in cash 15.91 -18.30 0.11 0.00 0.76
Cash paid (rec) for taxes
Cash interest paid (rec)
Note: Per share values in USD, all other amounts in millions of USD
Copyright 2000 BLOOMBERG L.P.
5. Analysis of net asset value based upon estimated market value of properties
owned
Real estate net asset value per share, based upon a capitalized cash flow
analysis, equals an approximate value of $3.25 per share. Because we do not have
a current appraised value for each individual property, a determination of value
by capitalizing cash flow, is the best method for reaching the estimated asset
value per share.
Vinings Investment Properties Trust
Valuation Analysis
Actuals
May 1999-
April 2000
--------------
GROSS POSSIBLE 12,022,115
VACANCY 606,286
CONCESSION 135,053
MODEL/OFFICE 6,690
WRITE OFFS 161,320
--------------
NET RENTAL INCOME 11,112,766
OTHER INCOME 623,203
--------------
TOTAL INCOME 11,735,969
EXPENSES:
SALARIES 1,036,656
LEASING/ADVERTISING 88,025
ADMINISTRATIVE 299,771
CORPORATE UNIT 86,918
UTILITIES 788,772
MAINTENANCE 803,823
MANAGEMENT FEES 465,739
R. E. TAX & PERS. PROP. TAXES 877,485
INSURANCE 107,353
--------------
TOTAL OPERATING EXPENSE 4,554,541
--------------
NET OPERATING INCOME 7,181,428
REPLACEMENT RESERVE 250 377,500
--------------
NOI AFTER CAPITAL 6,803,928
--------------
Portfolio Value 9.50% 71,620,292
Less PBC Value included above (3,984,664)
Plus estimated PBC Value 3,000,000
--------------
70,635,628
Cost of Sale 1% 706,356
Mortgage Debt 56,693,022
--------------
REMAINING EQUITY 13,236,250
Joint Venture Equity -
--------------
Subtotal 13,236,250
Less Preferred Payoff 8,867,529
--------------
Total Remaining Equity 4,368,721
==============
Outstanding Common Shares/Units 1,343,035
(excludes options) ==============
Value per Share 3.25
==============
VININGS INVESTMENT PROPERTIES TRUST
Portfolio Summary Schedule
November 16, 2000
===============================================================================================================================
Year
Construction Interest Principal
Property Completed City State Units Maturity Rate 9/30/00
===============================================================================================================================
TRUST PROPERTIES
Cottonwood Apartments 1996 Greenville MS. 120 10/1/36 8.875% 4,671,026
Delta Bluff Apartments 1996 Walls MS. 152 8/1/36 9.25% 6,187,924
Foxgate Apartments 1997 Hattiesburg MS. 160 6/1/37 8.50% 6,579,697
Hampton House Apartments 1996 Long Beach MS. 128 8/1/37 8.50% 5,154,069
Heritage Place Apartments 1996 Senatobia MS. 80 10/1/36 8.750% 3,132,948
Northwood Place Apartments 1993 Meridian MS. 136 6/1/34 8.75% 4,467,120
Peachtree Business Center 1984-86 Atlanta GA. * ** ** **
River Pointe Apartments 1997 Robinsonville MS. 152 1/1/37 8.625% 5,964,335
Thicket Apartments 1989 Atlanta GA. 254 7/1/03 9.04% 7,149,962
Trace Ridge Apartments 1996 Tupelo MS. 136 7/1/36 8.50% 5,313,610
Windrush Apartments 1982 Atlanta GA. 202 7/1/24 7.50% 6,207,341
------- ------------
Total 1,520 54,828,032
JOINT VENTURE PROPERTIES
Bradford Place Apartments 1995 Jackson MS. 120 8/1/35 8.5% 5,080,206
Bradford Place II Apartments 1997 Jackson MS. 120 11/1/37 8.4% 5,377,854
Cambridge Apartments 1994 Brandon MS. 120 9/1/94 8.75% 4,362,940
The Landings Apartments 1996 Vicksburg MS. 120 7/1/36 8.50% 5,638,728
Riverchase Apartments 1989 Jackson MS. 72 6/1/07 8.22% 2,139,196
Riverchase II Apartments 1994 Jackson MS. 120 11/1/34 8.125% 4,688,385
Riverchase III Apartments 1997 Jackson MS. 88 7/1/37 8.0% 3,766,831
Southwind Apartments 1993 Richland MS. 80 3/1/34 8.75% 2,763,784
Southwind II Apartments 1997 Richland MS. 128 8/1/37 8.0% 5,164,405
------- ------------
Total 968 38,982,329
Total Trust and Joint
Venture Properties 2,488 $93,810,361
======= ============
<FN>
* Peachtree has approximately 75,000 square feet rentable space.
** Peachtree Business Center is collateral for a $2,000,000 line of credit.
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 September 30, 2000 and the
maturity date is April 30, 2001. The principal balance of the line of
credit as of September 30, 2000 was $1,865,000.
</FN>
CONCLUSION
The best measure of share market value for any public company, is the
currently traded price per share on the open market. Even when the trading
market is thin, as in this instance, it is still indicative of the value that
these shares would command if liquidation took place. The market price of
Vinings stock has shown wide fluctuations during the past twelve month period,
and therefore, we concluded that a fair valuation would be approximately $2.21
per share at this time.
Although, Book Value or Net Asset Value, is not always a good measure for a
public company, it is more appropriate for a real estate investment trust, than
most other publicly owned companies. In this instance, after an allowance for
accumulated depreciation, the net share value can be approximated at $3.25.
Earnings per share and price earnings ratios, are not viable methods for
estimating a share value for a real estate owning company, for the reasons
stated. Cash flow and/or Adjusted Funds from Operations, is a much truer
approximation. An analysis of comparable AFFO multiples, from other real estate
investment trusts in Vinings' peer group, indicates that an appropriate fair
market value based upon AFFO multiples, would be $3.25 per share.
Finally, an estimate based upon net value of the underlying real estate
owned by Vinings, is another excellent indication of the fair per share market
value for the Vinings stock. In lieu of appraisals for each of the individual
properties, a capitalized net operating income model, based upon the actual
gross income for the latest verified twelve month period, again indicates that a
value of $3.25 per share, is a fair estimate of true market value, at this time.
RONALD WHITMAN WEISS
737 PARK AVENUE
NEW YORK, NEW YORK 10021
(212) 535-2077
December 15, 2000
Board of Directors
Vinings Investment Properties Trust
2839 Paces Ferry Road, Suite 1170
Atlanta,Georgia 30339-5704
Gentlemen:
You have requested our opinion as investment bankers, as to the fairness
from a financial point of view, to Vinings Investment Properties Trust, as of
the date hereof, of the value of the common shares of Vinings in a proposed
tender offer or other transaction.
In preparing this opinion, we have relied on and assumed the accuracy and
completeness of all of the financial and other information provided to us or
publicly available, and have not assumed any responsibility for independent
verification of any such information. We have not conducted any physical
inspection of all facilities or assets of Vinings, nor have we made or obtained
any independent appraisals of any such facilities or assets.
In preparing this opinion, we have relied on and assumed the accuracy and
completeness of all of the financial and other information provided to us or
publicly available, and have not assumed any responsibility for independent
verification of any such information. We have not conducted any physical
inspection of all of the facilities or assets of Vinings, nor have we made or
obtained any independent appraisals of any such facilities or assets.
In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following:
1. Certain public information concerning Vinings and contained in its
Schedule 14A, Proxy Statement, dated June 9, 2000, and its Quarterly
Report on form 10-Q, for the quarter ended September 30, 2000, and its
Annual Report on form 10-K, for the fiscal year ended December 31,
1999;
2. Certain historical and proforma financial and operating information,
furnished by Vinings;
3. Certain publicly available information concerning other companies and
transactions which we deemed relevant;
4. Discussed with management the current and historic operating result
prospects;
5. Reviewed recent market price and dividend information;
6. Reviewed the financial statements of Vinings;
7. Analyzed certain internal financial statements and forecasts prepared
by Vinings;
8. Any appraisals or estimates of value of individual or groups of
property;
9. And conducted such other financial studies, analyses, and
investigations and interviews as we deemed appropriate.
We have held discussions and interviewed members of senior management,
regarding the past, current and future projected operations, financial
conditions, and future prospects for the company.
We have assumed that the financial projections prepared by management
represent its best current judgment as to the future financial condition and
result of operation of the company, and have assumed that the projections have
been reasonably prepared based upon such current judgement. Further, we have
assumed that management is unaware of any facts that would make such information
incomplete or misleading. We have also taken into account our assessment of
general economic market, and financial conditions and our experience in similar
transactions.
Our opinion, necessarily is based upon regulatory, economic, market, and
other conditions as they exist, and the information made available to us, which
we relied upon without independent verification, as of the date of this letter.
Subsequent developments may affect this opinion, and we do not have any
obligations to update, revise or reaffirm this opinion.
As you are aware, Ronald Whitman Weiss (RWW) will receive a fee for its
services in connection with rendering this opinion. In addition, Vinings has
agreed to reimburse RAW for certain out of pocket expenses, and to indemnify RWW
for certain liabilities which may arise from, among other things, the delivery
and rendering of this opinion.
This letter does not constitute a recommendation to any holder of Vinings
stock and does not address the underlying business decisions of the Board of
Directors.
The information contained in this opinion may not be used for any other
purpose, or reproduced, disseminated, quoted, referred to, or disclosed, or
otherwise made available to, or relied upon by any other party, or for any other
purpose, nor reference be made hereto, without the prior written consent of RWW,
which will not be unreasonably withheld; provided, however, that although this
opinion is solely for the use of the Board of Directors of Vinings, it is
acknowledged that such opinion may be included in filings required by the
Securities and Exchange Commission and such other regulatory agencies which must
approve of the transaction, if any.
Based upon and subject to the foregoing, it is our opinion as investment
bankers, as of the date hereof, that the values and conclusions herein are fair,
from a financial point of view.
Very truly yours,
/s/ Ronald Whitman Weiss
-------------------------
Ronald Whitman Weiss
Ronald Whitman Weiss has spent his career in real estate finance, investment
banking and as a senior real estate analyst at major Wall Street firms. Prior to
becoming portfolio manager and investment advisor, Mr. Weiss was Senior Vice
President and Senior REIT Analyst at First Albany Corporation. At Shearson
Lehman Brothers, and predecessor firms, he was founder, Chairman and CEO of
Shearson Lehman Real Estate Corporation, Managing Director & Executive Vice
President of Shearson Lehman Brothers, Inc., as well as a member of the Board of
Directors of 34 Shearson Lehman subsidiary companies. He received a Bachelor of
Science in Economics from the Wharton School of The University of Pennsylvania
and a Juris Doctorate degree from the Columbia University School of Law. He is a
Registered Principal, with the National Association of Securities Dealers and
admitted to practice law before the New York State Bar.
Ronald Whitman Weiss
737 Park Avenue
New York, NY 10021
(212) 535-2077