UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _______
Commission file number 1-9016
AMERICAN INDUSTRIAL PROPERTIES REIT
(Exact name of registrant as specified in its charter)
Texas 75-6335572
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6220 North Beltline Road, Suite 205
Irving, Texas 75063-2656
(Address of principal executive (Zip Code)
offices)
(972) 550-6053
(Registrant's telephone number, including area code)
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
10,000,000 Shares of Beneficial Interest were outstanding as
of May 12, 1997.
American Industrial Properties REIT
Form 10-Q
For the Quarter Ended March 31, 1997
INDEX
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations for the
three months ended March 31, 1997 and 1996
(unaudited) 3
Consolidated Balance Sheets as of March 31, 1997
(unaudited) and December 31, 1996 4
Consolidated Statements of Cash Flows for the
three months ended March 31, 1997 and 1996
(unaudited) 5
Notes to Consolidated Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II - Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in the Rights of the Company's
Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
American Industrial Properties REIT
Consolidated Statements of Operations
(unaudited, in thousands except share and per share data)
Three Months Ended
March 31,
1997 1996
REVENUES
Rents $ 1,970 $ 2,150
Tenant reimbursements 667 667
Interest income 29 87
2,666 2,904
EXPENSES
Property operating expenses:
Property taxes 355 376
Property management fees 98 106
Utilities 97 107
General operating 219 230
Repairs and maintenance 89 49
Other property operating expenses 78 72
Depreciation and amortization 693 701
Interest on 8.8% notes payable 390 1,320
Interest on mortgages payable 1,014 408
Administrative expenses:
Trust administration and overhead 416 557
Litigation and proxy costs 236 488
3,685 4,414
Loss from operations (1,019) (1,510)
Gain on sale of real estate 312 -
Extraordinary gain on
extinguishment of debt 2,643 -
NET INCOME (LOSS) $ 1,936 $(1,510)
PER SHARE DATA
Loss from operations $ (0.10) $ (0.17)
Gain on sale of real estate 0.03 -
Extraordinary gain on
extinguishment of debt 0.26 -
Net Income (Loss) $ 0.19 $ (0.17)
Distributions Paid $ - $ 0.04
Number of shares outstanding 10,000,000 9,075,400
The accompanying notes are an integral part of these financial statements.
American Industrial Properties REIT
Consolidated Balance Sheets
(in thousands, except share and per share data)
March 31, December 31,
1997 1996
(unaudited)
ASSETS
Real estate:
Held for investment $ 91,940 $ 84,693
Held for sale - 9,779
91,940 94,472
Accumulated depreciation (23,637) (23,973)
Net real estate 68,303 70,499
Cash and cash equivalents:
Unrestricted 1,725 4,010
Restricted 1,138 1,366
Total cash and cash equivalents 2,863 5,376
Other assets, net 3,079 3,061
Total Assets $ 74,245 $ 78,936
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 41,710 $ 43,797
8.8% notes payable 5,450 9,419
Accrued interest 600 602
Accounts payable, accrued
expenses and other liabilities 1,419 1,964
Tenant security deposits 447 471
Total Liabilities 49,626 56,253
Shareholders' Equity:
Shares of beneficial interest,
$0.10 par value; authorized
issued and outstanding
10,000,000 Shares 1,000 1,000
Additional paid-in capital 127,056 127,056
Accumulated distributions (58,456) (58,456)
Accumulated loss from
operations and extraordinary
gains (losses) (46,441) (48,065)
Accumulated net realized gain
on sales of real estate 1,460 1,148
Total Shareholders' Equity 24,619 22,683
Total Liabilities
and Shareholders' Equity $ 74,245 $ 78,936
The accompanying notes are an integral part of these financial statements.
American Industrial Properties REIT
Consolidated Statements of Cash Flows
(unaudited, in thousands)
Three Months Ended
March 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,936 $ (1,510)
Adjustments to reconcile net income
(loss) to net cash
used in operating activities:
Extraordinary gain on
extinguishment of debt (2,643) -
Gain on sale of real estate (312) -
Depreciation 606 620
Amortization of deferred financing costs 49 17
Other amortization 87 81
Changes in operating assets
and liabilities:
Decrease (increase) in other assets
and restricted cash 61 (48)
Decrease in accounts payable, other
liabilities and tenant security deposits (507) (508)
Increase in accrued interest 263 1,320
Net Cash Used In Operating Activities (460) (28)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized improvements
and leasing commissions (176) (194)
Net proceeds from sales of real estate 2,029 -
Net Cash Provided By (Used In)
Investing Activities 1,853 (194)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on
mortgage notes payable (3,678) (56)
Distributions to shareholders - (363)
Net Cash Used In Financing Activities (3,678) (419)
Net Decrease in Unrestricted
Cash and Cash Equivalents (2,285) (641)
Unrestricted Cash and Cash Equivalents
at Beginning of Period 4,010 7,694
Unrestricted Cash and Cash Equivalents
at End of Period $ 1,725 $ 7,053
Cash Paid for Interest $ 1,092 $ 408
The accompanying notes are an integral part of these financial statements.
American Industrial Properties REIT
Notes to Consolidated Financial Statements
March 31, 1997
(unaudited)
Note 1 - Basis of Presentation
The accompanying consolidated financial statements are
presented in accordance with the requirements of Form 10-Q
and consequently do not include all of the disclosures
required by generally accepted accounting principles or
those contained in the Trust's Annual Report on Form 10-K.
Accordingly, these financial statements should be read in
conjunction with the audited financial statements of the
Trust for the year ended December 31, 1996, included in the
Trust's Annual Report on Form 10-K.
The financial information included herein has been prepared
in accordance with the Trust's customary accounting
practices and has not been audited. In the opinion of
management, the information presented reflects all
adjustments necessary for a fair presentation of interim
results. All such adjustments are of a normal and recurring
nature.
Certain amounts in prior year financial statements have been
reclassified to conform with the current year presentation.
Note 2 - Significant Accounting Policies
Principles of Consolidation. The consolidated financial
statements of the Trust include the accounts of American
Industrial Properties REIT and its wholly-owned
subsidiaries. Significant intercompany balances and
transactions have been eliminated in consolidation.
Use of Estimates. The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ significantly
from such estimates and assumptions.
Real Estate. The Trust carries its real estate held for
investment at depreciated cost unless the asset is
determined to be impaired. Real estate classified as held
for sale is carried at the lower of depreciated cost or fair
market value less costs to sell. In accordance with
Statement of Financial Accounting Standards No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of, the Trust records impairment
losses on long-lived assets used in operations when events
and circumstances indicate that the assets might be impaired
and the expected undiscounted cash flows estimated to be
generated by those assets are less than the related carrying
amounts. If an asset held for investment is determined to be
impaired, the impairment would be measured based upon the
excess of the asset's carrying value over the fair value.
In addition, the Trust records impairment losses on assets
held for sale when the estimated sales proceeds, after
estimated selling costs, is less than the carrying value of
the related asset. At March 31, 1997, all of the Trust's
properties were classified as held for investment. Should
unforeseen factors cause certain properties to be
reclassified to held for sale, significant adjustments to
reduce the net book value of such properties could be
required.
Property improvements are capitalized while maintenance and
repairs are expensed as incurred. Depreciation of buildings
and capital improvements is computed using the straight-line
method over forty years. Depreciation of tenant
improvements is computed using the straight-line method over
ten years.
American Industrial Properties REIT
Notes to Consolidated Financial Statements (continued)
March 31, 1997
(unaudited)
Other Assets. Other assets consists primarily of deferred
rent receivable, prepaid leasing commissions and loan fees.
Deferred rent receivable arises as the Trust recognizes
rental income, including contractual rent increases or
delayed rent starts, on a straight-line basis over the lease
term. The Trust has recorded deferred rent receivable of
$554,000 and $599,000 at March 31, 1997 and December 31,
1996, respectively. Leasing commissions are capitalized and
amortized on a straight-line basis over the life of the
lease. Loan fees are capitalized and amortized to interest
expense on a level yield basis over the term of the related
loan.
Income Taxes. The Trust operates as a real estate
investment trust ("REIT") for federal income tax purposes.
Under the REIT provisions, the Trust is required to
distribute 95% of REIT taxable income and is allowed a
deduction for dividends paid during the year. No provisions
for Federal income taxes have been required or recorded to
date.
Note 3 - Zero Coupon Notes
In December 1993 and November 1994, the Trust partially in-
substance defeased certain of its Zero Coupon Notes due 1997
totaling $16,365,000 (face amount at maturity). At March
31, 1997, the accreted value of these Zero Coupon Notes was
$15,158,000.
Note 4 - Shareholder Transactions
On February 26, 1997, USAA Real Estate Company ("USAA
REALCO"), the owner of approximately 31.8% of the Trust's
outstanding Shares of Beneficial Interest (the "Shares"),
purchased outstanding indebtedness of the Trust totaling
$9,419,213. Pursuant to an earlier agreement with the
Trust, the notes were then modified by USAA REALCO to, among
other things, reduce the principal amount of these notes
from $9,419,213 to $7,040,721, resulting in an extraordinary
gain on extinguishment of debt (including certain accrued
interest) to the Trust of $2,643,000. At the time the notes
were modified, the Trust made a principal payment of
$1,591,103, reducing the outstanding principal amount to
$5,449,618. According to the modification terms, interest
continues to accrue at 8.8%, payable monthly, and the
maturity of the notes is extended from March 31, 1997 to
December 31, 2000. In addition, USAA REALCO has the option
to convert the principal amount of the notes into Shares of
the Trust at the conversion rate of $2.00 per share (if
converted prior to December 31, 1997) or $2.25 per share (if
converted between December 31, 1997 and December 31, 2000).
In order for USAA REALCO to convert its debt into Shares, an
increase in the authorized Shares of the Trust, which
requires approval by holders of two-thirds of the
outstanding Shares, is necessary. In addition, the right of
USAA REALCO to convert its debt into Shares requires
approval by the shareholders. The notes provide that if
shareholder approval of this conversion right is not
received by June 30, 1997, interest on the debt will
increase to the lesser of 18% or the highest lawful rate
effective July 1, 1997 and the full principal amount will
become due and payable on October 31, 1997. Management
believes that the sale of one or more of the Trust's
properties would be required to satisfy this obligation in
the event the notes become due and payable.
American Industrial Properties REIT
Notes to Consolidated Financial Statements (continued)
March 31, 1997
(unaudited)
The Trust anticipates shareholder approval for this
transaction will be received on or about June 30, 1997 and
that USAA REALCO will convert the principal amount of the
debt into Shares of the Trust soon thereafter. Therefore,
the Trust currently anticipates it will reflect
approximately $1,022,000, representing the difference
between the market trading price of $2.38 per share on
February 26, 1997 and the $2.00 conversion price, as
interest expense between February 26, 1997 and June 30,
1997. The date of February 26, 1997 is used to measure
market value as this is deemed to be the date of issuance of
the modified note, which contains the convertibility option.
Based upon these assumptions, the Trust recorded additional
interest expense of $272,000 in the first quarter of 1997
and expects to record approximately $750,000 in additional
interest expense in the second quarter of 1997.
Note 5 - Subsequent Events
On May 1, 1997, the Trust entered into an agreement with
Morgan Stanley Asset Management, Inc. ("MSAM") whereby
certain clients and affiliates of MSAM will purchase up to
$20,000,000 of senior convertible debt issued by the Trust.
This debt will automatically be converted into Shares of the
Trust at $2.45 per share if the shareholders of the Trust
approve proposals authorizing such conversion and increasing
the number of authorized common shares to enable such
conversion to occur. The debt is non-interest bearing
unless shareholder approval of these proposals is not
received by June 30, 1997, at which time the debt begins to
bear interest at 10% and the debt matures in two years. The
obligation of the affiliates and clients of MSAM to invest
this amount is contingent on various conditions, including
completion of due diligence investigation by MSAM.
The Trust is currently pursuing a growth strategy and is
seeking shareholder approval of various capital transactions
at its Annual Meeting of Shareholders to be held on June 30,
1997. Among other items, the Trust is seeking approval for
the following:
1) An increase in authorized Shares from 10,000,000 to
500,000,000;
2) Authorization of 50,000,000 preferred shares;
3) Conversion of debt held by USAA REALCO into Shares;
4) Conversion of $20,000,000 of debt by certain
clients and affiliates of MSAM;
5) Issuance by the Trust of up to $15,000,000 of
convertible debt on similar terms and conditions as
the MSAM debt; and
6) An employee and Trust Manager incentive share plan.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The table below provides a reconciliation of net loss, funds
from operations ("FFO") and funds available for distribution
("FAD") for the quarter ended March 31, 1997 and 1996. The
determination of FFO is based on the definition adopted by the
National Association of Real Estate Investment Trusts ("NAREIT")
which is net income (loss) computed in accordance with generally
accepted accounting principles, excluding gains or losses from
debt restructuring and sales of property, plus real estate
related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. In addition,
NAREIT recommends that extraordinary items or significant non-
recurring items that distort comparability should not be
considered in arriving at FFO. Accordingly, the Trust does not
include the interest expense accrued related to the expected
future conversion of certain debt into equity or the default rate
interest accrued on its $45.2 million in unsecured notes payable
in the determination of FFO. FAD is also presented as it more
accurately portrays the ability of the Trust to make
distributions because it reflects capital expenditures. The
Trust believes FFO and FAD are appropriate measures of
performance relative to other REITs. FFO provides investors with
an understanding of the ability of the Trust to incur and service
debt and make capital expenditures. There can be no assurance
that FFO and FAD presented by the Trust is comparable to
similarly titled measures of other REITs. While other REITs may
not always use a similar definition, this information does add
comparability to those which have adopted the NAREIT definitions.
FFO and FAD should be not be considered as an alternative to
net income or other measurements under generally accepted
accounting principles as an indicator of the Trust's operating
performance or to cash flows from operating, investing or
financing activities as a measure of liquidity. FFO does not
reflect working capital changes, cash expenditures for capital
improvements or principal payments on indebtedness.
(000)
Quarter Ended
March 31,
1997 1996
Net income (loss) $1,936 $(1,510)
Exclude effects of:
Gain on sale of real estate (312) -
Extraordinary gain on
extinguishment of debt (2,643) -
Real estate depreciation and
amortization 693 700
Additional interest accrual
assuming future conversion of debt
to equity 272 -
Default rate interest accrual - 327
Funds from operation ("FFO") (54) (483)
Capitalized improvements and (176) (194)
leasing commissions
GAAP straight line rent adjustment 44 38
Funds available for
distribution("FAD") $(186) $(639)
Quarter Ended March 31, 1997 and 1996
The Trust had net income of $1,936,000 for the quarter ended
March 31, 1997 compared to a net loss of $1,510,000 for the same
quarter in 1996. This change was primarily related to the
extraordinary gain of $2,643,000 realized by the Trust on
extinguishment of debt and the gain on sale of real estate of
$312,000 in the first quarter of 1997, a decrease in interest
expense of $324,000 (due to the default rate interest accrued on
the MLI notes in 1996 and not incurred in 1997, paydown of debt
during 1996 and 1997, and the accrual in 1997 of approximately
$272,000 related to the expected future conversion of debt to
equity), a decrease in litigation and proxy costs of $252,000
(due to the settlement of litigation matters in 1996), a decrease
in net operating income of $176,000 (due to the sale of two
properties in 1996 and the sale of a third property during the
first quarter of 1997), and a decrease in administrative expenses
of $141,000 (due to the accrual of incentive compensation in the
first quarter of 1996).
The Trust's FFO improved by $429,000 when comparing the
quarter ended March 31, 1997 to the same quarter in 1996. This
increase is attributable to a net decrease (excluding the accrual
of certain interest expense items noted above) in interest
expense of $269,000 (due to the paydown or forgiveness of debt in
1996 and 1997), and the aforementioned decrease in litigation and
proxy costs, decrease in net operating income and decrease in
administrative expenses. FAD improved by $453,000 due primarily
to the same factors affecting FFO.
The overall occupancy of the Trust's portfolio on March 31,
1997 was 91.1%, compared to 93.9% on March 31, 1996. When
comparing the three months ended March 31, 1997 to the same
period in 1996 on a same property basis, revenue was up 10.6% and
net operating income was up 11.7% for the Trust's industrial
properties whereas revenue was down 11.1% and net operating
income was down 20.6% for the Trust's retail property. The
decline in the performance of the Trust's retail property was
primarily related to a nonrecurring collection of approximately
$76,000 in percentage rents during the first quarter of 1996 and
a bad debt writeoff of approximately $20,000 in the first quarter
of 1997. Occupancy at the Trust's retail property was 83.6% at
March 31, 1997 compared to 84.9% at March 31, 1996. The Trust is
currently working toward the repositioning of the property and
its tenants as a means of increasing occupancy.
Net cash used in operating activities was $460,000 for the
first quarter of 1997. This is primarily the net result of the
operational items discussed above and a decrease in accounts
payable, other liabilities and tenant security deposits of
$507,000 (due principally to the payment of property taxes during
the first quarter), offset by an increase in accrued interest of
$263,000. Included in net cash used in operating activities is
approximately $236,000 in litigation and proxy costs, which
management believes is of a nonrecurring nature. Management
believes that, in the future, cash flow provided by operations
will increase due to the elimination of such nonrecurring items
and the Trust's plans to pursue a growth strategy.
Net cash used in operating activities during the first
quarter of 1996 was $28,000. This was generated by the results
of operations, a decrease in accounts payable, other liabilities
and tenant security deposits of $508,000 (due principally to the
payment of property taxes during the first quarter) and an
increase in accrued interest of $1,320,000 due to the non-payment
of interest on the Trust's $45.2 million in 8.8% notes payable.
Included in net cash used in operating activities is
approximately $488,000 in litigation and proxy costs, which
management believes is of a nonrecurring nature.
Liquidity and Capital Resources
On May 1, 1997, the Trust entered into an agreement with
Morgan Stanley Asset Management, Inc. ("MSAM") whereby certain
clients and affiliates of MSAM will purchase up to $20,000,000 of
senior convertible debt issued by the Trust. This debt will
automatically be converted into Shares of the Trust at $2.45 per
share if the shareholders of the Trust approve proposals
authorizing such conversion and increasing the number of
authorized common shares to enable such conversion to occur. The
debt is non-interest bearing unless shareholder approval of these
proposals is not received by June 30, 1997, at which time the
debt begins to bear interest at 10% and the debt matures in two
years. The obligation of the affiliates and clients of MSAM to
invest this amount is contingent on various conditions, including
completion of due diligence investigation by MSAM.
The Trust is currently pursuing a growth strategy and is
seeking shareholder approval of various capital transactions at
its Annual Meeting of Shareholders to be held on June 30, 1997.
Among other items, the Trust is seeking approval for the
following:
1) An increase in authorized Shares from 10,000,000 to
500,000,000;
2) Authorization of 50,000,000 preferred shares;
3) Conversion of debt held by USAA REALCO into Shares;
4) Conversion of $20,000,000 of debt by certain
clients and affiliates of MSAM;
5) Issuance by the Trust of up to $15,000,000 of
convertible debt on similar terms and conditions as
the MSAM debt; and
6) An employee and Trust Manager incentive share plan.
The Trust believes that these transactions would improve the
Trust's capital structure and allow it to compete more
effectively in the current real estate and capital markets.
Although the Trust believes that it can make reasonable and
prudent purchases of real estate properties with additional
capital, there is no assurance that such investments will be
available to the Trust or that the yield on such investments will
result in an adequate return to shareholders.
The debt agreement currently in effect with USAA REALCO
prohibits the Trust from making distributions to shareholders
until the debt is paid in full or if USAA REALCO, in its sole
discretion, permits such distributions. To the extent allowable,
any future distributions to shareholders will be evaluated by the
Trust Managers based on the liquidity of the Trust, performance
of the Trust's portfolio, cash flow of the Trust and other
circumstances existing at such time.
The initial capitalization of the Trust in 1985 included
$179,698,000 (face amount at maturity) of Zero Coupon Notes due
1997. Pursuant to the retirement of these Zero Coupon Notes, the
Trust partially in-substance defeased certain Zero Coupon Notes
in December 1993 and November 1994. At March 31, 1997, the face
amount at maturity and the accreted value of the defeased Notes
were $16,365,000 and $15,158,000, respectively.
At March 31, 1997, the Trust had $41,710,000 in mortgage
debt outstanding, all of which is comprised of fixed rate debt
with a weighted average interest rate of 8.61%.
PART II. OTHER INFORMATION
Item 1.Legal Proceedings.
The Trust is not currently subject to any significant
litigation and is not aware of any material pending litigation.
Item 2.Changes in the Rights of the Company's Security Holders
In February 1997, USAA REALCO, the owner of approximately
31.8% of the Trust's outstanding Shares, purchased certain
outstanding debt of the Trust. Pursuant to an earlier agreement
with the Trust, the notes were then modified by USAA REALCO to,
among other things, reduce the principal amount of these notes
from $9,419,213 to $7,040,721, resulting in an extraordinary gain
on extinguishment of debt (including certain accrued interest) to
the Trust of $2,643,000 in the first quarter of 1997. At the
time the notes were modified, the Trust made a principal payment
of $1,591,103, reducing the outstanding principal amount to
$5,449,618. According to the modification terms, interest
continues to accrue at 8.8%, payable monthly, and the maturity of
the notes is extended from March 31, 1997 to December 31, 2000.
In addition, USAA REALCO has the option to convert the principal
amount of the notes into Shares of the Trust at the conversion
rate of $2.00 per share (if converted prior to December 31, 1997)
or $2.25 per share (if converted between December 31, 1997 and
December 31, 2000). In order for USAA REALCO to convert its debt
into Shares, an increase in the authorized Shares of the Trust,
which requires approval by holders of two-thirds of the
outstanding Shares of the Trust, is necessary. In addition, the
right of USAA REALCO to convert its debt into Shares requires
approval by the shareholders. If the shareholders approve the
conversion right of USAA REALCO and approve an increase in the
authorized Shares of the Trust, and USAA REALCO converts the
modified notes into Shares prior to December 31, 1997 at $2.00
per Share (assuming a principal balance of $5,449,618), USAA
REALCO will receive 2,724,809 Shares upon conversion, or 21.41%
of the outstanding Shares (assuming no other issuances of
Shares). Upon such an event, USAA REALCO will own approximately
46.42% of the outstanding Shares. The notes provide that if
shareholder approval of this conversion right is not obtained by
June 30, 1997, interest on the debt will increase to the lesser
of 18% or the highest lawful rate effective July 1, 1997 and the
full principal amount will become due and payable on October 31,
1997. Management believes that the sale of one or more of the
Trust's properties would be required to satisfy this obligation
in the event the notes become due and payable.
This transaction was determined to be exempt from
registration under Section 4(2) of the Securities Act of 1933, as
amended, because the transaction did not involve a public
offering.
Item 6.Exhibits and Reports on Form 8-K.
(a)Exhibits
Exhibit No. Description
27.1 * Financial Data Schedule
99.1 * Agreement dated May 1, 1997 between
the Trust, MS Real Estate Special
Situations, Inc. and Morgan Stanley
Asset Management, Inc.
* Filed herewith
(b) Reports on Form 8-K
Current Report on Form 8-K dated February 26, 1997,
reporting an Item 5 transaction.
SIGNATURES
Pursuant to the requirements 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.
AMERICAN INDUSTRIAL PROPERTIES REIT
(Registrant)
Date: May 15, 1997 /s/ MARC A. SIMPSON
Marc A. Simpson
Vice President and Chief Financial Officer
(principal accounting and financial officer)