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 SEPTEMBER 30, 1995, 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 1-9393
Interstate General Company L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1488756
------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 Smallwood Village Center
St. Charles, Maryland 20602
----------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(301) 843-8600
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
-------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
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 report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
10,256,785 Class A Units
------------------------
2
INTERSTATE GENERAL COMPANY L.P.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION Page
Number
Item 1. Consolidated Financial Statements ------
Consolidated Statements of (Loss) Income for
the Nine Months Ended September 30, 1995
and 1994. (Unaudited) 3
Consolidated Statements of (Loss) Income for
the Three Months Ended September 30, 1995
and 1994. (Unaudited) 4
Consolidated Balance Sheets at September 30, 1995
(Unaudited) and December 31, 1994. 5
Consolidated Statements of Changes in
Partners' Capital for the Nine
Months Ended September 30, 1995.
(Unaudited) 8
Consolidated Statements of Cash Flow for the
Nine Months Ended September 30, 1995 and 1994.
(Unaudited) 9
Consolidated Statements of Cash Flow for the
Three Months Ended September 30, 1995 and 1994.
(Unaudited) 10
Notes to Consolidated Financial Statements. 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Nine
and Three Months Ended September 30, 1995 and 1994. 24
PART II OTHER INFORMATION
Item 1. Legal Proceedings 35
Item 2. Material Modifications of Rights of Registrant's 36
Securities
Item 3. Defaults Upon Senior Securities 36
Item 4. Submission of Matters to a Vote of Security Holders 36
Item 5. Other Information 36
Item 6. Exhibits and Reports on Form 8-K 36
Signatures 38
3
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(In thousands, except per unit amounts)
(Unaudited)
1995 1994
----------- ------------
REVENUES:
Community development - land sales $ 11,598 $ 18,958
Homebuilding - home sales 8,378 15,135
Revenues from investment properties -
Equity in earnings from partnerships
and development fees 1,932 11,564
Apartment rental income 3,463 3,286
Management and other fees, substantially all
from related entities 3,181 2,569
Interest and other income 409 375
---------- ----------
Total revenues 28,961 51,887
---------- ----------
EXPENSES:
Cost of land sales 6,564 12,324
Cost of home sales 7,663 14,012
Selling and marketing 1,059 1,076
General and administrative 8,415 6,902
Rental apartment expense 3,307 3,336
Depreciation and amortization 409 456
Interest expense 1,742 1,512
Write-off deferred project cost -- 1,761
---------- ----------
Total expenses 29,159 41,379
---------- ----------
(LOSS) INCOME BEFORE PROVISION FOR INCOME
TAXES AND MINORITY INTEREST (198) 10,508
---------- ----------
PROVISION FOR INCOME TAXES 813 3,020
---------- ----------
(LOSS) INCOME BEFORE MINORITY INTEREST (1,011) 7,488
Minority interest 96 659
---------- ----------
NET (LOSS) INCOME $ (1,107) $ 6,829
========== ==========
NET (LOSS) INCOME
GENERAL PARTNERS $ (11) $ 68
LIMITED PARTNERS (1,096) 6,761
---------- ----------
$ (1,107) $ 6,829
========== ==========
NET (LOSS) INCOME PER UNIT $ (.11) $ .66
========== ==========
WEIGHTED AVERAGE UNITS OUTSTANDING 10,254 10,105
========== ==========
The accompanying notes are an integral part
of these consolidated statements.
4
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(In thousands, except per unit amounts)
(Unaudited)
1995 1994
----------- ------------
REVENUES:
Community development - land sales $ 1,911 $ 2,239
Homebuilding - home sales 2,532 5,130
Revenues from investment properties -
Equity in earnings from partnerships
and development fees 602 7,309
Apartment rental income 1,149 1,128
Management and other fees, substantially all
from related entities 905 693
Interest and other income 197 188
---------- ----------
Total revenues 7,296 16,687
---------- ----------
EXPENSES:
Cost of land sales 1,539 1,653
Cost of home sales 2,240 4,939
Selling and marketing 326 396
General and administrative 3,523 2,999
Rental apartment expense 1,113 1,163
Depreciation and amortization 144 149
Interest expense 722 419
Write-off deferred project costs -- 1,761
---------- ----------
Total expenses 9,607 13,479
---------- ----------
(LOSS) INCOME BEFORE PROVISION FOR INCOME
TAXES AND MINORITY INTEREST (2,311) 3,208
---------- ----------
PROVISION FOR INCOME TAXES 256 185
---------- ----------
(LOSS) INCOME BEFORE MINORITY INTEREST (2,567) 3,023
Minority interest (69) (42)
---------- ----------
NET (LOSS) INCOME $ (2,498) $ 3,065
========== ==========
NET (LOSS) INCOME
GENERAL PARTNERS $ (25) $ 31
LIMITED PARTNERS (2,473) 3,034
---------- ----------
$ (2,498) $ 3,065
========== ==========
NET (LOSS) INCOME PER UNIT $ (.24) $ .30
========== ==========
WEIGHTED AVERAGE UNITS OUTSTANDING 10,257 10,131
========== ==========
The accompanying notes are an integral part
of these consolidated statements.
5
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
A S S E T S
September 30, December 31,
1995 1994
------------- -----------
(Unaudited) (Audited)
CASH AND SHORT-TERM INVESTMENTS
Cash $ 2,120 $ 1,120
Restricted cash 6,953 5,713
-------- --------
9,073 6,833
-------- --------
ASSETS RELATED TO COMMUNITY DEVELOPMENT
Land and development costs
St. Charles, Maryland 25,080 26,426
Puerto Rico 25,672 26,103
Other United States locations 16,313 16,014
Notes receivable on lot sales, net of
reserves of $334 and $286
as of September 30, 1995 and
December 31, 1994, respectively 3,866 1,256
Other 324 262
-------- --------
71,255 70,061
-------- --------
ASSETS RELATED TO HOMEBUILDING PROJECTS
Homebuilding construction and land 3,217 4,384
Mortgages receivable 188 222
Receivables on home sales 46 271
Other 145 121
-------- --------
3,596 4,998
-------- --------
ASSETS RELATED TO INVESTMENT PROPERTIES
Investment in residential rental
partnerships 10,869 9,976
Investment properties, net of accumulated
depreciation and amortization of
$4,941 and $4,746 as of September 30,
1995 and December 31, 1994, respectively 24,137 24,499
Other receivables, net of reserves of
$505 and $1,071 as of September 30,
1995 and December 31, 1994, respectively 1,677 1,133
-------- --------
36,683 35,608
-------- --------
6
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
A S S E T S (continued)
September 30, December 31,
1995 1994
------------- -----------
(Unaudited) (Audited)
OTHER ASSETS
Property, plant and equipment, less
accumulated depreciation of $2,173
and $1,948 as of September 30, 1995 and
December 31, 1994, respectively 1,518 1,588
Costs in excess of net assets acquired,
less accumulated amortization of
$850 and $735 as of September 30,
1995 and December 31, 1994, respectively 2,185 2,299
Deferred costs regarding waste technology
and other 2,719 2,126
-------- --------
6,422 6,013
-------- --------
Total assets $127,029 $123,513
======== ========
The accompanying notes are an integral part
of these consolidated balance sheets.
7
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND PARTNERS' CAPITAL
September 30, December 31,
1995 1994
------------- ------------
(Unaudited) (Audited)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and other accrued
liabilities $ 4,673 $ 3,521
Mortgages and notes payable 298 370
Accrued income tax liability 3,029 4,553
-------- --------
8,000 8,444
-------- --------
LIABILITIES RELATED TO COMMUNITY DEVELOPMENT
Recourse debt 44,242 36,661
Non-recourse debt 2,004 4,268
Accounts payable, accrued liabilities
and deferred income 3,545 2,728
-------- --------
49,791 43,657
-------- --------
LIABILITIES RELATED TO HOMEBUILDING
Recourse debt 1,267 2,398
Accounts payable and accrued liabilities 2,327 2,506
-------- --------
3,594 4,904
-------- --------
LIABILITIES RELATED TO INVESTMENT PROPERTIES
Recourse debt 1,334 1,559
Non-recourse debt 22,681 22,771
Accounts payable and accrued liabilities 1,860 1,473
-------- --------
25,875 25,803
-------- --------
Total liabilities 87,260 82,808
-------- --------
PARTNERS' CAPITAL
General partners' capital 4,311 4,322
Limited partners' capital-10,257 and
10,215 Units issued and outstanding as of
September 30, 1995 and December 31, 1994 35,458 36,383
-------- --------
Total partners' capital 39,769 40,705
-------- --------
$127,029 $123,513
======== ========
The accompanying notes are an integral part
of these consolidated balance sheets.
8
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(In thousands)
(Unaudited)
General Limited
Partners' Partners'
Capital Capital Total
-------- --------- ---------
Balances, December 31, 1994 $ 4,322 $36,383 $40,705
Net income for the six
months ended June 30, 1995 14 1,377 1,391
Employee/Director Unit
options exercised -- 171 171
------- ------- -------
Balances, June 30, 1995 4,336 37,931 42,267
Net (loss) for the three months
ended September 30, 1995 (25) (2,473) (2,498)
------- ------- -------
Balances, September 30, 1995 $ 4,311 $35,458 $39,769
======= ======= =======
The accompanying notes are an integral part
of these consolidated statements.
9
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(In thousands)
(Unaudited)
1995 1994
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $(1,107) $6,829
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization
Corporate 409 456
Investment properties 497 470
Provision for income taxes 813 3,020
Equity in earnings of partnerships (1,204) (1,484)
Increase in sponsor and developer fees
from partnerships (273) (242)
Distribution of note receivable from partnership -- (6,526)
(Increase) decrease in
Receivables (2,576) 515
Homebuilding assets 1,368 1,738
Community development assets 1,417 7,807
Restricted cash (1,240) (5,512)
(Decrease) increase in accounts payable,
accrued liabilities and deferred income (546) 43
------- -------
Net cash (used in) provided by operating activities (2,442) 7,114
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in assets related to
investment properties 201 4,340
Net (acquisitions) dispositions of other assets (819) 318
------- -------
Net cash (used in) provided by investing activities (618) 4,658
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from debt financing 26,701 6,796
Payment of debt (22,812) (19,094)
Employee Unit options exercised 171 436
Cash distributions to partners -- (1,020)
------- -------
Net cash provided by (used in) financing activities 4,060 (12,882)
------- -------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 1,000 (1,110)
CASH AND SHORT-TERM INVESTMENTS, BEGINNING OF YEAR 1,120 2,009
------- -------
CASH AND SHORT-TERM INVESTMENTS, SEPTEMBER 30 $ 2,120 $ 899
======= =======
The accompanying notes are an integral part
of these consolidated statements.
10
INTERSTATE GENERAL COMPANY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(In thousands)
(Unaudited)
1995 1994
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $(2,498) $ 3,065
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization
Corporate 144 149
Investment properties 166 157
Provision for income taxes 256 185
Equity in earnings of partnerships (440) (552)
Increase in sponsor and developer fees
from partnerships (91) (80)
Distribution of note receivable from partnership -- (6,526)
Decrease (increase) in
Receivables 293 160
Homebuilding assets (111) 1,246
Community development assets 714 128
Restricted cash (1,434) 393
(Decrease) increase in accounts payable,
accrued liabilities and deferred income (1,414) 882
------- -------
Net cash used in operating activities (4,415) (793)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in assets related to
investment properties 64 (328)
Net (acquisitions) dispositions of other assets (240) 29
------- -------
Net cash used in investing activities (176) (299)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from debt financing 18,750 3,945
Payment of debt (13,311) (3,496)
Employee Unit options exercised -- 367
Cash distributions to partners -- (516)
------- -------
Net cash provided by financing activities 5,439 300
------- -------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 848 (792)
CASH AND SHORT-TERM INVESTMENTS, JUNE 30 1,272 1,691
------- -------
CASH AND SHORT-TERM INVESTMENTS, SEPTEMBER 30 $ 2,120 $ 899
======= =======
The accompanying notes are an integral part
of these consolidated statements.
11
INTERSTATE GENERAL COMPANY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
(1) BASIS OF PRESENTATION AND PRINCIPLES OF ACCOUNTING
The accompanying consolidated financial statements are unaudited but
include all adjustments (consisting of normal recurring adjustments) which the
Company's management considers necessary for a fair presentation of the results
of operations for the interim periods. Certain account balances in the 1994
financial statements have been reclassified to conform to the 1995
presentation. The operating results for the three and nine month periods ended
September 30, 1995 are not necessarily indicative of the results that may be
expected for the year. Net income per unit is calculated based on weighted
average units outstanding. Outstanding options and warrants to purchase Units
do not have a material dilutive effect on the calculation of earnings per Unit.
These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in financial statements
prepared in accordance with Generally Accepted Accounting Principles ("GAAP")
have been condensed or omitted. While the Managing General Partner believes
that the disclosures presented are adequate to make the information not
misleading, it is suggested that these financial statements be read in
conjunction with the financial statements and the notes included in the
Partnership's Annual Report filed on Form 10-K for the year ended December 31,
1994.
(2) FINANCING, LIQUIDITY AND RELATED MATTERS
The Company has historically met its liquidity requirements principally
from cash flow generated by home and land sales, property management fees,
distributions from HDA and residential rental partnerships and from bank
financing providing funds for development and working capital. As discussed in
Note 4, the Company will no longer receive distributions from HDA, as a result
of the Company's distribution of Equus Gaming Company L.P. ("Equus") units
representing a 99% limited partnership interest in Equus, to IGC Unitholders in
February 1995. In addition, under the terms of IGC's loans, most of the cash
generated by U.S. home and lot sales and distributions from partnerships,
including distributions from partnership refinancings, will be used to further
reduce bank loans and meet debt service requirements. Given these factors, the
Company's ability to generate cash for overhead, development and other uses is
limited. In addition, project financings will be necessary to fund the
continued development of land inventory to generate the necessary lot sales to
meet the Company's operating obligations. As further discussed in Note 5,
pending legal proceedings may also adversely affect the Company's liquidity,
including the timing and/or terms of any financings.
In response to the decline in the real estate markets and the decline in
the availability of financing, the Company developed a financial restructuring
plan in June 1992. Since commencing the plan, the Company has successfully
restructured all loans targeted by the plan and has reduced recourse bank debt
by $23.8 million from $69.1 million at the start of the restructuring plan to
$45.3 million at September 30, 1995.
12
NationsBank has agreed to extend the maturity of its loans until May 1998.
Under the agreement, the extension of the maturity beyond November 30, 1995 is
contingent upon a mandatory principal curtailment of $2.2 million which the
Company anticipates will come from the financing of the first phase of Fairway
Village in St. Charles, Maryland. Signet Bank has agreed to extend the
maturity of its loans until September 1996. The balance of the Signet loans as
of September 30, 1995 is $3.6 million. The Company anticipates it will pay off
these loans prior to their maturity with the proceeds from the sale of
residential lots which secure the loan.
A potential source of liquidity in late 1995 includes cash from four
projects in Puerto Rico which applied in March 1993 for economic incentives
under the 1990 Low-Income Housing Preservation and Resident Homeownership Act
("LIHPRHA"). Under LIHPRHA, the partnerships have the option of obtaining
additional HUD insured financing and additional subsidy funds, and distributing
net refinancing proceeds to partners, or selling the projects to non-profit
organizations which would continue the projects in HUD's low income housing
program. Management believes that the economic benefit to the Company and the
partners will be greater from a sale of the projects, in which event the
Company will endeavor to retain the right to manage the properties.
The decision to sell the projects under LIHPRHA is largely dependent on
the outcome of proposed legislation to be considered by Congress in 1995, which
could significantly reduce the proceeds available to the Company. If this
occurs, management will reconsider its decision to sell the projects under the
LIHPRHA program. It is not possible at the present time to predict the outcome
of the proposed changes to the LIHPRHA program. Should management decide not to
sell the projects under the LIHPRHA program, an alternative exit strategy would
be to convert the four projects to condominiums and sell the individual units.
If this alternative is pursued, the conversion and subsequent sale of the units
is expected to take approximately three to five years. The Company's share of
proceeds of any sales of the projects have been assigned to the FDIC and
NationsBank for repayment of debt totalling approximately $12.8 million at
September 30, 1995.
A LIHPRHA application was filed for a fifth project in Puerto Rico in
November 1994. The timetable for completing the LIHPRHA processing is
approximately two years. However, if proposed legislation is enacted,
management may withdraw the application.
(3) INVESTMENT IN RESIDENTIAL RENTAL PARTNERSHIPS
As of September 30, 1995, IGC manages and is a general partner in 29 real
estate partnerships which own 32 apartment projects in Puerto Rico, Maryland,
Virginia and Washington, D.C. IGC is also a limited partner in many of these
partnerships. The apartment projects are financed by non-recourse mortgages.
Of the 6,559 rental units in the various partnerships, the Federal Housing
Administration ("FHA") provides subsidies for low and moderate income tenants
in 5,371 units.
13
The following table summarizes IGC's investment in residential rental
partnerships:
September 30, December 31,
1995 1994
------------- -----------
(Unaudited) (Audited)
(In thousands)
Long-term receivables, net of deferred
income of $3,505 and $3,778 at
September 30, 1995 and December 31, 1994,
respectively $ 3,374 $ 3,368
Investment in partnerships 7,495 6,608
------- -------
$10,869 $ 9,976
======= =======
The combined condensed statements of income for the three and nine month
periods ended September 30, 1995 and 1994, are shown below for the partnerships
owning residential rental properties:
HOUSING PARTNERSHIPS'
COMBINED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ---------------------
1995 (1) 1994 (1) 1995 (1) 1994 (1)
-------- -------- -------- --------
(In thousands) (In thousands)
Revenues $10,248 $ 9,920 $30,673 $30,909
------- ------- ------- -------
Operating expenses
Depreciation 1,605 1,626 4,812 4,849
Other 8,133 8,089 25,005 25,070
------- ------- ------- -------
9,738 9,715 29,817 29,919
------- ------- ------- -------
Net income $ 510 $ 205 $ 856 $ 990
======= ======= ======= =======
(1) The income and expenses of Fox Chase Apartments General Partnership
("Fox Chase"), New Forest Apartments General Partnership ("New
Forest") and Lancaster Associates L.P. ("Lancaster") are excluded
from these statements. The operations of these partnerships are
consolidated in the Company's consolidated statements of (loss)
income for the three and nine month periods ended September 30, 1995
and 1994.
The FHA, Puerto Rico Housing Finance Corporation ("PRHFC"), State and
District of Columbia housing agencies and the partnership agreements require
that the accumulation of cash in the partnerships be sufficient to liquidate
all current liabilities before distributions to partners are permitted. Most of
the partnership agreements provide that IGC receive a zero to 5% interest in
profits, losses and cash flow from operations until such time as the limited
partners have received cash distributions equal to their capital contributions.
Thereafter, IGC generally shares in 50% of cash distributions from operations.
14
(4) INVESTMENT IN REAL ESTATE VENTURES RELATING TO HORSE RACING
Housing Development Associates, S.E. ("HDA"), a limited partnership that
owns the only thoroughbred race track in Puerto Rico, was owned 1% by IGC and
82% by Equus Gaming Company L.P. ("Equus") at September 30, 1995 and 68% by IGC
and its consolidated subsidiaries at December 31, 1994.
Equus was initially formed as a general partnership between IGC and IBC to
hold their interests in HDA and to hold all of the stock of ventures related to
horse racing. Through a series of transactions completed in August 1994, Equus
was restructured as a limited partnership between IGC and one of its wholly-
owned subsidiaries, Equus Management Company ("EMC"), for the purpose of
holding all of IGC's ownership interests in real estate assets employed in
thoroughbred racing and related wagering businesses.
A registration statement was filed with the Securities and Exchange
Commission ("SEC") for the distribution of Equus limited partnership units
("Equus Units") representing a 99% limited partnership interest in Equus, and
was declared effective by the SEC on January 10, 1995. The distribution of
Equus Units ("Distribution") took place on February 6, 1995 when IGC
distributed 5,128,372 Equus Units to IGC Unitholders and the Units became
listed on NASDAQ. The Distribution was made on the basis of one Equus Unit for
every two IGC Units outstanding on the record date of January 25, 1995. As a
result of the Distribution, IGC's total revenues for the three and nine months
ended September 30, 1995 were reduced by $164,000 and $749,000, respectively,
and net income was increased by $6,000 and decreased by $13,000, respectively,
for these periods. IGC's equity in earnings of HDA and resultant net income
were also reduced by approximately $453,000 for the nine month period ended
September 30, 1995 and increased by $187,000 for the third quarter 1995 due to
the Distribution of Equus.
IGC, through EMC, continues to manage Equus following the Distribution.
Certain directors and officers of EMC, including EMC's chief executive officer,
also continue to serve as officers and directors of IGC's managing general
partner, IGMC. IGC and EMC together have retained a 1% general partnership
interest in Equus.
For a transitional period following completion of the Distribution, IGC
will provide certain administrative services and support to Equus pursuant to a
Master Support and Services Agreement (the "Support Agreement"). Equus will
reimburse IGC for costs incurred in providing these services. An IGC
subsidiary, Interstate General Properties Limited Partnership S.E., will
continue to provide management services to HDA pursuant to an existing
management agreement.
Prior to the Distribution, during the first quarter of 1995, IGC agreed to
transfer to Equus all but 1% of its remaining capital interest in HDA for no
additional consideration. The transfer is required to take place on February
7, 1996, unless prior to that date HDA dissolves, liquidates or adopts a plan
of liquidation, becomes the subject of a bankruptcy petition which is not
discharged, or sells or enters into a definitive agreement to sell the Race
Track. If any of the foregoing occurs before February 7, 1996, IGC's
obligation to transfer the capital interest will be canceled.
At September 30, 1995, the Company's financial statements reflect the
equity method of accounting for its investment in Equus, including its
investments in HDA and Virginia Jockey Club, Inc. ("VJC"). Because IGC is the
1% general partner of Equus, it has the ability to exercise significant
15
influence over Equus' operating and financial policies and the equity method is
considered appropriate. At December 31, 1994, IGC's investment in Equus was
consolidated in the Company's financial statements, since IGC owned a majority
interest in Equus at this date.
(5) DEBT
The Company's outstanding debt is collateralized primarily by land,
housing and other land improvements, receivables, and investments in
partnerships. The following table summarizes the indebtedness of IGC:
Stated Outstanding Balance at:
Maturity Interest September 30, December 31,
Description by Lender Date Rate 1995 1994
- ------------------------- -------------- -------- ------------- ------------
(In thousands)
Non-recourse debt:
Community Development
Administration (11) 12-29-24 6.85% $ 4,403 $ 4,438
Community Development
Administration (9) 10-01-27 9.575% 6,369 6,390
Community Development
Administration (9) 10-01-28 9.875% 11,909 11,943
Supra & Co. (13) None Prime -- 1,514
+ 2.5%
Supra & Co. (13) 08-02-09 Prime 1,977 2,372
+ 1.5% (2)
Supra & Co. (13) 08-02-09 None (2) 12 382
------- -------
Total non-recourse 24,670 27,039
------- -------
Recourse debt:
Citibank (10) Demand (1) 1,334 1,559
Citibank (7) 05-05-96 (5) 2,325 --
NationsBank (5,7,12) 11-30-95 Prime 608 608
+ 1.5%
NationsBank (5,7,12) 11-30-95 Prime 4,788 5,146
+ 1.5%
NationsBank (5,7,12) 11-30-95 Prime 5,399 7,719
+ 1%
Purchase money Various from 9%-12% 1,742 2,081
mortgages (5) 06-12-96 to
04-01-98
Washington Savings (5,6) 12-27-95 8% 137 1,153
Signet Bank (6,12,15) 09-01-96 Prime 3,623 6,533
+ 2%
Wachovia Bank & Trust 11-30-95 Prime 239 337
(5,7) + .5%
FDIC (5,7,12) 09-30-96 Prime 6,785 8,995
+ 1%
1st National Bank of 12-29-97 Prime 406 460
St. Mary's (6) + 1.5%
1st National Bank of 12-21-95 9% 55 120
St. Mary's (6)
Washington Savings (6) Various from 9.75% 330 --
02-25-96 to to 10%
06-06-96
16
Stated Outstanding Balance at:
Maturity Interest September 30, December 31,
Description by Lender Date Rate 1995 1994
- ------------------------- -------------- -------- ------------- ------------
(In thousands)
1st National Bank of 09-14-96 10.25% 162 --
St. Mary's
Virginia First 11-16-95 Prime 577 484
Savings (6) + 1.5%
FirstBank (5) 12-31-97 Prime 17,425 --
+ 1.5%
Banco Central
Hispano (5,15,16) 12-31-97 (3) -- 3,875
Banco Central 12-31-97 Prime -- 1,300
Hispano (5,15,16) + 1%
Wachovia Bank & Trust Various from 7-1/2% 45 91
(7) 04-26-00 to
10-25-00
Riggs National Bank (5) 06-15-96 Prime 659 --
+ 1%
Various (5,7,8,14) Various from 7.1% 436 527
12-31-95 to to 11%
04-12-97 ------- -------
Total recourse 47,075 40,988
------- -------
Total debt $71,745 $68,027
======= =======
Balance Sheet Classification
- ----------------------------
Mortgages and notes payable - Recourse debt $ 298 $ 370
Related to community development -
Recourse debt 44,176 36,661
Non-recourse debt 1,989 4,268
Related to homebuilding projects - Recourse debt 1,267 2,398
Related to investment properties -
Recourse debt 1,334 1,559
Non-recourse debt 22,681 22,771
------- -------
Total debt $71,745 $68,027
======= =======
(1) The interest rate is not fixed to maturity and is renegotiated on a
periodic basis. The interest rate was 7.96% and 6.70% at September 30,
1995 and December 31, 1994, respectively.
(2) On August 2, 1994, HDA distributed a receivable from Land Development
Associates S.E. ("LDA") to Supra & Co. which included principal and
accrued interest. The accrued interest was distributed as a non-interest
bearing note. The interest bearing note has an interest rate of prime
plus 1.5% with a floor of 6% and a ceiling of 9%. At September 30, 1995
and December 31, 1994 the interest rate was 9.0%.
(3) Interest rate was 936 rate plus 3%, with minimum of 6% and maximum of 9%.
The rate at December 31, 1994 was 8.57%.
(4) Not used.
(5) These facilities are collateralized by land and improvements.
17
(6) These facilities are collateralized by land and housing.
(7) These facilities are collateralized by receivables.
(8) These facilities are collateralized by land and building.
(9) These facilities are mortgages on apartment projects insured by FHA.
(10) This loan is collateralized by a letter of credit.
(11) This facility is a mortgage on an apartment project insured by the
Maryland Housing Fund.
(12) These facilities are collateralized by investments in partnerships.
(13) This entity is a minority partner in LDA.
(14) These facilities are collateralized by vehicles.
(15) This facility was collateralized by the Company's 80% partnership
interest in LDA and by assignment of 70% of net cash distributions from
LDA or any other receivable from LDA to the Company.
(16) These loans were repaid in August 1995 when the Company refinanced the
property which secures the loans with FirstBank.
(6) RELATED PARTY TRANSACTIONS
James J. Wilson, Chief Executive Officer of the Company has an ownership
interest in various entities to which IGC provides management services. These
entities and their relationships to IGC are as follows:
Interstate Business
Corporation ("IBC")
or Affiliate IGC
-------------------- --------------------
Limited Limited
and Limited and Limited
General Liability General Liability
Partner Partner Partner Partner
------- ----------- ------- -----------
Chastleton .99% -- .01% --
Coachman's Landing
("Coachman's") 1% 49% 1% 49%
Santa Maria Associates,
S.E. ("Santa Maria") -- 99% -- 1%
El Monte Properties, S.E.
("El Monte") -- 99% -- 1%
G.L. Limited Partnership
("Rolling Hills") 1% 49% -- --
Village Lake Associates
Limited Partnership
("Village Lake") 99% 1% -- --
Capital Park Associates
("Capital Park") (a) -- -- --
Smallwood Village Associates
Limited Partnership ("SVA") 1% 51% -- --
Smallwood Village Office
Building Associates Limited
Partnership ("SVOBA") 25% -- -- --
Equus Gaming Company L.P. -- 32% 1% --
IBC, General Partner of IGC -- -- -- --
(a) An affiliate of IBC holds notes receivable that are secured by the
existing general partners' interest in the partnership.
18
Transactions between the above entities and IGC are described in the
following tables.
REVENUE FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1995
(In thousands)
---------------------------------------------
Income Earned
-------------------------
Management
Fees Interest Total Reserved Recognized
---------- -------- ----- -------- ----------
Chastleton (a,c) $ 54 $ -- $ 54 $ (53) $ 1
Coachman's (a) 112 178 290 (25) 265
Santa Maria 74 74 74
El Monte 56 56 56
Rolling Hills (b,j) 413 413 413
Village Lake (a) 45 45 45
Capital Park 234 234 234
SVA 44 44 44
SVOBA 5 5 5
IBC 23 25 48 48
------ ---- ------ ----- ------
$1,060 $203 $1,263 $ (78) $1,185
====== ==== ====== ===== ======
REVENUE FOR THE THREE MONTH PERIOD ENDED
SEPTEMBER 30, 1995
(In thousands)
---------------------------------------------
Income Earned
-------------------------
Management
Fees Interest Total Reserved Recognized
---------- -------- ----- -------- ----------
Chastleton (a,c) $ 19 $ -- $ 19 $ (19) $ --
Coachman's (a) 6 6 12 (12) --
Santa Maria 17 17 17
El Monte 26 26 26
Rolling Hills (b,j) 24 24 24
Village Lake (a) 6 6 6
Capital Park 79 79 79
SVA 15 15 15
SVOBA 2 2 2
IBC 8 8 16 16
---- ---- ---- ----- ----
$202 $ 14 $216 $ (31) $185
==== ==== ==== ===== ====
19
RECEIVABLES AT SEPTEMBER 30, 1995
(In thousands)
--------------------------------------------------------
Outstanding Balance
---------------------------------------
Working
Capital Land/
Management Loans Asset Book
Fees (d) Sales Interest Total Reserved Balance
---------- ------- ----- -------- ----- -------- -------
Chastleton (g,h) $330 $ 33 $ -- $ -- $363 $(330) $ 33
Coachman's (e,i) 13 116 $12 141 (25) 116
Santa Maria 6 6 6
El Monte 15 15 15
Rolling Hills (j) 321 4 325 325
Village Lake 43 -- 43 43
Capital Park 26 16 42 42
SVA (f) 4 1 5 5
SVOBA 1 -- 1 1
IBC (h,i) 3 13 302 25 343 343
---- ---- ---- ---- ------ ----- ----
$762 $183 $302 $37 $1,284 $(355) $929
==== ==== ==== ==== ====== ===== ====
REVENUE FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1994
(In thousands)
---------------------------------------------
Income Earned
-------------------------
Management
Fees Interest Total Reserved Recognized
---------- -------- ----- -------- ----------
Chastleton (a,c) $55 $ -- $55 $(47) $ 8
Coachman's (a) 18 14 32 (32) --
Santa Maria 43 43 43
El Monte 71 71 71
Rolling Hills (b) 71 71 (31) 40
Village Lake (a) 11 11 (11) --
Capital Park 212 212 212
SVA 42 115 157 (119) 38
SVOBA 8 8 8
IBC 21 61 82 (21) 61
---- ---- ---- ---- ----
$552 $190 $742 $(261) $481
==== ==== ==== ==== ====
20
REVENUE FOR THE THREE MONTH PERIOD ENDED
SEPTEMBER 30, 1994
(In thousands)
---------------------------------------------
Income Earned
-------------------------
Management
Fees Interest Total Reserved Recognized
---------- -------- ----- -------- ----------
Chastleton (a,c) $ 18 $18 $(18) $ --
Coachman's (a) 6 5 11 (11) --
Santa Maria 15 15 15
El Monte 22 22 22
Rolling Hills (b) 24 24 7 31
Village Lake (a) 6 6 (6) --
Capital Park 78 78 -- 78
SVA 13 39 52 (44) 8
SVOBA 3 3 3
IBC 7 19 26 (9) 17
---- ---- ---- ---- ----
$192 $ 63 $255 $(81) $174
==== ==== ==== ==== ====
RECEIVABLES AT DECEMBER 31, 1994
(In thousands)
--------------------------------------------------------
Outstanding Balance
---------------------------------------
Working
Capital Land/
Management Loans Asset Book
Fees (d) Sales Interest Total Reserved Balance
---------- ------- ----- -------- ----- -------- -------
Chastleton (g,h) $277 $ 30 $ -- $ -- $ 307 $ (277) $ 30
Coachman's (e) 93 211 -- 160 464 (315) 149
Santa Maria 4 -- -- -- 4 -- 4
El Monte 13 -- -- -- 13 -- 13
Rolling Hills 352 3 -- -- 355 (352) 3
Village Lake 26 1 -- -- 27 (26) 1
Capital Park 18 7 -- -- 25 -- 25
SVA (f) 3 -- -- -- 3 (3) --
SVOBA 1 -- -- -- 1 -- 1
IBC (h,i) 2 -- 302 -- 304 -- 304
---- ---- ---- ---- ------ ----- ----
$789 $252 $302 $160 $1,503 $(973) $530
==== ==== ==== ==== ====== ===== ====
(a) The management fee was reduced from 5% to 2.5% until the project has
positive cash flow.
(b) The management fee was reduced from 4.5% to 2.5% until the project has
positive operating cash flow.
(c) Management agreed that it would defer all management fees until Chastleton
had sufficient cash flow to fund operations and to subordinate 50% of its
management fee until IBC has recovered its operating advances.
21
(d) Working capital loans include operating advances and reimbursements due
for common expenses.
(e) IBC has the funding obligation for operating deficits. IGC equally shares
the general and limited partnership interest with IBC, since IGC funded
these deficits.
(f) During 1990, in satisfaction of outstanding advances of $1.7 million due
IGC from IBC, IBC transferred to IGC a $3.8 million note receivable due
from SVA. This note was purchased back by IBC on December 30, 1994.
(g) IBC has the funding obligation for operating deficits.
(h) IGC is contingently liable under $4.6 million of letters of credit issued
by NationsBank collateralized by land, which secure additional bonds
issued for Chastleton.
(i) During 1989, IBC purchased 5.01 acres of commercial land. IGC accepted a
note receivable for 80% of the $1,092,000 purchase price. The note is
collateralized by IBC's ownership interest in Santa Maria and Village
Lake. On December 23, 1994, Lakeside, a wholly owned subsidiary of the
Company purchased the remaining 1.23 acres of this land from IBC for the
development of rental units for senior citizens, for its appraised value
of $440,000. Lakeside paid $88,000 to IBC and issued a note payable for
the remaining $352,000. The note is payable upon the earlier of final
closing of permanent financing for the rental project or December 31,
1996. During the first quarter of 1995, IBC assigned the note receivable
due from Lakeside to IGC in satisfaction of past due receivables from
Coachman's. The collection of the majority of the Coachman's receivables
had previously been questionable and $328,000 had been reserved. This
transaction resulted in income recognition of these reserves during the
first nine months of 1995.
(j) The performance of this project has improved and the project is now
producing positive cash flow. During the first quarter of 1995, partial
payments were made of past due management fees owed to the Company. The
collection of the remaining receivable balance is now considered probable
and reserves related to this receivable aggregating $335,000 were
recognized as income during the first nine months of 1995.
IGC and affiliates lease office space from Smallwood Village Associates
Limited Partnership ("SVA"), one of IBC's commercial properties in which IGC's
executive offices are located. A total of 23,400 square feet of office space
was leased by IGC and affiliates at approximately $282,000 per year (subject to
adjustment for inflation). During the three and nine month periods ended
September 30, 1995 and 1994, IGC's rent for its share of the leases was $45,000
and $52,000, respectively, and $140,000 and $148,000, respectively. The lease
was amended reducing the square feet to 15,100 and the annual rate to $181,000.
The lease was also extended to 2005 with a sublease provision requiring IBC to
sublease the premises at IGC's request.
IGC provides management services to HDA pursuant to a management agreement
which has a term ending in December 2004. The management agreement provides
for an annual fee of $250,000, adjusted by the percentage increase in the
Consumer Price Index ("CPI") over the prior year. Management fees earned for
services provided to HDA in the first nine months of 1995 and 1994 were
$198,000 and $193,000, respectively. Management fees for the three month
periods ended September 30, 1995 and 1994 were $64,000 and $64,000,
respectively.
IGC provides administrative support services to Equus Gaming Company L.P.
pursuant to a Master Support and Services Agreement. During the three and nine
months ended September 30, 1995, IGC received $50,000 and $150,000,
respectively, in connection with such services.
22
IGC's Puerto Rico executive office has been located in the Doral Building
since November 1991 under a five-year lease providing for a first-year payment
of rent of approximately $187,000 and certain escalations for increases in the
CPI and pro-rata share of operating expenses in years two through five. The
Doral Building is owned by a 99% owned subsidiary of IBC. Rental expense for
the executive office and certain other property in Puerto Rico leased from
affiliates was $171,000 and $154,000 for the nine months ended September 30,
1995 and 1994, respectively. Rental expense for the three month periods ended
September 30, 1995 and 1994 was $61,000 and $51,000, respectively.
American Family Homes, a wholly owned subsidiary of IGC, leases 3000
square feet of commercial space from IBC which is used for one of its sales
centers. The lease term was modified to reflect a June 1, 1996 expiration
date. Rent expense associated with this lease during the three and nine month
periods ended September 30, 1995 was $10,000 and $29,000, respectively.
James J. Wilson, as a general partner of IGP, is entitled to priority
distributions made by each housing partnership in which IGP is the general
partner. If IGP receives a distribution which represents 1% or less of a
partnership's total distribution, Mr. Wilson receives the entire distribution.
If IGP receives a distribution which represents more than 1% of a partnership's
total distribution, Mr. Wilson receives the first 1% of such total.
On March 31, 1995, IGC sold two parcels in the Parque Escorial development
in Puerto Rico to Compri Caribe Development Corp. ("Compri"), a corporation
wholly owned by Jorge Colon Nevares, a director of the Company's managing
general partner, for use in its operations. The terms of this transaction
provided for a sales price of $3,453,000, of which $693,000 was paid in cash,
and the remainder of which was satisfied by a note in the amount of $2,760,000.
The note is collateralized by the land parcels and bears interest at a rate of
10% per annum commencing at the earlier of infrastructure completion or
December 15, 1995. From April 1, 1995 to December 15, 1995, the non-interest
bearing period, the note was discounted at a rate of 10%. Interest income
recognized in connection with this amortization of the discount from April 1,
1995 to September 30, 1995 totalled $131,311. Monthly payments of principal
and interest totalling $27,000 are due monthly commencing May 1, 1995 with a
balloon payment due at maturity on April 1, 1998.
Concurrent with the transaction described above, the Company executed a
contract of sale with Compri for three other land parcels in the Parque
Escorial development. The terms of the agreement, as amended, provide for a
base purchase price of $3,397,000, subject to monthly escalations of one
percent per month for each month that transpires from the earlier of
infrastructure completion or December 15, 1995. The closing of the transaction
is to take place on or before December 21, 1995. A 20% cash payment is due at
closing, with the remainder to be satisfied by an interest bearing note
collateralized by the land parcels. The note is to bear interest at a fixed
rate of prime plus one percent at the closing date, and is payable in thirty-
five monthly installments of principal and interest of $27,000, with a balloon
payment due at maturity.
On September 8, 1995, the Company executed a Contract of Sale with Twenty
First Century Homes S.E. ("Twenty First Century") for two parcels of land in
the Parque Escorial Development for $3,520,000. Jorge Colon Nevares holds a
50% ownership interest in Twenty First Century. The closing of the transaction
is to take place no later than December 15, 1995.
23
(7) COMMITMENTS AND CONTINGENCIES
In March 1990, the Company received a notice (the "Notice") from the U.S.
Army Corps of Engineers (the "Corps") asserting that unauthorized fill
materials had been placed in portions of an approximately five acre parcel in
Charles County, Maryland (the "Site") owned by the Company and claimed by the
Corps to constitute wetlands subject to regulation pursuant to the Clean Water
Act. Following receipt of the Notice, the Company ceased development of the
Site and remediated a portion of the Site in accordance with instructions
issued by the Corps. The Company also commenced discussions with the Corps
regarding mitigation plans that would preserve some commercial value for the
Site and filed suit against the Corps claiming that a prohibition of
development on the entire Site would constitute a governmental taking for which
the Company would be entitled to compensation.
In November 1993, the Company believed that it had an agreement in
principle with the Corps that would settle the Company's claim and permit
commercial development of a portion of the Site. However, in early 1994, the
Company became aware that this matter had been referred to the U.S. Attorney
for the District of Maryland. After conducting a lengthy investigation of the
Company's wetlands practices in St. Charles, in October 1995 a grand jury
convened by the U.S. Attorney charged that certain of the Company's practices
with respect to four parcels, including the Site, constituted criminal
violations of Section 404 of the Clean Water Act. The indictment charged each
of IGC, its affiliate, St. Charles Associates, L.P., and the Company's
Chairman, James J. Wilson. During the course of the U.S. Attorney's
investigation, the Corps issued additional violation notices relating to
filling portions of other parcels claimed by the Corps to be protected wetlands
and in October 1995 filed a civil action in the U.S. District Court for the
District of Maryland charging the Company and Mr. Wilson with violations of the
Clean Water Act. Of the approximately 4,400 acres developed by the Company in
St. Charles, approximately 70 acres are the subject of the civil and criminal
charges.
Through the nine months ended September 30, 1995 the Company incurred
approximately $700,000 in legal expenses and has taken a provision of
$1,500,000 for anticipated expenses related to defending against the criminal
and civil actions. No provision has been made for any fine or penalty. The
maximum statutory penalty sought under the civil action is $25,000 per day for
each of nine separate violations. Maximum statutory penalties sought against
the Company under the criminal action are $50,000 per day for each of four
felony violations or, alternatively, twice the pecuniary gain realized by the
Company from any illegal action. The U.S. Attorney also seeks to enjoin the
Company from engaging in future illegal wetlands practices.
Management believes the Company and Mr. Wilson have complied with
applicable laws relating to wetlands practices and, accordingly, the Company
and Mr. Wilson will vigorously defend against these charges and expect to
prevail.
24
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The real estate industry is cyclical, and is especially sensitive to
fluctuations in economic activity and movements in interest rates. Residential
lot sales and sales of new homes are affected by market conditions for rental
properties and by the condition of the resale market for used homes, including
foreclosed homes in certain cities as well as the competitive supply of other
new homes for sale. An oversupply of rental real estate depresses rents and
reduces incentives for renters to purchase homes. An oversupply of resale
units depresses prices and reduces the margins available to builders on sales
of new homes. In addition, the slowing of the economy and its impact on
consumer spending, particularly in over built markets, can adversely impact
both commercial and residential development activity, including the demand for
housing. The Company's community development and homebuilding sales are
greatly influenced by consumer confidence, housing demand, prevailing market
interest rates, movements in such rates and expectations about future rates as
well as the existing supply of commercial and residential properties.
The Company monitors the impact of these external factors and adjusts its
product line and marketing strategy as needed. The effect of these influences
and other circumstances on the Company's operating results are discussed in
further detail below.
Net (loss) income. The Company's net income for the nine and three months
ended September 30, 1995 and 1994 totalled a loss of $1.1 million and $2.5
million and an income of $6.8 million and $3.1 million, respectively. A
summary of these results by operation is as follows:
For the Nine Months For the Three Months
Ended September 30, Ended September 30,
-------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
(In thousands) (In thousands)
Operating (loss) income
Community development $ 4,845 $ 5,889 $ 437 $ 604
Homebuilding (251) 133 (30) (181)
Investment properties and
asset management 5,269 7,099 1,543 1,184
Operations distributed
to unitholders -- 5,223 -- 5,022
Other income and expenses (10,157) (8,495) (4,192) (3,379)
------- ------- ------- -------
Net (loss) income before
provision for income tax (294) 9,849 (2,242) 3,250
Provision for income tax 813 3,020 256 185
------- ------- ------- -------
Net (loss) income $(1,107) $ 6,829 $(2,498) $ 3,065
======= ======= ======= =======
25
The following table presents selected community development financial data
for the nine months ended September 30, 1995 and 1994.
1995 1994
---- ----
(In thousands, except
Lots Sold: units and percentages)
Commercial and business parks (acres)
St. Charles 14 10
Puerto Rico 5 62
Residential lots (units)
St. Charles
Developed single-family lots 109 83
Montclair
Developed townhome lots -- 19
Semi-developed multi-family lots 21 44
Westbury developed single-family lots -- 21
Undeveloped land (acres)
Westbury -- .06
Puerto Rico -- 19
Average sales price:
Commercial and business parks
St. Charles $269 $ 98
Puerto Rico $666 $194
Residential
St. Charles
Developed single-family lots $ 39 $ 46
Montclair
Developed townhome lots -- $ 38
Semi-developed multi-family lots $ 12 $ 11
Westbury developed single-family lots -- $ 27
Undeveloped land
Westbury -- $517
Puerto Rico -- $ 13
Average Gross Profit Margin:
Commercial and business parks
St. Charles 69% 69%
Puerto Rico 46% 37%
Residential lots
St. Charles
Developed single-family lots 35% 42%
Montclair
Developed townhome lots -- 10%
Semi-developed townhome lots 0% 9%
Westbury developed single-family lots -- 8%
Undeveloped land
Westbury -- 100%
Puerto Rico -- 47%
Sales revenue $11,598 $18,958
Cost of sales 6,564 12,324
------- -------
Gross profit 5,034 43% 6,634 35%
------- -------
Selling and marketing 93 86
Minority interest 96 659
------- -------
Operating profit $ 4,845 $ 5,889
======= =======
26
The following tables present selected community development financial data
for the quarter ended September 30, 1995 and 1994:
1995 1994
---- ----
(In thousands, except
units and percentages)
Lots Sold:
Commercial and business parks (acres)
St. Charles 3 2
Residential lots (units)
St. Charles
Developed single-family lots 38 26
Montclair
Developed townhome lots -- 10
Semi-developed multi-family lots 21 --
Westbury developed single-family lots -- 11
Undeveloped land (acres)
Puerto Rico -- 19
Average sales price:
Commercial and business parks
St. Charles $ 87 $ 92
Residential
St. Charles
Developed single-family lots $ 37 $ 43
Montclair
Developed townhome lots -- $ 37
Semi-developed multi-family lots $ 12 --
Westbury developed single-family lots -- $ 28
Undeveloped land
Puerto Rico -- $ 13
Average Gross Profit Margin:
Commercial and business parks
St. Charles 69% 73%
Residential
St. Charles
Developed single-family lots 29% 38%
Montclair
Developed townhome lots -- 11%
Semi-developed multi-family lots 0% --
Westbury developed single-family lots -- 11%
Undeveloped land
Puerto Rico -- 47%
Sales revenue $ 1,911 $ 2,239
Cost of sales 1,539 1,653
------- -------
Gross profit 372 19% 586 26%
------- -------
Selling and marketing 4 24
Minority interest (69) (42)
------- -------
Operating profit $ 437 $ 604
======= =======
27
The Company generally develops planned communities that contain a balanced
mix of residential, business and commercial property. The Company is currently
developing communities in the Washington, D.C. metropolitan area and San Juan,
Puerto Rico. The Washington, D.C. area is a highly competitive region
represented by national, regional and local developers. Other than the
Company's land inventory, the San Juan area has limited developable land
available. The effect of competition to the Company in this area has been
minimal. Management anticipates land sales to increase in 1996 with the
addition of the Puerto Rico planned community, Parque Escorial, to its
available inventory. This increase should be enhanced by the grand opening of
the third village in St. Charles, a planned community in Maryland
The Company sells fully developed lots, semi-developed lots and on
occasion undeveloped tracts of land. The sales prices and profit margins vary
depending on the size, development status, location and use. The U.S.
commercial parcels typically require limited development and have higher sales
prices resulting in significantly higher profit margins than those achieved by
the smaller finished residential lots. As a result, the Company's profits can
be greatly affected by the sales mix during any one period. The Company's
sales volume, revenues and profits during any one period can also be affected
by sales or lack of sales in developments that are in the final stages.
Typically, the most desirable lots sell first, leaving residual lots for sale
that are less profitable and more difficult to sell. The second village in St.
Charles, Westlake, was substantially sold out prior to 1995. As a result, the
Company's residential lot inventory available for sale in 1995 consisted
largely of these residual lots. In addition, the Company has continued its
sales efforts of the remaining lots in Montclair, Virginia. The basis of the
lots has reached the market value and all additional maintenance, minimal
development and carrying costs have an immediate and direct impact on gross
profits.
Land sales decreased to $12 million for the nine months ended September
30, 1995 from $19 million for this same period in 1994. The decrease in 1995
is primarily attributable to the closing of the sale of a shopping center site
in Puerto Rico during the 1994 period with no comparable sale in 1995. Land
sales decreased 37% to $1.9 million for the three months ended September 30,
1995 from $2.2 million for the same period in 1994. During the third quarter
1995, the single-family lots sold were smaller with lower sales prices than
those sold during the third quarter 1994. The residential lot sales volume has
continued to be unfavorably impacted by the competitive market conditions.
Excess home inventory levels throughout the industry have reduced the need for
homebuilders to purchase additional lots.
Gross profit margins from community development increased to 43% during
the first nine months of 1995 from 35% during the same period in 1994 due
primarily to a change in the sales mix. The benefits of this change in mix was
partially offset by an increase in period costs relative to total sales
revenues during the 1995 period. Gross profits from community development
decreased to 19% during the three months ended September 30, 1995 from 26%
during the third quarter of 1994 due primarily to the change in sales mix. A
greater percent of lots sold during the 1995 period, compared to the same
period in 1994, were small single-family lots. The majority of these lots were
originally financed with a participating mortgage. The Company's profit
margins are reduced by the lender's 50% share of the profit on these lots.
The land profits from the Puerto Rico operations are shared by the Company
and a minority partner, 80% and 20%, respectively. The minority partner earned
$96,000 for the first nine months in 1995 compared to $659,000 earned during
28
the comparable 1994 period. The profits were higher during the 1994 period due
to the sale of the shopping center site.
Homebuilding
The following table presents selected homebuilding financial data for the
nine months ended September 30, 1995 and 1994:
1995 1994
---- ----
(In thousands, except
units and percentages)
Units Sold:
Semi-Custom homebuilding 60 105
Tract homebuilding
St. Charles, MD 19 42
Lexington Park, MD 1 2
Montclair, VA -- 1
---- ----
80 150
==== ====
Backlog:
Semi-Custom homebuilding 84 120
Tract homebuilding
St. Charles, MD 7 8
Lexington Park, MD -- 4
Montclair, VA -- --
---- ----
91 132
==== ====
Average Sales Price:
Semi-Custom homebuilding (excludes lots) $ 91 $ 81
Tract homebuilding
St. Charles, MD $150 $152
Lexington Park, MD $ 80 $ 81
Montclair, VA -- $118
Division $105 $101
Home sales $ 8,378 $15,135
Cost of sales 7,663 14,012
------- -------
Gross profits 715 9% 1,123 7%
------- -------
Selling and marketing 966 990
------- -------
Operating (loss) income $ (251) $ 133
======= =======
29
The following table presents selected homebuilding financial data for the
three month period ended September 30, 1995 and 1994:
1995 1994
---- ----
(In thousands, except
units and percents)
Units Sold:
Semi-Custom homebuilding 19 33
Tract homebuilding
St. Charles, MD 5 16
Lexington Park, MD -- --
---- ----
24 49
==== ====
Average Sales Price:
Semi-Custom homebuilding (excludes lots) $ 95 $ 79
Tract homebuilding
St. Charles, MD $146 $158
Lexington Park, MD -- --
Division $105 $105
Home sales $ 2,532 $ 5,130
Cost of sales 2,240 4,939
------- -------
Gross profits 292 12% 191 4%
------- -------
Selling and marketing 322 372
------- -------
Operating loss $ (30) $ (181)
======= =======
In spite of the relatively favorable interest rate environment during the
first nine months of 1995, the general market conditions in the areas where
IGC's semi-custom homebuilding division operates softened. In St. Charles, the
Company's recent focus has been on lot sales to other builders due to the more
favorable gross margins provided by such sales. As a result, competition from
other builders has increased resulting in an unfavorable impact on the
Company's homebuilding operations in this market area. Due to increasingly
competitive conditions and cost factors, the Company downsized their
homebuilding operations during the second quarter of 1995. These downsizing
efforts included a reduction of administrative staff levels and the closing of
unprofitable sales centers. This undertaking is expected to permit the Company
to increase its focus on its more profitable land sale operations while
continuing limited homebuilding activities in geographic areas with the
greatest profit potential. The costs incurred in connection with these efforts
were not significant and have been included in the Company's operating results
for the nine month period ended September 30, 1995.
For the first nine months of 1995, unit settlements were 80, a 47%
decrease from 150 in the same period of 1994. Units settled during the third
quarter of 1995 were 24, a 51% decrease from 49 in the third quarter of 1994.
These decreases were due to a softening of the market conditions in the areas
30
where the Company's semi-custom homebuilding division operates. In addition,
the Company has reduced its tract division's staff and operations until the
competition's excess inventory has returned to normal levels.
The average sales price during the nine months ended September 30, 1995
was $105,000, a 4% increase from $101,000 during the comparable 1994 period.
The change in average sales price is due to nominal price increases offset by
the change in sales mix during those periods.
Gross profit margins for the first nine months in 1995 were 9%, a 29%
increase over the 7% margins in the first nine months of 1994. The gross
profit margins during the third quarter of 1995 were 12%, a 200% increase from
the 4% earned during the third quarter of 1994. Even though the Company's
gross profit margins have increased, they have been unfavorably impacted by the
continued competitive market conditions and excess industry inventory levels.
The improvement is attributable to the restructure of the Company's
homebuilding operations. These restructuring activities included a reduction
of administrative staff levels and the elimination of certain unprofitable
sales center locations. As a result of these efforts, overhead costs
associated with the homebuilding division's activities were reduced
significantly. Also, contributing to the lower margins in 1994 was the write-
off during the third quarter of unrealizable capitalized costs.
Selling and marketing expenses during the first nine months in 1995
remained comparable to those during the same period in 1994. Selling and
marketing expenses decreased $50,000 or 13% during the three months ended
September 30, 1995 as compared to this same period in 1994. This decrease was
attributable primarily to the restructuring and downsizing of this division's
activities during the second quarter of 1995.
Investment Properties and Asset Management. Revenues from investment
properties include equity in earnings from partnerships, development fees,
apartment operating income and management fees. The following table presents
selected financial data for the nine months ended September 30, 1995 and 1994:
1995 1994
---- ----
(In thousands)
Apartment rental revenues $ 3,463 $ 3,286
Apartment operating expense (3,307) (3,336)
------- -------
Apartment operating income (loss) 156 (50)
------- -------
Equity in earnings from partnerships
and development fees 1,932 4,580
Management and other fees 3,181 2,569
------- -------
$ 5,269 $ 7,099
======= =======
31
The following table presents selected financial data for the third quarter
of 1995 and 1994:
1995 1994
---- ----
(In thousands)
Apartment rental revenues $ 1,149 $ 1,128
Apartment operating expense (1,113) (1,163)
------- -------
Apartment operating income (loss) 36 (35)
------- -------
Equity in earnings from partnerships
and development fees 602 526
Management and other fees 905 693
------- -------
$ 1,543 $ 1,184
======= =======
Apartment operating income during the nine and three months ended
September 30, 1995 was $156,000 and $36,000, respectively, compared to losses
of $50,000 and $35,000, respectively, during the same periods in 1994. This
increase was due to increased rental rates and reduced vacancies. Also
contributing to the lower margins in the 1994 periods were certain non-
recurring repair and maintenance expenses.
Equity in earnings from partnerships and development fees during the nine
months ended September 30, 1995 decreased to $1.9 million from $4.6 million for
the same period in 1994. This decrease was due primarily to IGC's receipt and
recognition as revenue of distributions from a Puerto Rico partnership owning
four apartment projects that were refinanced during the first nine months of
1994. No similar distributions were received during the first nine months of
1995.
Equity in earnings from partnerships during the three months ended
September 30, 1995 increased to $.6 million from $.5 million for the same
period in 1994 due to the Company's share of the increased income produced by
the partnerships owning apartment projects. The increased income is a result
of improved occupancy rates, rent increases and reduced repair and maintenance
expenses.
Revenues from management fees increased $612,000 or 24% during the first
nine months of 1995 in comparison with the same period of the prior year. This
was due primarily to the recognition during the first three months of 1995 of
management fees related to prior periods. Prior to 1995, doubt as to the
collectibility of these fees existed and as a result, the fees were reserved.
However, during the first nine months of 1995, the performance of the two
multi-family projects from which the fees were due continued to improve
indicating that collection of the fees is probable and that recognition of the
prior year's fees as revenue is appropriate. In addition, IBC assigned a note
receivable from a wholly owned subsidiary of the Company to IGC in satisfaction
of past-due management fees from a multi-family project for which IBC is
responsible for deficit funding. Also contributing to the increase in
management fee revenue was $150,000 received from Equus during the first nine
months of 1995 for management and administrative support services. As
discussed in Note 4 to the September 30, 1995 consolidated financial
statements, IGC has continued to provide management and administrative support
services to Equus following the distribution of Equus Units to IGC Unitholders.
32
Management and other fees increased $212,000 to $905,000 during the three
months ended September 30, 1995 as compared to $693,000 during this same period
in 1994. This increase was due primarily to the recognition of current
management fees that were deferred during 1994 and the receipt of $50,000 from
Equus during the third quarter of 1995 for management and administrative
support services that commenced in 1995. Also contributing to the lower fees
in 1994 was the reserve of certain incentive management fees when management
determined their collection uncertain.
Equus Operations Distributed to Unitholders. As discussed in Note 4 to
the accompanying financial statements, the Company distributed 99% of its
investment in Equus to its unitholders during the first quarter of 1995.
During the nine months ended September 30, 1994, the Company recognized $7
million of revenues related to distributions from HDA, all of which was
recognized during the third quarter with the exception of $200,000. HDA
qualifies as a Puerto Rico special partnership and, as such, partners are not
liable for losses in excess of their capital investment. Since HDA's partners'
capital accounts were in a deficit at the time of the distribution, the Company
recognized $6.5 million of income from its share of the LDA note receivable
distributed by HDA. Partially offsetting this revenue was the write-off of
$1.8 million of deferred project costs. There were no comparable transactions
during 1995.
Other Income and Expenses. The Company's operations are principally
located in two offices. Costs associated with these offices including the
salaries and wages of executives and office personnel that provide management
and other services for the operating divisions are not included as reductions
to their operating income. These costs, additional general and administrative
expenses, depreciation and amortization, interest expense, interest income,
primarily from land notes receivable, and other income are reported at the
corporate level. The following table presents selected financial data for the
first nine months of 1995 and 1994:
1995 1994
---------- ----------
Interest and other income $ 409 $ 375
General and administrative expense (8,415) (6,902)
Depreciation and amortization (409) (456)
Interest expense (1,742) (1,512)
-------- -------
$(10,157) $(8,495)
======== =======
The following table presents selected financial data for the third quarter
of 1995 and 1994:
1995 1994
---------- ----------
Interest and other income $ 197 $ 188
General and administrative expense (3,523) (2,999)
Depreciation and amortization (144) (149)
Interest expense (722) (419)
------- -------
$(4,192) $(3,379)
======= =======
33
Interest and other income was $409,000 during the nine months ended
September 30, 1995, a 9% increase over this same period in 1994. Interest and
other income was $197,000 during the third quarter of 1995, a 5% increase from
the $188,000 in this same period in 1994. These increases consisted primarily
of interest earned on a larger outstanding balance during 1995 of notes
receivable from land sales.
General and administrative expenses increased $1.5 million or 22% during
the first nine months of 1995 as compared to the first nine months of 1994.
General and administrative expenses increased $524,000 or 17% during the third
quarter of 1995 as compared to the third quarter of 1994. This increase was
attributable primarily to increased legal fees associated with the grand jury
investigation. In addition, during the third quarter of 1995, management
reserved an additional $1.5 million for legal fees to defend the Company and
James J. Wilson against the Clean Water Act violations that were filed against
them as discussed in Note 7 to the accompanying financial statements.
Offsetting this increase in the third quarter of 1995 was an overall reduction
of expenses and the impact of expense recognition during the third quarter of
1994 for incentive rights granted certain officers and employees and the
exercise of unit options previously granted through the Directors and Employees
Unit Option Plans.
Depreciation and amortization expense declined $47,000 or 10% during the
first nine months of 1995 as compared to this same period in 1994. Depreciation
and amortization decreased $5,000 or 3% during the three months ended September
30, 1995 as compared to the three month period ended September 30, 1994. These
decreases were due to certain fixed assets, financing fees and similar assets
becoming fully amortized or depreciated during 1994.
Interest expense increased $230,000 or approximately 15% during the nine
months ended September 30, 1995 versus the comparable period of 1994. Interest
expense increased $303,000 or 72% during the three months ended September 30,
1995 versus this same period in 1994. These increases were attributable
primarily to the write-off of loan fees associated with debt repaid prior to
maturity and interest on increased debt partially collateralized by the Puerto
Rico land not currently under development.
Provision for Income Tax. The provision for Puerto Rico income taxes
during the nine months ended September 30, 1995 decreased to $.8 million
compared to $3 million during the first nine months of 1994 primarily due to
the recognition of taxable income in 1994, resulting from distributions
received from partnerships in Puerto Rico that refinanced their apartment
projects, and from profits on the sale of a shopping center site.
The provision for income taxes during the three months ended September 30,
1995 increased to $256,000 compared to $185,000 for the three months ended
September 30, 1994. This increase is due to the recognition for tax purposes
of intercompany interest income that for book purposes is eliminated against
the intercompany interest expense during consolidation.
FINANCING, LIQUIDITY AND RELATED MATTERS
The Company has historically met its liquidity requirements principally
from cash flow generated by home and land sales, property management fees,
distributions from HDA and residential rental partnerships and from bank
financing providing funds for development and working capital. As discussed in
Note 4, the Company will no longer receive distributions from HDA, as a result
of the Company's distribution of Equus Gaming Company L.P. ("Equus") units
34
representing a 99% limited partnership interest in Equus, to IGC Unitholders in
February 1995. In addition, under the terms of IGC's loans, most of the cash
generated by U.S. home and lot sales and distributions from partnerships,
including distributions from partnership refinancings, will be used to further
reduce bank loans and meet debt service requirements. Given these factors, the
Company's ability to generate cash for overhead, development and other uses is
limited. In addition, project financings will be necessary to fund the
continued development of land inventory to generate the necessary lot sales to
meet the Company's operating obligations. As further discussed in Note 5,
pending legal proceedings may also adversely affect the Company's liquidity,
including the timing and/or terms of any financings.
In response to the decline in the real estate markets and the decline in
the availability of financing, the Company developed a financial restructuring
plan in June 1992. Since commencing the plan, the Company has successfully
restructured all loans targeted by the plan and has reduced recourse bank debt
by $23.8 million from $69.1 million at the start of the restructuring plan to
$45.3 million at September 30, 1995.
NationsBank has agreed to extend the maturity of its loans until May 1998.
Under the agreement, the extension of the maturity beyond November 30, 1995 is
contingent upon a mandatory principal curtailment of $2.2 million which the
Company anticipates will come from the financing of the first phase of Fairway
Village in St. Charles, Maryland. Signet Bank has agreed to extend the
maturity of its loans until September 1996. The balance of the Signet loans as
of September 30, 1995 is $3.6 million. The Company anticipates it will pay off
these loans prior to their maturity with the proceeds from the sale of
residential lots which secure the loan.
A potential source of liquidity in late 1995 includes cash from four
projects in Puerto Rico which applied in March 1993 for economic incentives
under the 1990 Low-Income Housing Preservation and Resident Homeownership Act
("LIHPRHA"). Under LIHPRHA, the partnerships have the option of obtaining
additional HUD insured financing and additional subsidy funds, and distributing
net refinancing proceeds to partners, or selling the projects to non-profit
organizations which would continue the projects in HUD's low income housing
program. Management believes that the economic benefit to the Company and the
partners will be greater from a sale of the projects, in which event the
Company will endeavor to retain the right to manage the properties.
The decision to sell the projects under LIHPRHA is largely dependent on
the outcome of proposed legislation to be considered by Congress in 1995, which
could significantly reduce the proceeds available to the Company. If this
occurs, management will reconsider its decision to sell the projects under the
LIHPRHA program. It is not possible at the present time to predict the outcome
of the proposed changes to the LIHPRHA program. Should management decide not to
sell the projects under the LIHPRHA program, an alternative exit strategy would
be to convert the four projects to condominiums and sell the individual units.
If this alternative is pursued, the conversion and subsequent sale of the units
is expected to take approximately three to five years. The Company's share of
proceeds of any sales of the projects have been assigned to the FDIC and
NationsBank for repayment of debt totalling approximately $12.8 million at
September 30, 1995.
A LIHPRHA application was filed for a fifth project in Puerto Rico in
November 1994. The timetable for completing the LIHPRHA processing is
approximately two years. However, if proposed legislation is enacted,
management may withdraw the application.
35
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 22, 1993, the Company filed suit against the County
Commissioners of Charles County, Maryland in the Circuit Court for Charles
County seeking compensation for a school site that it had deeded to the County
on June 26, 1990. The Company sought a minimum of $3.2 million, equal to the
fair market value of the school site. The action sought to enforce an
agreement settling litigation between the parties that was entered into in
1989. Under the terms of that agreement, the County agreed to credit the
Company for school sites contributed and also agreed to refund to the Company
any excess school impact fees paid. In February 1994, the Circuit Court
granted the County's partial summary judgment motion and directed the Company
to file its suit for compensation in the Maryland Tax Court. The Company
appealed that decision to the Court of Special Appeals of Maryland, which
affirmed the Circuit Court's decision. The Company appealed that decision to
the Court of Appeals of Maryland, which eventually declined to review the case.
In accordance with the Circuit Court's ruling, the Company has filed for
appropriate relief in the Maryland Tax Court.
In a separate proceeding, the Company filed suit in 1990 against the
County Commissioners in the Circuit Court for Charles County to enforce a
provision of the same settlement agreement that required the County to conduct
an appropriate water and sewer connection fee study. On June 22, 1992,
judgment was rendered in favor of the Company. The judgment required the
County to conduct the appropriate water and sewer connection fee study as the
basis on which to set fees for St Charles. The County has appealed the
judgment to the Court of Special Appeals of Maryland, which affirmed the
Circuit Court's decision. The Maryland Court of Appeals declined to review the
case, and the Company is now awaiting the County's completion of the study and
seeking input into the study before it is completed.
In March 1990, the Company received a notice (the "Notice") from the U.S.
Army Corps of Engineers (the "Corps") asserting that unauthorized fill
materials had been placed in portions of an approximately five acre parcel in
Charles County, Maryland (the "Site") owned by the Company and claimed by the
Corps to constitute wetlands subject to regulation pursuant to the Clean Water
Act. Following receipt of the Notice, the Company ceased development of the
Site and remediated a portion of the Site in accordance with instructions
issued by the Corps. The Company also commenced discussions with the Corps
regarding mitigation plans that would preserve some commercial value for the
Site and filed suit against the Corps claiming that a prohibition of
development on the entire Site would constitute a governmental taking for which
the Company would be entitled to compensation.
In November 1993, the Company believed that it had an agreement in
principle with the Corps that would settle the Company's claim and permit
commercial development of a portion of the Site. However, in early 1994, the
Company became aware that this matter had been referred to the U.S. Attorney
for the District of Maryland. After conducting a lengthy investigation of the
Company's wetlands practices in St. Charles, in October 1995 a grand jury
convened by the U.S. Attorney charged that certain of the Company's practices
with respect to four parcels, including the Site, constituted criminal
violations of Section 404 of the Clean Water Act. The indictment charged each
of IGC, its affiliate, St. Charles Associates, L.P., and the Company's
Chairman, James J. Wilson. During the course of the U.S. Attorney's
investigation, the Corps issued additional violation notices relating to
36
filling portions of other parcels claimed by the Corps to be protected wetlands
and in October 1995 filed a civil action in the U.S. District Court for the
District of Maryland charging the Company and Mr. Wilson with violations of the
Clean Water Act. Of the approximately 4,400 acres developed by the Company in
St. Charles, approximately 70 acres are the subject of the civil and criminal
charges.
Through the nine months ended September 30, 1995 the Company incurred
approximately $700,000 in legal expenses and has taken a provision of
$1,500,000 for anticipated expenses related to defending against the criminal
and civil actions. No provision has been made for any fine or penalty. The
maximum statutory penalty sought under the civil action is $25,000 per day for
each of nine separate violations. Maximum statutory penalties sought against
the Company under the criminal action are $50,000 per day for each of four
felony violations or, alternatively, twice the pecuniary gain realized by the
Company from any illegal action. The U.S. Attorney also seeks to enjoin the
Company from engaging in future illegal wetlands practices.
Management believes the Company and Mr. Wilson have complied with
applicable laws relating to wetlands practices and, accordingly, the Company
and Mr. Wilson will vigorously defend against these charges and expect to
prevail.
ITEM 2. MATERIAL MODIFICATIONS OF RIGHTS OF REGISTRANT'S SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Securities and Exchange Commission Section
601 of Regulation S-K.
Exhibit
No. Description of Exhibit Reference
- ------- ----------------------------------------- --------------------------
10(a) Office Lease between Smallwood Village Filed herewith
Associates and Interstate General Company
L.P. for Smallwood Village Center dated
August 25, 1995
10(b) Amendment to Office Lease between Filed herewith
Smallwood Village Associates and
Interstate General Company L.P. for
Smallwood Village Center dated
September 5, 1995
37
10(c) Lease Amendment to Lease for commercial Filed herewith
space between Smallwood Village Associates
and Interstate General Company L.P.
dated October 1, 1991
10(d) Lease Amendment II to Lease for commercial Filed herewith
space between Smallwood Village Associates
and Interstate General Company L.P.
dated September 5, 1995
10(e) Store Lease between Smallwood Village Filed herewith
Associates and Interstate General
Company L.P. dated December 1, 1987
10(f) Lease Amendment to Store Lease between Filed herewith
Smallwood Village Associates and
Interstate General Company L.P. dated
February 1, 1989
10(g) Lease Amendment II to Store Lease Filed herewith
between Smallwood Village Associates
and Interstate General Company L.P.
dated December 1, 1992
10(h) Lease Amendment III to Store Lease Filed herewith
between Smallwood Village Associates
and Interstate General Company L.P.
dated September 30, 1994
10(i) Lease Amendment IV to Store Lease Filed herewith
between Smallwood Village Associates
and Interstate General Company L.P.
dated September 5, 1995
10(j) Agreement of Sale between Land Development Filed herewith
Associates S.E. and Twenty First Century
Homes S.E. dated September 8, 1995
10(k) Option Agreement between Land Development Filed herewith
Associates S.E. and Compri Caribe
Hospitality Corp. dated March 31, 1995
10(l) Amendment to Option Agreement between Filed herewith
Land Development Associates S.E. and
Compri Caribe Hospitality Corp. dated
November 13, 1995.
(b) None.
38
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERSTATE GENERAL COMPANY L.P.
-------------------------------
(Registrant)
By: Interstate General Management
Corporation
Managing General Partner
Dated: November 14, 1995 By: /s/ James J. Wilson
------------------- -----------------------------
James J. Wilson
Chairman, President and Chief
Executive Officer
Dated: November 14, 1995 By: /s/ John E. Hans
------------------- -----------------------------
John E. Hans
Senior Vice President and
Chief Financial Officer
39
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -------
10(a) Office Lease between Smallwood Village Associates and Interstate
General Company L.P. for Smallwood Village Center dated August
25, 1995
10(b) Amendment to Office Lease between Smallwood Village Associates
and Interstate General Company L.P. for Smallwood Village Center
dated September 5, 1995
10(c) Lease Amendment to Lease for commercial space between Smallwood
Village Associates and Interstate General Company L.P. dated
October 1, 1991
10(d) Lease Amendment II to Lease for commercial space between
Smallwood Village Associates and Interstate General Company L.P.
dated September 5, 1995
10(e) Store Lease between Smallwood Village Associates and Interstate
General Company L.P. dated December 1, 1987
10(f) Lease Amendment to Store Lease between Smallwood Village
Associates and Interstate General Company L.P. dated February 1,
1989
10(g) Lease Amendment II to Store Lease between Smallwood Village
Associates and Interstate General Company L.P. dated December 1,
1992
10(h) Lease Amendment III to Store Lease between Smallwood Village
Associates and Interstate General Company L.P. dated September
30, 1994
10(i) Lease Amendment IV to Store Lease between Smallwood Village
Associates and Interstate General Company L.P. dated September
5, 1995
10(j) Agreement of Sale between Land Development Associates S.E. and
Twenty First Century Homes S.E. dated September 8, 1995
10(k) Option Agreement between Land Development Associates S.E. and
Compri Caribe Hospitality Corp. dated March 31, 1995
10(l) Amendment to Option Agreement between Land Development
Associates S.E. and Compri Caribe Hospitality Corp. dated
November 13, 1995.