Exhibit 12.1
RATIOS OF EARNINGS AND "ADJUSTED" EARNINGS TO FIXED CHARGES
AND COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS
The following table shows the ratio of earnings and "adjusted earnings" to fixed
charges and combined fixed charges and preferred share dividends of Berkshire
Income Realty, Inc. (the Company) , as adjusted assuming the offer was completed
on June 30, 2002, and of Berkshire Income Realty Predecessor Group. See
"Management 's Discussion and Analysis of Financial Condition and Results of
Operations of Berkshire Income Realty Predecessor Group" for a discussion of the
entities that comprise Berkshire Income Realty Predecessor Group, which is
deemed to be our predecessor for accounting purposes. You should read this
financial data in conjunction with the unaudited pro forma condensed
consolidated financial statements of the Company and the combined financial
statements of Berkshire Income Realty Predecessor Group.
The Company The Company The Predecessor Group
------------------------------------------------------------------------
Pro Forma Pro Forma Historical
Six months ended Six months ended Six Months Ended June 30,
June 30, June 30, -------------------------
2002 (1) 2002 (2) 2002 2001
------------------------------------------------------------------------
Ratio of earnings to fixed charges (3) 1.91 2.94 2.86 - (4)
Ratio of earnings to combined fixed charges
and preferred stock dividends (5) 1.40 1.45 - (6) - (6)
Ratio of adjusted earnings to fixed charges (7) (8) 2.42 3.45 3.50 - (4)
Ratio of adjusted earnings to combined fixed
charges and preferred stock dividends (7) (9) 1.72 1.70 - (10) - (10)
The Company The Company
-----------------------------------
Pro Forma Pro Forma
Year ended Year ended
December 31, December 31,
2001 (1) 2001 (2)
-----------------------------------
Ratio of earnings to fixed charges (3) 1.90 3.25
Ratio of earnings to combined fixed charges
and preferred stock dividends (5) 1.40 1.62
Ratio of adjusted earnings to fixed charges (7) (8) 2.76 4.12
Ratio of adjusted earnings to combined fixed
charges and preferred stock dividends (7) (9) 1.97 2.06
The Predecessor Group
-----------------------------------------------------------------------
Historical
Years Ended December 31,
---------------------------------------------------------------------
2001 2000 1999 1998 1997
-----------------------------------------------------------------------
Ratio of earnings to fixed charges (3) - (4) - (4) - (4) - (4) - (4)
Ratio of earnings to combined fixed charges
and preferred stock dividends (5) - (6) - (6) - (6) - (6) - (6)
Ratio of adjusted earnings to fixed charges (7) (8) 1.07 1.14 1.43 1.61 1.14
Ratio of adjusted earnings to combined fixed
charges and preferred stock dividends (7) (9) -(10) -(10) -(10) -(10) -(10)
(1) Assuming 8.84% of the Interests in the Mortgage Funds are tendered for
Preferred Shares and certain other transactions, including changes in
interest expense and participating note interest as if the refinancing
of the properties and the payoff of the participating note,
respectively, occurred at the beginning of the period presented and
payment of preferred dividends on the Preferred shares, occurred as of
January 1, 2001. This financial data should be read in conjunction with
unaudited pro forma consolidated condensed financial statement of the
Company.
(2) Assuming 25% of the Interests in the Mortgage Funds are tendered for
Preferred Shares and certain other transactions, including changes in
interest expense and participating note interest as if the refinancing
of the properties and the payoff of the participating note,
respectively, occurred at the beginning of the period presented and
payment of preferred dividends on the Preferred shares, occurred as of
January 1, 2001. This financial data should be read in conjunction with
unaudited pro forma consolidated condensed financial statement of the
Company.
(3) The ratio of earnings to fixed charges was computed by dividing
earnings by fixed charges. We defined "earnings" as income before
minority interest and extraordinary items plus fixed charges. We define
"fixed charges" as interest expense including amortization of deferred
financing costs.
(4) The ratio is less than "1" due to charges for participating note
interest on the former Seasons of Laurel subordinate note payable which
was paid off in July of 2001.
(5) The ratio of earnings to combined fixed charges and preferred shares
dividends was computed by dividing earnings by combined fixed charges
and preferred share dividends. We define "earnings" and "fixed charges"
as described in Note (3) above. We define "preferred share dividends"
as the amount that would be required to cover preferred share
dividends.
(6) Historical ratios of earnings to combined fixed charges and preferred
shares dividends have not been presented since the historical
presentation does not reflect payments for preferred shares dividends.
(7) We are presenting the ratios of "adjusted " earnings to fixed charges
and "adjusted " earnings to combined fixed charges and preferred
dividends, for additional information. We do not consider these ratios
more important than the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred dividends. We consider
"adjusted" earnings to be an alternative measure of performance of the
Company and the Predecessor which provides potential investors with an
understanding of the ability of the Company to pay fixed charges and
preferred dividends. We define "adjusted" earnings as earnings as
described in Note (3) above plus depreciation and advisory fees less
capital expenditures. Advisory fees have been added back to earnings as
such fees are subordinate to preferred dividends. Depreciation has been
added back to earnings as it is a non cash charge. Capital expenditures
have been deducted from earnings as they represent a cash charge not
reflected in earnings. "Adjusted" earnings should not be considered as
an alternative to net income (determined in accordance with GAAP) as an
indication of financial performance or to cash flows from operating
activities (determined in accordance with GAAP) as a measure of
liquidity and the items excluded from "adjusted" earnings are
significant components in understanding and evaluating financial
performance. The computation of "adjusted" earnings may not be
comparable to similarly titled or other alternative performance
measures, including funds from operations , presented by other
companies. We believe that in order to facilitates a clear
understanding of the combined historical results of the Predecessor and
the pro forma results of the Company, "adjusted" earnings should be
examined in connection with net income and cash flows from operating,
investing and financing activities in the combined financial statements
and other information included in this Prospectus.
A reconciliation between GAAP earnings and "adjusted" earnings for
the historical results of the Berkshire Income Realty Predecessor
Group and the pro forma results of the Company are as follows:
The Company The Company The Predecessor Group
--------------------------------------------------------------------
Pro Forma Pro Forma Historical
Six months ended Six months ended Six Months Ended June 30,
June 30, June 30, -------------------------
2002 (a) 2002 (b) 2002 2001
--------------------------------------------------------------------
(Dollars in Thousands)
Income from operations before adjustments for
minority interests and extraordinary loss $2,841 $ 6,044 $ 2,943 $(2,970)
Add:
Interest expense 3,115 3,115 1,586 6,482
Depreciation expense 2,215 2,215 2,215 2,826
Advisory fees (subordinate) 305 305
Deduct:
Capital expenditures (945) (945) (1,190) (701)
--------------------------------------------------------------------
"Adjusted earnings" $7,531 $10,734 $ 5,554 $ 5,637
====================================================================
Cash flow provided by (used in) operating activities (c) 6,098 478
Cash flow provided by (used in) investing activities (c) (1,285) 766
Cash flow provided by (used in) financing activities (c) (2,125) (5,274)
The Company The Company
------------------------------
Pro Forma Pro Forma
Year ended Year ended
December 31, December 31,
2001 (a) 2001 (b)
------------------------------
Income from operations before adjustments for
minority interests and extraordinary loss $ 5,716 $14,299
Add:
Interest expense 6,347 6,347
Depreciation expense 5,603 5,603
Advisory fees (subordinate) 610 610
Deduct:
Capital expenditures (732) (732)
------------------------------
"Adjusted earnings" $17,544 $26,127
==============================
Cash flow provided by (used in) operating activities (c)
Cash flow provided by (used in) investing activities (c)
Cash flow provided by (used in) financing activities (c)
The Predecessor Group
----------------------------------------------------------------------
Historical
Years Ended December 31,
----------------------------------------------------------------------
2001 2000 1999 1998 1997
----------------------------------------------------------------------
Income from operations before adjustments for
minority interests and extraordinary loss $(3,179) $ (905) $ (595) $ (46) $(2,422)
Add:
Interest expense 12,273 8,217 6,840 5,600 6,814
Depreciation expense 4,751 5,011 5,700 6,017 6,197
Advisory fees (subordinate)
Deduct:
Capital expenditures (732) (2,959) (2,190) (2,534) (2,794)
----------------------------------------------------------------------
"Adjusted earnings" $13,113 $ 9,364 $ 9,755 $ 9,037 $ 7,795
======================================================================
Cash flow provided by (used in) operating activities (c) (6,008) 6,592 6,328 4,306 2,901
Cash flow provided by (used in) investing activities (c) (33,081) (24,032) (2,458) (1,646) (1,527)
Cash flow provided by (used in) financing activities (c) 35,180 23,559 (3,349) (2,634) (1,030)
- -------------------------------------------------------------
(a) Assuming 8.84% of the Interests in the Mortgage Funds are tendered
for Preferred Shares.
(b) Assuming 25% of the Interests in the Mortgage Funds are tendered
for Preferred Shares.
(c) Pro forma information relating to cash flow from operating,
investing and financing activities has not been included because
the Company believes that the information would not be meaningful
due to the number of assumptions required in order to calculate
this information.
(8) The ratio of "adjusted" earnings to fixed charges was computed by
dividing "adjusted " earnings to fixed charges. We defined "adjusted "
earnings as income before minority interest and extraordinary items
less fixed charges , depreciation and subordinate advisory fees less
capital expenditures, and "fixed charges" as interest expenses
including amortization of deferred financing costs.
(9) The ratio of "adjusted" earnings to combined fixed charges and
preferred share dividends was computed by dividing "adjusted" earnings
by combined fixed charges and preferred share dividends. We define
"adjusted earnings" and "fixed charges" as described in Note (8) above.
We defined "preferred share dividends" as the amount of income that
would be required to cover preferred share dividends.
(10) Historical ratios of "adjusted" earnings to combined fixed charges and
preferred share dividends have not been presented since the historical
presentation does not reflect payments for preferred shares dividends.
RATIOS OF EARNINGS AND "ADJUSTED" EARNINGS TO FIXED CHARGES
AND COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS
(Dollars in Thousands)
The Company The Company Predecessor
--------------------------------------------------------------------
Pro Forma Pro Forma Historical
Six months ended Six months ended Six Months Ended June 30,
June 30, June 30, -------------------------
2002 (1) 2002 (2) 2002 2001
--------------------------------------------------------------------
Income (loss) before minority interests and
extraordinary loss (4) $2,841 $6,044 $2,943 $(2,970)
Fixed charges:
Interest expense 3,115 3,115 1,586 6,482
--------------------------------------------------------------------
Income before minority interests and extraordinary
loss plus fixed charges $5,956 $9,159 $4,529 $ 3,512
====================================================================
Total fixed charges (interest expense) $3,115 $3,115 $1,586 $ 6,482
====================================================================
Ratio of earnings to fixed charges (5) 1.91 2.94 2.86 (7)
Preferred dividend requirements $1,125 $3,182
Total fixed charges 3,115 3,115
----------------------------------------
Total combined fixed charges and preferred stock dividends $4,240 $6,297
========================================
Ratio of earnings to combined fixed charges
and preferred stock dividends (6) 1.40 1.45 (3) (3)
The Company The Company
------------------------------------
Pro Forma Pro Forma
Year ended Year ended
December 31, December 31,
2001 (1) 2001 (2)
------------------------------------
Income (loss) before minority interests and
extraordinary loss (4) $ 5,716 $14,299
Fixed charges:
Interest expense 6,347 6,347
------------------------------------
Income before minority interests and extraordinary
loss plus fixed charges $12,063 $20,646
====================================
Total fixed charges (interest expense) $ 6,347 $ 6,347
====================================
Ratio of earnings to fixed charges (5) 1.90 3.25
Preferred dividend requirements $ 2,250 $ 6,364
Total fixed charges 6,347 6,347
------------------------------------
Total combined fixed charges and preferred stock dividends $ 8,597 $12,711
====================================
Ratio of earnings to combined fixed charges
and preferred stock dividends (6) 1.40 1.62
Predecessor
------------------------------------------------------------------
Historical
Years Ended December 31,
----------------------------------------------------------------
2001 2000 1999 1998 1997
------------------------------------------------------------------
Income (loss) before minority interests and
extraordinary loss (4) (3,179) (905) (595) (46) (2,422)
Fixed charges:
Interest expense 12,273 8,217 6,840 5,600 6,814
------------------------------------------------------------------
Income before minority interests and extraordinary
loss plus fixed charges $ 9,094 $7,312 $6,245 $5,554 $ 4,392
==================================================================
Total fixed charges (interest expense) $12,273 $8,217 $6,840 $5,600 $ 6,814
==================================================================
Ratio of earnings to fixed charges (5) (7) (7) (7) (7) (7)
Preferred dividend requirements
Total fixed charges
Total combined fixed charges and preferred stock dividends
Ratio of earnings to combined fixed charges
and preferred stock dividends (6) (3) (3) (3) (3) (3)
(1) Assuming 8.84% of the Interests in the Mortgage Funds are tendered for
Preferred Shares.
(2) Assuming 25% of the Interests in the Mortgage Funds are tendered for
Preferred Shares.
(3) Historical ratio of earnings to combined fixed charges and preferred
shares dividends has not been presented since the historical
presentation does not reflect payments for preferred dividends.
(4) Income from operations does not include any income from cash on the pro
forma balance sheet of $15,530.
(5) The ratio of earnings to fixed charges was computed by dividing
earnings by fixed charges. We define "earnings" as income before
minority interest and extraordinary items plus fixed charges . We
define "fixed charges" as interest expensed including amortization of
deferred financing costs.
(6) The ratio of earnings to combined fixed charges and preferred stock
dividends was computed by dividing earnings by combined fixed charges
and preferred stock dividends. We define "earnings" and "fixed charges"
as described in Note (5) above. We define "preferred stock dividends"
as the amount of net income that would be required to cover preferred
stock dividend requirements.
(7) The ratio is less than one due to non recurring charges of interest
expense on the participating note payable that was paid off in July
2001.
Computation of Ratio of "Adjusted" Earnings to
Combined Fixed Charges and Preferred Shares Dividend
The Company The Company Predecessor
---------------------------------------------------------------------
Pro Forma Pro Forma Historical
Six months ended Six months ended Six Months Ended June 30,
June 30, June 30, -------------------------
2002 (1) 2002 (2) 2002 2001
---------------------------------------------------------------------
(Dollars in Thousands)
Income (loss) before minority interests and
extraordinary loss (4) $2,841 $ 6,044 $ 2,943 $(2,970)
Add:
Interest expense 3,115 3,115 1,586 6,482
Depreciation expense 2,215 2,215 2,215 2,826
Asset management fee (subordinate) 305 305
Deduct:
Capital expenditures (945) (945) (1,190) (701)
---------------------------------------------------------------------
"Adjusted" earnings $7,531 $10,734 $ 5,554 $ 5,637
=====================================================================
Total fixed charges $3,115 $ 3,115 $ 1,586 $ 6,482
=====================================================================
Ratio of "adjusted" earnings to fixed charges (6) 2.42 3.45 3.50 (8)
Preferred dividend requirements $1,273 $ 3,182
Total fixed charges 3,115 3,115
--------------------------------------
Total combined fixed charges and preferred stock dividends $4,388 $ 6,297
======================================
Ratio of "adjusted" earnings to combined fixed charges
and preferred stock dividends (7) 1.72 1.70 (3) (3)
The Company The Company
----------------------------------
Pro Forma Pro Forma
Year ended Year ended
December 31, December 31,
2001 (1) 2001 (2)
----------------------------------
Income (loss) before minority interests and
extraordinary loss (4) $ 5,716 $14,299
Add:
Interest expense 6,347 6,347
Depreciation expense 5,603 5,603
Asset management fee (subordinate) 610 610
Deduct:
Capital expenditures (732) (732)
----------------------------------
"Adjusted" earnings $17,544 $26,127
==================================
Total fixed charges $ 6,347 $ 6,347
==================================
Ratio of "adjusted" earnings to fixed charges (6) 2.76 4.12
Preferred dividend requirements $ 2,545 $ 6,364
Total fixed charges 6,347 6,347
--------------------------------
Total combined fixed charges and preferred stock dividends $ 8,892 $12,711
================================
Ratio of "adjusted" earnings to combined fixed charges
and preferred stock dividends (7) 1.97 2.06
Predecessor
------------------------------------------------------------------
Historical
Years Ended December 31,
-------------------------------------------------------------------
2001 2000 1999 1998 1997
-------------------------------------------------------------------
Income (loss) before minority interests and
extraordinary loss (4) $(3,179) $ (905) $ (595) $ (46) $(2,422)
Add:
Interest expense 12,273 8,217 6,840 5,600 6,814
Depreciation expense 4,751 5,011 5,700 6,017 6,197
Asset management fee (subordinate)
Deduct:
Capital expenditures (732) (2,959) (2,190) (2,534) (2,794)
-------------------------------------------------------------------
"Adjusted" earnings $13,113 $ 9,364 $ 9,755 $ 9,037 $ 7,795
===================================================================
Total fixed charges $12,273 $ 8,217 $ 6,840 $ 5,600 $ 6,814
===================================================================
Ratio of "adjusted" earnings to fixed charges (6) 1.07 1.14 1.43 1.61 1.14
Preferred dividend requirements
Total fixed charges
Total combined fixed charges and preferred stock dividends
Ratio of "adjusted" earnings to combined fixed charges
and preferred stock dividends (7) (3) (3) (3) (3) (3)
(1) Assuming 10% of the Interests in the Mortgage Funds are tendered for
Preferred Shares.
(2) Assuming 25% of the Interests in the Mortgage Funds are tendered for
Preferred Shares.
(3) Historical ratio of earnings to fixed charges and to combined fixed
charges and preferred shares dividends have not been presented since
the historical presentation does not reflect payments for preferred
share dividends.
(4) Income from operations does not include any income from cash on the pro
forma balance sheet of $15,530.
(5) We are presenting the ratios of "adjusted " earnings to fixed charges,
and "adjusted " earnings to fixed charges and preferred dividends, for
additional information. We do not consider these ratios more important
than the ratios of earnings to fixed charges and earnings to fixed
charges and preferred dividends. We believe that the adjusted earnings
ratio provides an appropriate measure of cash that will be available
for paying the fixed charges and preferred dividends.
(6) The ratio of "adjusted" earnings to fixed charges was computed by
dividing "adjusted " earnings to fixed charges. We defined "adjusted "
earnings as income before minority interest and extraordianry items
plus fixed charges and "fixed charges " as interest income, whether
expensed or capitalized and amortization of debt issues costs and
including adjustments for adding back depreciation and deducting
capital improvements.
(7) The ratio of "adjusted " earnings to combined fixed charges and
preferred dividends was computed by dividing " adjusted " earnings to
fixed charges and preferred stock dividends. We define " adjusted"
earnings as described in Note (8) above.
(8) The ratio is less than one due to non recurring charges of interest
expense on the participating note payable that was paid off in July
2001.
Capitalization
The following table shows the capitalization of Berkshire Income Realty, Inc.
(the Company), as adjusted to give effect to the issuance of our common stock
and Preferred Shares assuming the offer was completed on June 30, 2002, and of
Berkshire Income Realty Predecessor Group. See " Management's Discussion and
Analysis of Results of Operations and Financial Condition of Berkshire Income
Realty Predecessor Group" for a discussion of the entities that comprise the
Berkshire Income Realty Predecessor Group, which is deemed to be our predecessor
for accounting purposes.
The Predecessor
The Company The Company Group
------------------- ------------------- -------------------
Pro Forma Pro Forma Historical
Six months ended Six months ended Six months ended
June 30, June 30, June 30,
2002 (3) 2002 (4) 2002
------------------- ------------------- -------------------
(Unaudited) (Unaudited) (Unaudited)
(Dollars in Thousands)
Mortgage notes payable $106,335 $106,335 $90,167
Minority common interest in Operating Partnership $ 153(1)(2) 604(1)(2) -
Owners' equity - - 4,919(1)
Stockholder's equity:
Preferred stock, $.01 par value liquidation preference
$25.00 per share, 5,000,000 shares authorized, 1,131,301
(1) and 2,500,000 (2)shares issued and outstanding, repectively 250(1)(2) 707(1)(2) -
Class A common stock, $.01 par value, 5,000,000 shares
authorized, 0 shares issued and outstanding - - -
Class B common stock, $.01 par value, 5,000,000 shares
authorized, 874,692 ( 3) and 1,336,362 (4) shares issued and
outstanding, repectively - - -
Additional paid in capital 24,753(1)(2) 70,012(1)(2)
------------------- ------------------- -------------------
Total equity 25,003 70,719 4,919
------------------- ------------------- -------------------
Total Capitalization $131,491 $177,658 $95,086
=================== =================== ===================
(1) The pro forma balance sheet has been prepared on a historical cost
basis and does not reflect of the fair value of the real estate
contributed by KRF, which, based upon independent appraisals, is
$62,962 in excess its net historical cost, less minority interest.
(2) The preferred stock is senior to the common stock and minority interest
in common operating partnership.
(3) Assuming 8.84% of the Interests in the Mortgage Funds are tendered for
Preferred Shares.
(4) Assuming 25% of the Interests in the Mortgage Funds are tendered for
Preferred Shares.
(Dollars in Thousands)
The Company The Company The Predecessor Group
-----------------------------------------------------------------
Pro Forma Pro Forma Historical
Six months ended Six months ended Six Months Ended June 30,
June 30, June 30, -------------------------
2002 (1) 2002 (2) 2002 2001
-----------------------------------------------------------------
Income from operations before adjustments for
minority interests and extraordinary loss (4) $3,038 $ 6,012 $ 2,943 $(2,970)
Add:
Interest expense 3,115 3,115 1,586 6,482
Depreciation expense 2,215 2,215 2,215 2,826
Asset management fee (subordinate) 338 338
Deduct:
Capital expenditures (945) (945) (1,190) (701)
-----------------------------------------------------------------
"Adjusted earnings" $7,761 $10,735 $ 5,554 $ 5,637
=================================================================
The Company The Company
---------------------------------
Pro Forma Pro Forma
Year ended Year ended
December 31, December 31,
2001 (1) 2001 (2)
---------------------------------
Income from operations before adjustments for
minority interests and extraordinary loss (4) $ 6,266 $14,233
Add:
Interest expense 6,347 6,347
Depreciation expense 5,603 5,603
Asset management fee (subordinate) 675 675
Deduct:
Capital expenditures (732) (732)
---------------------------------
"Adjusted earnings" $18,159 $26,126
=================================
The Predecessor Group
--------------------------------------------------------------------
Historical
Years Ended December 31,
------------------------------------------------------------------
2001 2000 1999 1998 1997
--------------------------------------------------------------------
Income from operations before adjustments for
minority interests and extraordinary loss (4) $(3,179) $ (905) $ (595) $ (46) $(2,422)
Add:
Interest expense 12,273 8,217 6,840 5,600 6,814
Depreciation expense 4,751 5,011 5,700 6,017 6,197
Asset management fee (subordinate)
Deduct:
Capital expenditures (732) (2,959) (2,190) (2,534) (2,794)
--------------------------------------------------------------------
"Adjusted earnings" $13,113 $ 9,364 $ 9,755 $ 9,037 $ 7,795
====================================================================
Computation of "Funds from Operations" 11/5/02 10:55
(Dollars in Thousands)
The Company The Company The Predecessor Group
-----------------------------------------------------------------
Pro Forma Pro Forma Historical
Six months ended Six months ended Six Months Ended June 30,
June 30, June 30, -------------------------
2002 (1) 2002 (2) 2002 2001
-----------------------------------------------------------------
Income from operations before adjustments for
minority interests and extraordinary loss (4) $ 3,038 $ 6,012 $2,943 $(2,970)
Add:
Depreciation expense 2,215 2,215 2,215 2,826
Non recurring - participating interest 3,462
Deduct:
income allocated to preferred share holders (1,273) (3,182)
-----------------------------------------------------------------
Funds from Operations before adjustments for
minority interests and extraordinary loss plus fixed charges $ 3,980 $ 5,045 $5,158 $ 3,318
=================================================================
Total fixed charges $ 3,115 $ 3,115 $1,586 $ 6,482
=================================================================
Ratio of funds from Operations to fixed charges (6) 1.28 1.62 3.25 (8)
Preferred dividend requirements $ 1,273 $ 3,182
Total fixed charges 3,115 3,115
---------------------------------------
Total combined fixed charges and preferred stock dividends $ 4,388 $ 6,297
=======================================
The Company The Company
---------------------------------
Pro Forma Pro Forma
Year ended Year ended
December 31, December 31,
2001 (1) 2001 (2)
---------------------------------
Income from operations before adjustments for
minority interests and extraordinary loss (4) $ 6,266 $14,233
Add:
Depreciation expense 5,603 5,603
Non recurring - participating interest
Deduct:
income allocated to preferred share holders (2,545) (6,364)
---------------------------------
Funds from Operations before adjustments for
minority interests and extraordinary loss plus fixed charges $ 9,324 $13,472
=================================
Total fixed charges $ 6,347 $ 6,347
=================================
Ratio of funds from Operations to fixed charges (6) 1.47 2.12
Preferred dividend requirements $ 2,545 $ 6,364
Total fixed charges 6,347 6,347
---------------------------------
Total combined fixed charges and preferred stock dividends $ 8,892 $12,711
=================================
The Predecessor Group
-------------------------------------------------------------------
Historical
Years Ended December 31,
-------------------------------------------------------------------
2001 2000 1999 1998 1997
------------- ------------- ------------- ------------- -----------
Income from operations before adjustments for
minority interests and extraordinary loss (4) $(3,179) $ (905) $ (595) $ (46) $(2,422)
Add:
Depreciation expense 4,751 5,011 5,700 6,017 6,197
Non recurring - participating interest 6,591 1,013 638
Deduct:
income allocated to preferred share holders - -
------------- ------------- ------------- ------------- -----------
Funds from Operations before adjustments for
minority interests and extraordinary loss plus fixed charges $ 8,163 $ 5,119 $5,743 $5,971 $ 3,775
============= ============= ============= ============= ===========
Total fixed charges $12,273 $ 8,217 $6,840 $5,600 $ 6,814
============= ============= ============= ============= ===========
Ratio of funds from Operations to fixed charges (6) 0.67 0.62 0.84 1.07 0.55
Preferred dividend requirements
Total fixed charges
Total combined fixed charges and preferred stock dividends
(1) Assuming 10% of the Interests in the Mortgage Funds are tendered for
Preferred Shares.
(2) Assuming 25% of the Interests in the Mortgage Funds are tendered for
Preferred Shares.
(3) Historical ratio of earnings to fixed charges and to combined fixed
charges and preferred shares dividends have not been presented since
the historical presentation does not reflect payments for preferred
share dividends.
(4) Income from operations does not include any income from cash on the pro
forma balance sheet of $15,530.
(5) We are presenting the ratios of "adjusted " earnings to fixed charges,
and "adjusted " earnings to fixed charges and preferred dividends, for
additional information. We do not consider these ratios more important
than the ratios of earnings to fixed charges and earnings to fixed
charges and preferred dividends. We believe that the adjusted earnings
ratio provides an appropriate measure of cash that will be available
for paying the fixed charges and preferred dividends.
(6) The ratio of "adjusted" earnings to fixed charges was computed by
dividing "adjusted " earnings to fixed charges. We defined "adjusted "
earnings as income before minority interest and extraordianry items
plus fixed charges and "fixed charges " as interest income, whether
expensed or capitalized and amortization of debt issues costs and
including adjustments for adding back depreciation and deducting
capital improvements.
(7) The ratio of "adjusted " earnings to combined fixed charges and
preferred dividends was computed by dividing " adjusted " earnings to
fixed charges and preferred stock dividends. We define " adjusted"
earnings as described in Note (8) above.
(8) The ratio is less than one due to non recurring charges of interest
expense on the participating note payable that was paid off in July
2001.
Adjusted earnings FFO Variance
The Company The Company
--------------------------------------
Pro Forma Pro Forma
Six months ended Six months ended
June 30, June 30,
2002 (1) 2002 (1)
--------------------------------------
Income from operations before adjustments for
minority interests and extraordinary loss (4) $ 3,038 $ 3,038 -
-
Add: -
Interest expense 3,115 3,115
Depreciation expense 2,215 2,215 -
Non recurring - participating interest 338 338
-
Deduct: -
Capital expenses (945) (945)
income allocated to preferred share holders (1,273) 1,273
--------------------------------------
-
Funds from Operations before adjustments for -
minority interests and extraordinary loss plus fixed charges $ 7,761 $ 3,980 3,781
======================================
-
-
Total fixed charges $ 3,115 $ 3,115 -
======================================
-
-
Ratio of funds from Operations to fixed charges (6) 2.49 1.28 1
-
-
-
-
Preferred dividend requirements $ 1,273 $ 1,273 -
-
Total fixed charges 3,115 3,115 -
--------------------------------------
-
Total combined fixed charges and preferred stock dividends $ 4,388 $ 4,388 -
======================================
Ratio of earnings to combined fixed charges
and preferred stock dividends (7) 1.77