1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 November 30, 1995 ---------------------------------------------------------------- Date of Report (Date of Earliest Event Reported) CONTINENTAL MORTGAGE AND EQUITY TRUST ---------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) California 0-10503 94-2738844 - -------------------------------------------------------------------------------- (State of Incorporation) (Commission (IRS Employer File No.) Identification No.) 10670 North Central Expressway, Suite 300, Dallas, TX 75231 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (214) 692-4700 ---------------------- Not Applicable -------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 1 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS This Form 8-K/A amends a Form 8-K Current Report dated November 30, 1995 and filed December 27, 1995 by Continental Mortgage and Equity Trust (the "Trust") and provides required financial statements that were not available at the date of the original filing. (a) Pro forma financial information: Pro forma statements of operations are presented for the year ended December 31, 1994 and the nine months ended September 30, 1995. A pro forma balance sheet as of September 30, 1995 is also presented. A summary of the pro forma transactions follows: In November 1995, the Trust purchased Willow Wick Apartments, a 104 unit apartment complex in North Augusta, South Carolina for $1.5 million, exclusive of commissions and closing costs. The Trust paid $595,000 in cash and assumed the existing first mortgage in the amount of $930,000. The mortgage bears interest at a rate of 7% per annum, requires monthly payments of principal and interest of $8,000 and matures in January 2013. In December 1995, the Trust purchased Heritage on the River Apartments, a 301 unit apartment complex in Jacksonville, Florida for $7.9 million, exclusive of commissions and closing costs. The Trust paid $1.4 million in cash, assumed the existing first mortgage in the amount of $6.3 million and the seller provided additional financing in the amount of $193,000. The mortgages bear interest at a variable rate, currently 9.18% per annum, require monthly payments of interest only and mature in December 1998. The combined $9.4 million purchase price of Willow Wick and Heritage on the River Apartments is approximately 5.1% of the Trust's consolidated assets at December 31, 1994. Although not a significant acquisition in themselves, when aggregated with the other acquisitions completed by the Trust in 1995 as described below, such acquisitions constitute a significant acquisition. In addition to the Willow Wick and Heritage on the River Apartments acquisitions discussed above, the Trust purchased two other apartment complexes and two commercial properties in 1995. The properties, located in Virginia, Texas and Florida, were purchased for a total of $26.0 million in separate transactions from unaffiliated sellers, and represent approximately 14.2% of the Trust's consolidated assets at December 31, 1994. The Trust paid a total of $5.1 million in cash and financed the remainder of the purchase prices. The mortgages bear interest at rates ranging from 6.0% to 9.9% and mature from 1997 to 2002. The pro forma statements of operations present the Trust's operations as if the transactions described above had occurred at the beginning of each of the periods presented. 2 3 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (b) Financial statements of property acquired: Exhibit Number Description - ------- --------------------------------------------------------------------------------------------------------- 99.0 Heritage on the River Apartments Audited Statement of Revenues and Direct Operating Expenses for the year ended December 31, 1994. 99.1 Willow Wick Apartments Audited Financial Statements for the year ended December 31, 1994. 3 4 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1995 Heritage on Willow Wick the River Actual Apartments(1) Apartments(1) Pro forma ---------- ---------- ---------- ----------- (dollars in thousands) Assets ------ Notes and interest receivable Performing..................... $ 4,344 $ - $ - $ 4,344 Nonperforming, nonaccruing..... 4,456 - - 4,456 ----------- ---------- -------- ---------- 8,800 - - 8,800 Real estate held for sale, net of accumulated depreciation....... 25,333 - - 25,333 Less - allowance for estimated losses......................... (9,207) - - (9,207) ----------- ---------- -------- ---------- 24,926 - - 24,926 Real estate held for investment, net of accumulated depreciation 150,024 1,525 7,940 159,489 Investments in marketable equity securities of affiliates, at market......................... 4,824 - - 4,824 Investments in partnerships..... 12,248 - - 12,248 Cash and cash equivalents....... 6,954 (595) (1,439) 4,920 Other assets.................... 5,665 - - 5,665 ----------- ---------- -------- ---------- $ 204,641 $ 930 $ 6,501 $ 212,072 =========== ========== ======== ========== 4 5 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA CONSOLIDATED BALANCE SHEET - Continued SEPTEMBER 30, 1995 Heritage on Willow Wick the River Actual Apartments(1) Apartments(1) Pro forma ---------- ---------- ---------- ----------- (dollars in thousands) Liabilities and Shareholders' Equity - ------------------------------------ Liabilities Notes and interest payable....... $ 121,920 $ 930 $ 6,501 $ 129,351 Other liabilities................ 5,848 - - 5,848 ----------- ------------ ---------- ---------- 127,768 930 6,501 135,199 Commitments and contingencies Shareholders' equity Shares of Beneficial Interest, no par value; authorized shares, unlimited; issued and out- standing, 2,918,100 shares...... 8,766 - - 8,766 Paid-in capital.................. 260,060 - - 260,060 Accumulated distributions in excess of accumulated earnings. (195,053) - - (195,053) Net unrealizable gains on market- able equity securities.......... 3,100 - - 3,100 ----------- ------------ ---------- ---------- 76,873 - - 76,873 ----------- ------------ ---------- ---------- $ 204,641 $ 930 $ 6,501 $ 212,072 =========== ============ ========== ========== - --------------------------------- (1) Assumes acquisition of Willow Wick and Heritage on the River Apartments by the Trust on January 1, 1995. The effects of all other 1995 property purchases are included in the September 30, 1995 actual balances. 5 6 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1995 Heritage on Willow Wick the River Other Property Actual Apartments(1) Apartments(1) Acquisitions(1) Pro forma ---------- ----------- ---------- ------------ ------------- (dollars in thousands) Income Rentals...................... $ 27,318 $ 339 $ 1,202 $ 1,306 $ 30,165 Interest..................... 600 - - - 600 Equity in income of partnerships............... 213 - - - 213 ----------- -------- ----------- --------- ----------- 28,131 339 1,202 1,306 30,978 Expenses Property operations.......... 16,456 222 728 712 18,118 Interest..................... 6,998 49 448 555 8,050 Depreciation................. 3,133 23 119 148 3,423 Advisory fee to affiliate.... 1,139 - - - 1,139 General and administrative... 928 - - - 928 Provision for losses......... 541 - - - 541 ----------- -------- ----------- --------- ----------- 29,195 294 1,295 1,415 32,199 ----------- -------- ----------- --------- ----------- Net income (loss)............. $ (1,064) $ 45 $ (93) $ (109) $ (1,221) =========== ======== =========== ========= =========== Earnings per share Net (loss)................... $ (.36) $ (.42) =========== =========== Shares of beneficial interest outstanding.................. 2,918,114 2,918,114 =========== =========== - ------------------------- (1) Assumes acquisition by the Trust on January 1, 1995. 6 7 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994 Heritage on Willow Wick the River Other Property Actual Apartments(1) Apartments(1) Acquisitions(1) Pro forma ---------- ----------- ---------- ------------ ------------- (dollars in thousands) Income Rentals...................... $ 27,042 $ 452 $ 1,603 $ 4,017 $ 33,114 Interest..................... 2,699 - - - 2,699 Other........................ (479) - - - (479) ----------- -------- ----------- --------- ----------- 29,262 452 1,603 4,017 35,334 Expenses Property operations.......... 16,888 296 971 1,708 19,863 Interest..................... 7,711 65 597 1,622 9,995 Depreciation................. 3,214 30 159 570 3,973 Advisory fee to affiliate.... 1,326 - - - 1,326 General and administrative... 1,235 - - - 1,235 Provision for losses......... 1,429 - - - 1,429 ----------- -------- ----------- --------- ----------- 31,803 391 1,727 3,900 37,821 ----------- -------- ----------- --------- ----------- Income (loss) before gain on sale of real estate.......... (2,541) 61 (124) 117 (2,487) Gain on sale of real estate... 1,708 - - - 1,708 ----------- -------- ----------- --------- ----------- Net income (loss)............. $ (833) $ 61 $ (124) $ 117 $ (779) =========== ======== =========== ========= =========== Earnings per share (Loss) before gain on sale of real estate.................. $ (.87) $ (.85) Gain on sale of real estate.. .58 .58 ----------- ----------- Net (loss)................... $ (.29) $ (.27) =========== =========== Shares of beneficial interest outstanding.................. 2,919,815 2,919,815 =========== =========== - ---------------------------- (1) Assumes acquisition by the Trust on January 1, 1994. 7 8 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. CONTINENTAL MORTGAGE AND EQUITY TRUST Date: January 12, 1996 By: /s/ Thomas A. Holland ------------------------ --------------------------------- Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 8 9 CONTINENTAL MORTGAGE AND EQUITY TRUST EXHIBIT TO ITS CURRENT REPORT ON FORM 8-K/A Dated November 30, 1995 Exhibit Page Number Description Number - ------- -------------------------------------------------------------------------------- ------ 99.0 Heritage on the River Apartments Audited Statement of Revenues and Direct 10 Operating Expenses for the year ended December 31, 1994. 99.1 Willow Wick Apartments Audited Financial Statements for the year ended 15 December 31, 1994. 9