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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
December 13, 1996
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Date of Report (Date of Earliest Event Reported)
CONTINENTAL MORTGAGE AND EQUITY TRUST
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(Exact Name of Registrant as Specified in its Charter)
California 0-10503 94-2738844
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(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index Appears on Page 9
Page 1 of 18
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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On December 13, 1996, Continental Mortgage and Equity Trust (the "Trust")
purchased the Oak Run Apartments in Pasadena, Texas for $3.8 million (1.7% of
the Trust's assets at December 31, 1995). The seller of the property was
Philip Edmundson, Trustee. The property was constructed in 1982 and consists
of 160 units which were 96% occupied at the date of acquisition. The Trust paid
$1.2 million in cash and obtained new mortgage financing for the remaining $2.6
million of the purchase price.
On December 27, 1996, the Trust purchased the Northpoint Central Office
Building in Houston, Texas for $8.5 million (3.9% of the Trust's assets at
December 31, 1995). The seller of the property was Alpha Northpoint
Associates, L.P., a Texas limited partnership. The property was constructed in
1983 and consists of 176,043 square feet which were 90% occupied at the date of
acquisition. The Trust paid $5.8 million in cash with the seller financing the
remaining $2.7 million of the purchase price.
On December 31, 1996, the Trust purchased the 2626 Cole Office Building in
Dallas, Texas for $8.7 million (4.0% of the Trust's assets at December 31,
1995). The seller of the property was Amerus Properties, Inc., an Iowa
corporation. The property was constructed in 1986 and consists of 119,632
square feet which were 99% occupied at the date of acquisition. The Trust paid
$2.2 million in cash and obtained new mortgage financing for the remaining $6.5
million of the purchase price.
These purchases combined with other property purchases the Trust has made in
1996 exceed 10% of the Trust's assets at December 31, 1995.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December
31, 1995 and the nine months ended September 30, 1996. A pro forma balance
sheet as of September 30, 1996 is also presented.
A summary of the pro forma transactions follows:
In December 1996, the Trust purchased Oak Run Apartments, a 160 unit apartment
complex in Pasadena, Texas for $3.8 million, exclusive of commissions and
closing costs. The Trust paid $1.2 million in cash and obtained new mortgage
financing secured by the apartment complex for the remaining $2.6 million of
the purchase price. The mortgage bears interest at 8.88% per annum, requires
monthly payments of principal and interest of $21,805 and matures January,
2002.
Also in December 1996, the Trust purchased the Northpoint Central Office
Building, a 176,043 square foot office building in Houston, Texas for $8.5
million, exclusive of commissions and closing costs. The Trust paid $5.8
million in cash with the seller financing the remaining $2.7 million of the
purchase price. The mortgage bears interest at 9.5% per annum, requires
monthly payments of interest only and matures September 1997.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
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Also in December 1996, the Trust purchased the 2626 Cole Office Building, a
199,632 square foot office building in Dallas, Texas for $8.7 million,
exclusive of commissions and closing costs. The Trust paid $2.2 million in
cash and obtained new mortgage financing for the remaining $6.5 million of the
purchase price. The mortgage bears interest at 9.0% per annum, requires
monthly payments of principal and interest of $59,409 and matures December 30,
1998.
The combined $21.0 million purchase prices of these properties is approximately
9.6% of the Trust's assets at December 31, 1995. Although not a significant
acquisitions in themselves, when aggregated with the other acquisitions
completed by the Trust in 1996 as described below, such acquisitions constitute
a significant acquisition.
In addition to the acquisitions discussed above, the Trust purchased three
other apartment complexes, six commercial properties and one parcel of raw land
in 1996. The properties, located in Texas, Louisiana and Colorado, were
purchased for a total of $46.6 million in separate transactions from
unaffiliated sellers and represent approximately 21% of the Trust's assets at
December 31, 1995. The Trust paid a total of $21.2 million in cash and
financed the remainder of the purchase prices. The mortgages bear interest at
rates ranging from 8.01% to 10% and mature from 1997 to 2004.
The Trust has previously filed audited statements of operations on five of
these acquisitions, totaling $27.5 million or 12.5% of the Trust's assets at
December 31, 1995.
The Trust has not provided audited financial statements of operations on the
remaining five acquisitions totaling $19.0 million or 8.7% of the Trust's
assets at December 31, 1995. None of the acquisitions for which audited
statements of operations have not been provided exceed 5% of the Trust's assets
at December 31, 1995.
In addition to the purchases described above, during 1996 the Trust has sold,
or otherwise disposed of, five apartment complexes and one office building.
The Trust recognized a total gain on these dispositions of $9.7 million.
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.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
Northpoint 2626 Cole Other
Oak Run Office Office Property
Actual Apartments Building Building Acquisitions(1) Pro forma
------ ---------- -------- -------- ------------ -----------
(dollars in thousands)
Assets
------
Notes and interest receivable
Performing.................. $ 6,119 $ - $ - $ - $ - $ 6,119
Nonperforming, nonaccruing.. 2,287 - - - - 2,287
--------- --------- ---------- ----------- ------- -----------
8,406 - - - - 8,406
Less - allowance for estimated
losses...................... (1,188) - - - - (1,188)
--------- --------- ---------- ----------- ------- -----------
7,218 - - - - 7,218
Foreclosed real estate held for
sale, net of accumulated
depreciation................. 10,657 - - - - 10,657
Less - allowance for estimated
losses....................... (4,941) - - - - (4,941)
--------- --------- ---------- ---------- ------- -----------
5,716 - - - - 5,716
Real estate held for invest-
ment, net of accumulated
depreciation................. 182,724 3,940 8,865 9,095 4,383 209,007
Investments in marketable
equity securities of
affiliates, at market........ 6,676 - - - - 6,676
Investments in partnerships.... 2,265 - - - - 2,265
Cash and cash equivalents...... 16,537 (1,315) (3,115) (2,555) (1,497) 8,055
Other assets................... 11,254 11,254
--------- --------- ---------- ---------- ------- -----------
$ 232,390 $ 2,625 $ 5,750 $ 6,540 $ 2,886 $ 250,191
========= ========= ========== ========== ======= ===========
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
Northpoint 2626 Cole Other
Oak Run Office Office Property
Actual Apartments Building Building Acquisitions(1) Pro forma
---------- ---------- ---------- ------------ --------------- ----------
(dollars in thousands)
Liabilities and Shareholders' Equity
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Liabilities
Notes and interest payable....... $ 142,516 $ 2,625 $ 5,750 $ 6,540 $ 2,886 $ 160,317
Other liabilities................ 7,462 - - - 7,462
--------- --------- ---------- ---------- -------- -----------
149,978 2,625 5,750 6,540 2,886 167,779
Commitments and contingencies
Shareholders' equity
Shares of Beneficial Interest, no
par value; authorized shares,
unlimited; issued and out-
standing, 4,182,030 shares..... 8,379 - - - - 8,379
Paid-in capital.................. 258,545 - - - - 258,545
Accumulated distributions in
excess of accumulated earnings. (189,468) - - - - (189,468)
Net unrealizable gains on market-
able equity securities......... 4,956 - - - - 4,956
--------- --------- ---------- --------- ------- -----------
82,412 - - - - 82,412
--------- --------- ---------- ---------- ------- -----------
$ 232,390 $ 2,625 $ 5,750 $ 6,540 $ 2,886 $ 250,191
========= ========= ========== ========== ======= ===========
_________________________
(1) The balance sheet effect of all other 1996 property purchases and
dispositions are included in the September 30, 1996 actual balances
presented.
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
Northpoint 2626 Cole Other
Oak Run Office Office Property Property
Actual Apartments(1) Building(1) Building(1) Acquisitions(1)Dispositions(1) Pro forma
------ ---------- -------- -------- ------------ ------------ ---------
Income (dollars in thousands, except per share)
Rents............... $ 33,205 $ 662 $ 1,411 $ 1,267 $ 5,770 $ (3,926) $ 38,389
Interest............ 821 - - - 821
--------- ---------- ---------- ------------ --------- ---------- ----------
34,026 662 1,411 1,267 5,770 (3,926) 39,210
Expenses
Property operations. 20,091 465 871 611 3,192 (2,560) 22,670
Interest............ 9,317 174 410 439 1,827 (1,079) 11,088
Depreciation........ 3,565 59 133 136 644 (461) 4,076
Provision for losses (884) - - - - - (884)
Advisory fee to
affiliate......... 1,300 - - - - - 1,300
General and
administrative.... 1,400 - - - - - 1,400
-------- ----------- ---------- ---------- ------------ --------- ----------
34,789 698 1,414 1,186 5,663 (4,100) 39,650
-------- ----------- ---------- ---------- ------------ --------- ----------
Income (loss) from
operations.......... (763) (36) (3) 81 107 174 (440)
Equity in income of
partnerships........ 197 - - - - 197
Gain on sale of real
estate.............. 9,397 - - - - - 9,397
--------- ----------- ---------- ---------- ------------ --------- -----------
Income (loss) before
extraordinary gain... 8,831 (36) (3) 81 107 174 9,154
Extraordinary gain.... 812 - - - - - 812
--------- ----------- ---------- ---------- ------------ --------- ----------
Net income (loss)..... $ 9,643 $ (36) $ (3) $ 81 $ 107 $ 174 $ 9,966
========= =========== ========== ========== ============ ========= ==========
Earnings per share
Net income before
extraordinary gain $ 2.08 $ 2.16
Extraordinary gain.. .20 .20
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Net income.......... $ 2.28 $ 2.36
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Shares of beneficial
interest outstanding 4,243,754 4,243,754
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(1) Assumes acquisition or disposition by the Trust on January 1, 1996. Pro
forma amounts for other property acquisitions are from January 1 through
the date of acquisition only, results subsequent to the date of acquisition
are included in the "Actual" column.
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
Northpoint 2626 Cole Other
Oak Run Office Office Property Property
Actual Apartments(1) Building(1) Building(1)Acquisitions(1) Dispositions(1) Pro forma
------ ---------- -------- -------- ------------ ------------ ---------
(dollars in thousands, except per share)
Income
Rents . . . . . . . $37,586 $882 $1,881 $1,690 $7,694 $(7,339) $42,394
Interest . . . . . 723 - - - - - 723
------- ---- ------ ------ ------ ------- -------
38,309 882 1,881 1,690 7,694 (7,339) 43,117
Expenses
Property operations. 22,682 620 1,161 814 4,255 (4,442) 25,090
Interest . . . . . 10,009 232 546 584 2,434 (1,990) 11,815
Depreciation . . . 4,279 79 177 182 859 (950) 4,626
Advisory fee to
affiliate. . . . 1,264 - - - - - 1,264
General and
administrative . 1,207 - - - - - 1,207
Provision for losses 541 - - - - - 541
------ ---- ------ ------ ------ ------ -------
39,982 931 1,884 1,580 7,548 (7,382) 44,543
------ ---- ------ ------ ------ ------ -------
Income (loss) from
operations . . . (1,673) (49) (3) 110 146 43 (1,426)
Equity in income of
partnerships . . 230 - - - - - 230
------ ---- ------ ------ ------ ------ -------
Net income (loss). $(1,443) $(49) $ (3) $ 110 $ 146 $ 43 $(1,196)
======= ==== ====== ====== ====== ======= =======
Earnings per share
Net income $ (.33) $ (.27)
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Shares of beneficial
interest outstanding 4,377,165 4,377,165
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(1) Assumes acquisition or disposition by the Trust on January 1, 1995.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
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(b) Financial statements of properties acquired:
Exhibit
Number Description
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99.0 Oak Run Apartments Audited Statement of Revenues and Direct
Operating Expenses for the year ended December 31, 1995.
99.1 Northpoint Central Office Building Audited Balance Sheet as of
December 31, 1995 and related Statement of Profit and Loss and
Statement of Cash Flow for the year ended December 31, 1995.
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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: February 11, 1997 By:/s/ Thomas A. Holland
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Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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CONTINENTAL MORTGAGE AND EQUITY TRUST
EXHIBIT TO ITS
CURRENT REPORT ON FORM 8-K
Dated December 13, 1996
Exhibit Page
Number Description Number
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99.0 Oak Run Apartments Audited Statement of 10
Revenues and Direct Operating Expenses for
the year ended December 31, 1995.
99.1 Northpoint Central Office Building Audited 15
Statement of Revenues and Direct Operating
Expenses for the year ended December 31, 1995.