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EXHIBIT 99.5
EAGLE ROCK APARTMENTS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
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Independent Auditors' Report
To the Board of Trustees
Continental Mortgage and Equity Trust
We have audited the accompanying statement of revenues and direct operating
expenses of Eagle Rock Apartments for the year ended December 31, 1996. This
statement of revenues and direct operating expenses is the responsibility of
the Property's management. Our responsibility is to express an opinion on this
statement of revenues and direct operating expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of revenues and direct
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of revenues and direct operating expenses. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall statement of revenues and
direct operating expenses presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of Continental Mortgage and Equity Trust) and, as
described in Note 1, is not intended to be a complete presentation of the
results of operations.
In our opinion, the statement of revenues and direct operating expenses
referred to above presents fairly, in all material respects, the revenues and
direct operating expenses of Eagle Rock Apartments for the year ended December
31, 1996, in conformity with generally accepted accounting principles.
Farmer, Fuqua, Hunt & Munselle, P.C.
Dallas, Texas
September 4, 1997
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EAGLE ROCK APARTMENTS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
Year Ended December 31, 1996
REVENUES
Net rental revenues $ 625,976
Other revenues 16,990
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Total revenues 642,966
DIRECT OPERATING EXPENSES
Repairs and maintenance 261,493
Utilities 115,082
Salaries 89,532
Property taxes 59,750
Insurance 17,867
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Total direct operating expenses 543,724
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REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 99,242
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The accompanying notes are an integral part of this statement.
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EAGLE ROCK APARTMENTS
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
December 31, 1996
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
The Eagle Rock Apartments is a 99-unit apartment complex located in
Los Angeles, California. During 1996, the property was owned by
Eagle Rock Corporation.
The accompanying financial statement does not include a provision for
depreciation and amortization, bad debt expense, interest expense,
significant non-recurring repairs expense and related insurance
reimbursements or income taxes. Accordingly, this statement is not
intended to be a complete presentation of the results of operations.
NOTE 2: ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 3: OTHER REVENUES
Other revenues consist of the following:
Damage fees, late charges and application fees $ 8,662
Laundry and vending income 6,610
Miscellaneous 1,718
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$ 16,990
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NOTE 4: SUBSEQUENT EVENT
The property was sold to Continental Mortgage and Equity Trust, a
California business trust, on August 18, 1997.
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