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EXHIBIT 99.4
ENCON WAREHOUSE
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
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Independent Auditors' Report
To the Board of Trustees
Transcontinental Realty Investors, Inc.
We have audited the accompanying statement of revenues and direct operating
expenses of Encon Warehouse 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 Transcontinental Realty Investors, Inc.) 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 Encon Warehouse for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
FARMER, FUQUA, HUNT & MUNSELLE, P.C.
Dallas, Texas
November 25, 1997
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ENCON WAREHOUSE
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
Year Ended December 31, 1996
REVENUES
Rental revenues $512,821
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Total revenues 512,821
DIRECT OPERATING EXPENSES --
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REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $512,821
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The accompanying notes are an integral part of this statement.
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ENCON WAREHOUSE
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
December 31, 1996
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
The Encon Warehouse (the Warehouse) is a 279,290 square foot warehouse
located in Ft. Worth, Texas. During 1996, the Warehouse was owned by
Seminary West Limited Partnership.
The accompanying financial statement does not include a provision for
depreciation and amortization, bad debt expense, interest expense 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: TENANT LEASE
The Warehouse was leased by one tenant during 1996. The lease agreement
requires the lessee to pay all expenses associated with the property,
including property taxes, utilities, insurance and repairs and
maintenance. Accordingly, there were no direct operating expenses
incurred by the owner.
The Warehouse is leased under an operating lease, which expires in
August, 2005. At December 31, 1996, the approximate future minimum
rental income under the operating lease are as follows:
1997 $ 412,822
1998 562,824
1999 562,824
2000 512,820
2001 512,820
Thereafter 1,880,340
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$4,444,450
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NOTE 4: SUBSEQUENT EVENT
The Warehouse was sold to Transcontinental Realty Investors, Inc., a
Nevada corporation, on October 1, 1997.