1
EXHIBIT 99.6
WESTGROVE AIR PLAZA
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED MAY 31, 1997
10
2
Independent Auditors' Report
To the Board of Trustees
Continental Mortgage & Equity Trust
We have audited the accompanying statement of revenues and direct operating
expenses of Westgrove Air Plaza for the year ended May 31, 1997. 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 & 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 Westgrove Air Plaza for the year ended May 31, 1997, in
conformity with generally accepted accounting principles.
Farmer, Fuqua, Hunt & Munselle, P.C.
Dallas, Texas
December 12, 1997
11
3
WESTGROVE AIR PLAZA
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
Year Ended May 31, 1997
REVENUES
Net rental revenues $ 320,449
Other revenues 737
----------
Total revenues 321,186
DIRECT OPERATING EXPENSES
Utilities 114,873
Repairs and maintenance 90,265
Ground rent 85,404
Property taxes 44,760
Insurance 13,027
Salaries and benefits 9,795
----------
Total direct operating expenses 358,124
----------
DIRECT OPERATING EXPENSES IN EXCESS OF REVENUES $ (36,938)
==========
The accompanying notes are an integral part of this statement.
12
4
WESTGROVE AIR PLAZA
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
May 31, 1997
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Westgrove Air Plaza is an 83,832 square foot office building
with three airplane hangars, located in Addison, Texas. During
the period ended May 31, 1997, the property was owned by First
National Bank and Trust Co. of McAlester (Oklahoma).
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: LEASE COMMITMENT
Westgrove Air Plaza rents land under two ground leases
classified as operating leases, both of which expire in
February, 2022. Future minimum lease payments under the leases
are approximately as follows:
Year ended May 31,
-----------------
1998 $ 54,000
1999 54,000
2000 54,000
2001 54,000
2002 54,000
Thereafter 1,074,000
-------------
$ 1,344,000
=============
NOTE 4: SUBSEQUENT EVENT
The property was sold to Continental Mortgage & Equity Trust,
a California trust, on October 16, 1997.
13