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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 22, 1997
------------------------------------------------
Date of Report (Date of Earliest Event Reported)
TRANSCONTINENTAL REALTY INVESTORS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada 0-13291 94-6565852
- ----------------------------------------------------------------------------------------------------------------------------
(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
---------------
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Form 8-K/A amends the Form 8-K Current Report dated December 22, 1997 and
filed January 9, 1998 by Transcontinental Realty Investors, Inc. (the "Company")
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,
1996 and the nine months ended September 30, 1997. A pro forma balance sheet as
of September 30, 1997 is also presented.
A summary of the pro forma transactions follows:
On December 22, 1997, the Company purchased Fairpark, a 49 unit apartment
complex in Los Angeles, California, for $2.0 million, approximately .8% of the
Company's assets at December 31, 1996. The seller of the property was Ulico Fair
Park Partnership, L.P., an unrelated party. The property was constructed in 1991
and was 90% occupied at the date of purchase. The Company paid $500,000 in cash
and obtained new mortgage financing of $1.5 million. The mortgage bears interest
at 8.45% per annum, requires monthly payments of principal and interest of
$11,628 and matures in January 2003.
Also on December 22, 1997, the Company purchased Villa Piedra, a 132 unit
apartment complex in Los Angeles, California, for $4.7 million, approximately
1.9% of the Company's assets at December 31, 1996. The seller of the property
was Ulico Villa Piedra Partnership, an unrelated party. The property was
constructed in 1991 and was 89% occupied at the date of purchase. The Company
paid $1.2 million in cash and obtained new mortgage financing of $3.5 million.
The mortgage bears interest at 8.45% per annum, requires monthly payments of
principal and interest of $26,833 and matures in January 2003.
On December 30, 1997, the Company purchased Timbers, a 100 unit apartment
complex in Tyler, Texas, for $2.3 million, approximately .9% of the Company's
assets at December 31, 1996. The seller of the property was John Hancock Mutual
Life Insurance Company, an unrelated party. The property was constructed in 1973
and was 90% occupied at the date of purchase. The Company paid $500,000 in cash
and obtained new mortgage financing of $1.8 million. The mortgage bears interest
at a variable rate, currently 9.2% per annum, requires monthly payments of
principal and interest of $16,763 and matures in December 2017.
Also on December 30, 1997, the Company purchased Lexington Center, a 74,603
square foot office building in Colorado Springs, Colorado, for $5.3 million,
approximately 2.2% of the Company's assets at December 31, 1996. The seller of
the property was The Navigator, an unrelated party. The property was constructed
in 1986 and was 74% occupied at the date of purchase. The Company paid $1.3
million in cash with the seller providing purchase money financing of the
remaining $4.0 million of the purchase price. The purchase money financing bears
interest at 9.0% per annum, requires monthly payments of principal and interest
of $30,000 and matures in December 1998.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
In addition to the Fairpark Apartments, Villa Piedra Apartments, Timbers
Apartments and Lexington Center purchased discussed above, the Company has
purchased seven apartment complexes, one in El Paso, Texas in March 1997, one in
Houston, Texas also in March 1997, one in Irving, Texas in May 1997, one in
Sterling, Virginia also in May 1997, one in Fort Worth, Texas in September 1997,
one in Mesa, Arizona in October 1997 and one in Odessa, Texas also in October
1997. The Company has also purchased two office buildings, one in Houston, Texas
in March 1997 and the other in Bonita, California in September 1997, and one
warehouse facility in Fort Worth, Texas in October 1997. These properties were
purchased for a total of $45.0 million and in the aggregate represent in excess
of 10% of the Company's assets at December 31, 1996. The Company paid a total of
$15.1 million in cash and financed the remainder of the purchase prices. The
mortgages secured by these properties bear interest at fixed and variable rates
ranging from 8.07% to 10.5% per annum and mature from June 1998 to October 2007.
In assessing each property purchase described above, the following were among
the factors considered by the Company's management, geographic location of the
property, performance of the property, new or renovated properties in the
vicinity of the property and the maintenance and appearance of the property.
Additional factors considered with respect to commercial properties were the
ease of access to the property, the adequacy of related facilities, such as
parking, and the property's sensitivity to market conditions in establishing
rental rates. With respect to apartment complexes the design and mix of units
and the ability to provide a community atmosphere for the tenants was also
considered.
In 1997, the Company also sold two retail centers, one in February 1997 and one
in November 1997, a parcel of land in February 1997, a single family dwelling in
April 1997 and an office building in December 1997. In connection with these
sales, the Company received net cash totaling $27.7 million.
These Pro Forma Statements of Operations present the Company's operations as if
the transactions described above, had occurred at the beginning of each of the
periods presented. The Company's management is not aware of any material factors
relating to the purchased properties that would cause the reported financial
information not be necessarily indicative of future operating results.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
Fairpark Villa Piedra Timbers Lexington
Actual(1) Apartments(2) Apartments(2) Apartments(2) Center(2)
--------- ------------ ------------- ------------ ---------
Assets (dollars in thousands)
------
Notes and interest receivable
Performing ......................... $ 4,453 $ -- $ -- $ -- $ --
Nonperforming ...................... 404 -- -- -- --
-------- -------- -------- -------- --------
4,857 -- -- -- --
Less - allowance for
estimated losses ................... (891) -- -- -- --
-------- -------- -------- -------- --------
3,966 -- -- -- --
Real estate held for sale,
net of accumulated
depreciation ....................... 281 -- -- -- --
Real estate held for
investment, net of
accumulated depreciation ........... 256,636 4,918 8,293 3,709 5,516
Investments in partnerships ........... 4,290 -- -- -- --
Cash and cash equivalents ............. 4,449 (1,418) (2,403) (1,550) (1,483)
Other assets .......................... 10,577 -- 28 92
-------- -------- -------- -------- --------
$280,199 $ 3,500 $ 5,918 $ 2,251 $ 4,033
======== ======== ======== ======== ========
Liabilities and Shareholders' Equity
- ------------------------------------
Liabilities
Notes and interest payable ............ $193,069 $ 3,500 $ 5,862 $ 2,134 $ 4,000
Other liabilities ..................... 12,160 -- 56 117 33
-------- -------- -------- -------- --------
205,229 3,500 5,918 2,251 4,033
Commitments and contingencies
Shareholders' equity
Common Stock, $.01 par value;
10,000,000 shares; issued and
outstanding, 3,899,487 shares ...... 39 -- -- -- --
Paid-in capital ....................... 217,831 -- -- -- --
Accumulated distributions in
excess of accumulated
earnings ........................... (142,900) -- -- -- --
-------- -------- -------- -------- --------
74,970 -- -- -- --
-------- -------- -------- -------- --------
$280,199 $ 3,500 $ 5,918 $ 2,251 $ 4,033
======== ======== ======== ======== ========
Other Other
Apartment Commercial
Complexes(3) Properties(4) Pro forma
------------ ------------- ---------
Assets (dollars in thousands)
------
Notes and interest receivable
Performing ......................... $ -- $ -- $ 4,453
Nonperforming ...................... -- -- 404
-------- -------- --------
-- -- 4,857
Less - allowance for
estimated losses ................... -- -- (891)
-------- -------- --------
-- -- 3,966
Real estate held for sale,
net of accumulated
depreciation ....................... -- -- 281
Real estate held for
investment, net of
accumulated depreciation ........... 12,002 4,918 295,992
Investments in partnerships ........... -- -- 4,290
Cash and cash equivalents ............. (3,953) (1,418) (7,776) (5)
Other assets .......................... 120 -- 10,817
-------- -------- --------
$ 8,169 $ 3,500 $307,570
======== ======== ========
Liabilities and Shareholders' Equity
- ------------------------------------
Liabilities
Notes and interest payable ............ $ 7,996 $ 3,500 $220,061
Other liabilities ..................... 173 -- 12,539
-------- -------- --------
8,169 3,500 232,600
Commitments and contingencies
Shareholders' equity
Common Stock, $.01 par value;
10,000,000 shares; issued and
outstanding, 3,899,487 shares ...... -- -- 39
Paid-in capital ....................... -- -- 217,831
Accumulated distributions in
excess of accumulated
earnings ........................... -- -- (142,900)
-------- -------- --------
-- -- 74,970
-------- -------- --------
$ 8,169 $ 3,500 $307,570
======== ======== ========
- -----------------------------
(1) Includes the Terrace Hills Apartments, Crescent Place Apartments and
Savings of America Building which were acquired in March 1997 and the
Treehouse Apartments and Villas at Countryside Apartments which were
acquired in May 1997, the Bonita Plaza and Country Bend Apartments which
were acquired in September 1997 and excludes the Fiesta Mart Shopping
Center and a .9976 acre parcel of land that were sold in February 1997
and a single family residence that was sold in April 1997.
(2) Assumes acquisition by the Company on January 1, 1997.
(3) Includes the Sandstone and Sunchase Apartments which were acquired in
October 1997.
(4) Includes the Encon Warehouse which was acquired in October 1997.
(5) The cash portion of the purchase prices were derived from the financings
of previously unencumbered properties and refinancings of owned
properties.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
Other Other Villa
Apartment Commercial Fairpark Piedra
Actual Complexes Properties Apartments Apartments
---------- ---------- ---------- ---------- ----------
(dollars in thousands)
Income
Rents ................ $ 39,205 $ 3,089 $ 1,092 $ 287 $ 691
Interest ............. 1,283 -- -- -- --
---------- ---------- ---------- ---------- ----------
40,488 3,089 1,092 287 691
Expenses
Property operations .. 23,403 1,481 267 148 368
Interest ............. 12,004 -- -- -- --
Depreciation ......... 7,048 -- -- -- --
Advisory fee to
affiliate ........... 1,459 -- -- -- --
General and
administrative ...... 1,977 -- -- -- --
---------- ---------- ---------- ---------- ----------
45,891 1,481 267 148 368
Net income (loss)
from operations ...... (5,403) 1,608 825 139 323
Equity in income of
investees ............ 680 -- -- -- --
Gain on sale of
real estate ......... 1,455 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income <loss> ...... $ (3,268) $ 1,608 $ 825 $ 139 $ 323
========== ========== ========== ========== ==========
Earnings per share
Net <loss> .......... $ (.83)
==========
Weighted average
shares of Common
Stock used in
computing
earnings per share .. 3,910,991
==========
Timbers Lexington Pro forma Pro forma
Apartments Center Sales Adjustments Combined
---------- ---------- ---------- ----------- ----------
(dollars in thousands)
Income
Rents ................ $ 353 $ 244 $ (1,198) $ -- $ 43,763
Interest ............. -- -- (2) -- 1,281
---------- ---------- --------- --------- ----------
353 244 (1,200) -- 45,044
Expenses
Property operations .. 227 112 (2,688) -- 23,318
Interest ............. -- -- (188) 2,366 14,182
Depreciation ......... -- -- (784) 675 6,939
Advisory fee to
affiliate ........... -- -- -- -- 1,459
General and
administrative ...... -- -- -- -- 1,977
---------- ---------- --------- ---------- ----------
227 112 (3,660) 3,041 47,875
Net income <loss>
from operations ...... 126 132 2,460 (3,041) (2,831)
Equity in income of
investees ............ -- -- -- -- 680
Gain on sale of
real estate ......... -- -- -- -- 1,455
---------- ---------- ---------- --------- ----------
Net income <loss> ...... $ 126 $ 132 $ 2,460 $ (3,041) $ (696)
========== ========== ========= ========= ==========
Earnings per share
Net <loss> .......... $ (.18)
==========
Weighted average
shares of Common
Stock used in
computing
earnings per share .. 3,910,991
==========
The accompanying footnotes are an integral part of this Pro Forma Combined
Statement of Operations.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
1. The Pro Forma Combined Statement of Operations assumes the property was
purchased or sold by the Company on January 1, 1997. Pro forma operating
results for property purchases are from January 1 through the respective
dates of purchase only. Results subsequent to the dates of purchase are
included in the "Actual" column.
2. The previous years' actual amounts were used to estimate the interim
period January 1 to the respective dates of purchase.
3. The pro forma interest adjustment is based on the mortgage obtained for
each property at the date of purchase. The pro forma depreciation
adjustment is based on the purchase price depreciated under the
Company's established depreciation policies.
Interest:
Fairpark $ 96
Villa Piedra 222
Timbers 126
Lexington 270
Other Apartment Complexes:
Terrace Hills 67
Crescent Place 36
Treehouse 114
Villas at Countryside 169
Country Bend 166
Sandstone 363
Sunchase 142
Other Commercial Properties:
Savings of America 68
Bonita Plaza 304
Encon Warehouse 223
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Total $ 2,366
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TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
NINE MONTHS ENDED SEPTEMBER 30, 1997
Depreciation:
Fairpark $ 32
Villa Piedra 73
Timbers 37
Lexington 83
Other Apartment Complexes:
Terrace Hills 21
Crescent Place 3
Treehouse 24
Villas at Countryside 18
Country Bend 48
Sandstone 124
Sunchase 56
Other Commercial Properties:
Savings of America 4
Bonita Plaza 78
Encon Warehouse 74
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Total $ 675
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4. Interim operating results for sold properties are their actual
operating results from January 1 to their respective dates of
sale.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
Other Other Villa
Apartment Commercial Fairpark Piedra
Actual Complexes Properties Apartments Apartments
---------- ---------- ---------- ---------- ----------
(dollars in thousands)
Income
Rents ................ $ 45,405 $ 6,737 $ 1,946 $ 382 $ 921
Interest ............. 1,473 -- -- -- --
---------- ---------- ---------- ---------- ----------
46,878 6,737 1,946 382 921
Expenses
Property operations .. 28,491 3,405 637 197 490
Interest ............. 14,999 -- -- -- --
Depreciation ......... 8,461 -- -- -- --
Advisory fee to
affiliate ........... 1,784 -- -- -- --
General and
administrative ...... 2,685 -- -- -- --
Litigation
settlement .......... (1,500) -- -- -- --
Provision for
losses .............. 1,579 -- -- -- --
---------- ---------- ---------- ---------- ----------
56,499 3,405 637 197 490
Income (loss) from
operations ........... (9,621) 3,332 1,309 185 431
Equity in income of
investees ............ (20) -- -- -- --
Gains on sale of
real estate .......... 1,579 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss)
before extra-
ordinary gain ........ (8,062) 3,332 1,309 185 431
Extraordinary gain ...... 256 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net (loss) .............. $ (7,806) $ 3,332 $ 1,309 $ 185 $ 431
========== ========== ========== ========== ==========
Earnings per share
Net (loss) ........... $ (1.96)
==========
Weighted average
shares of Common
Stock used in
computing
earnings per share ... 3,994,687
==========
Timbers Lexington Pro forma Pro forma
Apartments Center Sales Adjustments Combined
---------- ---------- --------- ----------- ----------
(dollars in thousands)
Income
Rents ................ $ 471 $ 325 $ (1,473) $ -- $ 54,714
Interest ............. -- -- -- -- 1,473
---------- ---------- ---------- ---------- ----------
471 325 (1,473) -- 56,187
Expenses
Property operations .. 303 150 (4,187) -- 29,486
Interest ............. -- -- (118) 3,911 18,792
Depreciation ......... -- -- (908) 1,243 8,796
Advisory fee to
affiliate ........... -- -- -- -- 1,784
General and
administrative ...... -- -- -- -- 2,685
Litigation
settlement .......... -- -- -- -- (1,500)
Provision for
losses .............. -- -- -- -- 1,579
---------- ---------- --------- ---------- ----------
303 150 (5,213) 5,154 61,622
Income (loss) from
operations ........... 168 175 3,740 (5,154) (5,435)
Equity in income of
investees ............ -- -- -- -- (20)
Gains on sale of
real estate .......... -- -- -- -- 1,579
Net income (loss)
before extra-
ordinary gain ........ 168 175 3,740 (5,154) (3,876)
Extraordinary gain ...... -- -- -- 256
---------- ---------- --------- ---------- ----------
Net (loss) .............. $ 168 $ 175 $ 3,740 $ (5,154) $ (3,620)
========== ========== ========= ========== ==========
Earnings per share
Net (loss) ........... $ (.91)
==========
Weighted average
shares of Common
Stock used in
computing
earnings per share ... 3,994,687
==========
The accompanying footnotes are an integral part of this Pro Forma Combined
Statement of Operations.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
1. The Pro Forma Combined Statement of Operations assumes the property was
purchased or sold by the Company on January 1, 1997.
2. The amounts for Terrace Hills, Treehouse, Villas at Countryside, Bonita
Plaza, Encon Warehouse, Sandstone, Sunchase, Timbers and Lexington
Center are from their respective audited statement of operations. The
amounts for Crescent Place, Savings of America, Country Bend, Fairpark
and Villa Piedra are based on available financial information or
estimates made in conjunction with purchases.
3. The pro forma interest adjustment is based on the mortgages obtained for
each property at the date of purchase. The pro forma depreciation
adjustment is based on the purchase price depreciated under the
Company's established depreciation policies.
Interest:
Fairpark $ 128
Villa Piedra 296
Timbers 169
Lexington 360
Other Apartment Complexes:
Terrace Hills 382
Crescent Place 149
Treehouse 229
Villas at Countryside 462
Country Bend 227
Sandstone 489
Sunchase 175
Other Commercial Properties:
Savings of America 108
Bonita Plaza 439
Encon Warehouse 298
----------------
Total $ 3,911
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TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
YEAR ENDED DECEMBER 31, 1997
Depreciation:
Fairpark $ 43
Villa Piedra 98
Timbers 49
Lexington 110
Other Apartment Complexes:
Terrace Hills 129
Crescent Place 49
Treehouse 72
Villas at Countryside 132
Country Bend 72
Sandstone 166
Sunchase 74
Other Commercial Properties:
Savings of America 34
Bonita Plaza 117
Encon Warehouse 98
----------------
Total $ 1,243
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4. Interim operating results for sold properties are their actual operating
results from January 1 to their respective dates of sale.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Financial statements of property acquired:
Exhibit
Number Description
99.0 Audited Statement of Revenue and Direct Operating Expenses of
Terrace Hills Apartments for the year ended December 31, 1996
(incorporated by reference to Exhibit 99.0 of the Registrant's
Current Report on Form 8-K/A, dated September 16, 1997).
99.1 Audited Statement of Revenue and Direct Operating Expenses of
Treehouse Apartments for the year ended December 31, 1996
(incorporated by reference to Exhibit 99.1 of the Registrant's
Current Report on Form 8-K/A, dated September 16, 1997).
99.2 Audited Statement of Revenue and Direct Operating Expenses of
Villas at Countryside Apartments for the year ended December
31, 1996 (incorporated by reference to Exhibit 99.2 of the
Registrant's Current Report on Form 8-K/A, dated September 16,
1997).
99.3 Audited Statement of Revenue and Direct Operating Expenses of
Bonita Plaza for the year ended December 31, 1996 (incorporated
by reference to Exhibit 99.3 of the Registrant's Current Report
on Form 8-K/A, dated September 16, 1997).
99.4 Audited Statement of Revenue of Encon Warehouse for the year
ended December 31, 1996 (incorporated by reference to Exhibit
99.4 of the Registrant's Current Report on Form 8-K/A, dated
September 16, 1997).
99.5 Audited Statement of Revenue and Direct Operating Expenses of
Sandstone Apartments for the year ended December 31, 1996
(incorporated by reference to Exhibit 99.5 of the Registrant's
Current Report on Form 8-K/A, dated September 16, 1997).
99.6 Audited Statement of Revenue and Direct Operating Expenses of
Sunchase Apartments for the year ended December 31, 1996
(incorporated by reference to Exhibit 99.6 of the Registrant's
Current Report on Form 8-K/A, dated September 16, 1997).
99.7 Audited Statement of Revenue and Direct Operating Expenses of
Timbers Apartments for the year ended December 31, 1996, filed
herewith.
99.8 Audited Statement of Revenue and Direct Operating Expenses of
Lexington Center for the year ended December 31, 1996, filed
herewith.
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SIGNATURE PAGE
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.
TRANSCONTINENTAL REALTY INVESTORS,
INC.
Date: June 29, 1998 By: /s/ Thomas A. Holland
------------------------ -----------------------------------
Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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TRANSCONTINENTAL REALTY INVESTORS, INC.
EXHIBITS TO
CURRENT REPORT ON FORM 8-K/A
Dated December 22, 1997
Exhibit Page
Number Description Number
- ------- ------------------------------------------------- ------
99.7 Audited Statement of Revenue and Direct Operating 14
Expenses of Timbers Apartments for the year ended
December 31, 1996.
99.8 Audited Statement of Revenue and Direct Operating 18
Expenses of Lexington Center for the year ended
December 31, 1996.
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