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EXHIBIT 99.2
ART FLORIDA PORTFOLIO III, LTD.
(PROPERTIES FORMERLY OWNED BY INVESTORS GENERAL ENTITIES)
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
Page No.
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INDEPENDENT AUDITOR'S REPORT..................................... 1
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES..... 2
NOTES TO COMBINED FINANCIAL STATEMENT............................ 3
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[WAGNER NOBLE & COMPANY LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
American Realty Trust, Inc.
Dallas, Texas
We have audited the accompanying combined statement of revenues and direct
operating expenses of Art Florida Portfolio III, Ltd. (properties formerly
owned by Investors General entities) for the year ended December 31, 1997. This
combined statement of revenues and direct operating expenses is the
responsibility of the entities' 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 American Realty Trust, Inc.) and, as described in Note
1, is not intended to be a complete presentation of the results of operations.
In our opinion, the combined statement of revenues and direct operating
expenses referred to above present fairly, in all material respects, the
combined revenues and direct operating expenses, as defined in Note 1, of Art
Florida Portfolio III, Ltd. (properties formerly owned by Investors General
entities) for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Charlotte, North Carolina
June 1, 1998
/s/ WAGNER NOBLE & COMPANY
--------------------------
Wagner Noble & Company
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ART FLORIDA PORTFOLIO III, LTD.
(Properties Formerly Owned By Investors General Entities)
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
For the year ended December 31, 1997
Properties
---------------------------------------------------------------------------------------------
Carriage Crossings Falcon Lake
Ashford Park At Church House Georgetown Greenbriar Chateau Landing
-------- -------- --------- -------- ---------- ---------- -------- --------
REVENUES:
Net rental revenues............... $314,607 $298,700 $294,367 $484,015 $232,930 $244,137 $337,306 $247,848
Other revenues.................... 13,204 5,677 14,396 22,959 17,502 6,607 19,474 43,788
-------- -------- -------- -------- -------- -------- -------- --------
Total revenues.................. 327,811 304,377 308,763 506,974 250,432 250,744 356,780 291,636
DIRECT OPERATING EXPENSES:
Personnel expense................. 29,897 33,899 34,807 60,163 33,167 38,581 50,505 51,354
Property management fee........... 13,113 12,175 12,349 20,279 10,011 10,030 14,065 11,651
Administrative expense............ 5,787 4,755 6,567 8,036 6,959 5,033 9,122 5,899
Leasing expense................... 4,333 4,183 3,938 3,438 4,749 6,617 2,741 1,930
Utility expense................... 19,895 21,542 23,863 39,543 15,916 7,580 26,851 18,088
Service expense................... 14,517 14,643 14,980 22,078 15,494 20,061 20,082 8,214
Cleaning and decorating expense... 8,158 5,404 9,249 9,565 4,794 17,238 17,627 2,885
Repairs and maintenance expense... 7,069 7,825 7,345 18,861 6,749 12,831 17,167 5,264
Property taxes.................... 32,970 23,189 26,683 25,758 16,659 18,371 15,337 11,718
Property insurance................ 10,627 4,508 4,188 15,369 5,813 3,277 9,958 8,273
-------- -------- -------- -------- -------- -------- -------- --------
Total direct operating expenses. 146,366 132,123 143,969 223,090 120,311 139,619 183,455 125,276
-------- -------- -------- -------- -------- -------- -------- --------
REVENUES IN EXCESS OF
DIRECT OPERATING EXPENSES......... $181,445 $172,254 $164,794 $283,884 $130,121 $111,125 $173,325 $166,360
======== ======== ======== ======== ======== ======== ======== ========
Properties
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Northside Rolling Valley Westwood
Villas Regency Hills Seville Hi Westwood Parc Total
--------- -------- --------- -------- ---------- ---------- -------- ----------
REVENUES:
Net rental revenues............... $758,342 $481,512 $727,075 $367,729 $186,558 $703,328 $389,391 $6,067,845
Other revenues.................... 29,610 28,265 37,881 13,136 16,067 55,305 16,635 340,506
-------- -------- -------- -------- -------- -------- -------- ----------
Total revenues.................. 787,952 509,777 764,956 380,865 202,625 758,633 406,026 6,408,351
DIRECT OPERATING EXPENSES:
Personnel expense................. 116,609 49,904 113,135 59,833 28,756 96,305 79,814 876,729
Property management fee........... 31,495 20,393 30,587 15,217 8,105 30,347 16,240 256,057
Administrative expense............ 18,020 10,493 18,448 10,476 5,428 17,755 10,136 142,914
Leasing expense................... 24,126 5,314 22,896 9,489 6,933 7,596 11,745 120,028
Utility expense................... 59,047 27,318 61,734 27,527 10,724 57,469 28,615 445,712
Service expense................... 28,229 25,707 26,507 8,941 13,057 40,909 17,618 291,037
Cleaning and decorating expense... 15,709 9,816 19,301 8,614 7,929 19,272 14,631 170,192
Repairs and maintenance expense... 26,907 9,391 19,018 9,548 7,351 17,501 15,330 188,157
Property taxes.................... 64,221 46,660 65,093 26,953 17,947 37,005 30,654 459,218
Property insurance................ 18,531 12,033 14,811 11,061 2,384 46,440 8,500 175,773
-------- -------- -------- -------- -------- -------- -------- ----------
Total direct operating expenses. 402,894 217,029 391,530 187,659 108,614 370,599 233,283 3,125,817
-------- -------- -------- -------- -------- -------- -------- ----------
REVENUES IN EXCESS OF
DIRECT OPERATING EXPENSES......... $385,058 $292,748 $373,426 $193,206 $ 94,011 $388,034 $172,743 $3,282,534
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ART FLORIDA PORTFOLIO III, LTD.
(PROPERTIES FORMERLY OWNED BY INVESTORS GENERAL ENTITIES)
NOTES TO COMBINED STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION:
The following properties were owned as of December 31, 1997, by various
entities affiliated with Investors General, Inc. and related companies.
Subsequent to January 1, 1998, the individual properties or the effective
economic interest in the properties were acquired by Art Florida
Portfolio III, Ltd.
Property Name Description Location Former Owner
------------- ----------- -------- ------------
Ashford 56 Residential Units Tampa, FL IG Capital Holdings
Carriage Park 46 Residential Units Tampa, FL Florida Income Fund I
Crossings at Church 52 Residential Units Tampa, FL Florida Income Fund II
Falcon House 82 Residential Units Ft. Walton Bch., FL Investors Synd. Ltd. VII
Georgetown 44 Residential Units Panama City, FL Investors Synd. Ltd. II
Greenbriar 50 Residential Units Tallahassee, FL Investors Synd. Ltd. V
Lake Chateau 98 Residential Units Thomasville, GA Investors Synd. Ltd.
Landing 52 Residential Units Pensacola, FL Investors Synd. Ltd. II
Northside Villas 160 Residential Units Tallahassee, FL IG Capital Holdings
Regency 78 Residential Units Tampa, FL IG Capital Holdings
Rolling Hills 134 Residential Units Tallahassee, FL Investors Synd. Ltd. II
Seville 62 Residential Units Tallahassee, FL Investors Synd. Ltd. II
Valley Hi 54 Residential Units Tallahassee, FL Investors Synd. Ltd. II
Westwood 120 Residential Units Panama City, FL Investors Synd. Ltd. V
& Commercial Prop.
Westwood Parc 94 Residential Units Tallahassee, FL Investors Synd. Ltd. VII
The accompanying combined statement of revenues and direct operating
expenses combines the accounts of properties which were previously owned
by various entities. There were no material intercompany transactions
between the properties.
Management of the properties defines direct operating expenses to include
the specific expense items shown on the accompanying combined statement of
revenues and direct operating expenses. In accordance with this
definition, the statement does not include interest expense, replacements,
professional fees, certain administrative expenses, additional management
fees, loss on disposition of property, or provisions for depreciation and
amortization. The statement also excludes interest income other than that
earned directly in property accounts and any provision for income taxes.
Accordingly, this statement is not intended to be a complete presentation
of the results of operations.
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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 expenditures
during the reporting period. Actual results could differ from those
estimates.
3. RELATED PARTY TRANSACTIONS:
The combined entities paid Investors General, Inc. approximately $22,000
for property management fees which are included in this financial
statement. As of December 31, 1997, Investors General, Inc. or its
affiliates owned directly or indirectly the controlling interest in each
entity.
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