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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 12-31-93 Commission file number 1-6249
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First Union Real Estate Equity and Mortgage Investments
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-6513657
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 1900, 55 Public Square
Cleveland, Ohio 44113-1937
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 781-4030
---------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- -------------------------
Shares of Beneficial Interest
(Par Value $1 Per Share) New York Stock Exchange
- ------------------------------ ------------------------
Securities registered pursuant to Section 12(g) of the Act:
None
- --------------------------------------------------------------------------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
Yes /X/ No / /
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
As of January 31, 1994, 18,108,640 Shares of Beneficial Interest were held by
non-affiliates, and the aggregate market value of such shares was approximately
$183,349,980.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
18,108,725 Shares of Beneficial Interest were outstanding as of
January 31, 1994.
- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K into which the document is incorporated: (1) Any annual
report to security holders; (2) Any proxy or information statement; and (3) Any
prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of
1933. The listed documents should be clearly described for identification
purposes.
Annual Report to Shareholders for the year ended December 31, 1993
(Parts II and IV).
Proxy Statement dated March 11, 1994 for the Annual Meeting of
Shareholders to be held on April 12, 1994 (Part III).
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FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
CROSS REFERENCE SHEET PURSUANT TO ITEM G,
GENERAL INSTRUCTIONS TO FORM 10-K
ITEM OF FORM 10-K LOCATION
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(page or pages)
PART I
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1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 and 4
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 5 through 11
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 12
4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . . . 12
PART II
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5. Market for Registrant's Common Equity and
Related Stockholder Matters. . . . . . . . . . . . . . . . . 12; Annual Report, Inside Front Cover
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . 12; Annual Report,
18 and 19
7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . 12; Annual Report,
30 through 31
8. Financial Statements . . . . . . . . . . . . . . . . . . . . . 12; Annual Report,
20 through 29
9. Changes in and Disagreements with Accountants
and Financial Disclosure . . . . . . . . . . . . . . . . . . 12
PART III
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10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . . . . . . 13 and 14; Proxy
Statement, 1 through 4
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . 14; Proxy Statement, 4 and
7 through 10
12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . 14; Proxy Statement, 6
13. Certain Relationships and Related Transactions . . . . . . . . 14
PART IV
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14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(a) Financial Statements and Financial
Statement Schedules . . . . . . . . . . . . . . . . . 14, 15 and 19 through
25; Annual Report,
20 through 29
(b) Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . 15 and 16; Exhibit Index,
26
(c) Reports on Form 8-K . . . . . . . . . . . . . . . . . . . 16
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3
PART I
ITEM 1. BUSINESS.
The registrant is an unincorporated association in the form of a business
trust organized in Ohio under a Declaration of Trust dated August 1, 1961, as
amended from time to time through July 25, 1986 (the "Declaration of Trust"),
which has as its principal investment policy the purchase of interests in real
estate equities. The registrant qualifies as a real estate investment trust
under Sections 856 through 860 of the Internal Revenue Code.
In order to encourage efficient operation and management of its property, and
after receiving a ruling from the Internal Revenue Service with respect to the
proposed form of organization and operation, the registrant, in 1971, caused a
management company to be organized pursuant to the laws of the State of
Delaware under the name First Union Management, Inc. (the "Management
Company"), to lease property from the registrant and to operate such property
for its own account as a separate taxable entity. The registrant presently net
leases 30 of its properties to the Management Company. The shares of the
Management Company are held in trust, with the shareholders of the registrant,
as exist from time to time, as contingent beneficiaries. For financial
reporting purposes, the financial statements of the Management Company are
combined with those of the registrant.
The registrant owns regional enclosed shopping malls, large downtown office
buildings and apartment complexes. Its portfolio is diversified by type of
property, geographical location, tenant mix and rental market. As of December
31, 1993, the registrant owned (in fee or pursuant to long-term ground leases
under which the registrant is lessee) seven office buildings, 15 shopping
malls, 50% interests in two shopping malls, six apartment complexes, a
1,100-car parking garage, and a 300-car parking facility, as well as other
miscellaneous properties (see Item 2 - Properties). The investment portfolio
also includes two mortgage loans secured by an office building and an apartment
complex.
Currently, the registrant intends to concentrate its portfolio in retail and
apartment properties while investments in office buildings will be
de-emphasized. Although not presently seeking new mortgage investments, the
registrant intends to hold its remaining two mortgage investments as long term
investments.
The registrant's office buildings compete for tenants principally with office
buildings throughout the respective areas in which they are located. In most
areas where the registrant's office buildings are located, there has been
extensive new office building construction and competition for tenants has been
and continues to be intense on the basis of rent, location and age of the
building. High vacancy rates in the cities in which the registrant has
properties continue to negatively impact the registrant's occupancy rates and
its ability to raise rental rates. All of the registrant's shopping malls
compete for tenants on the basis of the rent charged and location, and
encounter competition from other retail properties in their respective market
areas, and some of the registrant's shopping malls compete with other shopping
malls in the environs. However, the principal competition for the registrant's
shopping malls may come from future shopping malls locating in their market
areas. In four markets in which the registrant competes, overbuilding of
retail projects has caused occupancy levels to be negatively impacted.
Additionally, the overall economic health of retail tenants impacts the
registrant's shopping malls. The registrant's apartment complexes compete with
other apartments and residential housing in the immediate areas in which they
are located and may
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compete with apartments and residential housing constructed in the same areas
in the future. The registrant's parking facilities compete with other parking
facilities in the immediate areas in which they are located and may compete
with new parking facilities constructed in the same areas in the future.
Additionally, the registrant's mortgage investments are collateralized by an
office building and an apartment complex. Risks inherent with the registrant's
portfolio are applicable to the collateral securing the mortgage investments.
These risks may impair the realizability of the mortgage investments.
The registrant also experiences considerable competition when attempting to
acquire equity interests in desirable real estate at operating yields below the
registrant's cost of funds. The competition is provided by other real estate
investment trusts, insurance companies, private pension plans and private
developers.
Additionally, the opportunities for mortgage and public debt financing have
increased from the prior year, although available financing requires
restrictive covenants and conservative loan-to-value ratios. Moreover, the
increase in publicly traded real estate investment trusts during 1993 may
affect the registrant's competitive position in the public capital markets.
The Federal Government and a number of states have adopted environmental,
handicapped facilities and energy laws and regulations relative to the develop-
ment and use of real estate. Such laws and regulations may operate to reduce
the number and attractiveness of investment opportunities available to the
registrant. The registrant has reviewed the properties which it owns or in
which it has a leasehold interest to determine the extent and amount of capital
expenditures to comply with the requirements for handicapped facilities. While
the registrant is and will continue to make modifications to the properties
which it owns, the amount is not expected to be material. The registrant is
not aware of any other requirements to make capital expenditures to comply with
such laws and regulations. Other effects upon the registrant's investments of
the application of such laws and regulations cannot be predicted.
The number of persons employed by the registrant is 34.
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ITEM 2. PROPERTIES
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The following table sets forth certain information relating to the registrant's investments at December 31, 1993:
Square Year Total
Date of Ownership feet(1) Occupancy construction Cost
Direct equity investments Location acquisition percentage (000) rate(2) completed (000)
- ------------------------- -------- ----------- ---------- ------- --------- ----------- -----------
Shopping Malls:
Eastern
----------
Middletown Fairmont, WV 12/03/70 50 % 471 88 % 1970 $ 6,446
Wyoming Valley Wilkes-Barre, PA 6/12/72 50 909 97 1972 12,172
Mountaineer Morgantown, WV 1/29/78 100 656(5) 64(5) 1975 32,393
Fingerlakes Auburn, NY 9/28/81 100 403 84 1980 26,044
Fairgrounds Square Reading, PA 9/30/81 100 528(6) 97 1980 29,720
Wilkes Wilkesboro, NC 5/04/83 100 359 69 1982 18,685
-------
125,460
-------
Midwestern
------------
North Valley Denver, CO 12/03/69 100 452 66 1967 11,236
Crossroads St. Cloud, MN 1/01/72 100 743(8) 99 1966 22,138
Two Rivers Clarksville, TN 9/26/75 100 233 73 1968 7,975
Crossroads Fort Dodge, IA 4/22/77 100 425(10) 85 1967 11,137
Westgate Towne Centre Abilene, TX 4/22/77 100 386(11) 36(12) 1962 9,826
Kandi Willmar, MN 3/12/79 100 448 83 1973 18,648
-------
80,960
-------
Western
---------
Valley North Wenatchee, WA 8/30/73 100 170 97 1966 4,203
Mall 205 Portland, OR 3/01/75 100 434(13) 96 1970 13,700
Plaza 205 Portland, OR 4/26/78 100 167 100 1970 4,123
Peach Tree Marysville, CA 12/19/79 100 435 51(14) 1972 13,920
Valley Yakima, WA 5/01/80 100 418(15) 91 1972 11,791
-------
47,737
-------
254,157
-------
Apartments:
Midwestern
------------
Somerset Lakes Indianapolis, IN 11/10/88 100 360 units 93 1975 19,950
Meadows of Catalpa Dayton, OH 7/11/89 100 323 units 94 1972 10,056
-------
30,006
-------
Southern
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Briarwood Fayetteville, NC 6/30/91 100 273 units 97 1968-70 7,606
Woodfield Gardens Charlotte, NC 6/30/91 100 132 units 89 1974 3,613
Windgate Place Charlotte, NC 6/30/91 100 196 units 90 1974-78 5,785
Walden Village Atlanta, GA 6/01/92 100 380 units 91 1973 12,886
-------
29,890
-------
$59,896
-------
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Mortgage Loans
-----------------------------------------------------------
Balance Principal
Original at repayment
Direct equity balance(s) 12/31/93 for 1994 Interest Year of
investments (000) (000) (000) rate maturity
- --------------- ---------- -------- -------- -------- --------
Shopping Malls:
Eastern
---------
Middletown $ 2,950 $ 1,095 $ 187 8.25% 1998
Wyoming Valley 8,509(3) 4,266(4) 492(4) ---(4) ---(4)
Mountaineer 9,847 5,891 594 9.10 2002
Fingerlakes --- --- --- --- ---
Fairgrounds Square --- ---(7) --- --- ---
Wilkes --- --- --- --- ---
------- ------- ------
21,306 11,252 1,273
------- ------- ------
Midwestern
------------
North Valley $ 2,037 $ 736 $123 7.75% 1999
Crossroads 35,000(3) 34,907 589 ---(9) 2003(9)
Two Rivers --- --- --- --- ---
Crossroads --- --- --- --- ---
Westgate Towne Centre --- --- --- --- ---
Kandi --- --- --- --- ---
------- ------- ------
37,037 35,643 712
------- ------- ------
Western
---------
Valley North --- --- --- --- ---
Mall 205 --- --- --- --- ---
Plaza 205 1,716 825 114 8.50% 1999
Peach Tree --- --- --- --- ---
Valley 5,300 1,095 532 8.25 1995
------- ------- ------
7,016 1,920 646
------- ------- ------
65,359 48,815 2,631
------- ------- ------
Apartments:
Midwestern
------------
Somerset Lakes $12,000(3) $12,000 $ ---(16) 9.875 1995
Meadows of Catalpa 8,000(3) 7,927 64 8.75 2002
------- ------- ------
20,000 19,927 64
------- ------- ------
Southern
----------
Briarwood 2,542 2,233(17) 8(17) ---(17) ---(17)
Woodfield Gardens 1,074 960 53 8.875 2005
Windgate Place 1,794 1,627(18) 78(18) ---(18) ---(18)
Walden Village 3,342 2,924(19) 296(19) ---(19) ---(19)
------- ------- ------
8,752 7,744 435
------- ------- ------
28,752 27,671 499
------- ------- ------
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ITEM 2. PROPERTIES
-Continued
Square Year Total
Date of Ownership feet(1) Occupancy construction cost
Direct equity investments Location acquisition percentage (000) rate(2) completed (000)
- ------------------------- -------- ----------- ---------- ------- --------- ----------- -------
Office Buildings:
Midwestern
- ----------------
55 Public Square Cleveland, OH 1/15/63 100% 397 88% 1959 $28,896
Circle Tower Indianapolis, IN 10/16/74 100 103 74 1930 3,712
Rockwell Avenue Cleveland, OH 4/30/79 100 237 64 1916 12,451
300 Sixth Avenue Pittsburgh, PA 5/01/79 100 226 74 1906 7,955
Ninth Street Plaza Cleveland, OH 10/11/85 100 147 63 1981 7,072
-------
60,086
Southern -------
----------
Henry C. Beck Shreveport, LA 8/30/74 100 185 82 1958 7,161
Landmark Towers Oklahoma City, OK 10/01/77 100 259 73 1967-71 14,086
-------
21,247
-------
81,333
Other: -------
Land-Huntington Bldg. Cleveland, OH 10/25/61 100(21) --- -- --- 4,501
Parking Garage Cleveland, OH 12/31/75 100 1,100 spcs. -- 1969 6,887
Parking Facility Cleveland, OH 9/19/77 100 300 spcs. -- --- 2,286
-------
13,674
-------
$409,060
========
Mortgage Loans
------------------------------------------------------------------------
Balance Principal
Original at repayment
balance(s) 12/31/93 for 1994 Interest Year of
Direct equity investments (000) (000) (000) rate maturity
- ------------------------- --------- --------- -------- -------- --------
Office Buildings:
Midwestern
- -----------------
55 Public Square --- --- --- --- ---
Circle Tower --- --- --- --- ---
Rockwell Avenue --- --- --- --- ---
300 Sixth Avenue $ 1,003(20) $ 972(20) $ 3(20) 10.0 % 2031
Ninth Street Plaza --- --- --- --- ---
------ ----- ------
1,003 972 3
Southern ------ ----- ------
----------
Henry C. Beck --- --- --- --- ---
Landmark Towers 2,909 1,337 239 8.375 1998
------ ----- -----
2,909 1,337 239
------- ------ -----
3,912 2,309 242
------- ------ -----
Other:
Land-Huntington Bldg. --- --- --- --- ---
Parking Garage 9,300(3) 9,300 168 8.55 2014
Parking Facility --- --- --- ---
------- ------ -----
9,300 9,300 168
------- ------ -----
Total equity investments $107,323 88,095 3,540
========
Senior debt underlying wraparound
mortgage loan investments 4,260 248
------- -----
$92,355 $ 3,788
======= =======
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ITEM 2. PROPERTIES
- Continued
NOTES
(1) The square footage shown represents gross leasable area for shopping malls
and net rentable area for office buildings. The apartments are shown as
number of units. The parking garage and parking facility are shown as
number of parking spaces.
(2) Occupancy rates shown are as of December 31, 1993, and are based on
the total square feet at each property, except apartments which are based
on the number of units.
(3) The registrant obtained mortgages on the following properties subsequent
to acquisition: Wyoming Valley Mall in the amount of $259,000 in 1982;
Somerset Lakes Apartments in the amount of $12,000,000 in 1990; Meadows
of Catalpa Apartments in the amount of $8,000,000 in 1992; Crossroads
Shopping Center (St. Cloud, MN) in the amount of $35,000,000 in 1993;
and Huntington Parking Garage in the amount of $9,300,000 in 1993.
(4) This property has two mortgages. Interest rates are 9.75% and 9.5%. The
mortgages mature in 2000 and 2005, respectively. The 9.75% mortgage, in
the principal amount of $4,084,000, has a principal repayment for 1994 of
$482,000. The 9.5% mortgage, in the principal amount of $182,000, has a
principal repayment for 1994 of $10,000.
(5) The total mall contains 656,000 square feet; the registrant owns 598,000
square feet, the balance being ground leased to Giant Eagle Markets, Inc.
The occupancy rate at December 31, 1993 is non-inclusive of Wal-Mart which
opened in January 1994. Wal-Mart is currently occupying 126,390 square
feet, which increased total mall occupancy to 81% in January 1994.
(6) The total mall contains 528,000 square feet; the registrant owns 429,000
square feet, the balance being separately ground leased to Boscov Depart-
ment Store, Inc.
(7) This property serves as collateral for borrowings in excess of $30 million
on the registrant's $60 million five-year term loan.
(8) The total mall contains 743,000 square feet; the registrant owns 636,000
square feet, the balance being separately owned by Target Stores.
(9) The mortgage has a variable interest rate which was 5.63% at December 31,
1993. The interest is tied to LIBOR with a maximum rate of 9.5%.
At maturity in 2003, a lump sum payment will be due of approximately
$25,682,000.
(10) The total mall contains 425,000 square feet; the registrant owns 328,000
square feet, the balance being separately owned by an unrelated third party
with Sears, Roebuck and Co. as tenant.
(11) The total mall contains 386,000 square feet; the registrant owns 291,000
square feet, the balance being separately owned by Montgomery Ward & Co.,
Incorporated.
(12) Highly competitive market conditions have made leasing space difficult.
The registrant continues to seek tenants and alternative retail
strategies for this property.
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ITEM 2. PROPERTIES
- Continued
(13) The total mall contains 434,000 square feet; the registrant owns 257,000
square feet, the balance being separately owned by Montgomery Ward
Development Corporation.
(14) The property was inundated by a flood which occurred in February 1986.
The mall was subsequently rebuilt and re-opened in November 1986. In May
1992, a 60,000 square foot supermarket opened. Additionally, a temporary
tenant occupied approximately 70,000 square feet as of December 31, 1993.
The Trust is pursuing a mixed use strategy for this former retailing
facility.
(15) The total mall contains 418,000 square feet; the registrant owns 308,000
square feet, the balance being separately ground leased to Sears, Roebuck
and Co.
(16) This mortgage is interest only until maturity in December 1995.
(17) This property has two mortgages. The interest rate on both mortgages is
10%. The mortgage in the principal amount of $8,000 fully amortizes
through maturity in 1994. The mortgage in the principal amount of
$2,225,000 is interest only and matures in 1998.
(18) This property has two mortgages. Interest rates are 8.875% and 9.375%.
The mortgages mature in 2005 and 2007, respectively. The 8.875% mortgage,
in the principal amount of $930,000, has a principal repayment for 1994 of
$51,000. The 9.375% mortgage, in the principal amount of $697,000, has a
principal repayment for 1994 of $27,000.
(19) This property has two mortgages. Interest rates are 8.50% and 9.25%, and
both mature in 2000. The 8.50% mortgage, in the principal amount of
$1,579,000, has a principal repayment for 1994 of $191,000. The 9.25%
mortgage, in the principal amount of $1,345,000, has a principal repayment
for 1994 of $105,000.
(20) Represents a long-term leasehold estate interest which was capitalized in
accordance with Statement of Financial Accounting Standards No. 13.
(21) The registrant has ground leased the land until October 30, 2011, with
seven 10-year renewal options.
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ITEM 2. PROPERTIES
- Continued
As of December 31, 1993, the registrant owned in fee its interests in
Middletown Mall, Crossroads Center (St. Cloud, Minnesota), Wyoming Valley Mall,
Mall 205, Crossroads Mall (Ft. Dodge, Iowa), Westgate Towne Centre, Mountaineer
Mall, Plaza 205, Peach Tree Mall, Valley Mall, Fingerlakes Mall, Fairgrounds
Square Mall, Wilkes Mall, 55 Public Square Building, Henry C. Beck Building,
Landmark Towers, Ninth Street Plaza, Somerset Lakes Apartments, Meadows of
Catalpa Apartments, Briarwood Apartments, Woodfield Gardens Apartments,
Windgate Place Apartments, Walden Village Apartments, Land - Huntington
Building, and the Parking Facility. The registrant holds a leasehold estate or
estates, or a fee interest and one or more leasehold estates in North Valley
Mall, Valley North Mall, Two Rivers Mall, Kandi Mall, Circle Tower Building,
Rockwell Avenue Building, 300 Sixth Avenue Building and the Parking Garage.
9
10
ITEM 2. PROPERTIES
-Continued
RENTALS FROM NET LEASES
The following table sets forth the rentals payable to the registrant
for the year ended December 31, 1993, under net leases of the properties
indicated:
Annual
Property Base Rent Percentage Rents
-------- --------- ----------------
SHOPPING MALLS:
EASTERN
-------
Middletown $ 682,000(2) 25% of gross receipts in excess
of $1,502,146
Wyoming Valley 1,292,583(2) First $8,000 of gross receipts
in excess of $2,985,488 plus
25% of gross receipts in
excess of $2,993,488
Mountaineer (1) 705,000 45% of gross receipts in excess
of $1,506,000
Fingerlakes (1) 968,000 40% of gross receipts in excess
of $2,505,000
Fairgrounds Square (1) 2,850,000 55% of gross receipts in excess
of $3,944,000
Wilkes (1) 507,000 55% of gross receipts in excess
of $931,000
MIDWESTERN
----------
North Valley (1) --- 5% of gross receipts
Crossroads
(St. Cloud, Mn.) (1) 3,300,000 60% of gross receipts in excess
of $4,868,000
Two Rivers (1) 125,000 20% of gross receipts in excess
of $625,000
Crossroads
(Ft. Dodge, Iowa) (1) 736,000 55% of gross receipts in excess
of $1,302,000
Westgate Towne Centre (1) --- 10% of gross receipts (3)
Kandi (1) 712,000 45% of gross receipts in excess
of $1,631,000
WESTERN
-------
Valley North (1) 543,000 55% of gross receipts in excess
of $976,000
Mall 205 (1) 1,232,000 55% of gross receipts in excess
of $2,146,000
Plaza 205 (1) 276,000 60% of gross receipts in excess
of $463,000
Peach Tree (1) 292,000 45% of gross receipts in excess
of $672,000
Valley (1) 463,000 50% of gross receipts in excess
of $898,000
10
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ITEM 2. PROPERTIES
-Continued
Annual Base
Property Rent Percentage Rents
- ----------- ----------- ----------------
APARTMENTS:
MIDWESTERN
----------
Somerset Lakes (1) $ 971,000 55% of gross receipts in excess
of $1,744,000
Meadows of Catalpa (1) 900,000 35% of gross receipts in excess
of $2,300,000
SOUTHERN
--------
Briarwood (1) 335,000 35% of gross receipts in excess
of $1,000,000
Woodfield Gardens (1) 100,000 20% of gross receipts in excess
of $500,000
Windgate Place (1) 135,000 20% of gross receipts in excess
of $700,000
Walden Village (1) 850,000 55% of gross receipts in excess
of $1,545,000
OFFICE BUILDINGS:
MIDWESTERN
----------
55 Public Square (1) 1,550,000 40% of gross receipts in excess
of $3,400,000 (4)
Circle Tower (1) 189,000 25% of gross receipts in excess
of $709,000
Rockwell Avenue (1) 157,000 35% of gross receipts in excess
of $1,261,000 (5)
300 Sixth Avenue (1) --- 25% of gross receipts
Ninth Street Plaza (1) 322,000 25% of gross receipts in excess
of $1,288,000
SOUTHERN
--------
Henry C. Beck (1) 179,000 25% of gross receipts in excess
of $784,000
Landmark Towers East (1) --- 15% of gross receipts
Landmark Towers Center (1) 56,000 15% of gross receipts in excess
of $408,000
Landmark Towers West (1) 56,000 15% of gross receipts in excess
of $347,000
OTHER:
Land-Huntington Building 170,000 First $130,000 plus 50% of all
additional rental, as defined,
received by registrant as land-
lord under a net lease of
the building and improvements
situated on the land
Parking Garage (1) 800,000 70% of gross receipts in excess
of $1,168,000
Parking Facility (1) 217,000 70% of gross receipts in excess
of $416,000
<FN>
(1) Leased to the Management Company.
(2) Includes mortgage interest and principal amortization paid by lessee.
(3) An additional net lease for an 8,000 square foot office building
adjacent to the mall, the Social Security Building, provides for a
base rent of $17,000 and a percentage rent of 40% of gross receipts
in excess of $46,000.
(4) An additional net lease for the 55 Public Square Building garage
provides for a base rent of $281,000 and a percentage rent of
70% of gross receipts in excess of $537,000.
(5) An additional net lease for the Rockwell Avenue Building garage provides
for a base rent of $316,000 and percentage rent of 70% of gross receipts
in excess of $397,000.
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ITEM 3. LEGAL PROCEEDINGS.
The Trust has pursued legal action agaist the State of California associated
with the 1986 flood of Peach Tree Mall. In September 1991, the court ruled in
favor of the Trust on the liability portion of this inverse condemnation suit,
which the State of California appealed. The Trust is proceeding with its
damage claim. No recognition of potential income has been made in the
accompanying financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET PRICE AND DIVIDEND RECORD.
"Market Price and Dividend Record" presented on the inside front cover of
registrant's 1993 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA.
"Selected Financial Data" presented on pages 18 and 19 of registrant's 1993
Annual Report to Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" presented on pages 30 through 31 of registrant's 1993
Annual Report to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS.
The "Combined Balance Sheets" as of December 31, 1993 and 1992, and
the "Combined Statements of Income, Combined Statements of Changes in Cash,
Combined Statements of Shareholders' Equity" for the years ended December 31,
1993, 1992 and 1991, of the registrant, "Notes to Combined Financial
Statements" and "Report of Independent Public Accountants" are presented on
pages 20 through 29 of registrant's 1993 Annual Report to Shareholders and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL
DISCLOSURE.
None.
12
13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) DIRECTORS.
"Election of Trustees" presented on pages 1 through 4 of
registrant's 1994 Proxy Statement is incorporated herein by
reference.
(b) EXECUTIVE OFFICERS.
PERIOD
POSITIONS, OFFICES OF
NAME AGE AND BUSINESS EXPERIENCE SERVICE
- ------------------ --- ------------------------------- -------
James C. Mastandrea 50 Chairman, President and Chief 1993 to
Chief Executive Officer since date
January 1994 and President and
Chief Operating Officer from
July 1993 to December 1993.
President and Chief Executive
Officer of Triam Corporation,
Chicago, Illinois, an investment
adviser to various real estate
investment funds, from 1991 to 1993.
Chairman, President and Chief
Executive Officer of Midwest Development
Corporation, Buffalo Grove, Illinois
from 1978 to 1991. Served in various
capacities in the field of commercial
and real estate lending from 1971
to 1978, including Vice President of
Continental Bank, Chicago, Illinois,
and with Mellon Bank, Pittsburgh,
Pennsylvania
Gregory D. Bruhn 46 Executive Vice President and Chief
Financial Officer since March 1994.
Executive Vice President, Real Estate,
Bank of America, Los Angeles, from
April 1992 to February 1994. Executive
Vice President, Real Estate, Security
Pacific National Bank, Los Angeles,
from July 1991 to April 1992. Executive
Vice President, Real Estate, Union Bank,
Los Angeles, from 1989 to 1991. Senior
Vice President, Real Estate, Union Bank,
Los Angeles, from 1987 to 1989. Vice
President, Real Estate, Continental Bank,
Chicago, from 1977 to 1987; and various
capacities involving real estate from
1971 to 1977.
Paul F. Levin 47 Vice President, General Counsel 1989 to
and Secretary since May 1989. date
Principal of Schwarzwald, Robiner,
Rock & Levin, a Legal Professional
Association, from 1981 to 1989.
Associate of Gaines, Stern,
Schwarzwald & Robiner Co., L.P.A.
from 1979 to 1980. Assistant Director
of Law, City of Cleveland, Ohio,
from 1975 to 1978.
13
14
John J. Dee 42 Senior Vice President and Con- 1978 to
troller since July 1992. Vice date
President and Controller from
December 1986 to July 1992,
Controller from April 1981 to
December 1986, Assistant
Controller from December 1979
to April 1981, Accounting Manager
from August 1978 to December 1979.
The above-named executive officers of the registrant hold office at
the pleasure of the Trustees of the registrant, and until their successors are
chosen and qualified.
ITEM 11. EXECUTIVE COMPENSATION.
"Compensation of Trustees" and "Executive Compensation", presented on
page 4 and pages 7 through 10, respectively, of registrant's 1994 Proxy
Statement are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
"Security Ownership of Trustees, Officers and Others" presented on
page 6 of registrant's 1994 Proxy Statement is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
(1) FINANCIAL STATEMENTS:
Combined Balance Sheets - December 31, 1993 and 1992
(incorporated by reference to page 20 of registrant's
1993 Annual Report to Shareholders).
Combined Statements of Income - For the Years Ended
December 31, 1993, 1992 and 1991 (incorporated by
reference to page 21 of registrant's 1993 Annual Report
to Shareholders).
Combined Statements of Changes in Cash - For the Years
Ended December 31, 1993, 1992 and 1991 (incorporated by
reference to page 22 of registrant's 1993 Annual Report
to Shareholders).
Combined Statements of Shareholders' Equity - For the Years
Ended December 31, 1993, 1992 and 1991 (incorporated by
reference to page 23 of registrant's 1993 Annual Report
to Shareholders).
14
15
Notes to Combined Financial Statements (incorporated by reference
to pages 24 through 28 of registrant's 1993 Annual Report to
Shareholders).
Report of Independent Public Accountants (incorporated by
reference to page 29 of registrant's 1993 Annual Report to
Shareholders).
(2) FINANCIAL STATEMENT SCHEDULES:
Report of Independent Public Accountants on Financial Statement
Schedules.
SCHEDULE IX - Short-Term Borrowings.
SCHEDULE XI - Real Estate and Accumulated Depreciation.
SCHEDULE XII - Mortgage Loans on Real Estate.
All Schedules, other than IX, XI and XII, are omitted, as the
information is not required or is otherwise furnished.
(b) EXHIBITS.
Exhibit (10)(a) - Share Purchase Agreement dated as of December
31, 1983 between registrant and First Union Management, Inc.,
(incorporated by reference to Registration Statement No.
2-88719).
Exhibit (10)(b) - First Amendment to Share Purchase Agreement
dated as of December 10, 1985 between registrant and First Union
Management, Inc., (incorporated by reference to Registration
Statement No. 33-2818).
Exhibit (10)(c) - Second Amendment to Share Purchase Agreement
dated as of December 9, 1986 between registrant and First Union
Management, Inc., (incorporated by reference to Registration
Statement No. 33-11524).
Exhibit (10)(d) - Third Amendment to Share Purchase Agreement
dated as of December 2, 1987 between registrant and First Union
Management, Inc., (incorporated by reference to Registration
Statement No. 33-19812).
Exhibit (10)(e) - Fourth Amendment to Share Purchase Agreement
dated as of December 7, 1988, between registrant and First Union
Management, Inc., (incorporated by reference to Registration
Statement No. 33-26758).
Exhibit (10)(f) - Fifth Amendment to Share Purchase Agreement
dated as of November 29, 1989, between registrant and First Union
Management, Inc., (incorporated by reference to Registration
Statement No. 33-33279).
Exhibit (10)(g) - Sixth Amendment to Share Purchase Agreement
dated as of November 28, 1990, between registrant and First Union
Management, Inc., (incorporated by reference to Registration
Statement No. 33-38754).
15
16
Exhibit (10)(h) - Seventh Amendment to Share Purchase Agreement
dated as of November 27, 1991, between registrant and First Union
Management, Inc., (incorporated by reference to Registration
Statement No. 33-45355).
Exhibit (10)(i) - Eighth Amendment to Share Purchase Agreement
dated as of November 30, 1992, between registrant and First Union
Management, Inc., (incorporated by reference to Registration
Statement No. 33-57756).
Exhibit (11) - Statements Re: Computation of Per Share
Earnings.
Exhibit (12) - Statements Re: Computation of Ratios.
Exhibit (13) - 1993 Annual Report to Shareholders.
Exhibit (23) - Consent of Independent Public Accountants.
Exhibit (24) - Powers of Attorney.
(c) REPORTS ON FORM 8-K.
None.
16
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
By: /S/James C. Mastandrea
_____________________________
James C. Mastandrea, Chairman,
President and Chief Executive
Officer
March 21, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
Principal Executive Officer Chairman, President March 21, 1994
and Chief Executive
Officer
/S/James C. Mastandrea
________________________
James C. Mastandrea
Principal Financial Officer Executive Vice- March 21, 1994
President and Chief
Financial Officer
/S/Gregory D. Bruhn
________________________
Gregory D. Bruhn
Principal Financial and Senior Vice President- March 21, 1994
Accounting Officer Controller
/S/John J. Dee
________________________
John J. Dee
17
18
TRUSTEES: ) DATE
)
*Otes Bennett, Jr. )
)
*William E. Conway )
)
*Allen H. Ford )
)
*Russell R. Gifford )
) March 21, 1994
*James C. Mastandrea )
)
)
)
)
*By: /S/Paul F. Levin )
_________________________________ )
Paul F. Levin, Attorney-in-fact )
18
19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To First Union Real Estate Equity
and Mortgage Investments:
We have audited in accordance with generally accepted auditing
standards, the combined financial statements included in the registrant's 1993
Annual Report to Shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 1, 1994. Our audit was made for
the purpose of forming an opinion on those combined statements taken as a
whole. The schedules listed under Item 14(a)(2) on page 15 are the
responsibility of management and are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
combined financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic combined financial
statements taken as a whole.
ARTHUR ANDERSEN & CO.
Cleveland, Ohio,
February 1, 1994.
19
20
SCHEDULE IX
-----------
SHORT-TERM BORROWINGS
---------------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
Weighted Maximum Average Weighted
average amount amount average
interest outstanding outstanding interest rate
Category of aggregate Balance at rate at during the during the during the
short-term borrowings period end period end period period (1) period (2)
- ---------------------- ---------- ---------- ----------- ----------- -------------
Year Ended December 31, 1993
- ----------------------------
Bank loans $ 60,000(3) 4.18% $71,035 $55,179 3.91%
Year Ended December 31, 1992
- ----------------------------
Bank loans $ 67,000 4.06% $80,000 $70,798 4.49%
Year Ended December 31, 1991
- ----------------------------
Bank loans $ 80,000 5.12% $80,000 $74,574 6.45%
- --------------
<FN>
(1) Average borrowings were computed by dividing the borrowed amounts, which were weighted on the basis of the
number of days outstanding, by the number of calendar days in each of the respective years.
(2) Weighted average interest rate was computed by dividing short-term interest expense by average borrowings
outstanding, without consideration of commitment fees or compensating balances.
(3) As of December 31, 1993, the registrant's $60 million revolving credit agreement was converted to a five
year loan, requiring a 20% reduction on the last day of the following five years. The registrant's $20
million revolving credit agreement terminates in July 1996 and, as of December 31, 1993, there were no
amounts borrowed under this agreement.
20
21
SCHEDULE XI
-----------
REAL ESTATE AND ACCUMULATED DEPRECIATION
----------------------------------------
AS OF DECEMBER 31, 1993
-----------------------
(IN THOUSANDS)
Cost
capitalized
subsequent Gross amount at which
Intitial cost to to carried at close of
registrant acquisition period
--------------------- ----------- -------------------------------
Buildings Buildings
Encum- and Land and and
Description brances Land Improvements Improvements Land Improvements Total
- ---------------------------------- ------- ------ ------------ ------------ ------ --------------- -------
Shopping Malls:
EASTERN
-------
Middletown, Fairmont, WV (A) $ 1,095 $ 250 $ 5,591 $ 605 $ 250 $ 6,196 $ 6,446
Wyoming Valley, Wilkes-Barre, PA (A) 4,266 544 10,997 631 525 11,647 12,172
Mountaineer, Morgantown, WV 5,891 1,450 12,693 18,250 1,615 30,778 32,393
Fingerlakes, Auburn, NY -- 1,300 23,698 1,046 1,370 24,674 26,044
Fairgrounds Square, Reading, PA -- 2,400 22,635 4,685 2,369 27,351 29,720
Wilkes, Wilkesboro, NC -- 1,168 13,891 3,626 1,168 17,517 18,685
------- ------- -------- ------- ------- -------- --------
11,252 7,112 89,505 28,843 7,297 118,163 125,460
------- ------- -------- ------- ------- -------- --------
MIDWESTERN
----------
North Valley, Denver, CO 736 -- 7,666 3,570 -- 11,236 11,236
Crossroads, St. Cloud, MN 34,907 1,680 8,303 12,155 2,548 19,590 22,138
Two Rivers, Clarksville, TN -- -- 3,206 4,769 -- 7,975 7,975
Crossroads, Ft. Dodge, IA -- 1,151 2,792 7,194 1,151 9,986 11,137
Westgate Towne Centre, Abilene, TX -- 1,425 3,050 5,351 1,485 8,341 9,826
Kandi, Willmar, MN -- -- 5,035 13,613 -- 18,648 18,648
------- ------- -------- ------- ------- -------- --------
35,643 4,256 30,052 46,652 5,184 75,776 80,960
------- ------- -------- ------- ------- -------- --------
WESTERN
--------
Valley North, Wenatchee, WA -- 405 2,916 882 406 3,797 4,203
Mall 205, Portland, OR -- 1,228 6,140 6,332 1,228 12,472 13,700
Plaza 205, Portland, OR 825 -- 1,677 2,446 695 3,428 4,123
Peach Tree, Marysville, CA -- 985 3,622 9,313 985 12,935 13,920
Valley, Yakima, WA 1,095 -- 8,731 3,060 623 11,168 11,791
------- ------- -------- ------- ------- -------- --------
1,920 2,618 23,086 22,033 3,937 43,800 47,737
------- ------- -------- ------- ------- -------- --------
$48,815 $13,986 $142,643 $97,528 $16,418 $237,739 $254,157
------- ------- -------- ------- ------- -------- --------
Accumu- Year
lated Construc-
Depreci- tion Date
Description ation Completed Acquired Life
- ----------------------------------- ------- --------- ------------ ------
Shopping Malls:
EASTERN
-------
Middletown, Fairmont, WV (A) $ 2,855 1970 12-03-70 50
Wyoming Valley, Wilkes-Barre, PA (A) 5,131 1972 06-12-72 49
Mountaineer, Morgantown, WV 6,012 1975 01-29-78 60
Fingerlakes, Auburn, NY 6,244 1980 09-28-81 50
Fairgrounds Square, Reading, PA 6,039 1980 09-30-81 57
Wilkes, Wilkesboro, NC 3,728 1982 05-04-83 50
-------
30,009
-------
21
Accumu- Year
lated Construc-
Depreci- tion Date
Description ation Completed Acquired Life
- ----------------------------------- ------- --------- ------------ ------
Shopping Malls:
MIDWESTERN
----------
North Valley, Denver, CO $ 3,851 1967 12-03-69 60
Crossroads, St. Cloud, MN 5,841 1966 01-01-72 64
Two Rivers, Clarksville, TN 2,006 1968 09-26-75 50
Crossroads, Ft. Dodge, IA 3,007 1967 04-22-77 57
Westgate Towne Centre, Abilene, TX 2,074 1962 04-22-77 60
Kandi, Willmar, MN 4,677 1973 03-12-79 55
-------
21,456
-------
WESTERN
--------
Valley North, Wenatchee, WA 1,920 1966 08-30-73 40
Mall 205, Portland, OR 4,240 1970 03-01-75 59
Plaza 205, Portland, OR 1,110 1970 04-26-78 47
Peach Tree, Marysville, CA 3,017 1972 12-19-79 50
Valley, Yakima, WA 2,728 1972 05-01-80 54
-------
13,015
-------
$64,480
-------
21
22
Cost
capitalized
subsequent Gross amount at which
Intitial cost to to carried at close of
registrant acquisition period
--------------------- ----------- -------------------------------
Buildings
Encum- and Land and Building and
Description brances Land Improvements Improvements Land Improvements Total
- ---------------------------------- ------- ------ ------------ ------------ ------ ----------- --------
Apartments:
MIDWESTERN
----------
Somerset Lakes, Indianapolis, IN $12,000 $ 2,172 $ 16,400 $ 1,378 $ 2,172 $ 17,778 $ 19,950
Meadows of Catalpa, Dayton, OH 7,927 1,270 7,955 831 1,270 8,786 10,056
------- ------- -------- ------- ------- -------- --------
19,927 3,442 24,355 2,209 3,442 26,564 30,006
------- ------- -------- ------- ------- -------- --------
SOUTHERN
--------
Briarwood, Fayetteville, NC 2,233 495 6,614 497 495 7,111 7,606
Woodfield Gardens, Charlotte, NC 960 171 3,087 355 171 3,442 3,613
Windgate Place, Charlotte, NC 1,627 353 4,818 614 353 5,432 5,785
Walden Village, Atlanta, GA 2,924 2,768 9,288 830 2,768 10,118 12,886
------- ------- -------- ------- ------- -------- --------
7,744 3,787 23,807 2,296 3,787 26,103 29,890
------- ------- -------- ------- ------- -------- --------
27,671 7,229 48,162 4,505 7,229 52,667 59,896
------- ------- -------- ------- ------- -------- --------
Office Buildings:
MIDWESTERN
----------
55 Public Square, Cleveland OH -- 2,500 19,055 7,341 2,500 26,396 28,896
Circle Tower, Indianapolis, IN -- 270 1,609 1,833 270 3,442 3,712
Rockwell Avenue, Cleveland, OH -- 1,964 6,160 4,327 1,969 10,482 12,451
300 Sixth Avenue, Pittsburgh, PA 972(B) 144 2,667 5,144 144 7,811 7,955
Ninth Street Plaza, Cleveland, OH -- 710 5,718 644 710 6,362 7,072
------- ------- -------- ------- ------- -------- --------
972 5,588 35,209 19,289 5,593 54,493 60,086
------- ------- -------- ------- ------- -------- --------
Southern
--------
Henry C. Beck, Shreveport, LA -- 717 3,906 2,538 717 6,444 7,161
Landmark Towers, Oklahoma City, OK 1,337 1,940 7,234 4,912 1,940 12,146 14,086
------- ------- -------- ------- ------- -------- --------
1,337 2,657 11,140 7,450 2,657 18,590 21,247
------- ------- -------- ------- ------- -------- --------
2,309 8,245 46,349 26,739 8,250 73,083 81,333
------- ------- -------- ------- ------- -------- --------
Other:
Land-Huntington Bldg., Cleveland, OH -- 4,501 -- -- 4,501 -- 4,501
Parking Garage, Cleveland, OH 9,300 1,600 4,407 880 1,600 5,287 6,887
Parking Facility, Cleveland, OH -- 2,030 -- 256 2,286 -- 2,286
------- ------- -------- ------- ------- -------- --------
9,300 8,131 4,407 1,136 8,387 5,287 13,674
------- ------- -------- ------- ------- -------- --------
Totals, December 31, 1993 $88,095 $37,591 $241,561 $129,908 $ 40,284 $368,776 $409,060(C)
======= ======= ======== ======= ======= ======== ========
Accumu- Year
lated construc-
depreci- tion Date
ation completed Acquired Life
--------- --------- -------- ----
Apartments:
MIDWESTERN
----------
Somerset Lakes, Indianapolis, IN $2,434 1975 11-10-88 40
Meadows of Catalpa, Dayton, OH 1,163 1972 07-11-89 40
------
3,597
SOUTHERN ------
--------
Briarwood, Fayetteville, NC 499 1968-70 06-30-91 40
Woodfield Gardens, Charlotte, NC 263 1974 06-30-91 40
Windgate Place, Charlotte, NC 455 1974-78 06-30-91 40
Walden Village, Atlanta, GA 424 1973 06-01-92 40
------
1,641
------
5,238
------
22
23
Accumu- Year
lated construc-
depreci- tion Date
ation completed Acquired Life
---------- ------------ ---------- ---------
Office Buildings:
MIDWESTERN
----------
55 Public Square, Cleveland, Ohio 14,188 1959 01-15-63 63
Circle Tower, Indianapolis, IN 1,589 1930 10-16-74 40
Rockwell Avenue, Cleveland, OH 4,060 1916 04-30-79 40
300 Sixth Avenue, Pittsburgh, PA 2,463 1906 05-01-79 52
Ninth Street Plaza, Cleveland, OH 1,190 1981 10-11-85 50
--------
23,490
--------
SOUTHERN
--------
Henry C. Beck, Shreveport, LA 2,613 1958 08-30-74 51
Landmark Towers, Oklahoma City, OK 3,777 1967-71 10-01-77 60
--------
6,390
--------
29,880
--------
Other:
Land-Huntington Bldg., Cleveland, OH --- --- 10-25-61 ---
Parking Garage, Cleveland, OH 1,989 1969 12-31-75 53
Parking Facility, Cleveland, OH 237 --- 09-19-77 10
--------
2,226
--------
Totals, December 31, 1993 $101,824
========
<FN>
(A) Registrant's ownership represents an undivided 50% interest.
(B) Represents long-term leasehold estate interest which has been capitalized
in accordance with Statement of Financial Accounting Standards No. 13.
(C) Aggregate cost for federal tax purposes is $389,751,000.
22
24
SCHEDULE XI
-----------
- Continued
The following is a reconciliation of real estate assets and accumulated
depreciation for the years ended December 31, 1993, 1992 and 1991:
(In thousands)
Years Ended December 31,
--------------------------------------------
1993 1992 1991
---------- ---------- ----------
Asset reconciliation:
Balance, beginning of period $397,493 $377,218 $357,035
Additions during the period:
Property acquisitions 67 12,080 15,538
Improvements 11,974 9,013 5,227
Equipment and Appliances 822 1,247 649
Deductions during the period:
Sales of real estate ( 13) (416) ---
Other - write-off of assets and
certain fully depreciated
tenant alterations (1,283) (1,649) (1,231)
-------- -------- --------
Balance, end of period $409,060 $397,493(A) $377,218(A)
======== ======== ========
Accumulated depreciation
reconciliation:
Balance, beginning of period $ 92,426 $ 83,801 $ 75,928
Additions during the period:
Depreciation 10,681 10,274 9,084
Deductions during the period:
Write-off of assets and
certain fully depreciated
tenant alterations (1,283) (1,649) (1,211)
-------- -------- --------
Balance, end of period $101,824 $ 92,426(A) $ 83,801(A)
======== ======== ========
<FN>
(A) Certain amounts for 1992 and 1991 have been restated to conform with the presentation of 1993 balances. At December
31, 1993, 1992, and 1991, Building and Improvements included $9.5 million, $9.5 million and $9.3 million, respectively,
of leasing costs. Also included in Building and Improvements were equipment and appliances of $3.7 million, $2.9 million
and $1.7 million at December 31, 1993, 1992 and 1991, respectively.
Accumulated depreciation at December 31, 1993, 1992 and 1991 has also been restated for $4.1 million, $3.9 million and
$3.7 million of depreciation for leasing costs. Accumulated depreciation for equipment and appliances of $1.4 million,
$1 million and $0.6 million for December 31, 1993, 1992 and 1991, respectively, was also included in accumulated
depreciation.
23
25
Schedule XII
MORTGAGE LOANS ON REAL ESTATE
AS OF DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT FOR PAYMENT TERMS AND FOOTNOTES)
Current
effective Final Face Carrying
rate on net maturity amount of amount of Prior Net
Description investment date Periodic payment terms mortgage mortgage liens investment
- -------------- ---------- ------- ----------------------- --------- ---------- ------ ----------
First Mortgage
Loan:
Secured by 10% 10-31-11 Interest calculated at stated $11,387 $19,585 $ --- $19,585
office bldg. rate of 9.65%, with install-
in Cleveland, ments of principal and interest
Ohio payable monthly through maturity;
$13,013,000 due at maturity;
prepayment without penalty sub-
ject to certain conditions.
Wraparound Mortgage
Loan:
Secured by 14% 11-30-99 Monthly installments of interest 18,060 15,965 4,260 11,705
garden payable through November 1999;
apartments difference between interest paid
in Atlanta, and interest calculated at the
Georgia stated rate of 10% will increase
registrant's equity investment
until January 1998; equity invest-
ment and deferred interest total-
ing $22,434,000 due at maturity;
prepayment without penalty.
------- ------- ------ -------
Totals, December 31, 1993 $29,447 $35,550(A) $4,260 $31,290
======= ======= ====== =======
<FN>
(A) Aggregate cost for federal tax purposes is $39,973,000.
24
26
Schedule XII
------------
- Continued
The following is a reconciliation of the carrying amounts of the mortgage loans
outstanding for the years ended December 31, 1993, 1992 and 1991:
(In thousands)
Years Ended December 31,
---------------------------------
1993 1992 1991
---------------------------------
Balance, beginning of period $39,573 $61,903 $82,244
Additions during the period:
- ---------------------------
Deferred interest on wrap-
around mortgage loans, net:
Secured by office building
in Cleveland, Ohio -- -- 1,240
Secured by wraparound mortgages
on garden apartments in
Atlanta, Georgia 401 387 539
Secured by garden apartments
in Charlotte and Fayetteville,
North Carolina -- -- (75)
Recognition of discount from senior
mortgage loans purchased on wrap-
around mortgage investments -- -- 51
Deductions during the period:
- ----------------------------
Collection of principal (4,424) (11,326) (7,007)
Transfer from mortgage investments
to investments in real estate
resulting from:
Foreclosure of three wraparound
mortgages secured by garden apart-
ments in Charlotte and Fayetteville,
North Carolina -- -- (15,089)
Deed in lieu of foreclosure of
a wraparound mortgage secured
by a garden apartment complex
in Atlanta, Georgia -- (11,391) --
------- ------- -------
Balance, end of period $35,550 $39,573 $61,903
======= ======= =======
25
27
EXHIBIT INDEX
-------------
Exhibit Page
--------------- ----
Exhibit (10)(a) - Share Purchase Agreement dated as of December 31, 1983
between registrant and First Union Management, Inc., (incorporated
by reference to Registration Statement No. 2-88719).................
------
Exhibit (10)(b) - First Amendment to Share Purchase Agreement dated as
of December 10, 1985 between registrant and First Union Management,
Inc., (incorporated by reference to Registration Statement
No. 33-2818)........................................................
------
Exhibit (10)(c) - Second Amendment to Share Purchase Agreement dated as
of December 9, 1986 between registrant and First Union Management,
Inc., (incorporated by reference to Registration Statement
No. 33-11524).......................................................
------
Exhibit (10)(d) - Third Amendment to Share Purchase Agreement dated as
of December 2, 1987 between registrant and First Union Management,
Inc., (incorporated by reference to Registration Statement
No. 33-19812).......................................................
------
Exhibit (10)(e) - Fourth Amendment to Share Purchase Agreement dated as
of December 7, 1988 between registrant and First Union Management,
Inc., (incorporated by reference to Registration Statement
No. 33-26758).......................................................
------
Exhibit (10)(f) - Fifth Amendment to Share Purchase Agreement dated as
of November 29, 1989 between registrant and First Union Management,
Inc., (incorporated by reference to Registration Statement
No. 33-33279).......................................................
------
Exhibit (10)(g) - Sixth Amendment to Share Purchase Agreement dated as
of November 28, 1990 between registrant and First Union Management,
Inc., (incorporated by reference to Registration Statement
No. 33-38754).......................................................
------
Exhibit (10)(h) - Seventh Amendment to Share Purchase Agreement dated as
of November 27, 1991 between registrant and First Union Management,
Inc., (incorporated by reference to Registration Statement
No. 33-45355).......................................................
------
Exhibit (10)(i) - Eighth Amendment to Share Purchase Agreement dated as
of November 30, 1992 between registrant and First Union Management,
Inc., (incorporated by reference to Registration Statement
No. 33-57756)......................................................
------
Exhibit (11) - Statements Re: Computation of Per Share Earnings............ 27
------
Exhibit (12) - Statements Re: Computation of Ratios........................ 28
------
Exhibit (13) - 1993 Annual Report to Shareholders......................... 29
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Exhibit (23) - Consent of Independent Public Accountants.................. 30
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Exhibit (24) - Powers of Attorney......................................... 31
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26