-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EGCyBppYibiV7aQQjN81NZUcehBfI2rKsXNaDao6levblPlh35ufgNDzyPzjRfTb EUKp0DNA4S3MQ3hl8+SLHw== 0000950134-95-002546.txt : 19951024 0000950134-95-002546.hdr.sgml : 19951024 ACCESSION NUMBER: 0000950134-95-002546 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19951023 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONTINENTAL MORTGAGE & EQUITY TRUST CENTRAL INDEX KEY: 0000319416 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942738844 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-10503 FILM NUMBER: 95583140 BUSINESS ADDRESS: STREET 1: 10670 N CENTRAL EXPWY STE 300 CITY: DALLAS STATE: TX ZIP: 75231 BUSINESS PHONE: 2146924700 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED CAPITAL SPECIAL TRUST DATE OF NAME CHANGE: 19901122 10-Q/A 1 FORM 10-Q/A FOR PERIOD DATED JUNE 30, 1995 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1995 Commission File Number 0-10503 CONTINENTAL MORTGAGE AND EQUITY TRUST ------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) California 94-2738844 -------------------------------- ---------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 10670 North Central Expressway, Suite 300, Dallas, TX 75231 ----------------------------------------------------- ------------ (Address of Principal Executive Offices) (Zip Code)
(214) 692-4700 ------------------------------- (Registrant's Telephone Number, Including Area Code) 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 --- --- Shares of Beneficial Interest, no par value 2,918,106 - ------------------------------ -------------------------------- (Class) (Outstanding at July 28, 1995) 1 2 This Form 10-Q/A amends the Registrant's quarterly report on Form 10-Q for the quarter ended June 30, 1995 as follows: ITEM 1. FINANCIAL STATEMENTS - pages 3 and 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - pages 10 and 12 3 CONTINENTAL MORTGAGE AND EQUITY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months For the Six Months Ended June 30, Ended June 30, ----------------------------- --------------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- (dollars in thousands, except per share) Revenue Rents....................... $ 9,345 $ 6,383 $ 17,706 $ 12,261 Interest.................... 204 781 404 1,447 Equity in income (loss) of partnerships................ 78 (364) 185 (387) ------------- ------------ ----------- ------------- 9,627 6,800 18,295 13,321 Expenses Property operations......... 5,575 4,009 10,560 7,673 Interest.................... 2,411 1,866 4,517 3,526 Depreciation................ 1,067 772 2,030 1,497 Provision for losses........ - - 541 200 Advisory fee to affiliate... 393 357 745 646 General and administrative.. 264 395 629 707 ------------- ------------ ----------- ------------- 9,710 7,399 19,022 14,249 ------------- ------------ ----------- ------------- (Loss) before gain on sale of real estate.............. (83) (599) (727) (928) Gain on sale of real estate.. - 577 - 577 ------------- ------------ ----------- ------------- Net (loss)................... $ (83) $ (22) $ (727) $ (351) ============= ============ =========== ============= Earnings per share Net (loss).................. $ (.03) $ (.01) $ (.25) $ (.12) ============= ============ =========== ============= Weighted average shares of beneficial interest used in computing earnings per share. 2,918,111 2,913,840 2,918,118 2,916,496 ============ ============ =========== =============
The accompanying notes are an integral part of these Consolidated Financial Statements. 3 4 CONTINENTAL MORTGAGE AND EQUITY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) NOTE 4. REAL ESTATE (Continued) In May 1995, the Trust purchased the Will-O-Wick Apartments, a 152 unit apartment complex in Pensacola, Florida, for $3.6 million. The Trust paid $687,000, assumed an existing first mortgage of $2.8 million and the seller provided additional financing of $79,000. The $2.8 million first mortgage bears interest at 9.915% per annum, requires monthly payments of principal and interest of $26,000 and matures in April 2001. The $79,000 seller financing bears interest at 9.9% per annum and requires monthly payments of interest only through maturity in May 1997 at which time the entire outstanding principal balance and all accrued and unpaid interest is due. The Trust paid a real estate brokerage commission of $127,000 to Carmel Realty and an acquisition fee of $36,000 to BCM based on the $3.6 million purchase price of the property. NOTE 5. NOTES PAYABLE In February 1995, after determining that further investment in Genesee Towers, an office building in Flint, Michigan, could not be justified without a substantial modification of the mortgage debt, the Trust ceased making debt service payments on the $8.8 million nonrecourse mortgage secured by the property. The Trust is attempting to negotiate with the lender to modify the mortgage. However, there can be no assurance that such negotiations will be successful or that the Trust will continue to own the property. Accordingly, as of December 31, 1994, the carrying value of the property was written down by $1.2 million, which was included in the 1994 provision for losses, to the amount of the nonrecourse mortgage. In May 1995, the Trust obtained new mortgage financing secured by the Sunset Lake Apartments in Waukegan, Illinois in the amount of $5.4 million. The Trust received net cash of $2.2 million after the payoff of $1.9 million in existing mortgage debt that was scheduled to mature in September 1995. The remainder of the financing proceeds were used to fund a $1.0 million escrow for replacements and repairs and to pay various closing costs associated with the financing. The new $5.4 million mortgage bears interest at a variable rate of prime plus 1-1/2%, (10.5% at June 30, 1995), requires monthly payments of principal and interest and matures in May 2000. The Trust paid a mortgage brokerage and equity refinancing fee of $54,000 to BCM based upon the new first mortgage financing of $5.4 million. NOTE 6. COMMITMENTS AND CONTINGENCIES The Trust is involved in various lawsuits arising in the ordinary course of business. Management of the Trust is of the opinion that the outcome of these lawsuits would have no material impact on the Trust's financial condition or results of operations. 9 5 CONTINENTAL MORTGAGE AND EQUITY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) NOTE 7. SUBSEQUENT EVENTS In July 1995, the Trust purchased the McCallum Glen Apartments, a 275 unit apartment complex in Dallas, Texas for $6.0 million. The Trust paid $1.8 million and obtained new mortgage financing of $4.2 million. The new first mortgage bears interest at a variable rate, currently 8.6% per annum, requires monthly payments of principal and interest and matures on August 1, 2002. The Trust paid a real estate brokerage commission of $190,000 to Carmel Realty and an acquisition fee of $60,000 to BCM based on the $6.0 million purchase price. ___________________________________ ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Introduction Continental Mortgage and Equity Trust (the "Trust") was formed to invest in real estate through acquisitions, leases and partnerships and in mortgage loans on real estate, including first, wraparound and junior mortgage loans. The Trust was organized on August 27, 1980 and commenced operations on December 3, 1980. Liquidity and Capital Resources Cash and cash equivalents aggregated $6.6 million at June 30, 1995, compared with $7.5 million at December 31, 1994. The principal reasons for the reduction in cash are discussed in the paragraphs below. The Trust's principal sources of cash have been and will continue to be property operations, proceeds from property sales, collections of mortgage notes receivable and borrowings. The Trust expects that net cash provided by operating activities and from anticipated external sources, such as property sales and refinancings, will be sufficient to meet the Trust's various cash needs, including, but not limited to, debt service obligations, shareholder distributions and property maintenance and improvements. The Trust's cash flow from property operations (rents collected less payments for expenses applicable to rental income) increased from $4.3 million in the first six months of 1994 to $7.1 million in the first six months of 1995. Of this net increase, $2.1 million is the result of the Trust acquiring nine additional income producing properties in the last six months of 1994 and first six months of 1995. In addition, $531,000 of the increase is due to increases in cash flow from one of the Trust's apartment complexes and two of the Trust's commercial properties due to an increase in occupancy rates and a decrease in operating expenses. The Trust's management believes that the Trust's cash flow from property operations will continue to increase as the Trust benefits from the properties acquired in the last six months of 1994 and first six months of 1995. 10 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) Liquidity and Capital Resources (Continued) recorded by a charge against earnings. The estimate of net realizable value of mortgage notes receivable is based on management's review and evaluation of the collateral property securing the mortgage note. The property review generally includes selective property inspections, a review of the property's current rents compared to market rents, a review of the property's expenses, a review of maintenance requirements, discussions with the manager of the property and a review of the surrounding area. See "Recent Accounting Pronouncement," below. Results of Operations For the three and six months ended June 30, 1995, the Trust had a net loss of $83,000 and $727,000, compared to a net loss of $22,000 and $351,000 for the three and six months ended June 30, 1994. The primary factors contributing to the Trust's increased net loss are discussed in the following paragraphs. Net rental income (rental income less expenses applicable to rental income) increased from $2.4 million and $4.6 million for the three and six months ended June 30, 1994 to $3.8 million and $7.1 million for the three and six months ended June 30, 1995. Of this increase, $1.1 million for the three months and $2.1 million for the six months is due to the acquisition of six apartment complexes and three commercial properties subsequent to June 30, 1994. In addition, an increase of $218,000 for the six months is due to the acquisition of two apartment complexes in June 1994 and one apartment complex in March 1994. An additional increase of $531,000 for the six months is due to an increase in occupancy rates and a decrease in operating expenses at one of the Trust's apartment complexes and two of the Trust's commercial properties. These increases are partially offset by a decrease in net rental income at two of the Trust's apartment complexes and one of the Trust's commercial properties due to a decrease in occupancy rates and an increase in operating expenses. Interest income decreased from $781,000 and $1.4 million for the three and six months ended June 30, 1994 to $204,000 and $404,000 for the three and six months ended June 30, 1995. Of this decrease $390,000 for the three months and $778,000 for the six months is attributable to a $14.0 million wraparound mortgage note receivable which was paid in full in December 1994 and an additional $188,000 for the three months and $274,000 for the six months is due to the foreclosure of two properties during 1994 and one property during 1995 which secured three of the Trust's other mortgage notes receivable. Interest income is expected to continue at approximately the second quarter's level for the remainder of 1995, as the Trust is not considering new mortgage lending except in connection with purchase money financing of sales of Trust properties. The Trust's equity in partnerships improved from a loss of $364,000 and $387,000 for the three and six months months ended June 30, 1994 to income of $78,000 and $185,000 for the three and six months ended June 12 -----END PRIVACY-ENHANCED MESSAGE-----