-----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, Axva/vqCtu3/qaCEmLjgzh0rogoqno0MyILCV8NdQFKGgDIQ8qUHnuRui/Uvrfge heK//7PqY5tTcQpQBcC53Q== 0000950134-97-000033.txt : 19970107 0000950134-97-000033.hdr.sgml : 19970107 ACCESSION NUMBER: 0000950134-97-000033 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961105 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970106 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: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-10503 FILM NUMBER: 97501192 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 8-K/A 1 AMENDMENT NO. 1 TO FORM 8-K 1 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 November 5, 1996 ------------------------------------------------ Date of Report (Date of Earliest Event Reported) CONTINENTAL MORTGAGE AND EQUITY TRUST ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) California 0-10503 94-2738844 - -------------------------------------------------------------------------------- (State of Incorporation) (Commission (IRS Employer File No.) Identification No.) 10670 North Central Expressway, Suite 300, Dallas, TX 75231 - -------------------------------------------------------------------------------- (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) 1 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On November 5, 1996, Continental Mortgage and Equity Trust (the "Trust") purchased the Glenwood Apartments in Addison, Texas for $4.2 million (1.9% of the Trust's assets at December 31, 1995). The seller of the property was VRRM, Inc., a Texas corporation. The property was constructed in 1975 and consists of 168 units which were 92% occupied at the date of acquisition. The Trust paid $1.3 million in cash and assumed existing mortgage financing of $2.9 million. This purchase combined with other property purchases the Trust made in 1996 exceed 10% of the Trust's assets at December 31, 1995. During 1996, the Trust has sold, or otherwise disposed of, five apartment complexes and one office building. The Trust has recognized a total gain on these dispositions of $9.7 million. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Pro forma financial information: Pro forma statements of operations are presented for the year ended December 31, 1995 and the nine months ended September 30, 1996. A pro forma balance sheet as of September 30, 1996 is also presented. A summary of the pro forma transactions follows: In October 1996, the Trust purchased Glenwood Apartments, a 168 unit apartment complex in Addison, Texas for $4.2 million, exclusive of commissions and closing costs. The Trust paid $1.3 million in cash and assumed the first lien mortgage secured by the apartment complex of $2.9 million. The mortgage bears interest at 9.25% per annum, requires monthly payments of principal and interest of $27,476 and matures November 1, 2004. The $4.2 million purchase price of Glenwood Apartments is approximately 1.9% of the Trust's assets at December 31, 1995. Although not a significant acquisition in itself, when aggregated with the other acquisitions completed by the Trust in 1996 as described below, such acquisitions constitute a significant acquisition. In addition to the Glenwood Apartments acquisition discussed above, the Trust purchased two other apartment complexes, six commercial properties and one parcel of raw land in 1996. The properties, located in Texas, Louisiana and Colorado, were purchased for a total of $42.4 million in separate transactions from unaffiliated sellers and represent approximately 20% of the Trust's assets at December 31, 1995. The Trust paid a total of $19.9 million in cash and financed the remainder of the purchase prices. The mortgages bear interest at rates ranging from 8.01% to 10% and mature from 1997 to 2001. The Trust has previously filed audited statements of operations on four of these acquisitions, totaling $23.4 million or 10.7% of the Trust's assets at December 31, 1995. 2 3 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued) The Trust has not provided audited financial statements of operations on the remaining five acquisitions totaling $19.0 million or 8.7% of the Trust's assets at December 31, 1995. None of the acquisitions for which audited statements of operations have not been provided exceed 5% of the Trust's assets at December 31, 1995. In addition to the purchases described above, during 1996 the Trust has sold, or otherwise disposed of, five apartment complexes and one office building. The Trust recognized a total gain on these dispositions of $9.7 million. The pro forma statements of operations present the Trust's operations as if the transactions described above had occurred at the beginning of each of the periods presented. [THIS SPACE INTENTIONALLY LEFT BLANK.] 3 4 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1996
Glenwood Actual Apartments(1) Pro forma ------ ---------- --------- (dollars in thousands) Assets ------ Notes and interest receivable Performing . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,119 $ - $ 6,119 Nonperforming, nonaccruing . . . . . . . . . . . . . . . . . . 2,287 - 2,287 ------------ -------- ---------- 8,406 - 8,406 Less - allowance for estimated losses . . . . . . . . . . . . . . . . (1,188) - (1,188) ------------ -------- ----------- 7,218 - 7,218 Foreclosed real estate held for sale, net of accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 10,657 - 10,657 Less - allowance for estimated losses . . . . . . . . . . . . . . . . (4,941) - (4,941) ------------ -------- ---------- 5,716 - 5,716 Real estate held for investment, net of accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 182,724 4,383 187,107 Investments in marketable equity securities of affiliates, at market . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,676 - 6,676 Investments in partnerships . . . . . . . . . . . . . . . . . . . . . 2,265 - 2,265 Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . 16,537 (1,497) 15,040 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,254 - 11,254 ------------ -------- ---------- $ 232,390 $ 2,886 $ 235,276 ============ ======== ==========
4 5 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1996
Glenwood Actual Apartments(1) Pro forma ------ ---------- --------- (dollars in thousands) Liabilities and Shareholders' Equity - ------------------------------------ Liabilities Notes and interest payable . . . . . . . . . . . . . . . . . . . . . $ 142,516 $ 2,886 $ 145,402 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 7,462 - 7,462 ---------- ----------- ----------- 149,978 2,886 152,864 Commitments and contingencies Shareholders' equity Shares of Beneficial Interest, no par value; authorized shares, unlimited; issued and outstanding, 4,182,030 shares . . 8,379 - 8,379 Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 258,545 - 258,545 Accumulated distributions in excess of accumulated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . (189,468) - (189,468) Net unrealizable gains on marketable equity securities . . . . . . . 4,956 - 4,956 ---------- ----------- ----------- 82,412 - 82,412 ---------- ----------- ----------- $ 232,390 $ 2,886 $ 235,276 ========== =========== ===========
- --------------------------------- (1)The balance sheet effect of all other 1996 property purchases and dispositions are included in the September 30, 1996 actual balances presented. 5 6 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1996
Other Glenwood Property Property Actual Apartments(1) Acquisitions(1) Dispositions(1) Pro forma ------ ---------- ------------ ------------ --------- (dollars in thousands) Income Rentals . . . . . . . . . . . . . . . . . . . . . . $ 33,205 $ 810 $ 4,960 $ (3,926) $ 35,049 Interest . . . . . . . . . . . . . . . . . . . . . 821 - - - 821 ---------- -------- --------- ---------- ---------- 34,026 810 4,960 (3,926) 35,870 Expenses Property operations . . . . . . . . . . . . . . . . 20,091 415 2,777 (2,560) 20,723 Interest . . . . . . . . . . . . . . . . . . . . . 9,317 210 1,617 (1,079) 10,065 Depreciation . . . . . . . . . . . . . . . . . . . 3,565 66 578 (461) 3,748 Provision for losses . . . . . . . . . . . . . . . (884) - - - (884) Advisory fee to affiliate . . . . . . . . . . . . . 1,300 - - - 1,300 General and administrative . . . . . . . . . . . . 1,400 - - - 1,400 ---------- -------- --------- ---------- ---------- 34,789 691 4,972 (4,100) 36,352 ---------- -------- --------- ---------- ---------- Income (loss) from operations. . . . . . . . . . . . . . (763) 119 (12) 174 (482) Equity in income of partnerships. . . . . . . . . . . . . 197 - - - 197 Gain on sale of real estate . . . . . . . . . . . . . . . 9,397 - - - 9,397 ---------- -------- --------- ---------- ---------- Income (loss) before extraordinary gain . . . . . . . . . . . . . . . . . . . . . . 8,831 119 (12) 174 9,112 Extraordinary gain . . . . . . . . . . . . . . . . . . . 812 - - - 812 ---------- -------- --------- ---------- ---------- Net income (loss) . . . . . . . . . . . . . . . . . . . . $ 9,643 $ 119 $ (12) $ 174 $ 9,924 ========== ======== ========= ========== ========== Earnings per share Net income before extraordinary gain . . . . . . . . . . . . . . . . . . . . . . $ 2.08 $ 2.14 Extraordinary gain . . . . . . . . . . . . . . . . . . . .20 .20 ---------- ---------- Net income . . . . . . . . . . . . . . . . . . . . . . $ 2.28 $ 2.34 ========== ========== Shares of beneficial interest outstanding. . . . . . . . . . . . . . . . . . . . 4,243,754 4,243,754 ========== ==========
- ------------------------- (1) Assumes acquisition or disposition by the Trust on January 1, 1996. Pro forma amounts for other property acquisitions are from January 1, through the date of acquisition only, results subsequent to the date of acquisition are included in the "Actual" column. 6 7 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995
Other Glenwood Property Property Actual Apartments(1) Acquisitions(1) Dispositions(1) Pro forma ------ ---------- ------------ ------------ --------- (dollars in thousands) Income Rentals . . . . . . . . . . . . . . . . . . . . . . $ 37,586 $ 1,080 $ 6,614 $ (7,339) $ 37,941 Interest . . . . . . . . . . . . . . . . . . . . . 723 - - - 723 ---------- -------- --------- ---------- ---------- 38,309 1,080 6,614 (7,339) 38,664 Expenses Property operations. . . . . . . . . . . . . . . . 22,682 553 3,702 (4,442) 22,495 Interest . . . . . . . . . . . . . . . . . . . . . 10,009 278 2,156 (1,990) 10,453 Depreciation . . . . . . . . . . . . . . . . . . . 4,279 88 771 (950) 4,188 Advisory fee to affiliate. . . . . . . . . . . . . 1,264 - - - 1,264 General and administrative . . . . . . . . . . . . 1,207 - - - 1,207 Provision for losses . . . . . . . . . . . . . . . 541 - - - 541 ---------- -------- --------- ---------- ---------- 39,982 919 6,629 (7,382) 40,148 ---------- -------- --------- ---------- ---------- Income (loss) from operations . . . . . . . . . . . (1,673) 161 (15) 43 (1,484) Equity in income of partnerships . . . . . . . . . 230 - - - 230 ---------- -------- --------- ---------- ---------- Net income (loss) . . . . . . . . . . . . . . . . . . . . $ (1,443) $ 161 $ (15) $ 43 $ (1,254) ========== ======== ========= ========== ========== Earnings per share Net loss . . . . . . . . . . . . . . . . . . . . . $ (.33) $ (.29) ========== ========== Shares of beneficial interest outstanding . . . . . . . . . . . . . . . . . . . . 4,377,165 4,377,165 ========== =========
- ------------------------- (1) Assumes acquisition or disposition by the Trust on January 1, 1995. 7 8 ITEM 7.FINANCIAL STATEMENTS AND EXHIBITS (Continued) (b) Financial statements of properties acquired:
Exhibit Number Description - ------- ----------------------------------------------------------------------------------------------------------- 99.0 Glenwood Apartments Audited Statement of Revenues and Direct Operating Expenses for the year ended December 31, 1995.
-------------------------------- SIGNATURE 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. CONTINENTAL MORTGAGE AND EQUITY TRUST Date: January 6, 1996 By: /s/ Thomas A. Holland -------------------------- ---------------------------- Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 8 9 CONTINENTAL MORTGAGE AND EQUITY TRUST EXHIBIT TO ITS CURRENT REPORT ON FORM 8-K Dated November 5, 1996
Exhibit Page Number Description Number - ------- ------------------------------------------ ------ 99.0 Glenwood Apartments Audited Statement of 10 Revenues and Direct Operating Expenses for the year ended December 31, 1995.
9 EX-99 2 AUDITED STATEMENT OF REVENUES-DECEMBER 31, 1995 1 EXHIBIT 99.0 THE GLENWOOD APARTMENTS STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES Year Ended August 31, 1996 10 2 Independent Auditors' Report To the Board of Trustees Continental Mortgage and Equity Trust We have audited the accompanying statement of revenues and direct operating expenses of The Glenwood Apartments for the year ended August 31, 1996. This statement of revenues and direct operating expenses is the responsibility of the Property's management. Our responsibility is to express an opinion on this statement of revenues and direct operating expenses based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues and direct operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of revenues and direct operating expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement of revenues and direct operating expenses presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying financial statement is prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in Form 8-K of Continental Mortgage and Equity Trust) and, as described in Note 1, is not intended to be a complete presentation of the results of operations. In our opinion, the statement of revenues and direct operating expenses referred to above presents fairly, in all material respects, the revenues and direct operating expenses of The Glenwood Apartments for the year ended August 31, 1996, in conformity with generally accepted accounting principles. FARMER, FUQUA, HUNT & MUNSELLE, P.C. Dallas, Texas December 30, 1996 11 3 THE GLENWOOD APARTMENTS STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES Year Ended August 31, 1996 REVENUES Net rental revenues $ 947,995 Other 131,716 -------------- Total revenues 1,079,711 OPERATING EXPENSES Salaries and benefits 127,902 Property taxes 94,844 Utilities 236,966 Repairs and maintenance 71,742 Insurance 21,592 -------------- Total direct operating expenses 553,046 -------------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 526,665 ==============
The accompanying notes are an integral part of this statement. 12 4 THE GLENWOOD APARTMENTS NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES August 31, 1996 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION The Glenwood Apartments is a 168 unit apartment complex, located in Dallas, Texas. During 1996, the property was owned by VRRM, Inc. The accompanying financial statement does not include a provision for depreciation and amortization, bad debt expense, interest expense or income taxes. Accordingly, this statement is not intended to be a complete presentation of the results of operations. NOTE 2: ACCOUNTING ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3: SUBSEQUENT EVENT The property was sold to Continental Mortgage and Equity Trust, a California business trust, on November 5, 1996. 13 -----END PRIVACY-ENHANCED MESSAGE-----