-----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, Jyzwsa6zJkgOPpXq7zYlbthA3lGqkBDSIh+NLSbCPYtXZs4/0ER7Xy4OL0NGLrZR mDBih1jl5zoslVrVitFFJw== 0000950134-96-004744.txt : 19960910 0000950134-96-004744.hdr.sgml : 19960910 ACCESSION NUMBER: 0000950134-96-004744 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960709 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960909 SROS: NONE 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: 96627476 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 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 July 9, 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 March 6, 1996, Continental Mortgage and Equity Trust (the "Trust") purchased the Hampton Office Building in Dallas, Texas for $7.7 million (3.5% of the Trust's assets at December 31, 1995). The seller of the property was Legacy Capital Company. The property was constructed in 1987 and consists of 108,900 square feet. The building was 95% occupied at the date of acquisition. The Trust paid $1.4 million in cash and obtained mortgage financing for the remaining $6.3 million of the purchase price. On April 16, 1996, the Trust purchased the Amoco Building in New Orleans, Louisiana for $5.9 million in cash (2.7% of the Trust's assets at December 31, 1995). The seller of the property was 1340 Poydras New Orleans, Ltd. The property was constructed in 1977 and consists of 378,244 square feet. The building was 28% occupied at the date of acquisition. On April 29, 1996, the Trust purchased the Central Freight Storage Warehouse in Dallas, Texas for $2.2 million in cash (1.0% of the Trust's assets at December 31, 1995). The seller of the property was Vintage 1985 Associates. The property was constructed in 1966 and consists of 216,035 square feet. The building was 100% occupied at the date of acquisition. On June 28, 1996, the Trust purchased the Grove Park Apartments in Plano, Texas for $4.4 million (2.0% of the Trust's assets at December 31, 1995). The seller of the property was Grove Park Joint Venture, a Texas joint venture. The property was constructed in 1979 and consists of 188 units that were 95% occupied at the date of acquisition. The Trust paid $1.2 million in cash and assumed the first lien mortgage secured by the apartment complex of $3.2 million. On July 9, 1996, the Trust purchased the Promenade Shopping Center in Highlands Ranch, Colorado for $8.1 million (3.7% of the Trust's assets at December 31, 1995). The seller of the property was the Halpin Partnership. The property was constructed in 1985 and consists of 133,558 square feet. The shopping center was 79% occupied at the date of acquisition. The Trust paid $2.3 million in cash and obtained new mortgage financing for the remaining $6.3 million of the purchase price. On July 23, 1996, the Trust purchased The Park at Colonnade in San Antonio, Texas for $4.2 million (1.9% of the Trust's assets at December 31, 1995). The seller of the property was the United States Department of Housing and Urban Development. The property was constructed in 1975 and consists of 211 units. The property was 93% occupied at the date of acquisition. The Trust paid $700,000 in cash and obtained new mortgage financing for the remaining $3.5 million of the purchase price. On July 31, 1996, the Trust purchased the 3400 Carlisle Building in Dallas, Texas for $5.3 million (2.4% of the Trust's assets at December 31, 1995). The seller of the property was Dallas Metro Real Estate Fund I, a California limited partnership. The property was constructed in 1985 and consists of 76,727 square feet. The building was 95% occupied 2 3 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS (Continued) at the date of the acquisition. The Trust paid $800,000 in cash and obtained first mortgage financing for the remaining $4.5 million of the purchase price. The combined $35.0 million purchase prices exceeds 10% of the Trust's assets at December 31, 1995. 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 six months ended June 30, 1996. A pro forma balance sheet as of June 30, 1996 is also presented. A summary of the pro forma transactions follows: In March 1996, the Trust purchased Hampton Office Building, a 108,900 square foot office building in Dallas, Texas for $7.7 million, exclusive of commissions and closing costs. The Trust paid $1.4 million in cash and obtained mortgage financing in the amount of $6.3 million. The mortgage bears interest at a rate of 8.01% per annum, requires monthly payments of principal and interest of $42,053 for the first two years, increasing to $50,028 in the third year and matures in March 2001. In April 1996, the Trust purchased the Amoco Building, a 378,244 square foot office building in New Orleans, Louisiana for $5.9 million in cash, exclusive of commissions and closing costs. In April 1996, the Trust purchased the Central Storage Warehouse, a 216,035 square foot warehouse in Dallas, Texas for $2.2 million in cash, exclusive of commissions and closing costs. In June 1996, the Trust purchased the Grove Park Apartments, a 188 unit apartment complex in Plano, Texas for $4.4 million, exclusive of commissions and closing costs. The Trust paid $1.2 million in cash and assumed the first lien mortgage secured by the apartment complex of $3.2 million. The mortgage bears interest at a rate of 8.9% per annum, requires monthly payments of principal and interest of $26,315 and matures in March 1998. In July 1996, the Trust purchased the Promenade Shopping Center, a 133,558 square foot shopping center in Highlands Ranch, Colorado for $8.1 million, exclusive of commissions and closing costs. The Trust paid $3.2 million in cash and obtained new mortgage financing for the remaining $6.3 million of the purchase price. The first lien mortgage bears interest at 9.0% per annum, requires monthly payments of principal and interest of $50,385 and matures July 1, 1999. The second lien mortgage bears interest at 9.0% per annum and matures June 30, 1997 at which time all principal and interest is due. Also in July 1996, the Trust purchased The Park at Colonnade, a 211 unit apartment complex in San Antonio, Texas for $4.2 million, exclusive of 3 4 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued) commissions and closing costs. The Trust paid $700,000 in cash and obtained new mortgage financing for the remaining $3.5 million of the purchase price. The mortgage bears interest at 10.0% per annum through July 1997, increasing to 10.5% through maturity, requires monthly payments of interest only and matures January 1998. On July 31, 1996, the Trust purchased the 3400 Carlisle Building in Dallas, Texas for $5.3 million exclusive of commissions and closing costs. The Trust paid $800,000 in cash and obtained new mortgage financing for the remaining $4.5 million of the purchase price. The mortgage bears interest at 8.93% per annum, requires monthly payments of principal and interest of $33,488 through July 31, 1998, increasing to $38,457 through maturity and matures March 31, 2001. 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. (b) Financial statements of properties acquired:
Exhibit Number Description - ------- --------------------------------------------------------------- 99.0 Hampton Court Office Building Audited Statement of Revenues and Direct Operating Expenses for the year ended December 31, 1995. 99.1 Amoco Building Audited Statement of Revenues and Direct Operating Expenses for the year ended December 31, 1995. 99.2 Grove Park Apartments Audited Statement of Revenues and Direct Operating Expenses for the year ended December 31, 1995. 99.3 3400 Carlisle Building Audited Statement of Revenues and Direct Operating Expenses for the year ended December 31, 1995.
[THIS SPACE INTENTIONALLY LEFT BLANK.] 4 5 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA CONSOLIDATED BALANCE SHEET JUNE 30, 1996
Other 3400 Property Actual Carlisle(1) Acquisitions(1) Pro forma ---------- ----------- --------------- --------- (dollars in thousands) Assets ------ Notes and interest receivable Performing . . . . . . . . . . . . . . . . . . . . . . . . $ 6,520 $ - $ - $ 6,520 Nonperforming, nonaccruing . . . . . . . . . . . . . . . . 2,287 - - 2,287 ---------- -------- -------- --------- 8,807 - - 8,807 Less - allowance for estimated losses . . . . . . . . . . . . (1,081) - - (1,081) ---------- -------- -------- --------- 7,726 - - 7,726 Foreclosed real estate held for sale, net of accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . 10,616 - - 10,616 Less - allowance for estimated losses . . . . . . . . . . . . (5,047) - - (5,047) ---------- -------- -------- --------- 5,569 - - 5,569 Real estate held for investment, net of accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . 175,859 5,300 12,300 193,459 Investments in marketable equity securities of affiliates, at market . . . . . . . . . . . . . . . . . . . . . . . . 5,926 - - 5,926 Investments in partnerships . . . . . . . . . . . . . . . . . 2,146 - - 2,146 Cash and cash equivalents . . . . . . . . . . . . . . . . . . 14,870 (800) (3,000) 7,670 Other assets . . . . . . . . . . . . . . . . . . . . . . . . 9,728 - - 9,728 ---------- -------- -------- --------- $ 221,824 $ 4,500 $ 9,300 $ 235,624 ========== ======== ======== =========
5 6 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA CONSOLIDATED BALANCE SHEET JUNE 30, 1996
Other 3400 Property Actual Carlisle(1) Acquisitions(1) Pro forma ---------- ----------- ---------------- --------- Liabilities and Shareholders' Equity (dollars in thousands) Liabilities Notes and interest payable . . . . . . . . . . . . . . . . . $ 135,205 $ 4,500 $ 9,300 $ 149,005 Other liabilities . . . . . . . . . . . . . . . . . . . . . . 6,451 - - 6,451 ---------- -------- -------- --------- 141,656 4,500 9,300 155,456 Commitments and contingencies Shareholders' equity Shares of Beneficial Interest, no par value; authorized shares, unlimited; issued and outstanding, 4,193,914 shares . . . . . . . . . . . . . . . . . . . . . . . . . . 8,402 - - 8,402 Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . 258,641 - - 258,641 Accumulated distributions in excess of accumulated earnings . . . . . . . . . . . . . . . . . . . . . . . . . (191,077) - - (191,077) Net unrealizable gains on marketable equity securities . . . 4,202 - - 4,202 ---------- -------- -------- --------- 80,168 - - 80,168 ---------- -------- -------- --------- $ 221,824 $ 4,500 $ 9,300 $ 235,624 ========== ======== ======== =========
- --------------- (1) Assumes acquisitions completed by the Trust subsequent to June 30, 1996 to be on January 1, 1996. The balance sheet effect of all other 1996 property purchases are included in the June 30, 1996 actual balances presented. 6 7 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1996
Other Hampton Amoco Grove Park 3400 Property Actual Court(1) Building(1) Apartments(1) Carlisle(1) Acquisitions(1) Pro forma --------- -------- ----------- ------------- ----------- -------------- --------- (dollars in thousands) Income Rentals . . . . . . . . . . $ 21,770 $ 218 $ 253 $ 485 $ 351 $ 1,312 $ 24,389 Interest. . . . . . . . . . 553 - - - - - 553 --------- -------- -------- ---------- ---------- ---------- --------- 22,323 218 253 485 351 1,312 24,942 Expenses Property operations . . . . 12,903 118 242 224 158 620 14,265 Equity in losses of partnerships . . . . . . . 194 - - - - - 194 Interest. . . . . . . . . . 6,063 84 - 143 201 459 6,950 Depreciation. . . . . . . . 2,294 26 30 44 53 145 2,592 Advisory fee to affiliate. . . . . . . . . 851 - - - - - 851 General and administrative . . . . . . 939 - - - - - 939 --------- -------- -------- ---------- ---------- ---------- --------- 23,244 228 272 411 412 1,224 25,791 --------- -------- -------- ---------- ---------- ---------- --------- Income (loss) before gain on sale of real estate . . . . . . . . . . . (921) (10) (19) 74 (61) 88 (843) Gain on sale of real estate . . . . . . . . . . . 6,169 - - - - - 6,169 Extraordinary gain. . . . . . . 663 - - - - - 663 --------- -------- -------- ---------- ---------- ---------- --------- Net income (loss) . . . . . . . $ 5,911 $ (10) $ (19) $ 74 $ (61) $ 88 $ 5,983 ========= ======== ======== ========== ========== ========== ========= Earnings per share Net income before extraordinary gain. . . . $ 1.37 $ 1.38 Extraordinary gain . . . . . .02 .02 --------- --------- Net income . . . . . . . . . $ 1.39 $ 1.40 ========= ========= Shares of beneficial interest outstanding . . . . 4,273,916 4,273,916 ========= =========
- --------------- (1) Assumes acquisition by the Trust on January 1, 1996. Pro forma amounts for Hampton Court, Amoco Building and Grove Park are from January 1, through the date of acquisition only, results subsequent to the date of acquisition are included in the "Actual" column. 7 8 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995
Other Hampton Amoco Grove Park 3400 Property Actual Court(1) Building(1) Apartments(1) Carlisle(1) Acquisitions(1) Pro forma --------- -------- ----------- ------------- ----------- -------------- --------- (dollars in thousands) Income Rentals . . . . . . . . . . $ 37,586 $ 1,308 $ 1,010 $ 970 $ 701 $ 2,625 $ 44,200 Interest. . . . . . . . . . 723 - - - - - 723 Equity in income of partnerships . . . . . 230 - - - - - 230 --------- -------- -------- ---------- ---------- ---------- --------- 38,539 1,308 1,010 970 701 2,625 45,153 Expenses Property operations . . . . 22,682 707 967 447 316 1,240 26,359 Interest. . . . . . . . . . 10,009 505 - 285 402 917 12,118 Depreciation. . . . . . . . 4,279 154 118 88 106 290 5,035 Advisory fee to affiliate. . . . . . . . . 1,264 - - - - - 1,264 General and administrative . . . . . . 1,207 - - - - - 1,207 Provision for losses. . . . 541 - - - - - 541 --------- -------- -------- ---------- ---------- ---------- --------- 39,982 1,366 1,085 820 824 2,447 46,524 --------- -------- -------- ---------- ---------- ---------- --------- Net income (loss) . . . . . . . $ (1,443) $ (58) $ (75) $ 150 $ (123) $ 178 $ (1,371) ========= ======== ======== ========== ========== ========== ========= Earnings per share Net loss. . . . . . . . . . $ (.33) $ (.31) ========= ========= Shares of beneficial interest outstanding. . . . 4,377,165 4,377,916 ========= =========
- --------------- (1) Assumes acquisition by the Trust on January 1, 1995. 8 9 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: September 9, 1996 By: /s/ Thomas A. Holland ------------------------ ------------------------------ Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 9 10 CONTINENTAL MORTGAGE AND EQUITY TRUST EXHIBIT TO ITS CURRENT REPORT ON FORM 8-K Dated July 9, 1996
Exhibit Page Number Description Number - ------ ---------------------------------------- ------ 99.0 Hampton Court Office Building Audited State- 11 ment of Revenues and Direct Operating Expenses for the year ended December 31, 1995. 99.1 Amoco Building Audited Statement of Revenues 15 and Direct Operating Expenses for the year ended December 31, 1995. 99.2 Grove Park Apartments Audited Statement of 19 Revenues and Direct Operating Expenses for the year ended December 31, 1995. 99.3 3400 Carlisle Building Audited Statement of 23 Revenues and Direct Operating Expenses for the year ended December 31, 1995.
10 EX-99.0 2 HAMPTON COURT OFFICE 1 EXHIBIT 99.0 HAMPTON COURT STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1995 11 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 Hampton Court for the ended December 31, 1995. 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 Hampton Court for the year ended December 31, 1995, in conformity with generally accepted accounting principles. Farmer, Fuqua, Hunt & Munselle, P.C. Dallas, Texas September 5, 1996 12 3 HAMPTON COURT STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1995 REVENUES Net rental revenues $1,193,897 Other revenues 114,600 ---------- Total revenues 1,308,497 OPERATING EXPENSES Repairs and maintenance 257,810 Utilities 236,010 Property taxes 107,749 Salaries and benefits 89,652 Insurance 15,473 ---------- Total direct operating expenses 706,694 ---------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 601,803 ==========
The accompanying notes are an integral part of this statement. 13 4 HAMPTON COURT NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES DECEMBER 31, 1995 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Hampton Court is a 108,889 square foot office building, located in Dallas, Texas. During 1995, the property was owned by Itochu International. 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: OTHER REVENUES Other revenues consist of the following: Utility reimbursement $ 44,882 Lease termination fees 38,873 Tenant escalations 27,606 Miscellaneous 3,239 ------------- $ 114,600 =============
NOTE 4: SUBSEQUENT EVENT The property was sold to Continental Mortgage and Equity Trust, a California business trust, on March 6, 1996. 14 EX-99.1 3 AMOCO BUILDING 1 EXHIBIT 99.1 THE AMOCO BUILDING STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1995 15 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 Amoco Building for the year ended December 31, 1995. 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 Amoco Building for the year ended December 31, 1995, in conformity with generally accepted accounting principles. Farmer, Fuqua, Hunt & Munselle, P.C. Dallas, Texas May 23, 1996 16 3 THE AMOCO BUILDING STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1995 REVENUES Rental revenues $ 988,581 Tenant air conditioning charges 21,425 ------------- Total revenues 1,010,006 OPERATING EXPENSES Utilities 330,868 Contract services 190,450 Salaries and benefits 135,059 Property taxes 108,847 Cleaning 85,012 Insurance 74,500 Supplies 20,199 Mechanical repairs 17,602 Professional services 2,334 Repairs and maintenance 1,913 ------------- Total direct operating expenses 966,784 ------------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 43,222 =============
The accompanying notes are an integral part of this statement. 17 4 THE AMOCO BUILDING NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES DECEMBER 31, 1995 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION The Amoco Building is an office building with 378,244 square feet, located in New Orleans, Louisiana. During 1995, the property was owned by 1340 Poydras New Orleans Ltd. Partnership. 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: SUBSEQUENT EVENT The property was sold to Continental Mortgages and Equity Trust, a California business trust, on April 15, 1996. 18 EX-99.2 4 GROVE PARK APARTMENTS 1 EXHIBIT 99.2 GROVE PARK APARTMENTS STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1995 19 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 Grove Park Apartments for the year ended December 31, 1995. 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 Grove Park Apartments for the year ended December 31, 1995, in conformity with generally accepted accounting principles. Farmer, Fuqua, Hunt & Munselle, P.C. Dallas, Texas July 9, 1996 20 3 GROVE PARK APARTMENTS STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1995 REVENUES Net rental revenues $ 932,766 Other revenues 37,615 ------------- Total revenues 970,381 OPERATING EXPENSES Salaries and benefits 144,572 Property taxes 105,299 Utilities 90,814 Repairs and maintenance 81,474 Insurance 24,745 ------------- Total direct operating expenses 446,904 ------------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 523,477 =============
The accompanying notes are an integral part of this statement. 21 4 GROVE PARK APARTMENTS NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES DECEMBER 31, 1995 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Grove Park Apartments is a 188-unit apartment complex, located in Plano, Texas. During 1995, the property was owned by Southwest Properties Group, 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: OTHER REVENUES Other revenues consist of the following: Security deposits forfeited $ 11,419 Late fees 7,471 Interest income 6,894 Laundry revenue 4,410 Miscellaneous 4,321 Application fees 3,100 ------------- $ 37,615 =============
NOTE 3: SUBSEQUENT EVENT The property was sold to Continental Mortgages and Equity Trust, a California business trust, on June 28, 1996. 22 EX-99.3 5 3400 CARLISLE BUILDING 1 EXHIBIT 99.3 3400 CARLISLE STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1995 23 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 3400 Carlisle for the year ended December 31, 1995. 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 3400 Carlisle for the year ended December 31, 1995, in conformity with generally accepted accounting principles. Farmer, Fuqua, Hunt & Munselle, P.C. Dallas, Texas July 24, 1996 24 3 3400 CARLISLE STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1995 REVENUES Net rental revenues $ 690,262 Other revenues 10,973 ------------- Total revenues 701,235 OPERATING EXPENSES Repairs and maintenance 124,001 Utilities 95,437 Property taxes 67,174 Salaries and benefits 17,146 Insurance 12,022 ------------- Total direct operating expenses 315,780 ------------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 385,455 =============
The accompanying notes are an integral part of this statement. 25 4 3400 CARLISLE NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES DECEMBER 31, 1995 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION 3400 Carlisle is a 74,000 square foot office building located in Dallas, Texas. During 1995, the property was owned by Dallas Metro Real Estate Fund I. 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 assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3: OTHER REVENUES Other revenues consist of the following: Utility reimbursement $ 6,417 Lease termination fees 4,556 ------------- $ 10,973 =============
NOTE 4: SUBSEQUENT EVENT The property is to be sold to Continental Mortgage and Equity Trust, a California business trust, on July 30, 1996. 26 -----END PRIVACY-ENHANCED MESSAGE-----