-----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, Ex09ES+5Mgfz0RuBgeCtDrYJk3ifBVdZFej/nk+ZVguSIxiTTV1DFvvMLXi5ouGn op5j86iJ/4AEOHQHfJOpBA== 0000950152-96-004169.txt : 19960816 0000950152-96-004169.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950152-96-004169 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST UNION REAL ESTATE EQUITY & MORTGAGE INVESTMENTS CENTRAL INDEX KEY: 0000037008 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 346513657 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06249 FILM NUMBER: 96613562 BUSINESS ADDRESS: STREET 1: 55 PUBLIC SQUARE STREET 2: STE 1900 CITY: CLEVELAND STATE: OH ZIP: 44113 BUSINESS PHONE: 2167814030 MAIL ADDRESS: STREET 1: 55 PUBLIC SQUARE SUITE 1910 CITY: CLEVELAND STATE: OH ZIP: 44113 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION REALTY DATE OF NAME CHANGE: 19691012 10-Q 1 FIRST UNION REAL ESTATE 10-Q 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------- For Quarter Ended June 30, 1996 Commission File Number 1-6249 ------------- ------ First Union Real Estate Equity and Mortgage Investments - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 34-6513657 - --------------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification) No.) Suite 1900, 55 Public Square Cleveland, Ohio 44113-1937 - --------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (216) 781-4030 ------------------- - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 17,459,144 Shares of Beneficial Interest outstanding as of June 30, 1996 - -------------------------------------------------------------------------------- ================================================================================ Total number of pages contained in this report: 11 2 PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements. - ------- --------------------- The combined financial statements included herein have been prepared by the registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the registrant believes that the disclosures contained herein are adequate to make the information presented not misleading. It is suggested that these combined financial statements be read in conjunction with the combined financial statements and the notes thereto included in the registrant's latest annual report on Form 10-K. The unaudited "Combined Balance Sheets" as of June 30, 1996 and December 31, 1995 and "Combined Statements of Income and Combined Statements of Changes in Cash" for the periods ended June 30, 1996 and 1995, of the registrant, and "Notes to Combined Financial Statements," are included herein. These financial statements reflect, in the opinion of the registrant, all adjustments (consisting of normal recurring accruals) necessary to present fairly the combined financial position and results of operations for the respective periods in conformity with generally accepted accounting principles consistently applied. Item 2. Management's Discussion and Analysis of Financial Condition and Results - ------- ----------------------------------------------------------------------- of Operations. -------------- Financial Condition - ------------------- In February 1996, the registrant sold two office buildings and a parking garage in Cleveland, OH for $1.8 million in cash and a $7 million, 8% note secured by the properties. This sale resulted in a capital loss of $5.6 million which was provided for by the registrant as part of a $14 million noncash unrealized loss on the carrying value of certain assets which was recorded in December 1995. The registrant obtained a $12.5 million mortgage loan in January 1996. The mortgage loan is secured by an apartment complex in Durham, NC and is at an interest rate of 6.875%. In April 1996, the registrant obtained two mortgage loans secured by apartment complexes in Indianapolis, IN and Cincinnati, OH. The loans for $15 million and $9 million are at interest rates of 7.65% and 7.395%, respectively. Proceeds from these three mortgage loans totaling $36.5 million were used to repay short-term bank loans. In June 1996, the registrant received repayment of its $7 million mortgage investment. The mortgage investment had been part of the consideration received in the registrant's sale in February 1996, of the two office buildings and a parking garage discussed above. The proceeds of this mortgage investment were used to repay short-term bank loans and the $5 million, 8.6% medium term note which was due in July 1996. In June 1996, the registrant announced the signing of a contract to acquire nine regional malls for $319 million. The registrant intends to acquire these properties with a joint venture partner, and intends to fund its equity investment in the joint venture through short-term bank loans. This transaction is contingent upon completion and acceptance of due diligence and is expected to close in September 1996. Except as noted above, there has been no material change in the registrant's financial condition from December 31, 1995. Liquidity and Capital Resources - ------------------------------- Net cash provided by operations for the six months ended June 30, 1996 of $5.7 million was approximately $1.9 million below the same period in the prior year. This decline in cash provided by operations during 1996 is primarily attributed to the decrease in accrued liabilities when comparing the six months ended June 30, 1996 to the same period in the prior year. Dividends paid in 1996 of $3.9 million represented 68% of net cash from operating activities. Net cash used for investing of $8 million for the first six months of 1996 included $8.8 million in proceeds received from the sale of two office buildings and a parking garage, which was offset by reinvesting $13 million in building and tenant improvements. The expenditures were primarily made to complete the renovations of two retail properties and a retail anchor tenant building which began in 1995 and construct an office tenant alteration at North Valley Center which is being converted from a retail mall to an office complex. Additionally, the registrant advanced $3.4 million as a deposit on its purchase of nine regional malls, as noted previously. 2 3 Net cash provided by financing of $6.3 million, during the first six months of 1996 included $36.5 million from three new mortgage loans secured by apartment complexes. The proceeds were used to repay short-term bank loans. Also, the registrant purchased 950,000 of its shares of beneficial interest for $7.1 million using funds available under its bank credit facilities. This purchase was part of a settlement agreement with a minority shareholder. During the remaining six months of 1996, the registrant has approximately $1.7 million in mortgage principal payments, approximately $5 million in tenant and building improvements, and a $27 million investment in a joint venture to acquire nine regional shopping malls. The registrant intends to fund the debt repayments, planned capital expenditures, and its investment in a joint venture through short-term bank loans and cash flow generated from operations. Additionally, the registrant repaid the $5 million, 8.6% medium term note with cash available from the repayment of a mortgage investment in July 1996. Results of Operations - --------------------- Net income was $1 million and $1.3 million for the three months ending June 30, 1996 and 1995, respectively. Net income in 1995 included $150,000 of proxy and litigation expenses. Net income for the first six months of 1996 was $.1 million as compared to $27.4 million in 1995. Net income for 1995 included a capital gain of $29.9 million and a $4.3 million, non-cash charge for the cumulative effect of a change in accounting method. The amount in 1996 included two non-recurring, non-cash charges totaling $1.3 million for the write-off of a tenant allowance and the termination of an employment contract. The amount in 1995 included $1.1 million of proxy and litigation expenses. Income from operations was $.1 million for the first six months of 1996 compared to $1.9 million in 1995. The $29.9 million capital gain in 1995 resulted from the sale of the registrant's 50% interests in two malls in Wilkes-Barre, PA and Fairmount, WV for $29.5 million in cash, a $6 million mortgage at an interest rate of 9% secured by one of the malls and also secured by partnership units of Crown American Properties L.P., and the assumption by the purchaser of $4.7 million of mortgage debt. The proceeds from this sale were invested in short-term securities until properties were acquired in 1995 in a tax-free exchange. In 1995, the registrant recorded a non-cash charge of $4.3 million for the cumulative effect of the change in accounting method for leasing costs. Previously, the registrant deferred internal leasing costs and amortized these costs over the lives of the consummated leases. This change in the method of accounting was made retroactive to January 1995 and, consequently, 1995 amounts have been restated to reflect this change. Property net operating income, which is calculated as revenue generated from rents and mortgage investment interest less property operating expenses and real estate taxes, was $11.3 million and $11.1 million for the three months ended June 30, 1996 and 1995, respectively. Property net operating income for properties in the portfolio for 1996 and 1995 and the apartment complex acquired in June 1996, increased by $.8 million over 1995. This increase is partially offset by the loss of property net operating income from the sale of three office buildings and a parking garage sold in December 1995 and February 1996 resulting in a net increase of $.1 million. Additionally, mortgage investment income increased by $.1 million due to the addition of a mortgage obtained in connection with the sale of the two office buildings and a parking garage noted previously. This mortgage was repaid in June 1996. Property net operating income increased by $.2 million when comparing the first six months of 1996 to the same period of 1995. This increase is primarily due to the addition of two mortgage investments in January 1995 and February 1996, respectively. Property net operating income from property operations for the first six months of 1996 was comparable to that of 1995. In the second quarter and first six months of 1995, the registrant had an average of $8 million and $13 million, respectively, in short-term investments from the proceeds of the sale of its 50% interest in two malls. These funds were used to purchase a retail property and an apartment complex in April and June of 1995, respectively. Mortgage interest expense increased when comparing 1996 to 1995 due to the three new mortgage loans, noted previously, totaling $36.5 million obtained in January and April of 1996. However, the registrant's refinancing in the fourth quarter of 1995 of four mortgage loans totaling $48 million at an average interest rate of 9.25% for one mortgage loan at 7.49% partially offsets the full effect of the increase in mortgage interest expense from the addition of the three mortgage loans in 1996. 3 4 Bank loans increased when comparing 1996 to 1995 due to increased borrowings on the bank credit facilities during the last half of 1995 and first six months of 1996. The borrowings were used to fund the registrant's capital improvement program and to purchase 950,000 shares of beneficial interest in January 1996. For the six months ended June 30, 1996, the registrant had an average of $59 million of bank lines of credit outstanding as compared to an average of $42 million in 1995. Depreciation and amortization expense for the first six months of 1996 increased over the same period in 1995 by approximately $1 million. This increase was caused by a non-recurring $680,000 non-cash, write-off of a tenant allowance due to the registrant replacing an anchor tenant at one of its malls. Additionally, the remaining increase in depreciation expense, when comparing 1996 to 1995, was caused by the registrant's capital improvement program during the last half of 1995 and first quarter of 1996. General and administrative expenses in the first six months of 1996 included a non-recurring, non-cash charge of $650,000 for the termination of an employment contract of a former executive. Additionally, proxy and litigation expenses of $1.1 million were included in general and administrative expenses in the first six months of 1995. PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings. - ------- ------------------ None. Item 2. Changes in Securities. - ------- ---------------------- None. Item 3. Defaults Upon Senior Securities. - ------- -------------------------------- None. Item 4. Submission of Matters to a Vote of Security Holders. - ------- ---------------------------------------------------- None. Item 5. Other Information. - ------- ------------------ None. 4 5 Item 6. Exhibits and Reports on Form 8-K. - ------- --------------------------------- (a) Exhibits: --------- Exhibit (11) - Statements Re: Computation of Per Share Earnings. Exhibit (12) - Statements Re: Ratios of Combined Income from Operations and Combined Net Income to Fixed Charges Exhibit (20) - Financial Statements (Unaudited) Combined Balance Sheets as of June 30, 1996 and December 31, 1995 Combined Statements of Income for the Three and Six Months ended June 30, 1996 and 1995 Combined Statements of Changes in Cash for the Three and Six Months ended June 30, 1996 and 1995 Notes to Combined Financial Statements Exhibit (27) - Financial Data Schedule (b) Reports on Form 8-K: -------------------- Report dated June 12, 1996 regarding proposed acquisition of retail properties. 5 6 SIGNATURES ---------- 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 thereunto duly authorized. First Union Real Estate Equity and Mortgage Investments ---------------------------------- (Registrant) Date: August 13, 1996 By: /s/James C. Mastandrea ----------------------------------- James C. Mastandrea, Chairman President, Chief Executive Officer and Chief Financial Officer Date: August 13, 1996 By: /s/John J. Dee -------------- John J. Dee, Senior Vice President, Chief Accounting Officer 6 7 Index to Exhibits -----------------
Page Number ------ Exhibit (11) - Statements Re: Computation of Per Share Earnings .............................................. 8 Exhibit (12) - Statements Re: Ratios of Combined Income from Operations and Combined Net Income to Fixed Charges............... 9 Exhibit (20) - Financial Statements (unaudited) Combined Balance Sheets as of June 30, 1996 and December 31, 1995.................................. 10 Combined Statements of Income for the Three and Six Months ended June 30, 1996 and 1995.................... 10 Combined Statements of Changes in Cash for the Three and Six Months ended June 30, 1996 and 1995...... 10 Notes to Combined Financial Statements................. 10 Exhibit (27) - Financial Data Schedule........................................ 11
7 EX-11 2 EXHIBIT 11 1 Exhibit 11 ---------- FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS ------------------------------------------------------- Statements Re: Computation of Per Share Earnings ------------------------------------------------ (In thousands, except per share data)
Three Months Ended Six Months Ending June 30, June 30 ----------------- ------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Shares Outstanding For computation of primary net income per share - Weighted average 17,231 18,151 17,232 18,152 ====== ====== ====== ====== For computation of fully diluted net income per share - Weighted average, without regard to exercise of shares under share option, restricted stock or employee incentive plans 17,171 18,110 17,160 18,100 Weighted average of outstanding shares issued under restricted stock plan 60 41 65 45 Weighted average of shares issued under employee incentive plan --- --- 7 7 ------ ------ ------ ------ Adjusted shares outstanding 17,231 18,151 17,232 18,152 ====== ====== ====== ====== Net income(1): Net income applicable to shares of beneficial interest (used for computing primary and fully diluted net income per share): $ 973 $ 1,312 $ 96 $ 27,424 ====== ========= ====== ======== Net Income per share of beneficial interest -- primary and fully diluted: Income before cumulative effect of accounting change .06 .07 .01 1.74 Cumulative effect of change in accounting for internal leasing costs --- --- --- ( .24) ------ ------ ------ ------ Net Income $ .06 $ .07 $ .01 $ 1.50 ====== ======= ======= ======= (1) Net income for 1995 has been restated to reflect the change in accounting method for internal leasing costs which was adopted retroactively to the first quarter of 1995.
8 EX-12 3 EXHIBIT 12 1 EXHIBIT 12 ---------- FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS STATEMENTS OF RATIOS OF COMBINED INCOME FROM OPERATIONS AND COMBINED NET INCOME TO FIXED CHARGES (IN THOUSANDS, EXCEPT RATIOS)
Six Months Ended June 30, Years Ended December 31, ------------------ ------------------------------------------------------ 1996 1995 1995 1994 1993 1992 1991 ------- ------- -------- -------- -------- -------- ------ Income before capital gain or loss, extraordinary loss and cumulative effect of accounting change $ 96 $ 1,879 $ 3,256 $ 6,485 $10,276 $12,657 $13,330 Add fixed charges, exclusive of construction interest capitalized 11,935 11,259 22,987 21,865 19,103 19,469 21,513 ------- -------- ------- ------- ------- ------- ------- Income from operations, as defined 12,031 13,138 26,243 28,350 29,379 32,126 34,843 Capital gains --- 29,870 29,870 --- 4,948 5,775 4,906 ------- -------- ------- ------ ------- ------- ------- Reduction for unrealized loss on carrying value of assets identified for disposition --- --- 14,000 --- --- --- --- ------- -------- ------- ------- ------ ------- ------- Net income, as defined $12,031 $ 43,008 $42,113 $28,350 $34,327 $37,901 $39,749 ======= ======== ======= ======= ======= ======= ======= Fixed charges: Interest - Mortgage loans $ 4,065 $ 3,914 $ 7,670 $ 7,335 $ 5,777 $ 6,182 $ 6,493 - Senior notes 4,652 4,652 9,305 9,305 5,779 4,199 4,199 - 10.25% debentures --- --- --- --- 3,214 3,858 3,858 - Bank loans and other 2,916 2,403 5,422 4,640 3,747 4,694 6,221 - Capitalized interest 95 5 169 --- --- --- --- Amortization of debt issue costs 99 90 184 168 162 122 95 Rents (1) 203 200 406 417 424 414 647 -------- -------- ------- ------- ------- ------- ------- Fixed charges, as defined $ 12,030 $ 11,264 $23,156 $21,865 $19,103 $19,469 $21,513 ======== ======== ======= ======= ======= ======= ======= Ratio of income from operations, as defined, to fixed charges 1.00 1.17 1.13 1.30 1.54 1.65 1.62 ======== ======== ======= ====== ======= ======= ======= Ratio of net income, as defined, to fixed charges 1.00 3.82 1.82 1.30 1.80 1.95 1.85 ======== ======== ======= ====== ======= ======= ======= - ----------------- (1) The interest portion of rentals is assumed to be one-third of all ground rental and net lease payments.
9 EX-20 4 EXHIBIT 20 1 Exhibit 20 FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS - ------------------------------------------------------- Combined Balance Sheets
Unaudited (In thousands, except shares) June 30, December 31, 1996 1995 --------------- ----------------- ASSETS Investments in real estate Land $ 51,756 $ 54,403 Buildings and Improvements 395,382 395,157 --------------- ----------------- 447,138 449,560 Less - Accumulated depreciation (106,828) (107,701) --------------- ----------------- Total investments in real estate 340,310 341,859 Mortgage loans receivable 42,149 42,042 Other assets Cash and cash equivalents 7,403 3,402 Accounts receivable and prepayments 7,962 4,536 Deferred charges and other, net 5,082 4,873 Unamortized debt issue costs 3,926 4,287 --------------- ----------------- $ 406,832 $ 400,999 =============== ================= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Mortgage loans $ 118,832 $ 83,854 Senior notes 105,000 105,000 Bank loans 51,670 69,600 Accounts payable and accrued liabilities 14,044 21,779 Deferred obligations 10,752 10,670 Deferred capital gains and other deferred income 7,738 7,741 Shareholders' equity, including shares of beneficial interest, $1 par, unlimited authorization, outstanding 1996--17,459,144; 1995--17,485,057 98,796 102,355 --------------- ----------------- $ 406,832 $ 400,999 =============== =================
2 Exhibit 20 FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS - ------------------------------------------------------- Combined Statements of Income
Unaudited (In thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, ----------------------------- ----------------------------- 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Revenues Rents $ 18,095 $ 18,334 $ 36,780 $ 36,323 Interest - Mortgage loans 1,266 1,121 2,471 2,193 - Short-term investments 2 121 9 407 ------------ ------------ ------------ ------------ 19,363 19,576 39,260 38,923 ------------ ------------ ------------ ------------ Expenses Property operating 6,010 6,258 13,176 12,557 Real estate taxes 2,046 2,130 4,066 4,128 Depreciation and amortization 3,013 2,891 6,766 5,666 Interest - Mortgage loans 2,240 1,925 4,065 3,914 - Senior notes 2,325 2,325 4,652 4,652 - Bank loans and other 1,349 1,275 2,916 2,403 General and administrative 1,407 1,460 3,523 3,724 ------------ ------------ ------------ ------------ 18,390 18,264 39,164 37,044 ------------ ------------ ------------ ------------ Income before capital gains and cumulative 973 1,312 96 1,879 effect of accounting change Capital gains 29,870 ------------ ------------ ------------ ------------ Income before cumulative effect of accounting 973 1,312 96 31,749 change for internal leasing costs Cumulative effect of change in accounting for internal leasing costs (4,325) ------------ ------------ ------------ ------------ Net income $ 973 $ 1,312 $ 96 $ 27,424 ============ ============ ============ ============ Per share Income before cumulative effect of accounting change $ .06 $ .07 $ .01 $ 1.74 Cumulative effect of change in accounting for internal leasing costs (.24) ------------ ------------ ------------ ------------ Net income $ .06 $ .07 $ .01 $ 1.50 ============ ============ ============ ============ Adjusted shares of beneficial interest 17,231 18,151 17,232 18,152 ============ ============ ============ ============
3 Exhibit 20 FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS - ------------------------------------------------------- Combined Statements of Changes in Cash
Unaudited (In thousands) Three Months Six Months Ended June 30, Ended June 30, ------------------------ ----------------------- 1996 1995 1996 1995 --------- --------- -------- -------- Cash provided by (used for) operations Net Income $ 973 $ 1,312 $ 96 $ 27,424 Adjustments to reconcile net income to net cash provided by operations -- Depreciation and amortization 3,013 2,891 6,766 5,666 Cumulative effect of change in accounting for internal leasing costs 4,325 Capital gains (29,870) Increase in deferred charges, net (245) (540) (574) (1,209) Increase in deferred interest on mortgage investments, net (97) (96) (193) (186) Increase in deferred obligations 42 36 82 71 Net changes in other assets and liabilities (3,045) (2,995) (459) 1,354 ---------- ---------- ---------- ---------- Net cash provided by operations 641 608 5,718 7,575 ---------- ---------- ---------- ---------- Cash provided by (used for) investing Repayment of mortgage investment 7,000 7,000 Principal received from mortgage investments 44 40 86 78 Proceeds from sale of properties 1,825 27,500 Advance deposit for property acquisitions (3,480) (3,480) Investments in properties (32,529) (32,844) Investments in capital and tenant improvements (4,784) (4,847) (13,446) (7,430) ---------- ---------- ---------- ---------- Net cash used for investing (1,220) (37,336) (8,015) (12,696) ---------- ---------- ---------- ---------- Cash provided by (used for) financing Increase in mortgage loans 24,000 36,500 (Decrease) increase in short-term loans (18,030) 7,418 (17,930) 8,570 Repayment of mortgage loans (802) (890) (1,522) (1,845) Sale of First Union shares 2 81 75 Dividends paid (1,920) (1,828) (3,948) (3,654) Debt issue costs paid (166) (38) (777) (38) Purchase of First Union shares (7,125) Sale of interest rate protection agreement 1,025 Other (8) 13 (6) (4) ---------- ---------- ---------- ---------- Net cash provided by financing 3,076 4,675 6,298 3,104 ---------- ---------- ---------- ---------- Increase (decrease) in cash and cash equivalents 2,497 (32,053) 4,001 (2,017) Cash and cash equivalents at beginning of period 4,906 33,011 3,402 2,975 ---------- ---------- ---------- ---------- Cash and cash equivalents at end of period $ 7,403 $ 958 $ 7,403 $ 958 ========== ========== ========== ========== Notes to Combined Financial Statements 1. Income per share of beneficial interest has been computed on weighted average shares and share equivalents outstanding for the applicable periods. 2. In 1995, the Trust changed its accounting method to directly expense internal leasing costs and recorded a $4.3 million charge for the cumulative effect of the accounting change retroactive to January 1, 1995. Previously, the Trust deferred and amortized these costs over the lives of consummated lease transactions. Depreciation and amortization, general and administrative expenses, income before capital gains and cumulative effect of accounting change, net income and earnings per share on the 1995 Combined Statements of Income and investment in properties on the 1995 Combined Statements of Changes in Cash have been restated to reflect the change in accounting. 3. In February 1996, the Trust sold two office buildings in Cleveland, Ohio for $1.8 million in cash and a $7 million mortgage note resulting in a loss of $5.6 million. This loss had been previously recognized during the fourth quarter of 1995. In January 1995, the Trust sold its 50% interests in two malls in Wilkes-Barre, Pennsylvania and Fairmount, West Virginia for a $2 million payment which was received in 1994, a tax-free exchange of these properties for $27.5 million of cash that was deposited into a tax intermediary escrow account, a $6 million mortgage note receivable and the assumption by the purchaser of $4.7 million in mortgage debt, resulting in a capital gain for financial reporting purposes of approximately $29.9 million.
EX-27 5 EXHIBIT 27
5 0000037008 FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS 1 U.S. DOLLARS 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 1 7,403,000 0 7,962,000 0 0 15,365,000 447,138,000 (106,828,000) 406,832,000 14,044,000 275,502,000 98,796,000 0 0 0 406,832,000 0 39,260,000 0 17,242,000 10,289,000 0 11,633,000 0 0 96,000 0 0 0 96,000 .01 .01
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