-----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, QqPLJYYfGr5AkU2f0rbeRmU0TURlXcLr/AruBZt40cGRAtNjHutSxcFGnWxgSsdI SGzgoi8K4QSDeRjmcmetqw== 0000950134-98-009455.txt : 19981207 0000950134-98-009455.hdr.sgml : 19981207 ACCESSION NUMBER: 0000950134-98-009455 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981020 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSCONTINENTAL REALTY INVESTORS INC CENTRAL INDEX KEY: 0000733590 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 946565852 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09240 FILM NUMBER: 98764239 BUSINESS ADDRESS: STREET 1: 10670 N CENTRAL EXPRWY STE 300 CITY: DALLAS STATE: TX ZIP: 75231 BUSINESS PHONE: 2146924700 MAIL ADDRESS: STREET 1: 10670 N CENTRAL EXPRWY STREET 2: SUITE 300 CITY: DALLAS STATE: TX ZIP: 75231 FORMER COMPANY: FORMER CONFORMED NAME: JOHNSTOWN CONSOLIDATED REALTY TRUST /CA/ DATE OF NAME CHANGE: 19890815 FORMER COMPANY: FORMER CONFORMED NAME: JOHNSTOWN CONSOLIDATED REALTY TRUST DATE OF NAME CHANGE: 19861005 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 October 20, 1998 ---------------------------------------------------- Date of Report (Date of Earliest Event Reported) TRANSCONTINENTAL REALTY INVESTORS, INC. --------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Nevada 0-13291 94-6565852 - ------------------------------------------------------------------------------- (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) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On October 20, 1998, Transcontinental Realty Investors, Inc. (the "Company") purchased the 208 unit Cliffs of Eldorado Apartments in McKinney, Texas for $12.8 million, approximately 4.0% of the Company's assets at December 31, 1997. The seller of the property was 96 Eldorado I, Ltd., an unrelated party. The property was constructed in 1997 and was 86% occupied on the date of purchase. The Company paid $1.6 million in cash, assumed the existing mortgage of $10.6 million and issued 5,829 shares of Series A Cumulative Convertible Preferred Stock with a total liquidation value of $583,000. The assumed mortgage bears interest at 8.125% per annum, requires monthly payments of principal and interest of $75,197 and matures in November 2037. In assessing the income producing property described above, the following were among the factors considered by management, geographic location of the property, performance of the property, new or renovated properties in the vicinity of the property and the maintenance and appearance of the property. In addition to the purchase described above, the Company has also purchased, in 1998, seven additional apartment complexes, one each in El Paso, Midland, and Addison, Texas in January 1998, two in Midland, Texas in April 1998 and one each in Odessa and Midland, Texas in May 1998. The Company has also purchased six office buildings, two in Dallas, Texas, one in February 1998 and the other in March 1998, three in San Diego, California, two in May 1998 and one in July 1998 and one in Palm Beach, Florida in June 1998. In addition to these income producing properties, the Company has also purchased four parcels of undeveloped land, two in Dallas, Texas, one in January 1998 and the other in February 1998, one in Farmers Branch, Texas in May 1998 and one in Austin, Texas in July 1998. The above income producing properties and undeveloped land were purchased for a total of $58.4 million. The Company paid $21.8 million in cash and financed the remainder of the purchase prices. The mortgages secured by the properties bear interest at fixed and variable rates, ranging from 7.2% to 9.91% per annum and mature from October 1999 to March 2018. In 1998, the Company sold two retail centers, one in March 1998 and one in September 1998 and an office building in September 1998. In connection with the sales, the Company received net cash totaling $21.3 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, 1997 and the nine months ended September 30, 1998. The pro forma statements of operations present the Company's operations as if the transactions described above had occurred at January 1, of each of the periods presented. A pro forma balance sheet as of September 30, 1998 is also presented. The pro forma balance sheet presents the Cliffs of Eldorado purchase, described above, as if it had occurred at January 1, 1998. 2 3 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1998
Cliffs of Eldorado Actual(1) Apartments(2) Pro Forma -------- ------------- --------- (dollars in thousands) Assets ------ Notes and interest receivable Performing .............. $ 1,610 $ -- $ 1,610 Nonperforming ........... 806 -- 806 ---------- ---------- ---------- 2,416 -- 2,416 Less - allowance for estimated losses ........ (891) -- (891) Foreclosed real estate held for sale ................ 3,867 -- 3,867 Real estate held for sale, net of accumulated depreciation ............ 6,524 -- 6,524 Real estate held for investment, net of accumulated depreciation 309,039 13,236 322,275 Investment in partnerships .. 3,877 -- 3,877 Cash and cash equivalents ... 19,657 (1,830) 17,827 Other assets ................ 15,614 251 15,865 ---------- ---------- ---------- $ 360,103 $ 11,657 $ 371,760 ========== ========== ==========
- ------------------------------------- (1) Includes the Mountain Plaza Apartments, Hunters Glen Apartments and Bent Tree Garden Apartments which were acquired in January 1998, the Parkway North Office Building acquired in February 1998, the Plaza on Bachman Creek acquired in March 1998, the 4400 Apartments and Ashton Way Apartments acquired in April 1998, the Woodview Apartments, Emerald Terrace Apartments, Daley Plaza and Viewridge Building acquired in May 1998, the Atrium Office Building acquired in June 1998 and the Valley Rim Office Building acquired in July 1998 and excludes the Shaws Plaza Shopping Center which was sold in March 1998 and the Chesapeake Ridge Office Building and Northtown Mall Shopping Center which were sold in September 1998. (2) Assumes purchase by the Company on January 1, 1998. 3 4 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA CONSOLIDATED BALANCE SHEET - Continued SEPTEMBER 30, 1998
Cliffs of Eldorado Actual(1) Apartments(2) Pro Forma --------- ------------- --------- (dollars in thousands, except per share) Liabilities and Shareholders' Equity - ------------------------------------ Liabilities Notes and interest payable .... $ 258,782 $ 10,683 $ 269,465 Other liabilities ............. 8,738 391 9,129 ---------- ---------- --------- 267,520 11,074 278,594 Commitments and contingencies Shareholders' equity Common Stock, $.01 par value; 10,000,000 shares; issued and outstanding, 3,872,505 shares .................... 39 -- 39 Preferred Stock, $.01 par value, authorized 1,000,000 shares, Series A issued and outstanding, 5,829 shares (liquidation preference $583,000) ................. -- -- -- Paid-in capital ............... 217,431 583 218,014 Accumulated distributions in excess of accumulated earnings .................. (124,887) -- (124,887) ---------- ---------- ---------- 92,583 583 93,166 ---------- ---------- ---------- $ 360,103 $ 11,657 $ 371,760 ========== ========== ==========
- ---------------------------------- (1) Includes the Mountain Plaza Apartments, Hunters Glen Apartments and Bent Tree Garden Apartments which were acquired in January 1998, the Parkway North Office Building acquired in February 1998, the Plaza on Bachman Creek acquired in March 1998, the 4400 Apartments and Ashton Way Apartments acquired in April 1998, the Woodview Apartments, Emerald Terrace Apartments, Daley Plaza and Viewridge Building acquired in May 1998, the Atrium Office Building acquired in June 1998 and the Valley Rim Office Building acquired in July 1998 and excludes the Shaws Plaza Shopping Center which was sold in March 1998 and the Chesapeake Ridge Office Building and Northtown Mall Shopping Center which were sold in September 1998. (2) Assumes purchase by the Company on January 1, 1998. 4 5 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1998
Cliffs Other of Apartment Commercial Property Eldorado Actual Complexes Properties Purchases Apartments Sales ----------- ----------- ----------- ----------- ----------- ----------- (dollars in thousands) Income Rents ............... $ 51,414 $ 280 $ 1,059 $ 622 $ 1,216 $ (2,064) Income .............. 593 -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- 52,007 280 1,059 622 1,216 (2,064) Expenses Property operations ......... 27,355 241 402 419 682 (710) Interest ............ 16,865 -- -- -- -- (598) Depreciation ........ 7,882 -- -- -- -- (428) Advisory and net income fee to affiliate .......... 2,578 -- -- -- -- -- General and administrative .... 1,649 -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- 56,329 241 402 419 682 (1,736) Net income (loss) from operations .... (4,322) 39 657 203 534 (328) Equity in income of investees ....... 342 -- -- -- -- -- Gain on sale of real estate ........ 12,015 -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Net income (loss) ...... $ 8,035 $ 39 $ 657 $ 203 $ 534 $ (328) =========== =========== =========== =========== =========== =========== Earnings per share Net income (loss) ... $ 2.07 =========== Weighted average shares of Common Stock used in computing earnings per share ........... 3,876,505 =========== Pro Forma Pro Forma Adjustments Combined ----------- ----------- (dollars in thousands) Income Rents ............... $ -- $ 52,527 Income .............. -- 593 ----------- ----------- -- 53,120 Expenses Property operations ......... -- 28,389 Interest ............ 2,799 19,066 Depreciation ........ 1,029 8,483 Advisory and net income fee to affiliate .......... -- 2,578 General and administrative .... -- 1,649 ----------- ----------- 3,828 60,165 Net income (loss) from operations .... (3,828) (7,045) Equity in income of investees ....... -- 342 Gain on sale of real estate ........ -- 12,015 ----------- ----------- Net income (loss) ...... $ (3,828) $ 5,312 =========== =========== Earnings per share Net income (loss) ... $ 1.37 =========== Weighted average shares of Common Stock used in computing earnings per share ........... 3,876,505 ===========
The accompanying footnotes are an integral part of this Pro Forma Combined Statement of Operations. 5 6 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1998 1. The Pro Forma Combined Statement of Operations assumes the property was purchased or sold by the Company on January 1, 1998. Pro forma operating results for purchased properties are from January 1 through the respective date of purchase only. Results subsequent to the dates of purchase are included in the "Actual" column. 2. The caption "Apartment Complexes" includes Mountain Plaza, 4400 and Ashton Way Apartments. For further information, see the Company's Current Report on Form 8-K, dated May 29, 1998 as amended on Form 8-K/A, dated September 23, 1998. Revenues: Mountain Plaza Apartments $ 46 4400 Apartments 97 Ashton Way Apartments 137 ------- $ 280 ======= Property Operations Expenses: Mountain Plaza Apartments $ 25 4400 Apartments 93 Ashton Way Apartments 123 ------- $ 241 =======
3. The caption "Commercial Properties" includes Parkway North Office Building, Plaza on Bachman Creek, Atrium Office Building and Valley Rim Office Building. For further information on Parkway North Office Building and Plaza on Bachman Creek see the Company's Current Report on Form 8-K, dated May 29, 1998, as amended on Form 8-K/A, dated September 23, 1998. For the Atrium and Valley Rim Office Buildings see the Company's Current Report on Form 8-K, dated June 26, 1998, as amended on Form 8-K/A, dated October 16, 1998. Revenues: Parkway North Office Building $ 163 Plaza on Bachman Creek 195 Atrium Office Building 365 Valley Rim Office Building 336 ------ $1,059 ====== Property Operations Expenses: Parkway North Office Building $ 57 Plaza on Bachman Creek 53 Atrium Office Building 168 Valley Rim Office Building 124 ------ $ 402 ======
4. Other property purchases includes Bent Tree Garden, Hunters Glen, Woodview and Emerald Terrace Apartments, as well as Daley Plaza 6 7 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued NINE MONTHS ENDED SEPTEMBER 30, 1998 and View Ridge Office Buildings. The sellers of these properties were not able to provide either audited statements of operations or access to the respective property's financial records to enable the Company to have an audit performed. These properties in total represent approximately 6.8% of the Company's assets at December 31, 1997. Revenues: Bent Tree Garden Apartments $111 Hunters Glen Apartments 27 Woodview Apartments 266 Emerald Terrace Apartments 182 Daley Plaza Office Building 29 Viewridge Office Building 7 ---- Total $622 ==== Property Operations Expenses: Bent Tree Garden Apartments $ 68 Hunters Glen Apartments 17 Woodview Apartments 182 Emerald Terrace Apartments 128 Daley Plaza Office Building 22 Viewridge Office Building 2 ---- Total $419 ====
5. Statement of operations for the one month ended October 31, 1997, November 30, 1997, April 30, 1998 and for the six months ended June 30, 1998 were obtained for Mountain Plaza Apartments, Parkway North Office Building, Valley Rim Office Building and Cliffs of Eldorado Apartments, respectively. Such statements were used as the basis for estimating their respective operating results for the nine months ended September 30, 1998. The previous years' actual amounts were used to estimate the interim period January 1 to the respective dates of purchase for the remaining properties. 6. The pro forma interest adjustment is based on the mortgages obtained, assumed or seller financing obtained, if any, for each property at its respective date of purchase. The pro forma 7 8 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued NINE MONTHS ENDED SEPTEMBER 30, 1998 depreciation adjustment is based on the purchase price of each property depreciated under the Company's established depreciation policies. Interest: Atrium Office Building $ 246 Valley Rim Office Building 266 Ashton Way Apartments 73 Bent Tree Gardens Apartments 348 Cliffs of Eldorado Apartments 653 Emerald Terrace Apartments 61 4400 Apartments 73 Hunters Glen Apartments 115 Mountain Plaza Apartments 183 Woodview Apartments 142 Daley Plaza Office Building 249 Plaza on Bachman Creek 163 Parkway North Office Building 132 Viewridge Office Building 95 ------ Total $2,799 ====== Depreciation: Atrium Office Building $ 87 Valley Rim Office Building 81 Ashton Way Apartments 29 Bent Tree Gardens Apartments 129 Cliffs of Eldorado Apartments 250 Emerald Terrace Apartments 23 Hunters Glen Apartments 39 4400 Apartments 26 Mountain Plaza Apartments 63 Woodview Apartments 54 Daley Plaza Office Building 74 Plaza on Bachman Creek 55 Parkway North Office Building 89 Viewridge Office Building 30 ------ Total $1,029 ======
7. Interim operating results for Shaws Plaza Shopping Center which was sold in March 1998 and the Chesapeake Ridge Office Building and Northtown Mall Shopping Center which were both sold in September 1998 are their actual operating results from January 1 to the date of sale. 8 9
TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS TWELVE MONTHS ENDED DECEMBER 31, 1997 Other Cliffs of Apartment Commercial Property Eldorado Actual Complexes Properties Purchases Apartments Sales ----------- ----------- ----------- ----------- ----------- ----------- (dollars in thousands) Income Rents ...................... $ 54,462 $ 2,022 $ 3,001 $ 3,300 $ 583 $ (2,115) Income ..................... 1,499 -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- 55,961 2,022 3,001 3,300 583 (2,115) Expenses Property operations ........ 32,424 1,444 1,182 2,128 413 (677) Interest ................... 16,765 -- -- -- -- (651) Depreciation ............... 9,578 -- -- -- -- (417) Advisory fee to affiliate .. 1,807 -- -- -- -- -- Net income fee to affiliate 1,022 -- -- -- -- -- General and administrative . 2,645 -- -- -- -- -- Provision for losses ....... 1,337 -- -- -- -- (1,337) ----------- ----------- ----------- ----------- ----------- ----------- 65,578 1,444 1,182 2,128 413 (3,082) Income (loss) from operations . (9,617) 578 1,819 1,172 170 967 Equity in income of investees . 812 -- -- -- -- -- Gain on sale of real estate ... 21,404 -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Net income (loss) ............. $ 12,599 $ 578 $ 1,819 $ 1,172 $ 170 $ 967 =========== =========== =========== =========== =========== =========== Earnings per share Net income (loss) .......... $ 3.22 =========== Weighted average shares of Common Stock used in computing earnings per share 3,907,221 3,907,221 =========== =========== Pro Forma Pro Forma Adjustments Combined ----------- ----------- Income Rents ...................... $ -- $ 61,253 Income ..................... -- 1,499 ----------- ----------- -- 62,752 Expenses Property operations ........ -- 36,914 Interest ................... 3,705 19,819 Depreciation ............... 1,361 10,522 Advisory fee to affiliate .. -- 1,807 Net income fee to affiliate -- 1,022 General and administrative . -- 2,645 Provision for losses ....... -- -- ----------- ----------- 5,066 72,729 Income (loss) from operations . (5,066) (9,977) Equity in income of investees . -- 812 Gain on sale of real estate ... -- 21,404 ----------- ----------- Net income (loss) ............. $ (5,066) $ 12,239 =========== =========== Earnings per share Net income (loss) .......... $ 3.13 =========== Weighted average shares of Common Stock used in computing earnings per share 3,907,221 ===========
The accompanying footnotes are an integral part of this Pro Forma Combined Statement of Operations. 9 10 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 1. The Pro Forma Combined Statement of Operations assumes the property was purchased or sold by the Company on January 1, 1997. 2. The caption "Apartment Complexes" includes Mountain Plaza, 4400 and Ashton Way Apartments. For further information, refer to the Company's Current Report on Form 8-K, dated May 29, 1998 as amended on Form 8-K/A, dated September 23, 1998. Revenues: Mountain Plaza Apartments $1,085 4400 Apartments 389 Ashton Way Apartments 548 ------ $2,022 ====== Property Operations Expenses: Mountain Plaza Apartments $ 592 4400 Apartments 372 Ashton Way Apartments 480 ------ $1,444 ======
3. The caption "Commercial Properties" includes Parkway North Office Building, Plaza on Bachman Creek, Atrium Office Building and Valley Rim Office Building. For further information on the Parkway North Office Building and Plaza on Bachman Creek see the Company's Current Report on Form 8-K, dated May 29, 1998, as amended on Form 8-K/A, dated September 23, 1998. For the Atrium and Valley Rim Office Buildings see the Company's Current Report on Form 8-K, dated June 26, 1998, as amended on Form 8-K/A, dated October 16, 1998. Revenues: Parkway North Office Building $ 938 Plaza on Bachman Creek 506 Atrium Office Building 885 Valley Rim Office Building 672 ------ $3,001 ====== Property Operations Expenses: Parkway North Office Building $ 393 Plaza on Bachman Creek 252 Atrium Office Building 290 Valley Rim Office Building 247 ------ $1,182 ======
4. Other property purchases includes Bent Tree Garden, Hunters Glen, Woodview and Emerald Terrace Apartments, as well as Daley Plaza and View Ridge Office Buildings. The sellers of these properties were not able to provide either audited statements of operations or access to the respective property's financial records to enable 10 11 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued YEAR ENDED DECEMBER 31, 1997 the Company to have an audit performed. These properties in total represent approximately 6.8% of the Company's assets at December 31, 1997. 5. The amounts for Mountain Plaza Apartments, Parkway North Office Building, Plaza on Bachman Creek, 4400 Apartments, Ashton Way Apartments, Atrium Office Building and Valley Rim Office Building are from their respective audited statements of operations. Revenues: Bent Tree Garden Apartments $1,338 Hunters Glen Apartments 643 Woodview Apartments 797 Emerald Terrace Apartments 436 Viewridge Office Building 69 Daley Plaza Office Building 17 ------ Total $3,300 ====== Property Operations: Bent Tree Garden Apartments $ 809 Hunters Glen Apartments 406 Woodview Apartments 546 Emerald Terrace Apartments 307 Viewridge Office Building 54 Daley Plaza Office Building 6 ------ Total $2,128 ======
6. The amounts for Bent Tree Gardens Apartments, Hunters Glen Apartments, Woodview Apartments, Emerald Terrace Apartments, Viewridge Office Building and Daley Plaza are based on available financial information or estimates made in conjunction with the respective purchase. 7. The pro forma interest adjustment is based on the mortgages obtained or assumed and seller financing obtained, if any, for each property at its respective date of purchase. The pro forma 11 12 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued YEAR ENDED DECEMBER 31, 1997 depreciation adjustment is based on the purchase price of each property depreciated under the Company's established depreciation policies. Interest: Atrium Office Building $ 325 Valley Rim Office Building 352 Ashton Way Apartments 96 Bent Tree Gardens Apartments 461 Cliffs of Eldorado Apartments 865 Emerald Terrace Apartments 81 4400 Apartments 96 Hunters Glen Apartments 152 Mountain Plaza Apartments 242 Woodview Apartments 188 Daley Plaza Office Building 330 Plaza on Bachman Creek 216 Parkway North Office Building 175 Viewridge Office Building 126 ------ Total $3,705 ====== Depreciation: Atrium Office Building $ 115 Valley Rim Office Building 108 Ashton Way Apartments 38 Bent Tree Gardens Apartments 170 Cliffs of Eldorado Apartments 330 Emerald Terrace Apartments 31 Hunters Glen Apartments 52 4400 Apartments 36 Mountain Plaza Apartments 83 Woodview Apartments 72 Daley Plaza Office Building 97 Plaza on Bachman Creek 73 Parkway North Office Building 117 Viewridge Office Building 39 ------ Total $1,361 ======
8. Operating results for Shaws Plaza Shopping Center which was sold in March 1998 and the Chesapeake Ridge Office Building and Northtown Mall Shopping Center which were both sold in September 1998 are their actual operating results for the year ended December 31, 1997. 12 13 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (b) Financial statements of property acquired: Exhibit Number Description - ------- ----------------------------------------------------------------- 99.0 Audited Statement of Revenue and Direct Operating Expenses of Mountain View Apartments for the year ended December 31, 1997 (incorporated by reference to Exhibit 99.0 of the Registrant's Current Report on Form 8-K/A, dated May 29, 1998). 99.1 Audited Statement of Revenue and Direct Operating Expenses of Parkway North for the year ended December 31, 1997 (incorporated by reference to Exhibit 99.1 of the Registrant's Current Report on Form 8-K/A, dated May 29, 1998). 99.2 Audited Statement of Revenue and Direct Operating Expenses of Plaza on Bachman Creek for the year ended December 31, 1997 (incorporated by reference to Exhibit 99.2 of the Registrant's Current Report on Form 8-K/A, dated May 29, 1998). 99.3 Audited Statement of Revenue and Direct Operating Expenses of 4400 Apartments for the year ended December 31, 1997 (incorporated by reference to Exhibit 99.3 of the Registrant's Current Report on Form 8-K/A, dated May 29, 1998). 99.4 Audited Statement of Revenue of Ashton Way Apartments for the year ended December 31, 1997 (incorporated by reference to Exhibit 99.4 of the Registrant's Current Report on Form 8-K/A, dated May 29, 1998). 99.5 Mountain Plaza Statement of Operations for the ten months ended October 31, 1997, (incorporated by reference to Exhibit 99.5 of the Registrant's Current Report on Form 8-K/A, dated May 29, 1998). 99.6 Parkway North Statement of Operations for the eleven months ended November 30, 1997, (incorporated by reference to Exhibit 99.6 of the Registrant's Current Report on Form 8-K/A, dated May 29, 1998). 99.7 Audited Statement of Revenue and Direct Operating Expenses of Atrium Office Building for the year ended December 31, 1997 (incorporated by reference to Exhibit 99.7 of the Registrant's Current Report on Form 8-K/A, dated June 26, 1998). 99.8 Audited Statement of Revenue and Direct Operating Expenses of Valley Rim Building for the year ended December 31, 1997 (incorporated by reference to Exhibit 99.8 of the Registrant's Current Report on Form 8-K/A, dated June 26, 1998). 13 14 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued) Exhibit Number Description - ------- ----------------------------------------------------------------- 99.9 Valley Rim Building Statement of Operations for the four months ended April 30, 1998 (incorporated by reference to Exhibit 99.9 of the Registrant's Current Report on Form 8-K/A, dated June 26, 1998). 99.10 Audited Statement of Revenue and Direct Operating Expenses of Cliffs of Eldorado Apartments for the year ended December 31, 1997, filed herewith. 99.11 Cliffs of Eldorado Apartments Statement of Operations for the six months ended June 30, 1998, filed herewith. 14 15 SIGNATURE PAGE 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. TRANSCONTINENTAL REALTY INVESTORS, INC. Date: December 4, 1998 By: /s/ Thomas A. Holland ---------------------- -------------------------- Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 15 16 TRANSCONTINENTAL REALTY INVESTORS, INC. EXHIBITS TO CURRENT REPORT ON FORM 8-K/A Dated October 20, 1998
Exhibit Number Description - ------- ----------------------------------------------------------------- 99.10 Audited Statement of Revenue and Direct Operating Expenses of Cliffs of Eldorado Apartments for the year ended December 31, 1997, filed herewith. 99.11 Cliffs of Eldorado Apartments Statement of Operations for the six months ended June 30, 1998.
16 EX-99.10 2 AUDITED STATEMENT OF REVENUE 1 EXHIBIT 99.10 THE CLIFFS OF ELDORADO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES NINE MONTHS ENDED DECEMBER 31, 1997 2 Independent Auditors' Report To the Board of Trustees Transcontinental Realty Investors, Inc. We have audited the accompanying statement of revenues and direct operating expenses of The Cliffs of Eldorado for the nine months ended December 31, 1997. 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 Transcontinental Realty Investors, Inc.) 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 Cliffs of Eldorado for the nine months ended December 31, 1997, in conformity with generally accepted accounting principles. FARMER, FUQUA, HUNT & MUNSELLE, P.C. Dallas, Texas October 30, 1998 3 THE CLIFFS OF ELDORADO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES Nine months ended December 31, 1997 REVENUES Net rental revenues $572,693 Other revenues 10,177 -------- Total revenues 582,870 DIRECT OPERATING EXPENSES Repairs and maintenance 162,483 Salaries and benefits 131,774 Utilities 71,995 Property taxes 39,026 Insurance 7,813 -------- Total direct operating expenses 413,091 -------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $169,779 ========
The accompanying notes are an integral part of this statement. 4 THE CLIFFS OF ELDORADO NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES December 31, 1997 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION The Cliffs of Eldorado is a 208-unit apartment complex located in McKinney, Texas. During 1997, the property was owned by 96 Eldorado I, Ltd. The property is operated under the provisions of Section 221(d)(4) of the National Housing Act, with mortgage insurance provided by the Federal Housing Administration (FHA) of the Department of Housing and Urban Development. 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 consists of the following: NSF Fees $ 5,093 Other Income 5,084 ------- $10,177 =======
NOTE 4: SUBSEQUENT EVENT The property was sold to Transcontinental Realty Investors, Inc., a Nevada corporation, on October 20, 1998. EX-99.11 3 STATEMENT OF OPERATIONS 6/30/98 - EL DORADO APTS. 1 EXHIBIT 99.11 Report Date: 07/25/98 INCOME STATEMENT Page: 1 Company: SW SOUTHWEST PROPERTIES GROUP, INC. Date: 08/12/98 Development ID: ELA 96 ELDORADO I LTD Time: 12:10:29
CURRENT PERIOD 1 MONTH 1 MONTH THRU: JUN 1998 BUDGET VARIANCE % ---------- ---------- ---------- ---------- REVENUES RENTAL INCOME Gross Scheduled Income 168,960 168,960 0 0.00 Vacancies - Apartments (30,433) (11,827) (18,606) (157.32) Concession/Mkt Gain (Loss) (9,533) (1,250) (8,283) (662.64) Employee Rent Allowances (638) (589) (49) (8.23) Month to Month Premium 0 100 (100) (100.00) Security Deposit Forfeit 150 200 (50) (25.00) ---------- ---------- ---------- ---------- TOTAL RENT REVENUE 128,506 155,594 (27,088) (17.41) BAD DEBT Low Delinquencies (3,352) (2,500) (852) (34.07) Paid Delinquencies 920 1,652 (732) (44.31) ---------- ---------- ---------- ---------- TOTAL BAD DEBT (2,432) (848) (1,584) (186.77) PREPAID RENT Prepaid Rents 23,525 595 22,930 3,853.71 Prepaid Rents Applied (25,591) (595) (24,996) ****.** ---------- ---------- ---------- ---------- NET PREPAID RENT (2,066) 0 (2,066) 0.00 ---------- ---------- ---------- ---------- NET RENTAL COLLECTION 124,008 154,746 (30,738) (19.86) OTHER INCOME Damages and Cleaning Fees 0 0 0 0.00 Other Revenue 481 7,260 (6,779) (93.37) Rent Inc. - Application Fee 965 600 365 60.83 Interest Income 0 0 0 0.00 Pending/Tel./Utility/Etc. 523 100 423 422.85 Rent Income-Late Charges 1,301 250 1,051 420.21 NSF Fees 50 100 (50) (50.00) Rent Inc.-Furniture/Eqpts 1,103 1,040 63 6.04 Rent Inc.-Garage/Storage 2,478 4,485 (2,007) (44.74) Rent Income-Pet Income 600 0 600 0.00 Insufficient Notice Penalty 1,715 200 1,515 757.35 ---------- ---------- ---------- ---------- TOTAL OTHER INCOME 9,216 14,035 (4,819) (34.34) ---------- ---------- ---------- ---------- EFFECTIVE GROSS INCOME 133,224 168,781 (35,557) (21.07)
YEAR-TO-DATE 6 MONTHS 6 MONTHS THRU: JUN 1998 BUDGET VARIANCE % ----------- ---------- ---------- ---------- REVENUES RENTAL INCOME Gross Scheduled Income 1,013,760 1,013,760 0 0.00 Vacancies - Apartments (213,873) (135,166) (78,707) (58.23) Concession/Mkt Gain (Loss) (37,406) (31,910) (5,496) (17.22) Employee Rent Allowances (2,922) (3,534) 612 17.31 Month to Month Premium 100 600 (500) (83.33) Security Deposit Forfeit 2,350 1,200 1,150 95.83 ----------- ---------- ---------- ---------- TOTAL RENT REVENUE 762,008 844,950 (82,942) (9.82) BAD DEBT Low Delinquencies (22,843) (15,000) (7,843) (52.29) Paid Delinquencies 19,157 10,499 8,658 82.46 ----------- ---------- ---------- ---------- TOTAL BAD DEBT (3,686) (4,501) 815 18.10 PREPAID RENT Prepaid Rents 98,853 3,570 95,283 2,668.98 Prepaid Rents Applied (104,005) (3,570) (100,435) ****.** ----------- ---------- ---------- ---------- NET PREPAID RENT (5,152) 0 (5,152) 0.00 ----------- ---------- ---------- ---------- NET RENTAL COLLECTION 753,170 840,449 (87,279) (10.38) OTHER INCOME Damages and Cleaning Fees 2,735 0 2,735 0.00 Other Revenue (270) 14,520 (14,790) (101.86) Rent Inc. - Application Fee 2,345 3,600 (1,255) (34.86) Interest Income 5,461 0 5,461 0.00 Pending/Tel./Utility/Etc. 7,820 600 7,220 1,203.31 Rent Income-Late Charges 4,421 1,500 2,921 194.71 NSF Fees 750 600 150 25.00 Rent Inc.-Furniture/Eqpts 7,882 6,240 1,642 26.32 Rent Inc.-Garage/Storage 15,007 26,910 (11,903) (44.23) Rent Income-Pet Income 1,800 0 1,800 0.00 Insufficient Notice Penalty 9,528 1,200 8,328 693.98 ----------- ---------- ---------- ---------- TOTAL OTHER INCOME 57,479 55,170 2,309 4.18 ----------- ---------- ---------- ---------- EFFECTIVE GROSS INCOME 810,649 895,619 (84,970) (9.49)
2
- ---------------------------------------------------------------------------------------------------------------------------------- Report Date: 07/25/98 Income Statement Page: 2 Company: SW SOUTHWEST PROPERTIES GROUP, INC. Date: 08/12/98 Development ID: ELA 96 ELDORADO I LTD Time: 12:10:31 - ---------------------------------------------------------------------------------------------------------------------------------- Current Period Year-to-Date 1 Month 1 Month 6 Months 6 Months Thru: Jun 1998 Budget Variance % Jun 1998 Budget Variance % - ---------------------------------------------------------------------------------------------------------------------------------- EXPENSES PAYROLL/BENEFITS Manager/Assistant 5,133 3,694 (1,439) (38.94) 28,877 25,131 (3,746) (14.91) Rental Agent Payroll 2,044 1,203 (841) (69.91) 10,096 7,218 (2,878) (39.87) Maintenance Payroll 5,044 3,523 (1,521) (43.16) 27,100 22,269 (4,831) (21.69) Grounds Payroll 746 737 (9) (1.20) 4,924 4,422 (502) (11.34) Cleaning Payroll 746 737 (9) (1.20) 4,926 4,422 (504) (11.39) Courtesy Officer Allowance 595 595 0 0.00 3,570 3,570 0 0.00 Payroll Taxes-Unemployment 112 532 420 78.86 1,709 2,956 1,247 42.18 Payroll Taxes - FICA 938 1,025 87 8.45 6,003 5,696 (307) (5.39) Health Ins. & Other Bene. 735 1,145 410 35.79 7,813 6,870 (943) (13.73) Payroll-Workers Compensation 1,186 1,295 109 8.41 7,779 7,198 (581) (8.07) ---------- ---------- ---------- ---------- -------- -------- ----------- ------ TOTAL PAYROLL/BENEFITS 17,279 14,486 (2,793) (19.28) 102,797 89,752 (13,045) (14.53) RENTING EXPENSES Advertising & Promotions 2,220 1,085 (1,135) (104.61) 16,977 7,550 (9,427) (124.85) Advertising-Publications 0 0 0 0.00 675 0 (675) 0.00 Promotional Expense 283 0 (283) 0.00 1,771 0 (1,771) 0.00 Outside Commissions 1,800 500 (1,300) (260.00) 6,357 3,000 (3,357) (111.88) Commissions 700 3,500 2,800 80.00 7,775 11,000 3,225 29.32 Credit Checks 374 500 126 25.20 2,277 3,000 723 24.10 Resident Retention 214 0 (214) 0.00 671 0 (671) 0.00 Misc. Renting Expenses 0 100 100 100.00 1,855 1,000 (855) (85.53) ---------- ---------- ---------- ---------- ---------- ---------- ----------- ------ TOTAL RENTING EXPENSE 5,592 5,685 93 1.64 38,357 25,550 (12,807) (50.13) ADMINISTRATIVE EXPENSE Telephone Expenses 581 313 (268) (85.47) 3,926 2,176 (1,750) (80.42) Office Supplies 1,927 150 (1,777) ****.** 6,547 900 (5,647) (627.41) Postage & Delivery 275 32 (243) (757.81) 1,066 192 (874) (454.96) Management Fee 5,108 5,664 556 9.83 26,070 33,984 7,914 23.29 Asset Management Fee 2,189 2,427 238 9.81 14,557 14,562 5 0.03 Legal Expenses (Project) 0 200 200 100.00 225 1,200 975 81.25 Misc. Administr. Expenses 85 50 (35) (70.60) 2,337 300 (2,037) (678.95) ---------- ---------- ---------- ---------- ---------- ---------- ----------- ------ TOTAL ADMINISTRATIVE EXP 10,164 8,836 (1,328) (15.03) 54,727 53,314 (1,413) (2.65) UTILITIES Electricity-Common Areas 2,243 2,550 307 12.03 15,546 15,300 (246) (1.61) Electricity-Vacant Units 1,984 250 (1,734) (693.45) 10,347 1,500 (8,847) (589.83) Water/Sewer - Common Area 6,230 3,000 (3,230) (107.65) 27,719 18,000 (9,719) (53.99) ---------- ---------- ---------- ---------- ---------- ---------- ----------- ------ TOTAL UTILITY EXPENSE 10,456 5,800 (4,656) (80.28) 53,612 34,800 (18,812) (54.06) OPERATING EXPENSE Cleaning Supplies 66 100 34 33.92 771 600 (171) (28.52) Security Contract 476 513 37 7.29 2,771 3,078 307 9.98 Exterminating Contract 270 271 1 0.30 1,621 1,626 5 0.30
22 3 Report Date: 07/25/98 INCOME STATEMENT Page: 3 Company: SW SOUTHWEST PROPERTIES GROUP, INC. Date: 08/12/98 Development ID: ELA 96 ELDORADO I LTD Time: 12:10:33
CURRENT PERIOD Year-to-Date 1 Month 1 Month 6 Months 6 Months Thru: Jun 1998 Budget Variance % Jun 1998 Budget Variance % -------- -------- -------- -------- -------- -------- -------- -------- Garbage & Trash Removal 230 1,010 780 77.18 3,288 6,060 2,772 45.74 Uniforms 1,000 0 (1,000) 0.00 1,000 2,500 1,500 60.02 Licenses/Permits/Signs 715 0 (715) 0.00 715 0 (715) 0.00 Cleaning-Contract 405 0 (405) 0.00 405 0 (405) 0.00 Corporate Unit Expenses 469 0 (469) 0.00 7,548 0 (7,548) 0.00 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL OPERATING EXPENSE 3,631 1,894 (1,737) (91.69) 18,119 13,864 (4,255) (30.69) REPAIRS & MAINTENANCE Fence & Gate Repairs 2,016 0 (2,016) 0.00 2,600 0 (2,600) 0.00 Plumbing Repairs 0 150 150 100.00 165 500 335 66.94 Electrical Repairs 0 150 150 100.00 150 500 350 70.03 Electrical-Contract 0 0 0 0.00 11 0 (11) 0.00 Air Conditioning 0 510 510 100.00 451 1,120 669 59.76 Swimming Pool/Parts/Suppl 0 175 175 100.00 487 1,025 538 52.47 Misc. Maintenance Expense 11 150 139 92.97 927 900 (27) (3.03) Equipment Parts/Supplies 40 200 160 79.99 193 800 607 75.86 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL REPAIR & MAINT EXP 2,066 1,335 (731) (54.79) 4,985 4,845 (140) (2.88) GROUNDS EXPENSE Grounds Contract 2,517 2,500 (17) (0.67) 15,101 15,000 (101) (0.67) -------- -------- -------- -------- -------- -------- -------- -------- TOTAL GROUNDS EXPENSE 2,517 2,500 (17) (0.67) 15,101 15,000 (101) (0.67) DECORATING EXPENSE Painting/Decorating Contr 450 50 (400) (800.90) 777 300 (477) (159.10) Make Ready Supplies 933 1,000 67 6.71 5,300 6,000 700 11.66 Carpet Cleaning & Repairs 3,608 510 (3,098) (607.49) 11,085 2,050 (9,035) (440.72) Misc. Operating Expenses 100 0 (100) 0.00 1,230 0 (1,230) 0.00 -------- -------- -------- -------- -------- -------- -------- -------- DECORATING EXPENSE 5,092 1,560 (3,532) (226.39) 18,392 8,350 (10,042) (120.26) OTHER EXPENSE Property Insurance 1,333 1,333 0 0.00 7,998 7,998 0 0.00 Taxes 22,670 22,670 0 0.00 136,020 136,020 0 0.00 Other Insurance 0 0 0 0.00 4,317 0 (4,317) 0.00 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL OTHER EXPENSE 24,003 24,003 0 0.00 148,335 144,018 (4,317) (3.00) -------- -------- -------- -------- -------- -------- -------- -------- TOTAL OPERATING EXPENSE 80,801 66,099 (14,702) (22.24) 454,427 389,493 (64,934) (16.67) -------- -------- -------- -------- -------- -------- -------- -------- NET OPERATING INCOME 52,423 102,682 (50,259) (48.95) 356,222 506,126 (149,904) (29.62)
23 4
- ---------------------------------------------------------------------------------------------------------------------------------- Report Date: 07/25/98 INCOME STATEMENT Page: 4 Company: SW SOUTHWEST PROPERTIES GROUP, INC. Date: 08/12/98 Development ID: ELA 96 ELDORADO I LTD Time: 12:10:35 - ---------------------------------------------------------------------------------------------------------------------------------- Current Period Year-to-Date 1 Month 1 Month 6 Months 6 Months Thru: Jun 1998 Budget Variance % Jun 1998 Budget Variance % - ---------------------------------------------------------------------------------------------------------------------------------- ESCROW/RESERVE ACTIVITY Replacement Reserve 3,155 3,155 0 0.00 18,930 18,930 0 0.00 ---------- ---------- ---------- ---------- -------- -------- ----------- ------ TOTAL ESCROW/RESERVE 3,155 3,155 0 0.00 18,930 18,930 0 0.00 ---------- ---------- ---------- ---------- -------- -------- ----------- ------ NET OPERATING INCOME 49,268 99,527 (50,259) (50.50) 337,292 487,196 (149,904) (30.77) ========== ========== ========== ========== ======== ======== =========== ======
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