-----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, UOKEIg5nyVuLnzaK8GeE+bZVI2lvmaVu+Eg5jeiwvNSmz9xT07ZC7dMsni+jAk8F JAzY/dmHkZ3bEe2i8+aLeA== 0000950134-99-001205.txt : 19990219 0000950134-99-001205.hdr.sgml : 19990219 ACCESSION NUMBER: 0000950134-99-001205 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981202 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990218 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: 99545391 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 December 2, 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) 1 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On December 2, 1998, Transcontinental Realty Investors, Inc. (the "Company") purchased in a single transaction the Neighborhood Inns of Chicago, three hotels in Chicago, IL, the Belmont Hotel with 45 rooms, the Brompton Hotel with 52 rooms, and the Surf Hotel with 55 rooms, for a total of $11.6 million, approximately 3.6 percent of the Company's assets at December 31, 1997. The seller of the hotels was Wilmont Hotel Limited Partnership, an unrelated party. The properties were constructed in 1927. The Company paid a total of $2.3 million in cash and obtained mortgage financing secured by all three properties totaling $9.3 million. The mortgage bears interest at a variable rate, currently 9.376% per annum, requires monthly payments of principal and interest of $94,108 and matures in December 2001. On December 23, 1998, the Company purchased the 80 unit Southgreen Apartments in Bakersfield, California for $3.6 million, approximately 1.1% of the Company's assets at December 31, 1997. The seller of the property was Monarch Southgreen Partners, Ltd., an unrelated party. The property was constructed in 1985 and was 97% occupied on the date of purchase. The Company paid $1.1 million in cash, and obtained mortgage financing of $2.5 million. The mortgage bears interest at a variable rate, currently 8.25% per annum, requires monthly payments of principal and interest of $19,953 and matures in December 2005. In assessing the income producing properties described above, the following were among the factors considered by management, geographic location of the properties, performance of the properties, new or renovated properties in the vicinity of each property and the maintenance and appearance of the properties. In addition to the purchases described above, the Company has also purchased, in 1998, eight additional apartment complexes, one each in El Paso, Midland, and Addison, Texas in January 1998, two in Midland, Texas in April 1998, one each in Odessa and Midland, Texas in May 1998 and one in McKinney, Texas in October 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 $71.2 million. The Company paid $23.4 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 three retail centers, one in March 1998, one in September 1998 and one in October 1998 and an office building in September 1998. In connection with these sales, the Company received net cash totaling $22.1 million. 2 3 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 Neighborhood Inns of Chicago and Southgreen Apartments purchases, described above, as if they had occurred at January 1, 1998. [THIS SPACE INTENTIONALLY LEFT BLANK.] 3 4 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1998
Cliffs of Neighborhood Eldorado Inns of Southgreen Actual(1) Apartments(2) Chicago(3) Apartments(3) Sales(3) 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 12,494 3,776 (873) 337,672 Investment in partnerships ............. 3,877 -- -- -- -- 3,877 Cash and cash equivalents .............. 19,657 (1,830) (2,776) (937) 762 14,876 Other assets ........................... 15,614 251 (374) (310) (3) 15,178 --------- --------- --------- --------- --------- --------- $ 360,103 $ 11,657 $ 9,344 $ 2,529 $ (114) $ 383,519 ========= ========= ========= ========= ========= =========
- ------------------------ (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) Property acquired subsequent to September 30, 1998. See the Company's Current Report on Form 8-K, dated October 20, 1998. (3) Assumes purchase or sale by the Company on January 1, 1998. 4 5 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA CONSOLIDATED BALANCE SHEET - Continued SEPTEMBER 30, 1998
Cliffs of Neighborhood Eldorado Inns of Southgreen Actual(1) Apartments(2) Chicago(3) Apartments(3) Sales(3) Pro Forma --------- --------- --------- --------- --------- --------- (dollars in thousands, except per share) Liabilities and Shareholders' Equity Liabilities Notes and interest payable ............. $ 258,782 $ 10,683 $ 9,250 $ 2,500 $ (307) $ 280,908 Other liabilities ...................... 8,738 391 94 29 (26) 9,226 --------- --------- --------- --------- --------- --------- 267,520 11,074 9,344 2,529 (333) 290,134 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 6,000 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) -- -- -- 219 (124,668) --------- --------- --------- --------- --------- --------- 92,583 583 -- -- 219 93,385 --------- --------- --------- --------- --------- --------- $ 360,103 $ 11,657 $ 9,344 $ 2,529 $ (114) $ 383,519 ========= ========= ========= ========= ========= =========
- --------------------------- (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) Property acquired subsequent to September 30, 1998. See the Company's Current Report on Form 8-K, dated October 20, 1998. (3) Assumes purchase or sale by the Company on January 1, 1998. 5 6 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1998
Neigh- Other borhood Apartment Commercial Property Inns of Southgreen Actual Complexes Properties Purchases Chicago Apartments ----------- ----------- ----------- ----------- ----------- ----------- (dollars in thousands, except per share) Income Rents ..................... $ 51,414 $ 1,496 $ 1,059 $ 622 $ 4,027 $ 371 Income .................... 593 -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- 52,007 1,496 1,059 622 4,027 371 Expenses Property operations ....... 27,355 923 402 419 3,001 181 Interest .................. 16,865 -- -- -- -- -- Depreciation .............. 7,882 -- -- -- -- -- Advisory and net income fee to affiliate .............. 2,578 -- -- -- -- -- General and administrative ......... 1,649 -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- 56,329 923 402 419 3,001 181 Net income (loss) from operations ................ (4,322) 573 657 203 1,026 190 Equity in income of investees ................. 342 -- -- -- -- -- Gain on sale of real estate .................... 12,015 -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Net income (loss) ............ $ 8,035 $ 573 $ 657 $ 203 $ 1,026 $ 190 =========== =========== =========== =========== =========== =========== 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 Sales Adjustments Combined ----------- ----------- ----------- (dollars in thousands, except per share) Income Rents ..................... $ (2,064) $ -- $ 56,925 Income .................... -- -- 593 ----------- ----------- ----------- (2,064) -- 57,518 Expenses Property operations ....... (741) -- 31,540 Interest .................. (624) 3,582 19,823 Depreciation .............. (438) 1,270 8,714 Advisory and net income fee to affiliate .............. -- -- 2,578 General and administrative ......... -- -- 1,649 ----------- ----------- ----------- (1,803) 4,852 64,304 Net income (loss) from operations ................ (261) (4,852) (6,786) Equity in income of investees ................. -- -- 342 Gain on sale of real estate .................... -- -- 12,015 ----------- ----------- ----------- Net income (loss) ............ $ (261) $ (4,852) $ 5,571 =========== =========== =========== Earnings per share Net income (loss) ......... $ 1.44 =========== 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. 6 7 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, Ashton Way and Cliffs of Eldorado Apartments. For further information on Mountain Plaza, 4400 and Ashton Way Apartments, 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 Cliffs of Eldorado Apartments, see the Company's Current Report on Form 8-K, dated October 20, 1998. Revenues: Mountain Plaza Apartments $ 46 4400 Apartments 97 Ashton Way Apartments 137 Cliffs of Eldorado Apartments 1,216 ---------- $ 1,496 ========== Property Operations Expenses: Mountain Plaza Apartments $ 25 4400 Apartments 93 Ashton Way Apartments 123 Cliffs of Eldorado Apartments 682 ---------- $ 923 ==========
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 ==========
7 8 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued NINE MONTHS ENDED SEPTEMBER 30, 1998 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 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, for the six months ended June 30, 1998 and June 15, 1998 and one for the one month ended July 31, 1998 were obtained for Mountain Plaza Apartments, Parkway North Office Building, Valley Rim Office Building, Cliffs of Eldorado Apartments, Southgreen Apartments and Neighborhood Inns of Chicago, 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 8 9 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 Southgreen Apartments 155 Woodview Apartments 142 Daley Plaza Office Building 249 Neighborhood Inns of Chicago 628 Plaza on Bachman Creek 163 Parkway North Office Building 132 Viewridge Office Building 95 ---------- Total $ 3,582 ========== 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 Southgreen Apartments 57 Woodview Apartments 54 Daley Plaza Office Building 74 Neighborhood Inns of Chicago 184 Plaza on Bachman Creek 55 Parkway North Office Building 89 Viewridge Office Building 30 ---------- Total $ 1,270 ==========
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. 9 10 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS TWELVE MONTHS ENDED DECEMBER 31, 1997
Neigh- Other borhood Apartment Commercial Property Inns of Actual Complexes Properties Purchases Chicago ----------- ----------- ----------- ----------- ----------- (dollars in thousands, except per share) Income Rents ............................... $ 54,462 $ 2,605 $ 3,001 $ 3,300 $ 3,585 Income .............................. 1,499 -- -- -- -- ----------- ----------- ----------- ----------- ----------- 55,961 2,605 3,001 3,300 3,585 Expenses Property operations ................. 32,424 1,857 1,182 2,128 1,680 Interest ............................ 16,765 -- -- -- -- Depreciation ........................ 9,578 -- -- -- -- Advisory fee to affiliate ........................ 1,807 -- -- -- -- Net income fee to affiliate ........................ 1,022 -- -- -- -- General and administrative ................... 2,645 -- -- -- -- Provision for losses ................ 1,337 -- -- -- -- ----------- ----------- ----------- ----------- ----------- 65,578 1,857 1,182 2,128 1,680 Income (loss) from operations .......................... (9,617) 748 1,819 1,172 1,905 Equity in income of investees ........................... 812 -- -- -- -- Gain on sale of real estate .............................. 21,404 -- -- -- -- ----------- ----------- ----------- ----------- ----------- Net income (loss) ...................... $ 12,599 $ 748 $ 1,819 $ 1,172 $ 1,905 =========== =========== =========== =========== =========== Earnings per share Net income (loss) ................... $ 3.22 =========== Weighted average shares of Common Stock used in computing earnings per share ........................... 3,907,221 =========== Southgreen Pro Forma Pro Forma Apartments Sales Adjustments Combined ----------- ----------- ----------- ----------- (dollars in thousands, except per share) Income Rents ............................... $ 495 $ (2,304) $ -- $ 65,144 Income .............................. -- -- -- 1,499 ----------- ----------- ----------- ----------- 495 (2,304) -- 66,643 Expenses Property operations ................. 223 (739) -- 38,755 Interest ............................ -- (689) 4,749 20,825 Depreciation ........................ -- (430) 1,683 10,831 Advisory fee to affiliate ........................ -- -- -- 1,807 Net income fee to affiliate ........................ -- -- -- 1,022 General and administrative ................... -- -- -- 2,645 Provision for losses ................ -- (1,337) -- -- ----------- ----------- ----------- ----------- 223 (3,195) 6,432 75,885 Income (loss) from operations .......................... 272 891 (6,432) (9,242) Equity in income of investees ........................... -- -- -- 812 Gain on sale of real estate .............................. -- -- -- 21,404 ----------- ----------- ----------- ----------- Net income (loss) ...................... $ 272 $ 891 $ (6,432) $ 12,974 =========== =========== =========== =========== Earnings per share Net income (loss) ................... $ 3.32 =========== 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. 10 11 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, Ashton Way, and Cliffs of Eldorado Apartments. For further information on Mountain Plaza, 4400 and Ashton Way Apartments, 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. For the Cliffs of Eldorado, see the Company's Current Report on Form 8-K, dated October 20, 1998. Revenues: Mountain Plaza Apartments $ 1,085 4400 Apartments 389 Ashton Way Apartments 548 Cliffs of Eldorado 583 ---------- $ 2,605 ========== Property Operations Expenses: Mountain Plaza Apartments $ 592 4400 Apartments 372 Ashton Way Apartments 480 Cliffs of Eldorado 413 ---------- $ 1,857 ==========
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 11 12 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued YEAR ENDED DECEMBER 31, 1997 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. 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 12 13 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 Southgreen Apartments 206 Woodview Apartments 188 Daley Plaza Office Building 330 Neighborhood Inns of Chicago 838 Plaza on Bachman Creek 216 Parkway North Office Building 175 Viewridge Office Building 126 ---------- Total $ 4,749 ========== 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 Southgreen Apartments 76 Woodview Apartments 72 Daley Plaza Office Building 97 Neighborhood Inns of Chicago 246 Plaza on Bachman Creek 73 Parkway North Office Building 117 Viewridge Office Building 39 ---------- Total $ 1,683 ==========
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. 13 14 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). 14 15 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 (incorporated by reference to Exhibit 99.10 of the Registrant's Current Report on form 8-K/A, dated October 20, 1998). 99.11 Cliffs of Eldorado Apartments Statement of Operations for the six months ended June 30, 1998 (incorporated by reference to Exhibit 99.11 of the Registrant's Current Report on form 8-K/A, dated October 20, 1998). 99.12 Audited Statement of Revenue and Direct Operating Expenses of the Neighborhood Inns of Chicago for the year ended December 31, 1997, filed herewith. 99.13 Neighborhood Inns of Chicago Statement of Operations for the one month ended July 31, 1998, filed herewith. 99.14 Audited Statement of Revenue and Direct Operating Expenses of the Southgreen Apartments for the year ended December 31, 1997, filed herewith. 99.15 Southgreen Apartments Statement of Operations for the six months ended June 15, 1998, filed herewith. 15 16 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: February 18, 1999 By: /s/ Thomas A. Holland ----------------------- ----------------------------------- Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 16 17 EXHIBIT INDEX
Exhibit Number Description - ------ ----------------------------------------------------------- 99.12 Audited Statement of Revenue and Direct Operating Expenses of Neighborhood Inns of Chicago for the year ended December 31, 1997. 99.13 Neighborhood Inns of Chicago Statement of Operations for the one month ended July 31, 1998. 99.14 Audited Statement of Revenue and Direct Operating Expenses of Southgreen Apartments for the year Ended December 31, 1997. 99.15 Southgreen Apartments Statement of Operations for the six months ended June 15, 1998.
EX-99.12 2 AUDITED STMT OF OPERATING EXP.-NEIGHBORHOOD INNS 1 EXHIBIT 99.12 NEIGHBORHOOD INNS OF CHICAGO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR 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 Neighborhood Inns of Chicago for the Year 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 Neighborhood Inns of Chicago for the Year ended December 31, 1997, in conformity with generally accepted accounting principles. FARMER, FUQUA, HUNT & MUNSELLE, P.C. Dallas, Texas December 11, 1998 3 NEIGHBORHOOD INNS OF CHICAGO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES Year ended December 31, 1997 REVENUES Room rental revenues $3,480,711 Other revenues 104,042 ---------- Total revenues 3,584,753 DIRECT OPERATING EXPENSES Salaries and benefits 1,049,907 Repairs and maintenance 282,503 Utilities 177,919 Property taxes 147,709 Insurance 22,173 ---------- Total direct operating expenses 1,680,211 ---------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $1,904,542 ==========
The accompanying notes are an integral part of this statement. 4 NEIGHBORHOOD INNS OF CHICAGO NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES December 31, 1997 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Neighborhood Inns of Chicago is a group of three hotels located in Chicago, Illinois. During 1997, the hotels were owned by The Wilmont Hotel Limited Partnership. The three hotels, Park Brompton Inn, City Suites Hotel and Surf Hotel, have 52 rooms, 45 rooms and 55 rooms, respectively. 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: Phone Revenues $ 82,446 Other Revenues 21,596 ---------- $ 104,042 ==========
NOTE 4: SUBSEQUENT EVENT The property was sold to Transcontinental Realty Investors, Inc., a Nevada corporation, on December 2, 1998. EX-99.13 3 NEIGHBORHOOD INNS OF CHICAGO STMT OF OPERATIONS 1 EXHIBIT 99.13 Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/18/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 1
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- INFLOWS 501: Amex 25,055.12 Cash Room Rev 22,176.11 Diner's Club 2,790.92 Discover 3,502.15 Visa & MC 94,232.62 ---------- TOTAL 501 147,756.92 ---------- TOTAL INFLOWS 147,756.92 OUTFLOWS 503: Refunds: Room Refunds 335.88 ---------- TOTAL REFUNDS 335.88 ---------- TOTAL 503 335.88 550: Hotel Tax 18,586.64 ---------- TOTAL 550 18,586.64 605: Commission: Travel Agent Co 2,306.81 Utell 41.07 ---------- TOTAL COMMISSION 2,347.88 ---------- TOTAL 605 2,347.88 709: Hotel Supplies: Amenities 987.86 Cleaning Sup 1,777.40 Laundry Supp 644.44 ---------- TOTAL HOTEL SUPPLIES 3,409.70 ---------- TOTAL 709 3,409.70 717: Maintenance: Repairs 240.00 Supplies 315.79 ---------- TOTAL MAINTENANCE 555.79 ---------- TOTAL 717 555.79 718: Outside Service 12.00 ---------- TOTAL 718 12.00 729: Scavenger 191.00 ---------- TOTAL 729 191.00 804: Marketing Exp.:
22 2 Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/18/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 2
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- Media 1,890.91 Mktng Office Expense 105.00 Mrktng Mngmnt 834.00 Prdctn & Crtv 577.77 ----------- TOTAL MARKETING EXP 3,407.68 ---------- TOTAL 804 3,407.68 811: Credit Cards: Credit Card Dis 2,825.03 ---------- TOTAL CREDIT CARDS 2,825.03 ---------- TOTAL 811 2,825.03 819: Dues 147.81 ---------- TOTAL 819 147.81 825: Rent on Equip 230.44 ---------- TOTAL 825 230.44 826: Food Service: Brkfst Service 3,700.00 Room Service 1,089.43 ---------- TOTAL FOOD SERVICE 4,789.43 ---------- TOTAL 826 4,789.43 829: Health Insurance 1,484.92 ---------- TOTAL 829 1,484.92 830: Workmans Comp 1,547.00 ---------- TOTAL 830 1,547.00 837: Licenses 135.00 ---------- TOTAL 837 135.00 846: Office Expense: Supplies 328.34 ---------- TOTAL OFFICE EXPENSE 328.34 ---------- TOTAL 846 328.34 847: Parking Expense 1,370.00 ---------- TOTAL 847 1,370.00 848: Payroll Pro Exp 131.50 ---------- TOTAL 848 131.50 852: Postage & Delivery 1,153.92 ----------
23 3 Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/18/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 3
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- TOTAL 852 1,153.92 861: Payroll: Garnishment 716.10 Net Payroll 30,706.86 ---------- TOTAL PAYROLL 31,422.96 ---------- TOTAL 861 31,422.96 871: Property Taxes 4,961.11 ---------- TOTAL 871 4,961.11 873: Payroll Taxes 12,004.17 ---------- TOTAL 873 12,004.17 875: Taxes: Maintenance Fee 42.61 Telecommunication 106.81 ---------- TOTAL TAXES 149.42 ---------- TOTAL 875 149.42 876: Telephone: 1-800 Serv. 963.42 ATK Numbers 94.59 Long Distance 523.68 ---------- TOTAL TELEPHONE 1,581.69 ---------- TOTAL 876 1,581.69 877: Cable Television 489.11 ---------- TOTAL 877 489.11 878: Cable Music 38.97 ---------- TOTAL 878 38.97 882: Utilities: Electric 5,247.11 Gas-Broker 431.66 Gas-Peoples 638.26 Water 959.19 ---------- TOTAL UTILITIES 7,276.22 ---------- TOTAL 882 7,276.22 Meeting Expense 104.77 Newspapers 588.07 ---------- TOTAL OUTFLOWS 101,606.45 ---------- OVERALL TOTAL 46,150.47 ==========
24 4 PBI Checkbook NEIGHBORHOOD INNS OF CHICAGO 8/20/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 1
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- INFLOWS 501: Amex 23,735.29 Cash Room Rev 16,914.10 Diners Club 2,037.71 Discover 7,552.53 Visa&MC 88,542.28 ---------- TOTAL 501 138,781.91 ---------- TOTAL INFLOWS 138,781.91 OUTFLOWS 110: Cash In (5,872.38) Cash Out 5,872.38 ---------- TOTAL 110 0.00 703: Cable Television 1,163.34 ---------- TOTAL 703 1,163.34 708: Food Service: Breakfast Serv 4,760.03 ---------- TOTAL FOOD SERVICE 4,760.03 ---------- TOTAL 708 4,760.03 709: Hotel Supplies: Amenities 370.84 Cleaning Supp. 566.88 Laundry Supp. 942.94 ---------- TOTAL HOTEL SUPPLIES 1,880.66 ---------- TOTAL 709 1,880.66 713: Linens 2,211.98 ---------- TOTAL 713 2,211.98 716: Elevator Elevator Maintenance 125.00 ---------- TOTAL ELEVATOR 125.00 ---------- TOTAL 716 125.00 717: Maint & Repair: Equipment 952.20 Repairs 152.66 Supplies 765.08 ---------- TOTAL MAINT & REPAIR 1,869.94 ---------- TOTAL 717 1,869.94 727: Payroll:
25 5 PBI Checkbook NEIGHBORHOOD INNS OF CHICAGO 8/20/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 2
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- Administrative 7,432.11 Front Desk 7,357.83 Garnishment 1,593.48 Housekeeping 7,599.25 Maintenance 2,994.43 ---------- TOTAL PAYROLL 26,977.10 ---------- TOTAL 727 26,977.10 728: Contract Labor 2,144.25 ---------- TOTAL 728 2,144.25 729: Scavenger 170.00 ---------- TOTAL 729 170.00 804: Marketing Exp.: Crtve&Prdctn 349.41 Direct Mrktng 228.33 Media Expense 1,890.91 Mktng Mgmnt 1,668.00 ---------- TOTAL MARKETING EXP 4,136.65 ---------- TOTAL 804 4,136.65 806: Commissions: Travel Agent Co 780.59 Utell Int'l 317.84 ---------- TOTAL COMMISSIONS 1,098.43 ---------- TOTAL 806 1,098.43 811: Credit Card Fee: Discount Fees 2,924.70 ---------- TOTAL CREDIT CARD FEE 2,924.70 ---------- TOTAL 811 2,924.70 819: Dues 52.00 Newspapers 535.06 ---------- TOTAL 819 587.06 828: Insurance: Health Insurance 1,410.24 Workmans Comp 1,285.00 ---------- TOTAL INSURANCE 2,695.24 ---------- TOTAL 828 2,695.24 842: Office Expense: Equipment 27,684.57 Office PR Exp. 210.00 Supplies 582.78 ---------- TOTAL OFFICE EXPENSE 28,477.35
26 6 PBI Checkbook NEIGHBORHOOD INNS OF CHICAGO 8/20/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 3
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- ---------- TOTAL 842 28,477.35 847: Parking: Parking Sticker 7,000.00 ---------- TOTAL Parking 7,000.00 ---------- TOTAL 847 7,000.00 848: Payroll Pro Exp 110.30 ---------- TOTAL 848 110.30 852: Postage & Delivery 1,176.35 ---------- TOTAL 852 1,176.35 855: Prof Fees Other 25.00 ---------- TOTAL 855 25.00 860: Rent: Equipment 82.96 ---------- TOTAL RENT 82.96 ---------- TOTAL 860 82.96 870: Taxes: City Tax 3,927.00 Maintenance Fee 52.00 Payroll 9,719.24 Property Escrow 3,304.01 State Tax 15,247.00 Telecommunication 130.00 ---------- TOTAL TAXES 32,379.25 ---------- TOTAL 870 32,379.25 876: Telephone: 1-800 AT&T 994.28 Local Service 389.75 Long Distance 356.01 ---------- TOTAL TELEPHONE 1,740.04 ---------- TOTAL 876 1,740.04 881: Utilities: Electric 1,933.19 Gas - Broker 512.04 Gas - Peoples 767.82 Water 653.23 ---------- TOTAL UTILITIES 3,866.28 ---------- TOTAL 881 3,866.28 ---------- TOTAL OUTFLOWS 127,601.91
27 7 Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/19/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 1
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- INFLOWS 501: Amex Dep. 40,241.02 Cash Room Rov 16,887.52 Diners Card Dep 2,783.14 Discover Dep. 8,036.86 Mastercard & Visa 93,263.89 ---------- TOTAL 501 161,212.43 ---------- TOTAL INFLOWS 161,212.43 OUTFLOWS 317-03: Payroll Taxes 9,687.75 ---------- TOTAL 317-03 9,687.75 503: Refunds: Parking Refund 3.25 Room Refund 155.72 ---------- TOTAL REFUNDS 158.97 ---------- TOTAL 503 158.97 508: Vend & Ldry Rfnds 7.40 ---------- TOTAL 508 7.40 550: City Tax 4,212.00 State Tax 16,351.00 ---------- TOTAL 550 20,563.00 601: Laundry Expense 260.00 Vending 101.17 ---------- TOTAL 601 361.17 610: Food Service: Breakfast Svc 6,206.89 Room Service 408.54 ---------- TOTAL FOOD SERVICE 6,615.43 ---------- TOTAL 610 6,615.43 707: Cable Music 38.97 Cable Television 609.71 ---------- TOTAL 707 648.68 709: Decorating 193.07 ---------- TOTAL 709 193.07 740: Hotel Supplies:
28 8 Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/19/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 2
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- Amenities 3,163.79 Cleaning Suppls 555.49 Laundry Suppls 1,183.75 ---------- TOTAL HOTEL SUPPLIES 4,903.03 ---------- TOTAL 740 4,903.03 748: Linens 1,664.18 ---------- TOTAL 748 1,664.18 754: Elevator: Elevator Maint 125.00 ---------- TOTAL ELEVATOR 125.00 ---------- TOTAL 754 125.00 757: Maint & Repair: Maint, Outside 636.00 Repairs 682.84 Supplies 1,070.95 ---------- TOTAL MAINT & REPAIR 2,389.79 ---------- TOTAL 757 2,389.79 775: Scavenger 160.00 ---------- Total 775 160.00 780: Uniforms 148.41 ---------- TOTAL 780 148.41 804: Marketing Exp.: Marketing Mngmt 1,668.00 Media Expense 2,357.56 Prod & Crtv Exp 577.77 Promo & Events 19.25 ---------- TOTAL MARKETING EXP 4,622.58 ---------- TOTAL 804 4,622.58 806: Commission: Travel Agents 1,826.91 Utell 391.53 ---------- TOTAL COMMISSION 2,218.44 ---------- TOTAL 806 2,218.44 811: Credit Card: Discount Fees 3,270.74 ---------- TOTAL CREDIT CARD 3,270.74 ---------- TOTAL 811 3,270.74
29 9 Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/19/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 3
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- 819: Dues (600.00) ---------- TOTAL 819 (600.00) 822: Dining & Entertainment 45.00 ---------- TOTAL 822 45.00 825: Rental Equip 62.22 ---------- TOTAL 825 62.22 829: Health Insurance 2,849.97 ---------- TOTAL 829 2,849.97 837: Licenses-Permits 25.00 ---------- TOTAL 837 25.00 841: Parking: Parking Rental 97.00 Parking Sticker 4,074.00 ---------- TOTAL PARKING 4,171.00 ---------- TOTAL 841 4,171.00 846: Office Expense: Computer Exp. (740.00) Misc. Expenses 210.00 Office Supplies 426.95 Service Agrmts 1,249.50 ---------- TOTAL OFFICE EXPENSE 1,146.45 ---------- TOTAL 846 1,146.45 847: Payroll Pro Exp 139.90 ---------- TOTAL 847 139.90 852: Postage & Delivery 141.91 ---------- TOTAL 852 141.91 855: Prof Fees Other 49.54 ---------- TOTAL 855 49.54 871: Payroll: Administrative 6,801.89 Front Desk 7,725.13 Housekeeping 8,773.05 Maintenance 1,956.50 ---------- TOTAL Payroll 25,256.57 ---------- TOTAL 871 25,256.57
30 10 Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/19/98 Cash Flow Report 7/l/98 Through 7/31/98 Page 4
7/1/98- Category Description 7/31/98 - -------------------------------------------------------------------------------- 878: Taxes: Maintenance Fee 51.00 Prprty Tax Escr 4,035.61 Telecommunication 129.00 ---------- TOTAL TAXES 4,215.61 ---------- TOTAL 878 4,215.61 881: Telephone: 1-800 Service 1,350.97 Long Distance 363.62 ---------- TOTAL TELEPHONE 1,714.59 ---------- TOTAL 881 1,714.59 891: Electric 4,240.15 ---------- TOTAL 891 4,240.15 893: Gas Utilities: Gas - Broker 523.50 Gas - Peoples 789.42 ---------- TOTAL GAS UTILITIES 1,312.92 ---------- TOTAL 893 1,312.92 895: Water 730.13 ---------- TOTAL 895 730.13 Furn. & Appl. 321.55 Newspapers 730.36 ---------- TOTAL OUTFLOWS 104,290.51 ---------- OVERALL TOTAL 56,921.92 ==========
31 EX-99.14 4 AUDITED STMT OF OPERATING EXPENSES-SOUTHGREEN APTS 1 EXHIBIT 99.14 SOUTHGREEN APARTMENTS STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR 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 Southgreen Apartments for the year 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 Southgreen Apartments for the year ended December 31, 1997, in conformity with generally accepted accounting principles. FARMER, FUQUA, HUNT & MUNSELLE, P.C. Dallas, Texas February 2, 1999 3 SOUTHGREEN APARTMENTS STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES Year Ended December 31, 1997 REVENUES Net rental revenues $ 477,291 Other revenues 17,484 ---------- Total revenues 494,775 DIRECT OPERATING EXPENSES Repairs and maintenance 90,454 Salaries and benefits 59,207 Property taxes 42,028 Utilities 20,917 Insurance 10,274 ---------- Total direct operating expenses 222,880 ---------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 271,895 ==========
The accompanying notes are an integral part of this statement. 4 SOUTHGREEN APARTMENTS NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES December 31, 1997 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Southgreen Apartments is a 80-unit apartment complex located in Bakersfield, California. During 1997, the property was owned by Monarch Southgreen Partners, Ltd. 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: Forfeited deposits $ 7,330 Laundry and vending income 4,118 Miscellaneous income 3,461 Late fees and NSF charges 2,575 ----------- $ 17,484 ============
NOTE 4: SUBSEQUENT EVENT The property was sold to Transcontinental Realty Investors, Inc., a Nevada corporation, on December 23, 1998. EX-99.15 5 SOUTHGREEN APARTMENTS STATEMENT OF OPERATIONS 1 EXHIBIT 99.15 PDINCSTSUM INCOME STATEMENT SUMMARY PAGE 1 M2 SOUTHGREEN APARTMENTS SYSTEM DATE: 07/06/98 MSP SELECT DATE: 07/06/98 Cur. Period 06/98 As of 12:05:53 Set. Period 06/98 JUNE 15, 1998
CURRENT CURRENT YTD YTD ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE REVENUE RENT PER SCHEDULE 43,720 105.4% 43,245 475 259,845 105.7% 257,470 2,375 LOSS/GAIN TO LEASE (2,234) (5.4)% (1,545) (689) (14,034) (5.7)% (10,270) (3,764) -------- -------- -------- -------- -------- -------- -------- -------- GROSS POSSIBLE RENT 41,486 100.0% 41,700 (214) 245,811 100.0% 247,200 (1,389) -------- -------- -------- -------- -------- -------- -------- -------- VACANCY LOSS 2,789 6.7% 800 (1,989) 6,805 2.8% 4,800 (2,005) OTHER RENTAL LOSSES 278 0.7% 0 (278) (175) (0.1)% 0 175 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL RENTAL LOSSES 3,067 7.4% 800 (2,267) 6,630 2.7% 4,800 (1,830) -------- -------- -------- -------- -------- -------- -------- -------- NET RENTAL REVENUE 38,419 92.6% 40,900 (2,481) 239,181 97.3% 242,400 (3,219) TOTAL OTHER REVENUE 1,110 2.7% 1,900 (790) 8,142 3.3% 11,400 (3,258) -------- -------- -------- -------- -------- -------- -------- -------- TOTAL REVENUE 39,529 95.3% 42,800 (3,271) 247,323 100.6% 253,800 (6,477) -------- -------- -------- -------- -------- -------- -------- -------- OPERATING EXPENSES SALARY EXPENSE 4,670 11.3% 5,402 732 32,527 13.2% 32,412 (115) MANAGEMENT FEES 1,944 4.7% 1,704 (240) 12,041 4.9% 10,104 (1,937) PROPERTY ADMINISTRATION 552 1.3% 490 (62) 3,925 1.6% 2,940 (985) LEASING EXPENSE 1,290 3.1% 400 (890) 2,616 1.1% 2,400 (216) UTILITIES EXPENSE 1,463 3.5% 1,645 182 9,514 3.9% 9,870 356 SERVICE EXPENSES 2,329 5.6% 2,331 2 15,701 6.4% 14,286 (1,415) CLEANING & DECORATING 2,299 5.5% 600 (1,699) 3,750 1.5% 3,600 (150) REPAIRS & MAINTENANCE 1,104 2.7% 835 (269) 4,941 2.0% 5,310 369 PROPERTY TAXES 5,422 13.1% 3,634 (1,788) 30,480 12.4% 21,804 (8,676) HAZARD INSURANCE 851 2.1% 838 (13) 5,066 2.1% 5,028 (38) -------- -------- -------- -------- -------- -------- -------- -------- TOTAL OPERATING EXPENSES 21,924 52.8% 17,879 (4,045) 120,562 49.0% 107,754 (12,808) -------- -------- -------- -------- -------- -------- -------- -------- NET OPERATING INCOME 17,605 42.4% 24,921 (7,316) 126,761 51.6% 146,046 (19,285) PROPERTY REPLACEMENT RECURRING REPLACEMENT 1,537 3.7% 1,000 (537) 4,737 1.9% 6,000 1,263 NON-RECURRING REPLACEMENT 9,800 23.6% 0 (9,800) 43,046 17.5% 0 (43,046) -------- -------- -------- -------- -------- -------- -------- -------- TOTAL PROPERTY REPLACEMENT 11,337 27.3% 1,000 (10,337) 47,783 19.4% 6,000 (41,783) -------- -------- -------- -------- -------- -------- -------- -------- AVAILABLE FOR DEBT SERVICE 6,268 15.1% 23,921 (17,653) 78,978 32.1% 140,046 (61,068) TOTAL DEBT SERVICE 16,289 39.3% 16,000 (289) 97,567 39.7% 96,000 (1,567) -------- -------- -------- -------- -------- -------- -------- -------- CASH FLOW (DEFICIT) (10,021) (24.2)% 7,921 (17,942) (18,589) (7.6)% 44,046 (62,635) ======== ======== ======== ======== ======== ======== ======== ========
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