-----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, NeTykR8l/bLHIyzgBzGhoeBGzu2ikiZjT9zATq86pFcXnogI9Pee3nywbeYM/ceK Tc9B1lJ3sQ6H7oSdE/cc9g== 0000950134-98-005572.txt : 19980630 0000950134-98-005572.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950134-98-005572 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971222 ITEM INFORMATION: FILED AS OF DATE: 19980629 SROS: NONE 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/A SEC ACT: SEC FILE NUMBER: 001-09240 FILM NUMBER: 98656052 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/A 1 AMENDMENT NO. 1 TO FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 December 22, 1997 ------------------------------------------------ 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 7. FINANCIAL STATEMENTS AND EXHIBITS This Form 8-K/A amends the Form 8-K Current Report dated December 22, 1997 and filed January 9, 1998 by Transcontinental Realty Investors, Inc. (the "Company") and provides required financial statements that were not available at the date of the original filing. (a) Pro forma financial information: Pro forma statements of operations are presented for the year ended December 31, 1996 and the nine months ended September 30, 1997. A pro forma balance sheet as of September 30, 1997 is also presented. A summary of the pro forma transactions follows: On December 22, 1997, the Company purchased Fairpark, a 49 unit apartment complex in Los Angeles, California, for $2.0 million, approximately .8% of the Company's assets at December 31, 1996. The seller of the property was Ulico Fair Park Partnership, L.P., an unrelated party. The property was constructed in 1991 and was 90% occupied at the date of purchase. The Company paid $500,000 in cash and obtained new mortgage financing of $1.5 million. The mortgage bears interest at 8.45% per annum, requires monthly payments of principal and interest of $11,628 and matures in January 2003. Also on December 22, 1997, the Company purchased Villa Piedra, a 132 unit apartment complex in Los Angeles, California, for $4.7 million, approximately 1.9% of the Company's assets at December 31, 1996. The seller of the property was Ulico Villa Piedra Partnership, an unrelated party. The property was constructed in 1991 and was 89% occupied at the date of purchase. The Company paid $1.2 million in cash and obtained new mortgage financing of $3.5 million. The mortgage bears interest at 8.45% per annum, requires monthly payments of principal and interest of $26,833 and matures in January 2003. On December 30, 1997, the Company purchased Timbers, a 100 unit apartment complex in Tyler, Texas, for $2.3 million, approximately .9% of the Company's assets at December 31, 1996. The seller of the property was John Hancock Mutual Life Insurance Company, an unrelated party. The property was constructed in 1973 and was 90% occupied at the date of purchase. The Company paid $500,000 in cash and obtained new mortgage financing of $1.8 million. The mortgage bears interest at a variable rate, currently 9.2% per annum, requires monthly payments of principal and interest of $16,763 and matures in December 2017. Also on December 30, 1997, the Company purchased Lexington Center, a 74,603 square foot office building in Colorado Springs, Colorado, for $5.3 million, approximately 2.2% of the Company's assets at December 31, 1996. The seller of the property was The Navigator, an unrelated party. The property was constructed in 1986 and was 74% occupied at the date of purchase. The Company paid $1.3 million in cash with the seller providing purchase money financing of the remaining $4.0 million of the purchase price. The purchase money financing bears interest at 9.0% per annum, requires monthly payments of principal and interest of $30,000 and matures in December 1998. 2 3 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued) In addition to the Fairpark Apartments, Villa Piedra Apartments, Timbers Apartments and Lexington Center purchased discussed above, the Company has purchased seven apartment complexes, one in El Paso, Texas in March 1997, one in Houston, Texas also in March 1997, one in Irving, Texas in May 1997, one in Sterling, Virginia also in May 1997, one in Fort Worth, Texas in September 1997, one in Mesa, Arizona in October 1997 and one in Odessa, Texas also in October 1997. The Company has also purchased two office buildings, one in Houston, Texas in March 1997 and the other in Bonita, California in September 1997, and one warehouse facility in Fort Worth, Texas in October 1997. These properties were purchased for a total of $45.0 million and in the aggregate represent in excess of 10% of the Company's assets at December 31, 1996. The Company paid a total of $15.1 million in cash and financed the remainder of the purchase prices. The mortgages secured by these properties bear interest at fixed and variable rates ranging from 8.07% to 10.5% per annum and mature from June 1998 to October 2007. In assessing each property purchase described above, the following were among the factors considered by the Company's 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. Additional factors considered with respect to commercial properties were the ease of access to the property, the adequacy of related facilities, such as parking, and the property's sensitivity to market conditions in establishing rental rates. With respect to apartment complexes the design and mix of units and the ability to provide a community atmosphere for the tenants was also considered. In 1997, the Company also sold two retail centers, one in February 1997 and one in November 1997, a parcel of land in February 1997, a single family dwelling in April 1997 and an office building in December 1997. In connection with these sales, the Company received net cash totaling $27.7 million. These Pro Forma Statements of Operations present the Company's operations as if the transactions described above, had occurred at the beginning of each of the periods presented. The Company's management is not aware of any material factors relating to the purchased properties that would cause the reported financial information not be necessarily indicative of future operating results. 3 4 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1997
Fairpark Villa Piedra Timbers Lexington Actual(1) Apartments(2) Apartments(2) Apartments(2) Center(2) --------- ------------ ------------- ------------ --------- Assets (dollars in thousands) ------ Notes and interest receivable Performing ......................... $ 4,453 $ -- $ -- $ -- $ -- Nonperforming ...................... 404 -- -- -- -- -------- -------- -------- -------- -------- 4,857 -- -- -- -- Less - allowance for estimated losses ................... (891) -- -- -- -- -------- -------- -------- -------- -------- 3,966 -- -- -- -- Real estate held for sale, net of accumulated depreciation ....................... 281 -- -- -- -- Real estate held for investment, net of accumulated depreciation ........... 256,636 4,918 8,293 3,709 5,516 Investments in partnerships ........... 4,290 -- -- -- -- Cash and cash equivalents ............. 4,449 (1,418) (2,403) (1,550) (1,483) Other assets .......................... 10,577 -- 28 92 -------- -------- -------- -------- -------- $280,199 $ 3,500 $ 5,918 $ 2,251 $ 4,033 ======== ======== ======== ======== ======== Liabilities and Shareholders' Equity - ------------------------------------ Liabilities Notes and interest payable ............ $193,069 $ 3,500 $ 5,862 $ 2,134 $ 4,000 Other liabilities ..................... 12,160 -- 56 117 33 -------- -------- -------- -------- -------- 205,229 3,500 5,918 2,251 4,033 Commitments and contingencies Shareholders' equity Common Stock, $.01 par value; 10,000,000 shares; issued and outstanding, 3,899,487 shares ...... 39 -- -- -- -- Paid-in capital ....................... 217,831 -- -- -- -- Accumulated distributions in excess of accumulated earnings ........................... (142,900) -- -- -- -- -------- -------- -------- -------- -------- 74,970 -- -- -- -- -------- -------- -------- -------- -------- $280,199 $ 3,500 $ 5,918 $ 2,251 $ 4,033 ======== ======== ======== ======== ======== Other Other Apartment Commercial Complexes(3) Properties(4) Pro forma ------------ ------------- --------- Assets (dollars in thousands) ------ Notes and interest receivable Performing ......................... $ -- $ -- $ 4,453 Nonperforming ...................... -- -- 404 -------- -------- -------- -- -- 4,857 Less - allowance for estimated losses ................... -- -- (891) -------- -------- -------- -- -- 3,966 Real estate held for sale, net of accumulated depreciation ....................... -- -- 281 Real estate held for investment, net of accumulated depreciation ........... 12,002 4,918 295,992 Investments in partnerships ........... -- -- 4,290 Cash and cash equivalents ............. (3,953) (1,418) (7,776) (5) Other assets .......................... 120 -- 10,817 -------- -------- -------- $ 8,169 $ 3,500 $307,570 ======== ======== ======== Liabilities and Shareholders' Equity - ------------------------------------ Liabilities Notes and interest payable ............ $ 7,996 $ 3,500 $220,061 Other liabilities ..................... 173 -- 12,539 -------- -------- -------- 8,169 3,500 232,600 Commitments and contingencies Shareholders' equity Common Stock, $.01 par value; 10,000,000 shares; issued and outstanding, 3,899,487 shares ...... -- -- 39 Paid-in capital ....................... -- -- 217,831 Accumulated distributions in excess of accumulated earnings ........................... -- -- (142,900) -------- -------- -------- -- -- 74,970 -------- -------- -------- $ 8,169 $ 3,500 $307,570 ======== ======== ========
- ----------------------------- (1) Includes the Terrace Hills Apartments, Crescent Place Apartments and Savings of America Building which were acquired in March 1997 and the Treehouse Apartments and Villas at Countryside Apartments which were acquired in May 1997, the Bonita Plaza and Country Bend Apartments which were acquired in September 1997 and excludes the Fiesta Mart Shopping Center and a .9976 acre parcel of land that were sold in February 1997 and a single family residence that was sold in April 1997. (2) Assumes acquisition by the Company on January 1, 1997. (3) Includes the Sandstone and Sunchase Apartments which were acquired in October 1997. (4) Includes the Encon Warehouse which was acquired in October 1997. (5) The cash portion of the purchase prices were derived from the financings of previously unencumbered properties and refinancings of owned properties. 4 5 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997
Other Other Villa Apartment Commercial Fairpark Piedra Actual Complexes Properties Apartments Apartments ---------- ---------- ---------- ---------- ---------- (dollars in thousands) Income Rents ................ $ 39,205 $ 3,089 $ 1,092 $ 287 $ 691 Interest ............. 1,283 -- -- -- -- ---------- ---------- ---------- ---------- ---------- 40,488 3,089 1,092 287 691 Expenses Property operations .. 23,403 1,481 267 148 368 Interest ............. 12,004 -- -- -- -- Depreciation ......... 7,048 -- -- -- -- Advisory fee to affiliate ........... 1,459 -- -- -- -- General and administrative ...... 1,977 -- -- -- -- ---------- ---------- ---------- ---------- ---------- 45,891 1,481 267 148 368 Net income (loss) from operations ...... (5,403) 1,608 825 139 323 Equity in income of investees ............ 680 -- -- -- -- Gain on sale of real estate ......... 1,455 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income ...... $ (3,268) $ 1,608 $ 825 $ 139 $ 323 ========== ========== ========== ========== ========== Earnings per share Net .......... $ (.83) ========== Weighted average shares of Common Stock used in computing earnings per share .. 3,910,991 ========== Timbers Lexington Pro forma Pro forma Apartments Center Sales Adjustments Combined ---------- ---------- ---------- ----------- ---------- (dollars in thousands) Income Rents ................ $ 353 $ 244 $ (1,198) $ -- $ 43,763 Interest ............. -- -- (2) -- 1,281 ---------- ---------- --------- --------- ---------- 353 244 (1,200) -- 45,044 Expenses Property operations .. 227 112 (2,688) -- 23,318 Interest ............. -- -- (188) 2,366 14,182 Depreciation ......... -- -- (784) 675 6,939 Advisory fee to affiliate ........... -- -- -- -- 1,459 General and administrative ...... -- -- -- -- 1,977 ---------- ---------- --------- ---------- ---------- 227 112 (3,660) 3,041 47,875 Net income from operations ...... 126 132 2,460 (3,041) (2,831) Equity in income of investees ............ -- -- -- -- 680 Gain on sale of real estate ......... -- -- -- -- 1,455 ---------- ---------- ---------- --------- ---------- Net income ...... $ 126 $ 132 $ 2,460 $ (3,041) $ (696) ========== ========== ========= ========= ========== Earnings per share Net .......... $ (.18) ========== Weighted average shares of Common Stock used in computing earnings per share .. 3,910,991 ==========
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, 1997 1. The Pro Forma Combined Statement of Operations assumes the property was purchased or sold by the Company on January 1, 1997. Pro forma operating results for property purchases are from January 1 through the respective dates of purchase only. Results subsequent to the dates of purchase are included in the "Actual" column. 2. The previous years' actual amounts were used to estimate the interim period January 1 to the respective dates of purchase. 3. The pro forma interest adjustment is based on the mortgage obtained for each property at the date of purchase. The pro forma depreciation adjustment is based on the purchase price depreciated under the Company's established depreciation policies. Interest: Fairpark $ 96 Villa Piedra 222 Timbers 126 Lexington 270 Other Apartment Complexes: Terrace Hills 67 Crescent Place 36 Treehouse 114 Villas at Countryside 169 Country Bend 166 Sandstone 363 Sunchase 142 Other Commercial Properties: Savings of America 68 Bonita Plaza 304 Encon Warehouse 223 ---------------- Total $ 2,366 ================
6 7 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued NINE MONTHS ENDED SEPTEMBER 30, 1997 Depreciation: Fairpark $ 32 Villa Piedra 73 Timbers 37 Lexington 83 Other Apartment Complexes: Terrace Hills 21 Crescent Place 3 Treehouse 24 Villas at Countryside 18 Country Bend 48 Sandstone 124 Sunchase 56 Other Commercial Properties: Savings of America 4 Bonita Plaza 78 Encon Warehouse 74 ---------------- Total $ 675 ================
4. Interim operating results for sold properties are their actual operating results from January 1 to their respective dates of sale. 7 8 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996
Other Other Villa Apartment Commercial Fairpark Piedra Actual Complexes Properties Apartments Apartments ---------- ---------- ---------- ---------- ---------- (dollars in thousands) Income Rents ................ $ 45,405 $ 6,737 $ 1,946 $ 382 $ 921 Interest ............. 1,473 -- -- -- -- ---------- ---------- ---------- ---------- ---------- 46,878 6,737 1,946 382 921 Expenses Property operations .. 28,491 3,405 637 197 490 Interest ............. 14,999 -- -- -- -- Depreciation ......... 8,461 -- -- -- -- Advisory fee to affiliate ........... 1,784 -- -- -- -- General and administrative ...... 2,685 -- -- -- -- Litigation settlement .......... (1,500) -- -- -- -- Provision for losses .............. 1,579 -- -- -- -- ---------- ---------- ---------- ---------- ---------- 56,499 3,405 637 197 490 Income (loss) from operations ........... (9,621) 3,332 1,309 185 431 Equity in income of investees ............ (20) -- -- -- -- Gains on sale of real estate .......... 1,579 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) before extra- ordinary gain ........ (8,062) 3,332 1,309 185 431 Extraordinary gain ...... 256 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net (loss) .............. $ (7,806) $ 3,332 $ 1,309 $ 185 $ 431 ========== ========== ========== ========== ========== Earnings per share Net (loss) ........... $ (1.96) ========== Weighted average shares of Common Stock used in computing earnings per share ... 3,994,687 ========== Timbers Lexington Pro forma Pro forma Apartments Center Sales Adjustments Combined ---------- ---------- --------- ----------- ---------- (dollars in thousands) Income Rents ................ $ 471 $ 325 $ (1,473) $ -- $ 54,714 Interest ............. -- -- -- -- 1,473 ---------- ---------- ---------- ---------- ---------- 471 325 (1,473) -- 56,187 Expenses Property operations .. 303 150 (4,187) -- 29,486 Interest ............. -- -- (118) 3,911 18,792 Depreciation ......... -- -- (908) 1,243 8,796 Advisory fee to affiliate ........... -- -- -- -- 1,784 General and administrative ...... -- -- -- -- 2,685 Litigation settlement .......... -- -- -- -- (1,500) Provision for losses .............. -- -- -- -- 1,579 ---------- ---------- --------- ---------- ---------- 303 150 (5,213) 5,154 61,622 Income (loss) from operations ........... 168 175 3,740 (5,154) (5,435) Equity in income of investees ............ -- -- -- -- (20) Gains on sale of real estate .......... -- -- -- -- 1,579 Net income (loss) before extra- ordinary gain ........ 168 175 3,740 (5,154) (3,876) Extraordinary gain ...... -- -- -- 256 ---------- ---------- --------- ---------- ---------- Net (loss) .............. $ 168 $ 175 $ 3,740 $ (5,154) $ (3,620) ========== ========== ========= ========== ========== Earnings per share Net (loss) ........... $ (.91) ========== Weighted average shares of Common Stock used in computing earnings per share ... 3,994,687 ==========
The accompanying footnotes are an integral part of this Pro Forma Combined Statement of Operations. 8 9 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 amounts for Terrace Hills, Treehouse, Villas at Countryside, Bonita Plaza, Encon Warehouse, Sandstone, Sunchase, Timbers and Lexington Center are from their respective audited statement of operations. The amounts for Crescent Place, Savings of America, Country Bend, Fairpark and Villa Piedra are based on available financial information or estimates made in conjunction with purchases. 3. The pro forma interest adjustment is based on the mortgages obtained for each property at the date of purchase. The pro forma depreciation adjustment is based on the purchase price depreciated under the Company's established depreciation policies. Interest: Fairpark $ 128 Villa Piedra 296 Timbers 169 Lexington 360 Other Apartment Complexes: Terrace Hills 382 Crescent Place 149 Treehouse 229 Villas at Countryside 462 Country Bend 227 Sandstone 489 Sunchase 175 Other Commercial Properties: Savings of America 108 Bonita Plaza 439 Encon Warehouse 298 ---------------- Total $ 3,911 ================
9 10 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued YEAR ENDED DECEMBER 31, 1997 Depreciation: Fairpark $ 43 Villa Piedra 98 Timbers 49 Lexington 110 Other Apartment Complexes: Terrace Hills 129 Crescent Place 49 Treehouse 72 Villas at Countryside 132 Country Bend 72 Sandstone 166 Sunchase 74 Other Commercial Properties: Savings of America 34 Bonita Plaza 117 Encon Warehouse 98 ---------------- Total $ 1,243 ================
4. Interim operating results for sold properties are their actual operating results from January 1 to their respective dates of sale. 10 11 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 Terrace Hills Apartments for the year ended December 31, 1996 (incorporated by reference to Exhibit 99.0 of the Registrant's Current Report on Form 8-K/A, dated September 16, 1997). 99.1 Audited Statement of Revenue and Direct Operating Expenses of Treehouse Apartments for the year ended December 31, 1996 (incorporated by reference to Exhibit 99.1 of the Registrant's Current Report on Form 8-K/A, dated September 16, 1997). 99.2 Audited Statement of Revenue and Direct Operating Expenses of Villas at Countryside Apartments for the year ended December 31, 1996 (incorporated by reference to Exhibit 99.2 of the Registrant's Current Report on Form 8-K/A, dated September 16, 1997). 99.3 Audited Statement of Revenue and Direct Operating Expenses of Bonita Plaza for the year ended December 31, 1996 (incorporated by reference to Exhibit 99.3 of the Registrant's Current Report on Form 8-K/A, dated September 16, 1997). 99.4 Audited Statement of Revenue of Encon Warehouse for the year ended December 31, 1996 (incorporated by reference to Exhibit 99.4 of the Registrant's Current Report on Form 8-K/A, dated September 16, 1997). 99.5 Audited Statement of Revenue and Direct Operating Expenses of Sandstone Apartments for the year ended December 31, 1996 (incorporated by reference to Exhibit 99.5 of the Registrant's Current Report on Form 8-K/A, dated September 16, 1997). 99.6 Audited Statement of Revenue and Direct Operating Expenses of Sunchase Apartments for the year ended December 31, 1996 (incorporated by reference to Exhibit 99.6 of the Registrant's Current Report on Form 8-K/A, dated September 16, 1997). 99.7 Audited Statement of Revenue and Direct Operating Expenses of Timbers Apartments for the year ended December 31, 1996, filed herewith. 99.8 Audited Statement of Revenue and Direct Operating Expenses of Lexington Center for the year ended December 31, 1996, filed herewith. 11 12 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: June 29, 1998 By: /s/ Thomas A. Holland ------------------------ ----------------------------------- Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 12 13 TRANSCONTINENTAL REALTY INVESTORS, INC. EXHIBITS TO CURRENT REPORT ON FORM 8-K/A Dated December 22, 1997
Exhibit Page Number Description Number - ------- ------------------------------------------------- ------ 99.7 Audited Statement of Revenue and Direct Operating 14 Expenses of Timbers Apartments for the year ended December 31, 1996. 99.8 Audited Statement of Revenue and Direct Operating 18 Expenses of Lexington Center for the year ended December 31, 1996.
13 EX-99.7 2 AUDITED STATEMENT OF REVENUE-TIMBERS APARTMENTS 1 EXHIBIT 99.7 THE TIMBERS APARTMENTS STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1997 14 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 Timbers 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 The Timbers Apartments for the year ended December 31, 1997, in conformity with generally accepted accounting principles. FARMER, FUQUA, HUNT & MUNSELLE, P.C. Dallas, Texas April 7, 1998 15 3 THE TIMBERS APARTMENTS STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES Year Ended December 31, 1997 REVENUES Net rental revenues $444,956 Other revenues 25,874 -------- Total revenues 470,830 DIRECT OPERATING EXPENSES Salaries and benefits 111,896 Repairs and maintenance 71,869 Utilities 70,056 Property taxes 37,890 Insurance 11,206 -------- Total direct operating expenses 302,917 -------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $167,913 ========
The accompanying notes are an integral part of this statement. 16 4 THE TIMBERS APARTMENTS NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES December 31, 1997 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION The Timbers Apartments is a 100-unit apartment complex located in Tyler, Texas. During 1997, the property was owned by John Hancock Mutual Life Insurance Company. 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: Miscellaneous fees $ 16,409 NSF and late fees 8,780 Forfeited deposits 685 ------------ $ 25,874 ============
NOTE 4: SUBSEQUENT EVENT The property was sold to Transcontinental Realty Investors, Inc., a Nevada corporation, on December 30, 1997. 17 EX-99.8 3 AUDITED STATEMENT OF REVENUE-LEXINGTON CENTER 1 EXHIBIT 99.8 THE LEXINGTON CENTER STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED AUGUST 31, 1997 18 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 Lexington Center for the year ended August 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 Lexington Center for the year ended August 31, 1997, in conformity with generally accepted accounting principles. FARMER, FUQUA, HUNT & MUNSELLE, P.C. Dallas, Texas May 5, 1998 19 3 THE LEXINGTON CENTER STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES Year Ended August 31, 1997 REVENUES Net rental revenues $ 325,159 ------------- Total revenues 325,159 DIRECT OPERATING EXPENSES Utilities 70,026 Repairs and maintenance 56,842 Insurance 20,236 Salaries and benefits 2,450 ------------- Total direct operating expenses 149,554 ------------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 175,605 =============
The accompanying notes are an integral part of this statement. 20 4 THE LEXINGTON CENTER NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES August 31, 1997 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION The Lexington Center is a 74,603 square foot office building located in Colorado Springs, Colorado. During 1997, the property was owned by The Navigators. 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. Additionally, The Navigators is a not-for-profit corporation and is not subject to real estate taxes, therefore there is no such provision in the accompanying financial statements NOTE 2: ACCOUNTING ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3: SUBSEQUENT EVENT The property was sold to Transcontinental Realty Investors, Inc., a Nevada corporation on December 30, 1997. 21 -----END PRIVACY-ENHANCED MESSAGE-----