-----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, MYR9Xs9RNuZzsdoKKYi80XjxTzN0m8rURLckKL78g28W0dhbcYkz807ZxiCV/30f F77UrsyoCxqQOHRr6hYbcQ== 0000950134-98-008149.txt : 19981019 0000950134-98-008149.hdr.sgml : 19981019 ACCESSION NUMBER: 0000950134-98-008149 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980626 ITEM INFORMATION: FILED AS OF DATE: 19981016 SROS: NYSE 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: 98726993 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 June 26, 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 7. FINANCIAL STATEMENTS AND EXHIBITS This Form 8-K/A amends the Form 8-K Current Report dated June 26, 1998 and filed July 21, 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, 1997 and the six months ended June 30, 1998. A pro forma balance sheet as of June 30, 1998 is also presented. A summary of the pro forma transactions follows: On June 26, 1998, the Company purchased the Atrium, a 74,603 square foot office building in Palm Beach, Florida, for $5.4 million, approximately 1.7% of the Company's assets at December 31, 1997. The seller of the property was U. S. Technologies Trading, Ltd., an unrelated party. The property was constructed in 1985 and was 98% occupied on the date of purchase. The Company paid $1.3 million in cash and obtained new mortgage financing of $4.1 million. The mortgage bears interest at a variable rate, currently 7.93% per annum, requires monthly payments of principal and interest of $31,455 and matures in July 2001. On July 8, 1998, the Company purchased Valley Rim, a 54,194 square foot office building in San Diego, California, for $5.1 million, approximately 1.6% of the Company's assets at December 31, 1997. The seller of the property was Valley Rim, LLC, an unrelated party. The property was constructed in 1988 and was 85% occupied on the date of purchase. The Company paid $1.4 million in cash and obtained new mortgage financing of $3.7 million. The mortgage bears interest at a variable rate, currently 9.45% per annum, requires monthly payments of principal and interest of $32,576 and matures in June 2005. In assessing each of the office building purchases 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 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. In addition to the purchases described above, the Company has also purchased, in 1998, seven 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 four office buildings, two in Dallas, Texas, one in February 1998 and the other in March 1998, and two in San Diego, California in May 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 Midland, Texas in May 1998 and one in Austin, 2 3 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued) Texas in July 1998. The income producing properties and undeveloped land were purchased for a total of $48.3 million. The Company paid $17.3 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 9.5% per annum and mature from November 1999 to May 2013. In March 1998, the Company sold Shaws Plaza, a 103,482 square foot shopping center in Sharon, Massachusetts, for $3.8 million. The Company received net cash of $1.2 million after the payoff of $2.6 million in existing mortgage debt and the payment of various closing costs associated with the sale. 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 JUNE 30, 1998
Valley Rim Office Actual(1) Building(2) Pro Forma --------- ----------- --------- Assets (dollars in thousands) Notes and interest receivable Performing.................... $ 4,370 $ -- $ 4,370 Nonperforming................. 416 -- 416 -------- -------- -------- 4,786 -- 4,786 Less - allowance for estimated losses.............. (891) -- (891) Foreclosed real estate held for sale...................... 1,356 -- 1,356 Real estate held for sale, net of accumulated depreciation.................. 21,571 -- 21,571 Real estate held for investment, net of accumulated depreciation...... 301,404 5,400 306,804 Investment in partnerships........ 4,011 -- 4,011 Cash and cash equivalents......... 7,093 (1,671) 5,422 Other assets...................... 15,058 (8) 15,050 -------- -------- -------- $354,388 $ 3,721 $358,109 ======== ======== ======== Liabilities and Shareholders' Equity Liabilities Notes and interest payable........ $261,440 $ 3,700 $265,140 Other liabilities................. 7,199 21 7,220 -------- -------- -------- 268,639 3,721 272,360 Commitments and contingencies Shareholders' equity Common Stock, $.01 par value; 10,000,000 shares; issued and outstanding, 3,872,505 shares........................ 39 -- 39 Paid-in capital................... 217,431 -- 217,431 Accumulated distributions in excess of accumulated earnings...................... (131,721) -- (131,721) -------- -------- -------- 85,749 -- 85,749 -------- -------- -------- $354,388 $ 3,721 $358,109 ======== ======== ========
- ------------------------------------- (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 and the Atrium Office Building acquired in June 1998 and excludes the Shaws Plaza Shopping Center which was sold in March 1998. (2) Assumes acquisition by the Company on January 1, 1998. 4 5 TRANSCONTINENTAL REALTY INVESTORS, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998
Valley Other Atrium Rim Apartment Commercial Property Office Office Shaws Pro Forma Pro Forma Actual Complexes Properties Purchases Building Building Plaza Adjustments Combined ----------- ---------- ----------- ---------- --------- --------- ----- ----------- ---------- (dollars in thousands) Income Rents................. $ 33,393 $ 280 $ 358 $ 622 $ 365 $ 336 $ (157) $ - $ 35,197 Income................ 393 - - - - - - - 393 ---------- ------ ------ ------ ------ ----- ------ ------- ---------- 33,786 280 358 622 365 336 (157) - 35,590 Expenses Property operations... 17,283 241 110 419 168 124 (100) - 18,245 Interest.............. 10,944 - - - - - (41) 1,138 12,041 Depreciation.......... 5,129 - - - - - (56) 515 5,588 Advisory and net income fee to affiliate........... 1,303 - - - - - - - 1,303 General and administrative...... 1,065 - - - - - - - 1,065 ---------- ------ ------ ------ ------- ----- ------ ------- ---------- 35,724 241 110 419 168 124 (197) 1,653 38,242 Net income (loss) from operations............ (1,938) 39 248 203 197 212 40 (1,653) (2,652) Equity in income of investees............. 432 - - - - - - - 432 Gain on sale of real estate................ 2,132 - - - - - - - 2,132 ---------- ------ ------ ------ ------- ----- ------ ------- ---------- Net income (loss)........ $ 626 $ 39 $ 248 $ 203 $ 197 $ 212 $ 40 $(1,653) $ (88) ========== ====== ====== ====== ======= ===== ====== ======= ========== Earnings per share Net income (loss)..... $ .16 $ (.02) ========== ========== Weighted average shares of Common Stock used in computing earnings per share............. 3,879,080 3,879,080 ========== ==========
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 SIX MONTHS ENDED JUNE 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, 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 (collectively the "Form 8-K"). 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 and Plaza on Bachman Creek. For further information refer to the Company's Form 8-K. Revenues: Parkway North Office Building $ 163 Plaza on Bachman Creek 195 ------------------ $ 358 ================== Property Operations Expenses: Parkway North Office Building $ 57 Plaza on Bachman Creek 53 ------------------ $ 110 ==================
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. 6 7 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued SIX MONTHS ENDED JUNE 30, 1998 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 and April 30, 1998 were obtained for Mountain Plaza Apartments, Parkway North Office Building and the Valley Rim Office Building, respectively. Such statements were used as the basis for estimating their respective operating results for the six months ended June 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 or assumed and seller financing obtained, if any, for each property at its respective date of purchase. The pro forma depreciation adjustment is based on the purchase price of each property depreciated under the Company's established depreciation policies. Interest: Atrium Office Building $ 27 Valley Rim Office Building 29 Ashton Way Apartments 48 Bent Tree Gardens Apartments 230 Emerald Terrace Apartments 40 4400 Apartments 49 Hunters Glen Apartments 76 Mountain Plaza Apartments 121 Woodview Apartments 94 Daley Plaza Office Building 165 Plaza on Bachman Creek 108 Parkway North Office Building 88 Viewridge Office Building 63 ---------- Total $ 1,138 ==========
7 8 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued SIX MONTHS ENDED JUNE 30, 1998 Depreciation: Atrium Office Building $ 57 Valley Rim Office Building 54 Ashton Way Apartments 19 Bent Tree Gardens Apartments 85 Emerald Terrace Apartments 15 Hunters Glen Apartments 26 4400 Apartments 17 Mountain Plaza Apartments 41 Woodview Apartments 36 Daley Plaza Office Building 49 Plaza on Bachman Creek 37 Parkway North Office Building 59 Viewridge Office Building 20 -------- Total $ 515 ========
7. Interim operating results for Shaws Plaza Shopping Center which was sold in March 1998, are its 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
Valley Other Atrium Rim Apartment Commercial Property Office Office Shaws Pro Forma Pro Forma Actual Complexes Properties Purchases Building Building Plaza Adjustments Combined ----------- --------- ---------- --------- -------- -------- ------ ----------- ---------- (dollars in thousands) Income Rents.................. $ 54,462 $ 2,022 $ 1,444 $ 3,300 $ 885 $ 672 $ (656) $ - $ 62,129 Income................. 1,499 - - - - - - - 1,499 ----------- --------- ---------- --------- -------- -------- ------ ----------- ---------- 55,961 2,022 1,444 3,300 885 672 (656) - 63,628 Expenses Property operations.... 32,424 1,444 645 2,128 290 247 (332) - 36,846 Interest............... 16,765 - - - - - (276) 2,840 19,329 Depreciation........... 9,578 - - - - - (265) 1,031 10,344 Advisory fee to affiliate........... 1,807 - - - - - - - 1,807 Net income fee to affiliate........... 1,022 - - - - - - - 1,022 General and administrative...... 2,645 - - - - - - - 2,645 Provision for losses... 1,337 - - - - - (1,337) - - ----------- --------- ---------- --------- -------- -------- ------- ---------- ---------- 65,578 1,444 645 2,128 290 247 (2,210) 3,871 71,993 Income (loss) from operations............. (9,617) 578 799 1,172 595 425 1,554 (3,871) (8,365) Equity in income of investees.............. 812 - - - - - - - 812 Gain on sale of real estate................. 21,404 - - - - - - - 21,404 ----------- --------- ---------- --------- -------- -------- ------- ---------- ---------- Net income (loss)......... $ 12,599 $ 578 $ 799 $ 1,172 $ 595 $ 425 $ 1,554 $ (3,871) $ 13,851 =========== ========= ========== ========= ======== ======== ======= ========== ========== Earnings per share Net income (loss)...... $ 3.22 $ 3.55 =========== ========== Weighted average shares of Common Stock used in computing earnings per share............. 3,907,221 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 (collectively "Form 8-K"). 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 and Plaza on Bachman Creek. For further information refer to the Company's Form 8-K. Revenues: Parkway North Office Building $ 938 Plaza on Bachman Creek 506 --------- $ 1,444 ========= Property Operations Expenses: Parkway North Office Building $ 393 Plaza on Bachman Creek 252 --------- $ 645 =========
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. 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. 10 11 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued YEAR ENDED DECEMBER 31, 1997 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 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 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 $ 2,840 ==========
11 12 TRANSCONTINENTAL REALTY INVESTORS, INC. NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS - Continued YEAR ENDED DECEMBER 31, 1997 Depreciation: Atrium Office Building $ 115 Valley Rim Office Building 108 Ashton Way Apartments 38 Bent Tree Gardens Apartments 170 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 $ 1,031 =========
8. Operating results for Shaws Plaza Shopping Center which was sold in March 1998, are its 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, filed herewith. 99.8 Audited Statement of Revenue and Direct Operating Expenses of Valley Rim Building for the year ended December 31, 1997, filed herewith. 99.9 Valley Rim Building Statement of Operations for the four months ended April 30, 1998, filed herewith.
13 14 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: October 16, 1998 By: /s/ THOMAS A. HOLLAND ----------------------- ------------------------------- Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 14 15 TRANSCONTINENTAL REALTY INVESTORS, INC. EXHIBITS TO CURRENT REPORT ON FORM 8-K/A Dated MAY 29, 1998
Exhibit Page Number Description Number - ------- ------------------------------------------------- ------ 99.7 Audited Statement of Revenue and Direct Operating 16 Expenses of Atrium Office Building for the year ended December 31, 1997. 99.8 Audited Statement of Revenue and Direct Operating 20 Expenses of Valley Rim Building for the year ended December 31, 1997. 99.9 Valley Rim Building Statement of Operations for 24 the four months ended April 30, 1998.
15 EX-99.7 2 AUDITED STATEMENT OF REVENUE/DIRECT OPERATING 1 EXHIBIT 99.7 Statement of Revenues and Direct Operating Expenses Year Ended December 31, 1997 THE ATRIUM BUILDING [GOODMAN & COMPANY, L.L.P. LETTERHEAD] 16 2 [GOODMAN & COMPANY, L.L.P. LETTERHEAD] REPORT OF INDEPENDENT AUDITORS To the Board of Trustees TRANSCONTINENTAL REALTY INVESTORS, INC. We have audited the accompanying statement of revenues and direct operating expenses of "THE ATRIUM OFFICE BUILDING" 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 an 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 2, 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 ATRIUM OFFICE BUILDING" for the year ended December 31, 1997, in conformity with generally accepted accounting principles. One Commercial Place Norfolk, Virginia May 26, 1998 /s/GOODMAN & COMPANY, L.L.P. GOODMAN & COMPANY, L.L.P. - 1 - 17 3 "THE ATRIUM BUILDING" STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES ===============================================================================
Year Ended December 31, 1997 REVENUES Net rental revenues $ 663,522 Tenant reimbursements 221,199 ---------- TOTAL REVENUES 884,721 ---------- DIRECT OPERATING EXPENSES Property taxes 82,631 Repairs and maintenance 52,058 Utilities 46,001 Salaries and benefits 40,050 Insurance 28,299 Management fees 26,353 Administrative 7,737 Land rent 6,292 Advertising 99 ---------- TOTAL DIRECT OPERATING EXPENSES 289,520 ---------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 595,201 ==========
The accompanying notes are an integral part of this financial statement. - 2 - 18 4 "THE ATRIUM BUILDING" NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES DECEMBER 31, 1997 =============================================================================== NOTE 1 - ORGANIZATION AND BUSINESS "The Atrium Building" is a 63,017 square foot office rental building located in North Palm Beach, Florida and is currently owned by U.S. Technology Trading, Ltd. NOTE 2 - BASIS OF PRESENTATION INCOME AND EXPENSE RECOGNITION Rental income and expenses are recorded on the accrual method of accounting. Tenant leases vary in terms at varying rental rates. 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. ESTIMATES The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and disclosure of contingent assets and liabilities for the reported periods. Actual results could differ from those estimates and assumptions. NOTE 3 - RELATED PARTY TRANSACTIONS In 1997, the Company paid management fees of $26,353 to a related party. The Company also paid $31,250 in salaries to a shareholder. ***** - 3 - 19 EX-99.8 3 AUDITED STATEMENT OF REVENUE/DIRECT OPERATING 1 EXHIBIT 99.8 VALLEY RIM STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1997 20 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 Valley Rim 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 Valley Rim for the year ended December 31, 1997, in conformity with generally accepted accounting principles. FARMER, FUQUA, HUNT & MUNSELLE, P.C. Dallas, Texas July 14, 1998 21 3 VALLEY RIM STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES Year Ended December 31, 1997
REVENUES Net rental revenues $663,468 Other revenues 9,208 -------- Total revenues 672,676 DIRECT OPERATING EXPENSES Repairs and maintenance 146,380 Utilities 43,073 Property taxes 25,466 Salaries and benefits 21,300 Insurance 11,016 -------- Total direct operating expenses 247,235 -------- REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $425,441 ========
The accompanying notes are an integral part of this statement. 22 4 VALLEY RIM NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES December 31, 1997 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Valley Rim is a 49,377 square foot office building located in San Diego, California. During 1997, the property was owned by Valley Rim, LLC. 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:
CAM Reimbursement $4,570 Other Income 2,666 Other Expense Reimbursement 1,355 Utilities Reimbursement 428 Interest Income 189 ------ $9,208 ======
NOTE 4: SUBSEQUENT EVENT The property was sold to Transcontinental Realty Investors, Inc., a Nevada corporation, on July 8, 1998. 23 EX-99.9 4 VALLEY RIM BUILDING STATEMENT OF OPERATIONS 1 Report Date: 05/08/98 Page: 1 Company: VR Date: 05/08/98 Development ID: V01 Time: 08:34:41 EXHIBIT 99.9 Detail Income Statement Valley Rim LLC Valley Rim Office Building
CURRENT PERIOD YEAR-TO-DATE 1 MONTH 1 MONTH 4 MONTHS 4 MONTHS THRU: APR 1998 STD. BUDGET VARIANCE APR 1998 STD. BUDGET VARIANCE -------- ----------- -------- -------- ----------- --------- INCOME ------ RENTAL INCOME Industrial Rent 59,572.31 0.00 59,572.31 241,825.96 0.00 241,825.96 --------- ---- --------- ---------- ---- ---------- TOTAL RENTAL INCOME 59,572.31 0.00 59,572.31 241,825.96 0.00 241,825.96 REIMBURSEMENTS CAM Reimbursement 255.00 0.00 255.00 1,902.34 0.00 1,902.34 Other Expense Reimb. 502.50 0.00 502.50 691.50 0.00 691.50 --------- ---- --------- ---------- ---- ---------- TOTAL REIMBURSEMENTS 757.50 0.00 757.50 2,593.84 0.00 2,593.84 OTHER INCOME Interest Income 19.80 0.00 19.80 63.87 0.00 63.87 Other Income 498.44 0.00 498.44 1,556.84 0.00 1,556.84 --------- ---- --------- ---------- ---- ---------- TOTAL OTHER INCOME 518.24 0.00 518.24 1,620.71 0.00 1,620.71 --------- ---- --------- ---------- ---- ---------- TOTAL INCOME 60,848.05 0.00 60,848.05 246,040.51 0.00 246,040.51 EXPENSES -------- INTEREST Interest Expense 100.00 0.00 (100.00) 36,383.13 0.00 (36,383.13) --------- ---- --------- ---------- ---- ---------- TOTAL INTEREST 100.00 0.00 (100.00) 36,383.13 0.00 (36,383.13) REPAIRS & MAINTENANCE Elec Contract Services 207.29 0.00 (207.29) 207.29 0.00 (207.29) Struct Contract Services 0.00 0.00 0.00 2,416.75 0.00 (2,416.75) Roof Contract Services 169.55 0.00 (169.55) 322.55 0.00 (322.55) HVAC Contract Services 1,402.47 0.00 (1,402.47) 2,956.03 0.00 2,956.03 Elev Contract Services 18.54 0.00 (18.54) 1,208.58 0.00 (1,208.58) Plumb Contract Services 0.00 0.00 0.00 140.83 0.00 (140.83) Other General Supplies 0.00 0.00 0.00 144.46 0.00 (144.46) Other Decorating 94.98 0.00 (94.98) 379.92 0.00 (379.92) Other Pest Control 37.00 0.00 (37.00) 148.00 0.00 (148.00) Other R & M Expenses 669.66 0.00 (669.66) 3,436.93 0.00 (3,436.93) Locks/Keys 459.70 0.00 (459.70) 651.19 0.00 (651.19) Directory Signage 616.46 0.00 (616.46) 783.47 0.00 (783.47) --------- ---- --------- ---------- ---- ---------- TOTAL REPAIRS & MAINT. 3,675.65 0.00 (3,675.65) 12,796.00 0.00 (12,796.00) COMMON AREA MAINT. Contract Services 3,361.00 0.00 (3,361.00) 13,424.00 0.00 (13,424.00) Supplies/Materials 818.79 0.00 (818.79) 3,585.58 0.00 (3,585.58) Trash Removal 166.74 0.00 (166.74) 622.74 0.00 (622.74) Cleaning-Other 550.00 0.00 (550.00) 1,050.00 0.00 (1,050.00) Safety Contract Services 0.00 0.00 0.00 550.00 0.00 (550.00) Fire Protection 36.77 0.00 (36.77) 858.96 0.00 (858.96) Landscaping 295.00 0.00 (295.00) 1,250.01 0.00 (1,250.01) Parking Facilities 699.38 0.00 (699.38) 2,861.61 0.00 (2,861.61) --------- ---- --------- ---------- ---- ---------- TOTAL COMMON AREA MAINT. 5,927.68 0.00 (5,927.68) 24,202.90 0.00 (24,202.90) ADMINISTRATIVE Telephone 0.00 0.00 0.00 3.97 0.00 (3.97) Legal Fees 0.00 0.00 0.00 2,908.30 0.00 (2,908.30) Other Professional Fees 115.00 0.00 (115.00) 1,006.50 0.00 (1,006.50) Other Administrative Exp. 0.00 0.00 0.00 470.96 0.00 (470.96) Lease Advertising/Promo 0.00 0.00 0.00 181.02 0.00 (181.02) --------- ---- --------- ---------- ---- ----------
24 2 Report Date: 05/08/98 DETAIL INCOME STATEMENT Page: 2 Company: VR VALLEY RIM LLC Date: 05/08/98 Development ID: V01 VALLEY RIM OFFICE BUILDING Time: 08:34:44
CURRENT PERIOD YEAR-TO-DATE 1 MONTH 1 MONTH 4 MONTHS 4 MONTHS THRU: APR 1998 STD. BUDGET VARIANCE APR 1998 STD. BUDGET VARIANCE -------- ----------- -------- -------- ----------- --------- TOTAL ADMINISTRATIVE 115.00 0.00 (115.00) 4,570.75 0.00 (4,570.75) MANAGEMENT FEES Management Fees 1,775.00 0.00 (1,775.00) 7,100.00 0.00 (7,100.00) --------- ---- ---------- ---------- ---- ----------- TOTAL MANAGEMENT FEES 1,775.00 0.00 (1,775.00) 7,100.00 0.00 (7,100.00) UTILITIES Electricity 1,341.65 0.00 (1,341.65) 9,153.05 0.00 (9,153.05) Gas 0.00 0.00 0.00 1,004.24 0.00 (1,004.24) Water/Sewer 2,075.23 0.00 (2,075.23) 2,550.46 0.00 (2,550.46) --------- ---- ---------- ---------- ---- ----------- TOTAL UTILITIES 3,416.88 0.00 (3,416.88) 12,707.75 0.00 (12,707.75) INSURANCE Primary Property 1,940.00 0.00 (1,940.00) 1,940.00 0.00 (1,940.00) --------- ---- ---------- ---------- ---- ----------- TOTAL INSURANCE 1,940.00 0.00 (1,940.00) 1,940.00 0.00 (1,940.00) REAL ESTATE TAXES Real Estate Taxes 10,983.27 0.00 (10,983.27) 10,983.27 0.00 (10,983.27) --------- ---- ---------- ---------- ---- ----------- TOTAL REAL ESTATE TAXES 10,983.27 0.00 (10,983.27) 10,983.27 0.00 (10,983.27) INCOME TAX EXPENSE Income Tax Expense 0.00 0.00 0.00 2,300.00 0.00 (2,300.00) --------- ---- ---------- ---------- ---- ----------- TOTAL INCOME TAX EXPENSE 0.00 0.00 0.00 2,300.00 0.00 (2,300.00) --------- ---- ---------- ---------- ---- ----------- TOTAL OPER EXPENSES 27,933.48 0.00 (27,933.48) 112,983.80 0.00 (112,983.80) --------- ---- ---------- ---------- ---- ----------- NET OPERATING INCOME 32,914.57 0.00 32,914.57 133,056.71 0.00 133,056.71 CAPITAL EXPENDITURES Capital Improvements 0.00 0.00 0.00 3,150.00 0.00 (3,150.00) Leasing Commissions 0.00 0.00 0.00 4,235.17 0.00 (4,235.17) Tenant Improvements 7,577.40 0.00 (7,577.40) 16,262.35 0.00 (16,262.35) ADA Costs 0.00 0.00 0.00 3,260.00 0.00 (3,260.00) --------- ---- ---------- ---------- ---- ----------- TOTAL CAPITAL EXPENDITURE 7,577.40 0.00 (7,577.40) 26,907.52 0.00 (26,907.52) LIABILITIES Mortgage Note Payable (7,772.24) 0.00 (7,772.24) (13,564.08) 0.00 (13,564.08) Security Deposits 0.00 0.00 0.00 4,289.10 0.00 (4,289.10) --------- ---- ---------- ---------- ---- ----------- TOTAL LIABILITIES (7,772.24) 0.00 (7,772.24) (9,274.98) 0.00 (9,274.98) --------- ---- ---------- ---------- ---- ----------- TOTAL CASH FLOW 17,564.93 0.00 17,564.93 96,874.21 0.00 96,874.21 EQUITY Due to/(from) Owner 26,500.00 0.00 (26,500.00) 97,369.18 0.00 (97,369.18) --------- ---- ---------- ---------- ---- ----------- TOTAL EQUITY 26,500.00 0.00 (26,500.00) 97,369.18 0.00 (97,369.18) --------- ---- ---------- ---------- ---- ----------- NET CHANGE IN CASH (8,935.07) 0.00 (8,935.07) (494.97) 0.00 (494.97)
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