-----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, INVtgD88bsWLTzOfHtTOtvXWbXRT1vd7GHQVG+3Ti1NAuAIYbxaemJeL82x3jeQp fXLLSp3Zdf2hHw9AR5QyxA== /in/edgar/work/0000759174-00-500002/0000759174-00-500002.txt : 20001115 0000759174-00-500002.hdr.sgml : 20001115 ACCESSION NUMBER: 0000759174-00-500002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VININGS INVESTMENT PROPERTIES TRUST/GA CENTRAL INDEX KEY: 0000759174 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 136850434 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13693 FILM NUMBER: 766218 BUSINESS ADDRESS: STREET 1: 2839 PACES FERRY ROAD STREET 2: STE 1170 CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 7709849500 MAIL ADDRESS: STREET 1: 2839 PACES FERRY ROAD STREET 2: SUITE 1170 CITY: ATLANTA STATE: GA ZIP: 30339 10-Q 1 0001.txt THIRD QUARTER INTERIM REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ****************************************** FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ****************************************** For the period ended SEPTEMBER 30, 2000 Commission file number 0-13693 ------------------------------ VININGS INVESTMENT PROPERTIES TRUST AND SUBSIDIARIES ------------------------------------------- (Exact name of registrant as specified in charter) Massachusetts 13-6850434 ------------- -------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2839 Paces Ferry Road, Suite 1170, Atlanta, GA 30339 - ---------------------------------------------- -------------- (Address of principal executive offices) (Zip Code) (770) 984-9500 ------------------- Registrant's telephone number, including area code: Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ The number of shares outstanding as of November 7, 2000 was 1,100,489. VININGS INVESTMENT PROPERTIES TRUST AND SUBSIDIARIES INDEX OF FINANCIAL INFORMATION PAGE PART I FINANCIAL INFORMATION Item 1 Financial Statements Consolidated Balance Sheets (unaudited) as of September 30, 2000 and December 31, 1999 3 Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2000 and 1999 4 Consolidated Statement of Shareholders' Equity (unaudited) for the nine months ended September 30, 2000 5 Consolidated Statements of Cash Flows (unaudited) for the three and nine months ended September 30, 2000 and 1999 6 Notes to Consolidated Financial Statements 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 19 PART II OTHER INFORMATION/SIGNATURE Item 6 Exhibits and Reports on Form 8-K 23 Signature 24 VININGS INVESTMENT PROPERTIES TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)
September 30, December 31, 2000 1999 ---------------- --------------- Real estate assets: Land $ 8,247,900 $ 8,247,900 Buildings and improvements 55,609,852 55,545,257 Furniture, fixtures & equipment 4,102,335 3,968,848 Less: accumulated depreciation (5,029,109) (3,351,811) ---------------- --------------- Net real estate assets 62,930,978 64,410,194 Investment in unconsolidated Joint Venture 1,392,377 1,551,974 Cash and cash equivalents 552,704 916,215 Restricted cash 1,864,790 1,816,102 Receivable from Joint Venture 13,373 27,356 Receivables and other assets 262,249 236,900 Deferred financing costs, less accumulated amortization of $171,831 and $127,656 at September 30, 2000 and December 31, 1999, respectively 93,734 117,908 Deferred leasing costs, less accumulated amortization of $74,584 and $59,240 at September 30, 2000 and December 31, 1999, respectively 22,322 37,665 ---------------- --------------- Total assets $ 67,132,527 $ 69,114,314 ================ =============== LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage notes payable $ 54,828,032 $ 55,074,923 Line of credit 1,864,990 1,715,000 Accounts payable and accrued liabilities 1,766,844 1,899,937 Distributions payable to Preferred Unitholders - 464,750 Dividends payable to Preferred Shareholders 232,376 - ---------------- --------------- Total liabilities 58,692,242 59,154,610 ---------------- --------------- Minority interests of unitholders in Operating Partnership: Preferred partnership interests - 8,730,003 Common partnership interests (77,127) 222,084 ---------------- --------------- Total minority interests (77,127) 8,952,087 ---------------- --------------- Shareholders' equity: Series A convertible preferred shares of beneficial interest, 8,867,529 - (par value $.01 per share) 2,050,000 authorized, 1,988,235 and 0 shares issued and outstanding at September 30, 2000 and December 31, 1999, respectively Common shares of beneficial interest, without par or stated value, 25,000,000 authorized, 1,100,490 and 1,100,493 shares issued and outstanding at September 30, 2000 and December 31, 1999, respectively Additional paid in capital 3,295,970 3,295,998 Accumulated deficit (3,646,087) (2,288,381) ---------------- --------------- Total shareholders' equity 8,517,412 1,007,617 ---------------- --------------- Total liabilities and shareholders' equity $ 67,132,527 $ 69,114,314 ================ =============== The accompanying notes are an integral part of these consolidated financial statements.
VININGS INVESTMENT PROPERTIES TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) For the three months For the nine months ended September 30, ended September 30, ------------------------------- ------------------------------- 2000 1999 2000 1999 ------------- ------------ ------------- ------------- REVENUES Rental revenues $ 2,796,239 $ 2,866,225 $ 8,334,522 $ 6,034,948 Other property revenues 159,587 194,898 460,515 340,764 Other income 16,570 4,867 44,001 23,137 ------------- ------------- ------------ ------------ 2,972,396 3,065,990 8,839,038 6,398,849 ------------- ------------- ------------ ------------- EXPENSES Property operating and maintenance 1,194,500 1,173,329 3,402,647 2,417,411 Depreciation and amortization 564,698 562,557 1,692,641 1,156,428 Amortization of deferred financing costs 11,476 15,036 44,175 35,361 Interest expense 1,296,993 1,270,653 3,880,148 2,559,036 General and administrative 126,167 208,140 492,095 469,977 ------------- ------------- ------------ ------------- 3,193,834 3,229,715 9,511,706 6,638,213 Loss before equity in loss of unconsolidated Joint Venture and minority interests (221,438) (163,725) (672,667) (239,364) Equity in loss of unconsolidated Joint Venture (42,857) (57,022) (149,597) (74,790) ------------- ------------- ------------ ------------- Loss before minority interests (264,295) (220,747) (822,264) (314,154) Less Minority interests in Operating Partnership: Preferred partnership interests - 336,757 336,758 566,587 Common partnership interests (89,662) (100,682) (299,211) (159,056) ------------- ------------- ------------ ------------- Net loss (174,633) (456,822) (859,811) (721,685) ------------- ------------- ------------ ------------- Distributions to preferred shareholders 232,376 - 464,751 - Accretion to preferred shareholders - - 33,144 - ------------- ------------- ------------ ------------- Net loss available to common shareholders' $ (407,009) $ (456,822) $(1,357,706) $ (721,685) ============= ============= ============ ============= NET LOSS PER SHARE - BASIC $ (0.37) $ (0.42) $ (1.23) $ (0.66) ============= ============= ============ ============= NET LOSS PER SHARE - DILUTED $ (0.37) $ (0.42) $ (1.23) $ (0.66) ============= ============= ============ ============= WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 1,100,490 1,100,499 1,100,491 1,100,504 ============= ============= ============ ============= WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 1,343,036 1,343,045 1,343,037 1,343,050 ============= ============= ============ ============= The accompanying notes are an integral part of these consolidated financial statements.
VININGS INVESTMENT PROPERTIES TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the nine months ended September 30, 2000 1999 -------------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (859,811) $ (721,685) -------------- ----------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,692,641 1,156,428 Amortization of deferred financing costs 44,175 35,361 Equity in loss of unconsolidated Joint Venture 149,597 74,790 Minority interests in Operating Partnership: Preferred partnership interests 336,758 566,587 Common partnership interests (299,211) (159,056) Distributions to common unitholders - (12,127) Distributions to preferred unitholders (697,125) (158,591) Changes in assets and liabilities, net of the effect of real estate assets acquired Restricted cash (48,688) (411,220) Receivable from Joint Venture 13,983 - Receivables and other assets (25,349) (194,470) Capitalized leasing costs - (12,213) Accounts payable and accrued liabilities (133,093) 442,603 ------------ ----------- Total adjustments 1,033,688 1,328,092 ------------ ----------- Net cash provided by operating activities 173,877 606,407 ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of real estate assets - (6,066,073) Capital expenditures (198,083) (297,196) Investment in unconsolidated Joint Venture - (1,705,100) Acquisition advances from Joint Venture - 363,837 Distributions from Joint Venture 10,000 15,760 ------------ ----------- Net cash used in investing activities (188,083) (7,688,772) ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Deferred financing costs (20,000) (29,242) Net proceeds (repayments) from/to line of credit 149,990 (1,024,000) Principal repayments on mortgage notes payable (246,891) (178,730) Purchase of retired shares (28) (3) Proceeds from issuance of preferred partnership interests - 8,450,000 Distributions to preferred shareholders (232,376) - Distributions to shareholders - (55,021) ------------ ----------- Net cash provided (used) by financing activities (349,305) 7,163,004 ------------ ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (363,511) 80,639 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 916,215 158,302 ------------ ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 552,704 $ 238,941 ============ =========== The accompanying notes are an integral part of these consolidated financial statements.
VININGS INVESTMENT PROPERTIES TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY For the three months ended September 30, 2000 (unaudited) Series A Additional Total Convertible paid in Accumulated Shareholders' Preferred Shares capital deficit equity --------------- ------------- -------------- ----------------- BALANCE AT DECEMBER 31, 1999 $ - $ 3,295,998 $ (2,288,381) $ 1,007,617 Net loss - - (1,357,706) (1,357,706) Conversion of preferred units to preferred shares 8,867,529 8,867,529 Retirement of shares - (28) - (28) Distributions Common - - - - --------------- ------------- -------------- ------------------ BALANCE AT SEPTEMBER 30, 2000 $ 8,867,529 $ 3,295,970 $ (3,646,087) $ 8,517,412 =============== ============= ============== ================== The accompanying notes are an integral part of these consolidated financial statements.
VININGS INVESTMENT PROPERTIES TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) September 30, 2000 NOTE 1 - BUSINESS AND ORGANIZATION - ---------------------------------- Vinings Investment Properties Trust ("Vinings" or the "Trust") was organized on December 7, 1984 as a mortgage real estate investment trust ("REIT") whose original plan was to liquidate within approximately ten years. On February 28, 1996, Vinings Investment Properties, Inc. completed a tender offer to acquire control of the Trust in order to rebuild Vinings assets by expanding into the multifamily real estate markets through the acquisition of garden style apartment communities that are leased to middle-income residents. Effective July 1, 2000, Vinings no longer qualifies as a REIT for federal income tax purposes and will be taxed as a corporation (See Note 2). Vinings currently conducts all of its operations through Vinings Investment Properties, L.P. (the "Operating Partnership"), a Delaware limited partnership. As of September 30, 2000, the Trust was the sole 1% general partner and an 92.72% limited partner in the Operating Partnership, controlling 80.94% of the common partnership interests and 100% of the preferred partnership interests (See Note 5). On April 29, 1999, the Operating Partnership offered, in a private transaction pursuant to a Securities Purchase Agreement (the "Purchase Agreement"), Series A Convertible Preferred Partnership interests (the "Preferred Units"), the proceeds from which were used to acquire thirteen multifamily communities (collectively, the "Portfolio Properties") from seventeen limited partnerships and limited liability companies. Eight of the Portfolio Properties were purchased through subsidiary partnerships of the Operating Partnership. The remaining Portfolio Properties were purchased through a joint venture structure. Effective April 1, 2000, 100% of the 1,988,235 Preferred Units were converted to Series A Convertible Preferred Shares of the Trust (the "Preferred Shares") with the same rights, preferences and privileges as the Preferred Units (See Note 5). Vinings currently owns, through wholly-owned subsidiaries, ten apartment communities totaling 1,520 units and a 75,000 square foot, single story business park. In addition, Vinings holds a 20% interest in and is the general partner of an unconsolidated joint venture, which owns through subsidiary partnerships five additional apartment communities totaling 968 units (See Note 4). At September 30, 2000, the average occupancy of Vinings' portfolio, including the communities held by the unconsolidated joint venture, was 92%. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - --------------------------------------------------- Basis of Presentation --------------------- The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying consolidated financial statements of Vinings include the consolidated accounts of the Trust and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Vinings accounts for its investment in the unconsolidated joint venture using the equity method of accounting. The term "Vinings" or "Trust" hereinafter refers to Vinings Investment Properties Trust and its subsidiaries, including the Operating Partnership. The minority interests of the common unitholders in the Operating Partnership (the "Common Units") reflected on the accompanying balance sheets are calculated based on the common unitholders' minority interest ownership percentage as compared to the total common unitholders' interest (18.06% as of September 30, 2000) multiplied by the Operating Partnership's net assets. The minority interests of the preferred unitholders at December 31, 1999 on the accompanying balance sheet represents cash contributed of $8,450,000 in exchange for those units and the accrued liquidation preference of $0.21 per Preferred Unit ($280,003 at December 31, 1999). The Preferred Units were exchanged for Preferred Shares effective April 1, 2000 and are reflected on the accompanying balance sheet as the cash contributed and the accrued liquidation preference of $0.21 per Preferred Share ($417,529 at September 30, 2000). The minority interests of the common unitholders in the income or loss of the Operating Partnership on the accompanying statements of operations is calculated based on the weighted average minority interest ownership percentage (approximately 18% for all periods presented) multiplied by income (loss) before minority interests after subtracting income allocated to the preferred partnership interests. The minority interests of the preferred unitholders on the statements of operations for the three months ended September 30, 1999 ($336,757) and for the nine months ended September 30, 1999 and 2000 ($566,587 and $336,758 respectively) represents the accrued preferred 11% return on the Preferred Units and the accrued pro rata liquidation preference of $0.21 per Preferred Unit. Income Taxes ------------ Prior to June 30, 2000, Vinings had elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). As a result, Vinings was generally not subject to federal income taxation on that portion of its income that qualified as REIT taxable income to the extent that Vinings distributed at least 95% of its taxable income to its shareholders and satisfied certain other requirements. Effective July 1, 2000, Vinings no longer qualifies as a REIT for federal income tax purposes and will be taxed as a corporation. The Trust, however is not currently generating taxable income and accordingly, no provisions for federal income taxes and deferred income taxes have been included in the accompanying consolidated financial statements. Cash and Cash Equivalents ------------------------- Vinings considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Restricted Cash --------------- Restricted cash consists of real estate tax, insurance and replacement reserve escrows held by mortgagees, which are funded monthly from property operations and released solely for the purpose for which they were established. Restricted cash also includes security deposits collected and held on behalf of the residents and tenants. Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Assets ------------------ Real estate assets are stated at depreciated cost less reductions for impairment, if any. In identifying potential impairment, management considers such factors as declines in a property's operating performance or market value, a change in use, or adverse changes in general market conditions. In determining whether an asset is impaired, management estimates the future cash flows expected to be generated from the asset's use and its eventual disposition. If the sum of these estimated future cash flows on an undiscounted basis is less than the asset's carrying cost, the asset is written down to its fair value. In management's opinion, there has been no impairment of Vinings' real estate assets as of September 30, 2000. Ordinary repairs and maintenance are expensed as incurred. Major improvements and replacements are capitalized and depreciated over their estimated useful lives when they extend the useful life, increase capacity or improve efficiency of the related asset. Depreciation is computed on a straight-line basis over the useful lives of the real estate assets (buildings and improvements, 5-40 years; furniture, fixtures and equipment, 3-7 years; and tenant improvements, generally over the life of the related lease). Revenue Recognition ------------------- All leases are classified as operating leases and rental income is recognized when earned, which materially approximates revenue recognition on a straight-line basis. Deferred Financing Costs and Amortization ----------------------------------------- Deferred financing costs include fees and costs incurred to obtain financing and are capitalized and amortized over the term of the related debt. Net Loss Per Share ------------------ The following is a reconciliation of net loss available to the common shareholders and the weighted average shares used in Vinings' basic and diluted net loss per share computations:
For the three months For the nine months ended September 30, ended September 30, 2000 1999 2000 1999 ------------------------------------------------------------ Net loss - basic $(407,009) $ (456,822) $(1,357,706) $ (721,685) Minority interests in Operating Partnership: Preferred partnership interests - - - - Common partnership interests (89,662) (100,682) (299,211) (159,056) ------------------------------------------------------------ Total minority interest (89,662) (100,682) (299,211) (159,056) ------------------------------------------------------------ Net loss - diluted $(496,671) $ (557,504) $(1,656,917) $ (880,741) ============================================================ Weighted average shares - basic 1,100,490 1,100,499 1,100,491 1,100,504 Dilutive Securities Weighted average Common Units 242,546 242,546 242,546 242,546 Weighted average Preferred Units/Shares - - - - Share options - - - - ------------------------------------------------------------ Weighted average shares - diluted 1,343,036 1,343,045 1,343,037 1,343,050 ============================================================
Both common units and preferred units in the Operating Partnership held by the minority unitholders and preferred shares of the Trust are redeemable for common shares of beneficial interest of the Trust ("Shares") on a one-for-one basis, or for cash, at the option of the Trust. For the three months and nine months ended September 30, 1999 and 2000, options to purchase 108,750 shares and 102,750 shares, respectively, were excluded as the impact of such options was antidilutive. For the three and nine months ended September 30, 1999 Preferred Units totaling 1,988,235 and for the three and nine months ended September 30, 2000 Preferred Shares totaling 1,988,235 were also excluded as the impact of such units was antidilutive. Recent Accounting Pronouncement ------------------------------- Vinings adopted Statements of Financial Accounting Standards ("SFAS") No. 130, "Reporting of Comprehensive Income," during 1998, which establishes a standard for reporting and display of comprehensive income and its components. Comprehensive income is the total of net income and all other nonowner changes in shareholders' equity. As of September 30, 2000 and 1999, Vinings had no items of other comprehensive income. Vinings also adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information," during 1998, which establishes new standards for disclosure of segment information on the so called "management approach." The management approach is based on the way that the chief operating decision maker organizes segments within a company for making operating decisions and assessing performance. Since Vinings' real estate portfolio has similar economic characteristics, customers, products and services, Vinings evaluates the operating performance of its real estate portfolio as one reportable segment, on the same basis of presentation for internal and external reporting. Therefore, no additional segment information is presented herein. Reclassifications ----------------- Certain 1999 financial statement amounts have been reclassified to conform to the current year presentation. NOTE 3 - REAL ESTATE ASSETS - --------------------------- On May 1, 1999, Vinings, through its subsidiaries, completed the acquisition of the Portfolio Properties from seventeen limited partnerships and limited liability companies. Eight of the Portfolio Properties (the "Mississippi Properties") were purchased through subsidiary partnerships of the Operating Partnership. The remaining Portfolio Properties (the "Joint Venture Properties") were purchased through a joint venture structure. (See Note 4.) The Mississippi Properties, totaling 1,064 units, were purchased by eight individual partnerships in each of which Vinings Holdings, Inc., a wholly owned subsidiary of the Trust, owns a .1% general partnership interest and the Operating Partnership owns a 99.9% limited partnership interest. The aggregate purchase price for the Mississippi Properties was $47,665,396 (excluding closing costs), which included the assumption of debt of approximately $41,693,000 with the balance paid in cash. The acquisition was funded by the issuance of the Preferred Units, which effective April 1, 2000 were converted to Preferred Shares (See Note 5). A total of approximately $749,200 in escrows held by the mortgagees was also purchased. In addition Vinings owns, also through subsidiary partnerships of the Operating Partnership, two additional multifamily communities in the metropolitan Atlanta area with a total of 1,520 units in ten communities, as well as a 75,000 square foot business center. All of the multifamily communities are encumbered by fixed rate mortgage financing and the business center is security for the line of credit. NOTE 4 - INVESTMENT IN UNCONSOLIDATED JOINT VENTURE - --------------------------------------------------- On May 1, 1999, Vinings purchased, through a joint venture structure, five apartment communities, totaling 968 units (the "Joint Venture Properties"). The Joint Venture Properties were purchased by nine individual partnerships in each of which Vinings Holdings, Inc., a wholly owned subsidiary of the Trust, owns a .1% general partnership interest and Vinings/CMS Master Partnership, L.P. (collectively, the "Joint Venture"), a Delaware limited partnership, owns a 99.9% limited partnership interest. The Operating Partnership has a .1% general partner interest and a 19.98% limited partner interest in the Joint Venture, for which it paid $1,705,100. This investment was funded by the issuance of the Preferred Units, which effective April 1, 2000 were converted to Preferred Shares (See Note 5). The remaining limited partnership interests in the Joint Venture are held by an unaffiliated third party. The Joint Venture was formed on March 22, 1999, primarily to acquire the limited partner interest in limited partnerships that acquire, operate, manage, hold and sell certain real property, specifically the Joint Venture Properties. The aggregate purchase price paid by the property partnerships for the Joint Venture Properties was $46,634,603 (excluding closing costs), which included the assumption of approximately $39,265,000 of debt with the balance paid in cash. A total of approximately $716,400 in escrows held by the mortgagees was also purchased. Vinings accounts for its investment in the Joint Venture using the equity method of accounting. The following is a summary of the results of operations of the Joint Venture and Vinings' share of the equity in the loss from the Joint Venture for the three months and nine months ended September 30, 2000:
For the three For the nine months ended months ended September 30, 2000 September 30, 2000 ----------------------- ----------------------- Revenues $1,760,736 $5,149,450 Expenses: Property operating and maintenance 715,011 2,129,164 General and administrative 11,897 37,558 Depreciation and amortization 380,730 1,136,201 Interest expense 867,382 2,594,512 ----------------------- ----------------------- Total Expenses 1,975,020 5,897,435 ----------------------- ----------------------- Net loss (214,284) (747,985) Vinings' equity percentage 20% 20% ----------------------- ----------------------- Vinings' equity in loss of unconsolidated Joint Venture $ (42,857) $ (149,597) ======================= ======================= Distributions received by Vinings from Joint Venture $ 10,000 $ 10,000 ======================= ======================= Cash flows provided by operating activities $ 207,781 ======================= Cash flows used in investing activities $ (137,144) ======================= Cash flows used in financing activities $ (213,507) =======================
The following summarizes the balance sheet of the Joint Venture as of September 30, 2000: Real estates assets, net of accumulated depreciation $45,218,659 Cash and other assets 1,788,726 ---------------- Total assets $47,007,385 ================ Mortgage notes payable $38,982,330 Other liabilities 1,063,569 ---------------- Total liabilities 40,045,899 ---------------- Capital - Vinings 1,392,377 Capital - Other 5,569,109 ---------------- Total capital 6,961,486 ---------------- Total liabilities and capital $47,007,385 ================
Mortgage notes payable held by the Joint Venture are non-recourse fixed rate notes secured by the individual properties. All of the notes except one are insured by the U.S. Department of Housing and Urban Development ("HUD") and, therefore, distributions from the properties are subject to "surplus cash" as defined by HUD. The maturity dates of the notes payable range from June 2007 to November 2037 and interest rates range from 8.00% to 8.75%. NOTE 5 - SHAREHOLDERS' EQUITY AND PREFERRED PARTNERSHIP INTERESTS - ---------------------------------------------------------------- On April 29, 1999, the Operating Partnership offered in a private transaction Preferred Units pursuant to the Purchase Agreement. A total of 1,988,235 Preferred Units were issued for an aggregate purchase price of $8,450,000. The Operating Partnership used the proceeds of the sales of the Preferred Units to pay the cash consideration for the Operating Partnership's interests in the property partnerships that acquired the Mississippi Properties, and its interest in the Joint Venture. (See Notes 3 and 4.) Effective April 1, 2000, Vinings converted all of the Preferred Units to Preferred Shares, which have the same rights, preferences and privileges as the Preferred Units. The holders of Preferred Shares are entitled to receive cumulative preferential cash distributions at the per annum rate of $0.4675 per Preferred Share. Upon the occurrence of certain triggering events, the holders of Preferred Shares are entitled to receive, in addition to an amount equal to any accumulated and unpaid distributions on such holder's Preferred Shares, a liquidation preference of $4.46 per Preferred Share. Under certain circumstances, the holders of Preferred Shares may convert any part or all of such Preferred Shares into common shares. In lieu of converting Preferred Shares into common shares, the Trust, in its sole discretion, may satisfy its conversion obligations through certain cash payments, as further set forth in the Declaration of Trust. Generally, the holders of Preferred Shares do not have the right to vote on any matter on which any of the holders of common shares may vote. The holders of Preferred Shares do, however, have the right to vote as a separate class of shareholders on certain transactions including, without limitation, certain authorizations and issuances of preferred shares designated as ranking senior to the Preferred Shares, certain amendments to the Declaration of Trust, and certain sales or other dispositions of assets of the Trust or the Operating Partnership, certain mergers or consolidations of the Trust or the Operating Partnership, and transactions that result in the liquidation of the Trust or the Operating Partnership. As of September 30, 2000, a total of 1,988,235 Preferred Shares were outstanding. In addition, as of September 30, 2000 a total of $417,529 had been accrued as a liquidation preference on the Preferred Shares. NOTE 6 - NOTES PAYABLE - ---------------------- Mortgage Notes Payable ---------------------- Mortgage notes payable were secured by the following apartment communities at September 30, 2000 and December 31, 1999, as follows:
Fixed interest rate Balance as of: Balance as of: Maturity as of 9/30/00 9/30/00 12/31/99 -------------------- ---------------------- ------------------ ------------------- Cottonwood 10/01/2036 8.875% $ 4,671,026 $ 4,683,888 Delta Bluff 08/01/2036 9.25 % 6,187,924 6,203,591 Foxgate I 06/01/2037 8.50 % 6,579,697 6,598,549 Hampton House 08/01/2037 8.50 % 5,154,069 5,169,167 Heritage Place 10/01/2036 8.75 % 3,132,948 3,141,865 Northwood 06/01/2034 8.75 % 4,467,120 4,482,862 River Pointe 01/01/2037 8.625% 5,964,335 5,981,475 Trace Ridge 07/01/2036 8.50 % 5,313,610 5,330,125 The Thicket 07/01/2003 9.04 % 7,149,962 7,200,487 Windrush 07/01/2024 7.50 % 6,207,341 6,282,914 ----------------- ------------------- Total $54,828,032 $55,074,923 ================= ===================
All of the notes except The Thicket are insured by HUD and, therefore, distributions from the properties are subject to "surplus cash" as defined by HUD. Scheduled maturities of the mortgage notes payable as of September 30, 2000 are as follows: 2000 $ 85,823 2001 361,792 2002 393,425 2003 7,314,761 2004 367,596 Thereafter 46,304,635 --------------- Total $54,828,032 =============== Line of Credit -------------- On April 27, 1999 Vinings obtained a line of credit in the amount of $2,000,000 from a financial institution. The line of credit is secured by Peachtree Business Center. The interest rate on the line of credit is one percent over prime as posted in The Wall Street Journal, which was 9.50% at September 30, 2000. The principal balance of the line of credit as of September 30, 2000 and December 31, 1999 was $1,864,990 and $1,715,000, respectively. The line of credit expired on April 27, 2000 and was renewed until April 30, 2001. NOTE 7 - RELATED PARTY TRANSACTIONS - ----------------------------------- On January 1, 1999, Vinings entered into management agreements with VIP Management, LLC ("VIP"), an affiliate of the officers, who are also Trustees of Vinings, to provide property management services for a fee equal to varying percentages ranging from three and one half to six percent of gross revenues, plus a fee for data processing. Effective January 1, 2000, the management fee percentages were reduced to three and one half percent on all of the multifamily communities. Prior to January 1, 1999, Vinings had entered into management agreements with Vinings Properties, Inc., also an affiliate of the officers of Vinings, to provide property management services on substantially the same terms as the current agreements. In addition, as a commitment to the rebuilding of Vinings, prior to 1998 The Vinings Group, Inc., the parent corporation of Vinings Properties, Inc. (collectively with VIP, "The Vinings Group"), provided numerous services at no cost to Vinings relating to administration, acquisition, and capital and asset advisory services. Certain direct costs paid on Vinings' behalf were reimbursed to The Vinings Group. Beginning January 1, 1998, The Vinings Group has charged Vinings for certain overhead charges. Beginning August 1, 1999, the Trust has also paid for its pro-rata share of rent, administrative and other overhead charges, which includes reimbursing The Vinings Group for a pro-rata portion of salaries and benefits for the officers and other employees providing services to Vinings. Effective July 1, 2000, Vinings restructured its relationship with VIP who will administer the Trust for an advisory fee equal to 1 1/2% of gross revenues, including the revenues from the Joint Venture Properties. The advisory fee is in lieu of reimbursing VIP for all overhead, salaries and other indirect costs attributable to the Trust's operations. The following table reflects payments made to The Vinings Group:
Three months ended Nine months ended September 30, September 30, ------------------------ ----------------------------- 2000 1999 2000 1999 ------------- ---------- ------------- ----------- VININGS Management fees $105,234 $126,036 $314,240 $281,497 Data processing fees 16,416 14,288 49,248 36,480 Overhead reimbursements - 90,565 189,219 197,065 Advisory fee 70,909 - 70,909 - ------------- ---------- ------------- ----------- Total $192,559 $230,889 $623,616 $515,042 ============= ========== ============= =========== JOINT VENTURE Management fees $ 75,290 $ 77,400 $217,970 $126,036 Data processing fees 14,520 14,520 43,560 24,200 ------------- ---------- ------------- ----------- Total $ 89,810 $ 91,920 $261,530 $150,236 ============= ========== ============= ===========
On February 4, 1999, one of the independent Trustees purchased the Trust's line of credit, which expired on December 28, 1998 and Vinings paid interest to the Trustee monthly at the annual rate of 8.50% through April 27, 1999, at which time the Trustee was repaid in full. In connection with the acquisition of the Portfolio Properties on May 1, 1999, MFI Realty, Inc., an affiliate of the officers of Vinings, received fees totaling $400,276 of which $167,103 was paid by the Operating Partnership and $233,173 was paid by the Joint Venture. Effective March 1, 2000, 628,927 shares of Vinings were purchased in a privately negotiated transaction by the Officers, one of their affiliates and an affiliate of one of the Trustees from a limited number of shareholders, which included three of the Trustees and certain of their affiliates (the "Stock Transaction"). In connection with the Stock Transaction, the three selling Trustees -- James D. Ross, Martin H. Petersen and Gilbert H. Watts, Jr. -- resigned from the Board of Trustees. On March 15, 2000, the Board of Trustees voted to waive the ownership limitations in Vinings' Declaration of Trust with respect to shareholders acquiring shares in the Stock Transaction, as well as with respect to certain holders of Preferred Shares. NOTE 8 - DISTRIBUTIONS - ---------------------- Vinings has not declared or paid any common dividends during the three and nine months ended September 30, 2000. Vinings declared two common dividends of five cents per share each, which were paid September 1, 1999 and December 8, 1999, respectively to shareholders of record on August 16, 1999 and November 26, 1999, respectively. For federal income tax purposes these distributions represented a return of capital. Effective April 1, 2000, Vinings converted all of the Preferred Units to Preferred Shares. (See Note 5). The holders of Preferred Shares are entitled to receive cumulative preferential cash distributions at the per annum rate of $0.4675 per Preferred Share. For the nine months ended September 30, 2000, Vinings paid distributions totaling $232,376 to Preferred Shareholders. NOTE 9 - LEASING ACTIVITY - ------------------------- The following is a schedule of future minimum rents due under operating leases that have initial or remaining noncancellable lease terms in excess of one year as of September 30, 2000, at Peachtree: 2000 $96,549 2001 386,175 2002 148,236 ---------- Total $630,960 ========== One tenant generated 48% of Peachtree's revenues for the period ended September 30, 2000. The same tenant accounts for 76% of the future minimum lease payments. NOTE 10 - CONTINGENCIES - ----------------------- Vinings is, from time to time, subject to various claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of such matters will not have a material adverse effect on the financial position or results of operations of Vinings. NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION - -------------------------------------------- Vinings paid interest of $3,699,141 and $2,453,449 for the nine months ended September 30, 2000 and 1999, respectively. NOTE 12 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - -------------------------------------------------------------- Based on interest rates and other pertinent information available to Vinings as of September 30, 2000 and December 31, 1999 the Trust estimates that the carrying value of cash and cash equivalents, the mortgage notes payable, the line of credit, and other liabilities approximate their fair values when compared to instruments of similar type, terms and maturity. Disclosure about fair value of financial instruments is based on pertinent information available to management as of September 30, 2000 and December 31, 1999. Although management is not aware of any factors that would significantly affect its estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since September 30, 2000. NOTE 13 - 1997 STOCK OPTION AND INCENTIVE PLAN - ---------------------------------------------- Vinings' 1997 Stock Option and Incentive Plan (the "Plan") provides incentives to officers, employees, Trustees, and other key persons including the grant of share options, share appreciation rights, restricted and unrestricted share awards, performance share awards, and dividend equivalent rights. Under the Plan, the maximum number of shares that may be reserved and available for issuance is 10% of the total number of outstanding shares at any time plus 10% of the number of Units outstanding at any time that are subject to redemption rights. As of September 30, 2000, the total number of shares authorized for issuance under the Plan was 132,305. Options granted under the Plan expire ten years from the date of grant. During 1998 and 1997, Vinings granted non-qualified share options to the officers, Trustees and certain key persons. The options were vested in full after one year from the date of the grant. A total of 26,000 options were granted in 1997, which have an exercise price of $5.00 per share as compared to a fair value of $4.56 per share on the date of the grant. Of the options granted in 1998, 75,250 have an exercise price of $4.00 per share as compared to a fair value of $3.63 on the date of the grant and 1,500 have an exercise price of $4.75 per share, which was equal to the fair value on the date of grant. There were no options granted during 1999 or 2000. On July 1, 1998, Vinings awarded 20,000 shares of restricted stock to the officers and certain trustees (the "Restricted Stock"), representing a total value of $80,000 (based on the fair market value of a share of the Trust on the award date) which was reflected in compensation expense and shareholders' equity in 1998. The Restricted Stock was awarded as compensation for services to the Trust provided by such officers and trustees as well as by The Vinings Group. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------- Overview - -------- Vinings Investment Properties Trust ("Vinings" or the "Trust") was organized on December 7, 1984 as a mortgage real estate investment trust ("REIT") whose original plan was to liquidate within approximately ten years. On February 28, 1996, Vinings Investment Properties, Inc. completed a tender offer to acquire control of the Trust in order to rebuild Vinings' assets by expanding into the multifamily real estate markets through the acquisition of garden style apartment communities that are leased to middle-income residents. Effective July 1, 2000 Vinings no longer qualifies as a REIT for federal income tax purposes and will be taxed as a corporation. (See Note 2 to Vinings' September 30, 2000 consolidated financial statements.) Vinings currently conducts all of its operations through Vinings Investment Properties, L.P. (the "Operating Partnership"), a Delaware limited partnership. As of September 30, 2000, the Trust was the sole 1% general partner and an 92.72% limited partner in the Operating Partnership, controlling 80.94% of the common partnership interests and 100% of the preferred partnership interests (See Note 5 to Vinings' September 30, 2000 consolidated financial statements.) The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements of Vinings and the notes thereto. Results of Operations - --------------------- Rental and other property revenues decreased $105,297 or 3%, from $3,061,123 for the three months ended September 30, 1999 to $2,955,826 for the same period in 2000. This decrease is due primarily to an increase in vacancy loss of approximately 2%. Rental and other property revenues increased $2,419,326 or 38%, from $6,375,712 for the nine months ended September 30, 1999 to $8,795,038 for the same period in 2000. This increase is due primarily to the revenues generated in connection with the Trust's ownership of the Mississippi Properties for the nine months ended September 30, 2000, as compared to only five months during the same period in 1999. Other income increased $11,703 or 240%, from $4,867 for the three months ended September 30, 1999 to $16,570 for the same period in 2000, and $20,864 or 90% from $23,137 for the nine months ended September 30, 1999 to $44,001 for the same period in 2000. This increase is due to interest earned on cash balances. Property operating and maintenance expense increased $21,171 or 2%, from $1,173,329 for the three months ended September 30, 1999 to $1,194,500 for the same period in 2000, and increased $985,236 or 41%, from $2,417,411 for the nine months ended September 30, 1999 to $3,402,647 for the same period in 2000. For the three months ended September 30, 2000, this increase is due primarily to an increase in real estate taxes on one of the Mississippi Properties. For the nine months ended September 30, 2000, this increase is due primarily to expenses generated in connection with the Trusts' ownership of the Mississippi Properties for the nine months in 2000, as compared to only five months during the same period in 1999, which was offset by a decrease in management fee expense relating to Windrush and Thicket. Depreciation and amortization increased by $2,141, or .4%, from $562,557 for the three months ended September 30, 1999 to $564,698 for the same period in 2000, and $536,213 or 46 % from $1,156,428 for the nine months ended September 30, 1999 to $1,692,641 for the same period in 2000. This increase for the nine months ended September 30, 2000 is due primarily to depreciation generated in connection with the Trusts' ownership of the Mississippi Properties for nine months in 2000, as compared to only five months during the same period in 1999. There was a slight increase in Windrush and Thicket's depreciation due to additional capital expenditures. Amortization of deferred financing costs decreased by $3,560, or 24%, from $15,036 for the three months ended September 30, 1999 to $11,476 for the same period in 2000, and increased $8,814 or 25%, from $35,361 for the nine months ended September 30, 1999 to $44,175 for the same period in 2000. The increase for the nine months ended September 30, 2000 is due to costs incurred in connection with the refinancing of the line of credit. Interest expense increased $26,340, or 2%, from $1,270,653 for the three months ended September 30, 1999 to $1,296,993 for the same period in 2000, and $1,321,112 or 52% from $2,559,036 for the nine months ended September 30, 1999 to $3,880,148 for the same period in 2000. For the three months ended September 30, 2000, this increase is due to rising interest rates on the line of credit. For the nine months ended September 30, 2000, this increase is due primarily to the mortgage interest generated in connection with the Trusts' ownership of the Mississippi Properties for nine months in 2000, as compared to only five months during the same period in 1999, as well as rising interest rates on the line of credit. General and administrative expense decreased $81,973, or 39%, from $208,140 for the three months ended September 30, 1999 to $126,167 for the same period in 2000, and increased $22,118 or 5%, from $469,977 for the nine months ended September 30, 1999 to $492,095 for the same period in 2000. For the three months ended September 30, 2000, this decrease consists of (1) overhead allocations paid to The Vinings Group totaling $90,565, which was offset by an increase in the advisory fee totaling $70,909; (2) professional fees totaling $29,276; (3) office expense totaling $15,375; (4) corporate communications expense totaling $7,126; (5) travel expense totaling $4,211; and (6) trustee expense totaling $3,810. The increase for the nine months ending September 30, 2000 consists of: (1) advisory fees paid to The Vinings Group totaling $70,909 offset by a decrease in overhead allocations totaling $7,846; and (2) office expense totaling $5,695. This increase is offset by the following decreases: (1) professional fees totaling $14,683; (2) trustee expense totaling $14,586; (3) corporate communications expense totaling $13,378; and (4) travel expense totaling $4,044. Liquidity and Capital Resources - ------------------------------- Net cash of $173,877 was provided by operating activities for the nine months ended September 30, 2000 as compared to $606,407 for the nine months ended September 30, 1999. This change is due primarily to the increased distributions paid to the holders of Preferred Units made by the Operating Partnership. The distributions paid during 2000 were for the period from July 1, 1999 to March 31, 2000, while the distribution made during 1999 was for the period from April 1, 1999 to June 30, 1999. Net cash of $188,083 was used in investing activities for the nine months ended September 30, 2000 as compared to net cash of $7,688,772 used in investing activities for the nine months ended September 30, 1999. The cash used during 1999 was due primarily to the purchase of the Mississippi Properties and the investment in the Joint Venture in May, 1999 and higher capital expenditures for the first nine months of 1999. Net cash of $349,305was used by financing activities for the nine months ended September 30, 2000 as compared to net cash of $7,163,004 provided by financing activities for the same period in 1999. The cash used by financing activities for the nine months ended September 30, 2000 is due primarily to: (1) principal payments made on mortgage notes payable totaling $246,891; (2) deferred financing costs on the line of credit totaling $20,000; and (3) distributions paid to preferred shareholders totaling $232,376. These uses wereoffset by a draw of $149,990 on the line of credit. The cash provided by financing activities for the nine months ended September 30, 1999 is due primarily to proceeds of $8,450,000 from the issuance of preferred partnership interests which was offset by: (1) $1,024,000 pay down on the line of credit; (2) $29,242 deferred financing costs relating primarily to the line of credit; (3) $178,730 repayments on mortgage notes payable; and (4) $55,021 distributed to common shareholders. The cash held by Vinings at September 30, 2000, plus the cash flow from Vinings' assets, including the investment in the Joint Venture, is expected to provide sources of liquidity to allow Vinings to meet current operating obligations excluding the distributions to the preferred shareholders. While Vinings has been able to pay currently the preferred distributions from the Trust's cash flow, Vinings may not have sufficient cash flow from operations to make future distributions on the Preferred Shares without drawing on the line of credit. This is due to a slight decline in occupancy at the Mississippi Properties and the less than anticipated distributions from the Joint Venture. However, Vinings continues its efforts to increase revenues as well as decrease its general and administrative expenses. There can be no assurance however, that sufficient cash flow will be generated from the Trust's operations. In addition, management plans to continue ongoing discussions with capital sources, both public and private, as well as explore financing alternatives, so as to allow the Trust to continue to grow its income producing investments. Other Matters - ------------- This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Vinings' actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include the following: the inability of Vinings to identify properties for acquisition; the inability of Vinings to continue to acquire properties in the future; the less than satisfactory performance of any property that might be acquired by Vinings; the inability to access the capital markets in order to fund Vinings' growth and expansion strategy; the cyclical nature of the real estate market generally and locally in Georgia, Mississippi and the surrounding southeastern states; the national economic climate; the local economic climate in Georgia, Mississippi and the surrounding southeastern states; the local real estate conditions and competition in Georgia, Mississippi and the surrounding southeastern states; and the ability of Vinings to generate sufficient cash flow to pay the entire preferred distribution. There can be no assurance that, as a result of the foregoing factors, Vinings' growth and expansion strategy will be successful or that the business and operations of Vinings will not be adversely affected thereby. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ------------------------------------------------------------------- Vinings is exposed to market risk from changes in interest rates, which may adversely affect its financial position, results of operations and cash flows. In seeking to minimize the risks from interest rate fluctuations, Vinings manages exposures through its regular operating and financing activities. Vinings does not use financial instruments for trading or other speculative purposes. Vinings is exposed to interest rate risk primarily through its borrowing activities, which are described in Note 6 to Vinings' September 30, 2000 Consolidated Financial Statements. All of Vinings' borrowings are under fixed rate instruments, except the line of credit, which is at prime plus 1%. However, Vinings has determined that there is no material market risk exposure to its consolidated financial position, results of operations or cash flows due to changes in interest rates because of the fixed rate nature of its long-term debt. The following table presents principal reductions and related weighted average interest rates by year of expected maturity for Vinings' debt obligations as of September 30, 2000 and should be read in conjunction with Vinings' December 31, 1999 SEC form 10-K: Fair Value There September 30, (In Thousands) 2000 2001 2002 2003 2004 -after Total 2000 - ----------------------------------------------------------------------------------------------------------------------- Principal Reductions In Mortgage Notes $ 86 $ 362 $393 $7,315 $367 $ 46,305 $54,828 $54,828 Average Interest Rates 8.63% 8.63% 8.63% 8.63% 8.63% 8.58% 8.63% 8.63% Line Of Credit $1,865 - - - - - $ 1,865 $ 1,865 Interest Rate 10.50% - - - - - 10.50% 10.50% - -----------------------------------------------------------------------------------------------------------------------
PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3.1 Third Amended and Restated Declaration of Trust of Vinings effective July 1, 1999 (incorporated by reference to Exhibit 3.1 to Vinings' Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, No. 0-13693). 3.2 Seventh Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings Investment Properties, L.P. (filed herewith). 27 Financial Data Schedule (filed herewith). (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Vinings Investment Properties Trust By: /s/ Stephanie A. Reed ------------------------------ Stephanie A. Reed Vice President and Treasurer Dated: November 14, 2000 EX-3.2 2 0002.txt AMENDMENT 7 VININGS INVESTMENT PROPERTIES, L.P. Seventh Amendment to the Amended and Restated Agreement of Limited Partnership ---------------------------------------------------- This Seventh Amendment to the Amended and Restated Agreement of Limited Partnership of Vinings Investment Properties, L.P. is made as of January 1, 2000 by Vinings Investment Properties Trust, a Massachusetts business trust (the "Trust"), as general partner (the "General Partner") of Vinings Investment Properties, L.P., a Delaware limited partnership (the "Partnership"), and the Trust, as limited partner of the Partnership and Mary Susan Leahy, Executor of the Estate of Joseph Dunbar Shields, Jr.(the "Withdrawing Limited Partner"), as limited partner of the Partnership, for the purpose of amending the Amended and Restated Agreement of Limited Partnership of the Partnership dated June 30, 1997, as amended (the "Partnership Agreement"). All capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to them in the Partnership Agreement. WHEREAS, the Trust has made a capital contribution and has been admitted as a Limited Partner of the Partnership; WHEREAS, the Trust has purchased and retired an additional 15 of its shares of beneficial interest ("Shares") and the General Partner wishes to adjust the interests in the Partnership pursuant to Section 4.1 of the Partnership Agreement to accurately reflect such redemption; WHEREAS, the Withdrawing Limited Partner has made a capital contribution to the Partnership and owns a total of 6,958 Partnership units (the "Interest") and wishes to transfer the Interest in the Partnership to the following (the "Substituted Limited Partners"): Number Substituted Limited Partner of Units --------------------------- -------- A. Mary Louise Shields 3,197 B. Joseph Dunbar Shields, III 1,134 C. Evelyn Riddle 1,134 D. Sarah Shields Residuary Trust 1,133 WHEREAS, the General Partner has consented to the above transfers; WHEREAS, each Substituted Limited Partner has made certain representations and warranties to the Partnership concerning it's investment status; NOW THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: Section 1. Change in Percentage Interest. ---------------------------------------- (a) Pursuant to Section 4.2 of the Partnership Agreement, the Trust's interest in the Partnership shall decrease by the number of Units associated with the redemption of Shares as reflected on Exhibit A; THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AND EXEMPTIONS FROM THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACTS OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACTS. (b) The Withdrawing Limited Partner does hereby sell, grant, convey, transfer, assign, set over and deliver unto the Substituted Limited Partners all of its Interest in the Partnership. To have and to hold the Interest, together with all and singular rights, privileges and appurtenances thereto, and anywise belonging or in any way appertaining to the Withdrawing Limited Partner unto the Substituted Limited Partners, their successors and assigns, forever. (c) The Withdrawing Limited Partner hereby represents and warrants that it is the sole owner of legal and beneficial title to all of the Interest and that it has made no previous assignment of the Interest. (d) Pursuant to Section 11.4 of the Partnership Agreement, the General Partner hereby consents to the transfer of the Interest from the Withdrawing Limited Partner to the Substituted Limited Partners pursuant to Section 11.3 A of the Partnership Agreement. (e) The change in limited partnership interests in the Partnership shall become effective as of the date of this Agreement. Section 2. Representations of Each Substituted Limited Partner. --------------------------------------------------------------- Each Substituted Limited Partner hereby represents, warrants and acknowledges as follows: (a) It (i) is an "accredited investor" as that term is defined in Rule 501(a) promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), (ii) is an investor experienced in the evaluation of businesses similar to the Partnership, (iii) has such knowledge and experience in financial, business and investment matters as to be capable of evaluating the merits and risks of this investment, (iv) has the ability to bear the economic risks of the investment in the Units, and (vi) was not organized or reorganized for the specific purpose of acquiring the Units. (b) It understands that: (i) The Units are unregistered and may be required to be held indefinitely unless they are subsequently registered under the Securities Act, or an exemption from such registration is available. (ii) Rule 144 promulgated under the Securities Act ("Rule 144"), which provides for certain limited sales of unregistered securities, is not presently available with respect to the Units, and the Partnership is under no obligation to make Rule 144 available. (c) (i) It will not offer, sell, pledge, hypothecate, or otherwise dispose of the Units unless such offer, sale, pledge, hypothecation or other disposition is (A) registered under the Securities Act, or (B) in compliance with an opinion of counsel to such Substituted Limited Partner, delivered to the Partnership and reasonably acceptable to the Partnership, to the effect that such offer, sale, pledge, hypothecation or other disposition thereof does not violate the Securities Act, and (ii) the Units, if issued in certificated form, shall bear a legend stating in substance: "THESE UNITS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. THESE UNITS MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, TOGETHER WITH QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAW, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE PARTNERSHIP AND ITS COUNSEL THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED." (d) It agrees that the Partnership may provide for appropriate stop transfer instructions to its corporate counsel and/or transfer agent to implement the provisions of Section 2 of this Agreement. (e) It understands that it must bear the economic risk of the investment represented by the purchase of the Units for an indefinite period. (f) The Units are being acquired solely for the account of the undersigned for purposes of investment only, and are not being purchased with a view to or in connection with, any resale or distribution thereof in violation of applicable federal or state securities laws. Section 3. Amendment to Partnership Agreement. ---------------------------------------------- Pursuant to Sections 4.1 and 11.4 C. of the Partnership Agreement, the General Partner, as general partner of the Partnership, hereby amends the Partnership Agreement by deleting Exhibit A thereto in its entirety and replacing it with the Exhibit A attached hereto. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. VININGS INVESTMENT PROPERTIES TRUST As General Partner /s/ Peter D. Anzo By: _____________________________________ Peter D. Anzo President VININGS INVESTMENT PROPERTIES TRUST As Limited Partner /s/ Peter D. Anzo By: _____________________________________ Peter D. Anzo President MARY SUSAN LEAHY EXECUTOR OF THE JOSHEPH DUNBAR SHIELDS, JR. ESTATE Withdrawing Limited Partner /s/ Mary Susan Leahy By: _____________________________________ Mary Susan Leahy Executor MARY LOUISE SHIELDS Substituted Limited Partner /s/ Mary Louise Shields _____________________________________ JOSEPH DUNBAR SHIELDS III Substituted Limited Partner /s/ Joseph Dunbar Shields III _____________________________________ EVELYN RIDDLE Substituted Limited Partner /s/ Evelyn Riddle _____________________________________ SARAH SHIELDS RESIDUARY TRUST Substituted Limited Partner /s/ Mary Susan Leahy By: _____________________________________ Mary Susan Leahy Co-Trustee /s/ Sarah Shields By: _____________________________________ Sarah Shields Co-Trustee VININGS INVESTMENT PROPERTIES, L.P. Seventh Amendment to the Amended and Restated Partnership Agreement Exhibit A Percentage Number of Name and Address of Contributor Interest Units Issued - ------------------------------- ---------- ------------- GENERAL PARTNER: Vinings Investment Properties Trust 1.00% 13,431 LIMITED PARTNERS: Vinings Investment Properties Trust 80.94% 1,087,062 The Vinings Group, Inc. 0.80% 10,758 Peter D. Anzo 0.80% 10,757 Irving Abrams 0.49% 6,598 Tim R. Altman 0.25% 3,299 William G. Beshears, Jr. 0.49% 6,598 William E. & Mary E. Butler 0.25% 3,299 Donald E. Chace 0.49% 6,598 Terry D. Douglass 0.49% 6,598 Hazel E. Earsley 0.25% 3,299 Stanley D. Eason 0.49% 6,598 C.W. Gustav & Janice S. Eifrig 0.25% 3,299 Jane L. Finchum 0.12% 1,649 Esty Foster 0.49% 6,598 Robert Hesseltine 0.49% 6,598 Betty T. Hinds 0.49% 6,598 Albert H. Hooper, Jr. 0.49% 6,598 Trustmark National Bank, Agent for Kathryn D. Little, Investment 0.49% 6,598 Patrick Paul McCarthy 0.25% 3,299 James A. Melvin, Jr. 0.49% 6,598 John R. Mileski 0.49% 6,598 J. Cary Monroe 0.25% 3,299 E. Ray Morris 0.49% 6,598 Thomas W. Orcutt, M.D. 0.49% 6,598 Thomas D. Price 0.25% 3,299 Frederick R. Radcliffe 0.25% 3,299 Robert G. Randall 0.49% 6,598 Evelyn Riddle 0.08% 1,134 Joseph D. Shields, III, M.D. 0.33% 4,432 Mary Louise Shields 0.23% 3,197 Sarah Shields Residuary Trust 0.08% 1,134 M.F. Soukkar 0.49% 6,598 Virginia G. Sturwold, Trustee of the Virginia G. Sturwold Revocable Trust 0.25% 3,299 Oliver H. Tallman, II 0.25% 3,299 Lewis F. Wood, Jr. 0.49% 6,598 Homer R. Yook 0.25% 3,299 Alice C. Young 0.25% 3,299 ASSIGNEES: Robert L. Bell, M.D. 0.49% 6,598 Joseph Bonsall, Jr. 0.49% 6,598 Harold J. DeBlanc, Jr., M.D. 0.49% 6,598 William A. Hall 1.96% 26,391 Thomas L. Williams 0.25% 3,299 Don M. Updegraff, Jr. 0.12% 1,649 Majed S. Zakaria 0.49% 6,598 ----------- ------------ Total Common Units 100.00% 1,343,039 ----------- ------------ EX-27 3 0003.txt FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
5 This Schedule contains summary financial information extracted from the consolidated balance sheet and statements of operations for Vinings Investment Properties Trust for the nine months ended September 30, 2000 and is qualified in its entirety by reference to such financial statements as contained in the Form 10-Q report for the nine months ended September 30, 2000. 0000759174 Vinings Investment Properties Trust 1 US DOLLARS 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 2417494 0 89014 0 0 0 67960087 (5029109) 67132527 0 56693022 0 8867529 0 350117 67132527 0 8839038 0 0 5631558 0 3880148 (1357706) 0 0 0 0 0 (1357706) (1.23) (1.23)
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