-----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, L/uGsT1dRlsQGxyAWiRBipWQd7iNMmR8x6G937Au2u9vd4iVkmIotG6Nv4Niqz6P 6LZVrdeEMqehYnnoxeLObg== 0000948524-98-000059.txt : 19980518 0000948524-98-000059.hdr.sgml : 19980518 ACCESSION NUMBER: 0000948524-98-000059 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: METRIC INCOME TRUST SERIES INC CENTRAL INDEX KEY: 0000846722 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 943087630 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18294 FILM NUMBER: 98623732 BUSINESS ADDRESS: STREET 1: ONE CALIFORNIA ST STREET 2: STE 1400 CITY: SAN FRANCISCO STATE: CA ZIP: 94111-5415 BUSINESS PHONE: 4156782000 MAIL ADDRESS: STREET 1: ONE CALIFORNIA ST STREET 2: SUITE 1400 CITY: SAN FRANCISCO STATE: CA ZIP: 94111-5415 FORMER COMPANY: FORMER CONFORMED NAME: METRIC PARTNERS HIGH INCOME FUND SERIES I INC DATE OF NAME CHANGE: 19890629 10-Q 1 MARCH 31, 1998 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) _X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number 0-18294 METRIC INCOME TRUST SERIES, INC., a California corporation (Exact name of Registrant as specified in its charter) CALIFORNIA 94-3087630 - --------------------------------- ------------------------------------ (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) One California Street San Francisco, California 94111 - --------------------------------- ----------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 678-2000 (800) 347-6707 in all states 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 ___ Shares of common stock outstanding as of March 31, 1998: 6,321,641 ================================================================================ Page 1 of 12 PART 1 FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited). METRIC INCOME TRUST SERIES, INC., A California corporation CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, 1998 1997 ---- ---- ASSETS Cash and Cash Equivalents $ 2,948,000 $ 19,762,000 Accounts and Interest Receivable 60,000 65,000 Investment in Mortgage-Backed Securities 1,988,000 - Real Estate Held for Sale 828,000 1,744,000 Prepaid and Other Assets 59,000 54,000 ------------ ------------ Total Assets $ 5,883,000 $ 21,625,000 ============ ============ LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities Dividends Payable $ - $ 17,385,000 Payable to Sponsor and Affiliates 10,000 50,000 Other Accounts Payable and Accrued Liabilities 2,013,000 326,000 ------------ ------------ Total Liabilities 2,023,000 17,761,000 ------------ ------------ Commitments and Contingencies Shareholder's Equity: Common Stock - no par value, stated at $0.001, 12,250,000 Shares authorized and 6,321,641 Shares issued and outstanding 6,000 6,000 Additional Paid-in Capital 55,200,000 55,200,000 Accumulated Dividends in Excess of Net Income (51,346,000) (51,342,000) ------------ ------------ Total Shareholder's Equity 3,860,000 3,864,000 ------------ ------------ Total Liabilities and Shareholder's Equity $ 5,883,000 $ 21,625,000 ============ ============ See notes to consolidated financial statements (unaudited). Page 2 of 12 METRIC INCOME TRUST SERIES, INC., a California corporation CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months Ended March 31, ------------------------------ 1998 1997 ---- ---- Revenues: Lease Income $ 45,000 $ 853,000 Interest on mortgage-backed securities - 138,000 Interest Income 61,000 19,000 ---------- ---------- Total Revenues 106,000 1,010,000 ---------- ---------- Expenses: Depreciation - 64,000 General and administrative 86,000 151,000 ---------- ---------- Total Expenses 86,000 215,000 ---------- ---------- Income Before Net Gain (Loss) on Sale of Properties 20,000 795,000 Gain (Loss) on Sale of Properties - Net (24,000) 212,000 ---------- ---------- Net Income (Loss) $ (4,000) $1,007,000 ========== ========== Net Income per Share: Income before net gain (loss) on sale of properties $ - $ 0.13 Gain (loss) on sale of properties - net - 0.03 ---------- ---------- Net Income per Share $ - $ 0.16 ========== ========== Dividends per Share $ - $ 0.46 ========== ========== See notes to consolidated financial statements (unaudited). Page 3 of 12 METRIC INCOME TRUST SERIES, INC., a California corporation CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) For the Three Months Ended March 31, 1998 and 1997
Unrealized Holding Gain/(Loss) Common Stock Additional Accumulated on Investment in ------------ Paid-in Dividends in Excess Mortgage-Backed Shares Amount Capital of Net Income Securities - Net Total ------ ------ ------- ------------- ---------------- ----- Balance, January 1, 1998 6,321,641 $ 6,000 $55,200,000 $(51,342,000) $ - $ 3,864,000 Income Before Loss on Sale of Properties 20,000 20,000 Loss on Sale of Properties (24,000) (24,000) ---------- ----------- ----------- ------------ -------- ----------- Balance, March 31, 1998 6,321,641 $ 6,000 $55,200,000 $(51,346,000) $ - $ 3,860,000 ========== =========== =========== ============ ======== =========== Balance, January 1, 1997 6,321,641 $ 6,000 $55,200,000 $(23,521,000) $170,000 $31,855,000 Unrealized Holding Loss on Investment in Mortgage-Backed Securities - Net (122,000) (122,000) Income Before Net Gain on Sale of Properties 795,000 795,000 Gain on Sale of Properties - Net 212,000 212,000 Dividends Declared (2,900,000) (2,900,000) ---------- ----------- ----------- ------------ -------- ----------- Balance, March 31, 1997 6,321,641 $ 6,000 $55,200,000 $(25,414,000) $ 48,000 $29,840,000 ========== =========== =========== ============ ======== =========== See notes to consolidated financial statements (unaudited). Page 4 of 12
METRIC INCOME TRUST SERIES, INC., a California corporation CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended March 31, --------------------------------- 1998 1997 ---- ---- Operating Activities Net Income (Loss) $ (4,000) $ 1,007,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization -- 62,000 (Gain) loss on sale of properties - net 24,000 (212,000) Changes in operating assets and liabilities: (Increase) decrease in accounts and interest receivable 5,000 (58,000) Decrease in prepaid and other assets 1,000 1,000 Decrease in payable to sponsor and affiliates (40,000) -- Decrease in other accounts payable and accrued liabilities (301,000) (29,000) ------------ ------------ Net cash provided (used) by operating activities (315,000) 771,000 ------------ ------------ Investing Activities Principal payments received on mortgage-backed securities -- 339,000 Proceeds from sale of properties 1,005,000 2,056,000 Cash used for selling costs of properties (119,000) (212,000) ------------ ------------ Net cash provided by investing activities 886,000 2,183,000 ------------ ------------ Financing Activities Dividends paid to Shareholders (17,385,000) (3,888,000) ------------ ------------ Cash used by financing activities (17,385,000) (3,888,000) ------------ ------------ Decrease in Cash and Cash Equivalents (16,814,000) (934,000) Cash and Cash Equivalents at beginning of period 19,762,000 3,781,000 ------------ ------------ Cash and Cash Equivalents at End of Period $ 2,948,000 $ 2,847,000 ============ ============ SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES Purchase of mortgage-backed securities - see Note 7 See notes to consolidated financial statements (unaudited). Page 5 of 12 METRIC INCOME TRUST SERIES, INC., a California corporation NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Reference to 1997 Audited Consolidated Financial Statements These unaudited consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the 1997 audited consolidated financial statements. The financial information contained herein reflects all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation. 2. Transactions with Advisor and Affiliates In accordance with the Advisory Agreement, the Fund pays the Advisor and affiliates compensation for services provided to the Fund. Amounts earned by the Advisor and its affiliates for the three months ended March 31, 1998 and 1997 were as follows: 1998 1997 ---- ---- Reimbursement of administrative expenses $ 44,000 $ 50,000 Securities management fee - 9,000 Advisory fee - 46,000 -------- -------- Total $ 44,000 $105,000 ======== ======== The securities management fee was earned by State Street Research & Management Company, an affiliate of the Advisor. The quarterly advisory fees payable to the Advisor under the Advisory Agreement commencing April 1, 1994, are calculated at a rate of 0.75 percent per annum of the appraised value of the properties. Such fees are payable in full only if the Fund makes annualized dividend payments equaling at least 8.5 percent of the Shareholders' adjusted capital contribution. To the extent that the dividend paid for a calendar quarter is less than 8.5 percent on an annualized basis, the advisory fee payable to the Advisor will be proportionately reduced. No dividends were paid for the first quarter of 1998; therefore no advisory fee was earned. In February 1998, the Independent Directors approved the renewal of the term of the Advisory Agreement to December 31, 1998 with flat fees of $25,000 per quarter to be paid to the Advisor with the quarter commencing April 1, 1998. 3. Net Income per Share Net income per share is based upon 6,321,641 shares outstanding. 4. Contingencies and Major Tenant Developments In 1997, in connection with the marketing of the convenience stores, the Fund commissioned Phase I Environmental Site Assessments which revealed that Circle K, the tenant of the Rubidoux National Convenience Store property, had reported hydrocarbon contaminants to regulatory authorities in April 1994. It is estimated that the total cost to cure the contamination will not exceed $120,000. Per the terms of the lease, Circle K was required to notify the Fund at the time of discovery and to promptly mitigate the problem but no such action was taken. The Advisor has been assured by Circle K that it will indemnify both the Fund and any purchaser of the property. The Fund has negotiated the specific terms of this indemnification with Circle K, and in April 1998 received an executed Indemnity Letter from Circle K. With this indemnification, the Advisor believes that the contamination, as it is now defined, will not materially adversely affect an ultimate sales price. Marketing efforts for the property have been reinitiated. Page 6 of 12 5. Sale of Rental Properties In the first quarter of 1998, additional expenses of sale were paid and a loss on sale totaling $10,000 was recognized for the following properties which were sold in December of 1997: the National Convenience Stores located in Placentia, California, Marietta Georgia, and Fort Worth and San Antonio, Texas and the Wickes Furniture Store located in Torrance, California. In March 1998, the Fund sold the Pearle Express Store located in Morrow, Georgia for $1,005,000. After payment of expenses of sale of $103,000 (including real estate commissions of $80,000 paid to outside brokers), the proceeds received by the Fund were $902,000. The carrying value at the time of sale was $916,000 (net of the $42,000 provision for impairment of value recognized in 1997), resulting in a net loss on sale of $14,000. In March 1997 the Fund's subsidiary, Metric Real Estate, L.P., sold National Convenience Store Stop N Go #3571 located in Sealy, Texas for $265,000. After payment of expenses of sale of $28,000 (including real estate commissions of $16,000 paid to outside brokers), the proceeds to the Fund were $237,000. The carrying value at the time of sale was $303,000 (including $9,000 deferred lease income receivable), resulting in a loss of $66,000. In March 1997 the Fund's subsidiary, Metric Real Estate, L.P., sold National Convenience Store Stop N Go #655 located in Dallas, Texas for $1,392,000. After payment of expenses of sale of $103,000 (including a real estate commission of $80,000 paid to an outside broker), the proceeds to the Fund were $1,289,000. The carrying value at the time of sale was $715,000 (including $43,000 deferred lease income receivable), resulting in a gain of $574,000. In March 1997 the Fund's subsidiary, Metric Real Estate, L.P., sold National Convenience Store Stop N Go #3592 located in Texas City, Texas for $135,000. After payment of expenses of sale of $23,000 (including real estate commissions of $8,000 paid to outside brokers), the proceeds to the Fund were $112,000. The carrying value at the time of sale was $272,000 (including $7,000 deferred lease income receivable), resulting in a loss of $160,000. In February 1997 the Fund's subsidiary, Metric Real Estate, L.P., sold National Convenience Store Stop N Go #3583 located in Clute, Texas for $264,000. After payment of expenses of sale of $29,000 (including real estate commissions of $16,000 paid to outside brokers), the proceeds to the Fund were $235,000. The carrying value at the time of sale was $373,000 (including $9,000 deferred lease income receivable), resulting in a loss of $138,000. 6. Real Estate Held for Sale In the third quarter of 1996, the Fund's Board of Directors approved a plan to market for sale the sixteen National Convenience Stores located in California, Georgia and Texas and all the National Convenience Stores were classified as Real Estate Held for Sale at that time. As a result of the Board of Directors' decision to proceed with an orderly liquidation of the Fund, the remaining Rental Properties owned by the Fund were classified as Real Estate Held for Sale as of June 30, 1997. The Fund's remaining one property (at March 31, 1998) and two properties (at December 31, 1997) are classified as Real Estate Held for Sale. Pursuant to FAS 121, real estate held for sale is presented at the lower of carrying value or fair market less estimated cost to dispose. No further depreciation is provided after properties are classified as Real Estate Held for Sale. Page 7 of 12 7. Mortgage-Backed Securities On March 31, 1998, the Fund purchased mortgage-backed securities of the Government National Mortgage Association ("GNMA"). The securities have a par value of $2,003,000 and were purchased at a $15,000 discount for a net purchase price of $1,988,000. The coupon rate is 6.5% per annum and the repayment period terminates in 2024. The trade settled in April 1998; therefore the purchase price is shown as an Accounts Payable at March 31, 1998. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This item should be read in conjunction with Consolidated Financial Statements and other Items contained elsewhere in this Report. Properties A description of the properties in which the Fund or its subsidiary has held an ownership interest follows: METRIC INCOME TRUST SERIES, INC., a California corporation PROPERTY AND OCCUPANCY SUMMARY Occupancy Rate % Date of at March 31, Size Purchase 1998 1997 ---- -------- ---- ---- Pearle Express Store Morrow, Georgia ........... (1) 11/89 -- 100 National Convenience Stores (2) (1) 11/89 100 100 Wickes Furniture Store Torrance, California ...... 51,000 sq. ft. 01/90 -- 100 Haverty's Furniture Store Plano, Texas .............. 55,000 sq. ft. 12/94 -- 100 - ---------------- (1) For details of individual properties, see Part I, Item 2 of the Form 10-K Report filed for 1997. (2) To date the Fund has sold all but one of its original portfolio of nineteen convenience stores. Results of Operations Income before net gain (loss) on sale of properties decreased $775,000 in the first quarter of 1998 compared to the first quarter of 1997 primarily due to the sale of fifteen of the Fund's properties and the mortgage-backed securities portfolio in 1997. As a result of the sale of fifteen of the Fund's properties in 1997 and the Pearle Express Store located in Morrow, Georgia on March 3, 1998, lease income decreased by $808,000 in the first quarter of 1998 compared to the same period in 1997. There was no interest on mortgage-backed securities in the first quarter of 1998 compared to $138,000 for the same period in 1997 due to the sale of the mortgage-backed securities portfolio in the third quarter of 1997. However, other interest income increased by $42,000 in the first quarter of 1998 compared to the same period in 1997 due to the interest earned on the proceeds from the sale of properties in October and December of 1997 and from the sale of the Pearle Express Store on March 3, 1998. Page 8 of 12 There was no depreciation expense in the first quarter of 1998 compared to $64,000 for the same period in 1997 due to the sale or reclassification to Real Estate Held for Sale of all assets which were depreciated in the first quarter of 1997. (See Note 6 to the consolidated financial statements). General and Administrative expenses decreased by $65,000 in the first quarter of 1998 compared to the same period in 1997, primarily due to the fact that no advisory or securities management fees were paid for the first quarter of 1998 (see note 2 to the consolidated financial statements). As discussed in Note 5 to the consolidated financial statements, the Fund sold the Pearle Express Store in Morrow, Georgia in March 1998 resulting in a loss on sale of $14,000 and paid additional expenses of sale for properties sold in December 1997, resulting in a loss on sale recognized in the first quarter of 1998 of $10,000. The Fund's operations have been primarily dependent upon the overall financial condition and creditworthiness of the lessees of its real estate properties. The Fund's single remaining property, operated as a Circle K store, experiences competition from other similar establishments in its market. Circle K currently makes lease payments for the Fund's remaining store which it operates as the result of an exchange transaction in the second quarter of 1994; however, NCS remains financially liable for the lease. Diamond Shamrock, Inc. ("DSI") purchased the outstanding stock of NCS in December 1995 and NCS became a wholly-owned subsidiary of DSI. In late 1996 DSI merged with Ultramar Corporation to form Ultramar Diamond Shamrock Corporation ("UDS"). In August 1996 the Board of Directors approved a sales strategy for the Fund's remaining convenience stores and in November 1996 the Fund sold the Circle K store in Rancho Cucamonga, California, followed by the Stop N Go Store in Houston, Texas in December. In February 1997 the Stop N Go Store in Clute, Texas was sold, followed by the Stop N Go Stores in Sealy, Dallas, and Texas City, Texas in March 1997, and the Stop N Go Store located in Arlington (Green Oaks Blvd.), Texas in July 1997 (see Note 5 to the consolidated financial statements). In December 1997 the Fund sold the stores located in Marietta, Georgia; Placentia and Fontana, California; Fort Worth, Grand Prairie, Arlington (Kennedale), and San Antonio (Babcock Road and Fredericksburg Blvd. locations), Texas. The Fund remains the owner of one convenience store property, operated as Circle K. In connection with the marketing MITS had commissioned Phase I Environmental Site Assessments which revealed that Circle K, the tenant of the Rubidoux property, had reported hydrocarbon contaminants to regulatory authorities in April 1994. Per the terms of the lease, the lessee was required to notify MITS at the time of discovery and to promptly remediate the property but no such action was taken. The Advisor notified Circle K of its default and asserted the rights and remedies under the lease, including indemnification for the Fund. Circle K agreed that it would indemnify both MITS and any purchaser of the property. The Fund has received the final Indemnity Letter from Circle K, and has reinitiated marketing efforts. At the recommendation of the Advisor, in the third quarter of 1995 the Board of Directors approved the marketing for sale of the Fund's Sam's Club in Menomonee Falls, Wisconsin; the Wickes Furniture Store in Torrance, California; and the Pearle Express Stores located in Orland Park, Illinois and Morrow, Georgia. The Sam's Club was sold in June 1996 and the Pearle Express Store in Orland Park, Illinois was sold in July 1996. The Wickes Furniture Store and Pearle Express Store in Morrow, Georgia were offered for sale but subsequently withdrawn from the market due to weak market conditions and lease terms that were unattractive to potential buyers. In the second quarter of 1997 the Board of Directors approved a sales strategy for the Fund's Haverty's Furniture Store in Plano, Texas and the remaining Pearle Express Store in Morrow, Georgia, and in the third quarter approved remarketing the Wickes Furniture Store in Torrance, California. Haverty's was sold in October 1997 and Wickes was sold in December 1997. The Pearle Express - Morrow, Georgia location was sold in March 1998. As previously reported, in September 1997, the Advisor was instructed by the Board of Directors to liquidate the Fund's holdings in mortgage-backed securities. These securities were sold in the third quarter of 1997. The Fund has invested cash reserved from sales in the fourth quarter of 1997, in mortgage-backed securities, and intends to invest the bulk of the proceeds from the sale of the Pearle Express - Morrow, Georgia location, in mortgage-backed securities. Page 9 of 12 Fund Liquidity and Capital Resources The Fund intends to meet its cash needs from cash flow generated by its remaining property and securities that it acquires and holds. In order to continue to qualify as a REIT for income tax purposes, the Fund is required, among other things, to distribute 95 percent of its REIT taxable income to its Shareholders annually. The level of cash distributions to Shareholders through 1998 will be sustained by cash provided from net operating activities, from principal repayments on the mortgage-backed securities, from capital gains from the sale of securities, and from property sale proceeds. In July 1996, Shareholders were informed that in June 1996 the Board of Directors unanimously voted to proceed with the orderly liquidation of the Fund's assets over the next several years and to terminate the Dividend Reinvestment Plan ("DRP") and Liquidity Option Program ("LOP") for dividends payable after August 15, 1996. The Board of Directors believed that with the implementation of a formal disposition strategy, the Plan was no longer a viable investment purchase/liquidation vehicle. The Fund's regular quarterly dividend for the second quarter of 1996 was the final dividend for which the DRP/LOP was effective. The Fund's Advisor has continued to provide, on a quarterly basis, an estimated net asset value per Share for the Shares of MITS, utilizing the methodology previously employed to determine the DRP Share purchase price. The estimated net asset value per Share as of March 31, 1998 has been determined to be $0.597. The property value utilized in the calculation was based on the estimated net proceeds assuming the remaining property is at its asking price. The value utilized for this property does not necessarily reflect the proceeds that the Fund would ultimately receive upon the sale of the asset. The estimated net asset value per Share has remained unchanged from that determined as of December 31, 1997, as the Fund's asset base has not materially changed since that time. First Quarter of 1998 The Fund, after taking into account lease income, other interest income and general and administrative expenses, and realized loss on sale, experienced negative results from operations for the period. As presented in the Consolidated Statement of Cash Flows, cash was provided by operating activities. Cash was provided by investing activities and from proceeds from sale of a property, and used for expenses incurred in the sales of properties. Cash was used by financing activities for dividends paid to Shareholders. As approved by the Board of Directors in the third quarter of 1995, the Fund marketed for sale the Pearle Express location in Morrow, Georgia through the second quarter of 1996; however, due to the short term of the existing lease, no viable offers were received and the property was removed from the market. Subsequently, the Advisor successfully negotiated an extension to the lease, and in March 1997 Pearle, Inc. signed an amendment providing for an extension of eight years in exchange for a blending of the remaining lease obligations with current market rates. Pursuant to a decision by the Board of Directors, the Advisor again marketed the property for sale in the third quarter of 1997. On March 3, 1998 the property was sold for $1,005,000. After the payment of the expenses of sale of $103,000 (including real estate commissions of $80,000 paid to outside brokers) the proceeds to the Fund were $902,000. The carrying value at the time of sale was $916,000 (net of the $42,000 provision for impairment of value recognized in 1997), resulting in a net loss on sale of $14,000. The Advisor anticipates that the Fund will have sufficient resources to meet its capital and operating requirements into the foreseeable future. Page 10 of 12 PART II OTHER INFORMATION Item 1. Legal Proceedings. There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Fund (or any of its subsidiaries) is a party or of which any of their property is the subject. Item 6. Exhibits and Reports on Form 8-K. a) No reports on Form 8-K were required to be filed during the last quarter of the period covered by this Report other than the Form 8-K Report filed on January 5, 1998 reporting the disposition of eight of the Fund's convenience store properties; the Form 8-K Report filed on January 9, 1998 reporting the disposition of the Fund's Wickes Furniture Store; the Form 8-K Report filed on January 12, 1998 including a letter from the Registrant to its Shareholders, and the Form 8-K Report filed on March 13, 1998 reporting the disposition of the Pearle Express Store in Morrow, Georgia. On February 12, 1998 the Form 8-K filed on January 5, 1998 was amended to include additional information concerning the disposition of the properties. On March 10, 1998 the Form filed by the Registrant on November 3, 1997, concerning the disposition of Haverty's Furniture Store, was amended to include additional information regarding the disposition. b) List of Exhibits (numbered in accordance with Item 601 of Regulation S-K) 10.26 Ninth Amendment to Advisory Agreement dated as of April 1, 1998, between the Fund and SSR Realty Advisors, Inc. Page 11 of 12 SIGNATURE 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. METRIC INCOME TRUST SERIES, INC., a California corporation By: /s/ William A. Finelli ---------------------- William A. Finelli Director, Vice President, Chief Financial Officer, and Treasurer Date: May 15, 1998 ---------------------- Page 12 of 12 EX-10 2 NINTH AMENDMENT TO ADVISORY AGREEMENT EXHIBIT 10.26 ------------- NINTH AMENDMENT TO ADVISORY AGREEMENT BETWEEN METRIC INCOME TRUST SERIES, INC. AND SSR REALTY ADVISORS, INC. THIS NINTH AMENDMENT TO ADVISORY AGREEMENT is dated as of April 1, 1998, between Metric Income Trust Series, Inc., a California corporation (the "Fund"), and SSR Realty Advisors, Inc., a Delaware corporation, as assignee of Metric Realty, an Illinois general partnership (the "Advisor"). WHEREAS, the Fund entered into an Advisory Agreement with the Advisor dated as of June 29, 1989 and Amendments to such Agreement dated as of January 1, 1991 and April 1 of 1993, 1994, 1995, 1996, and 1997 (collectively, the "Agreement"). WHEREAS, Metric Realty, as the Advisor, assigned its interest in the Agreement to SSR Realty Advisors, Inc., which accepted such assignment, pursuant to an Assignment and Assumption Agreement dated as of March 27, 1997, to which the Fund consented. WHEREAS, the term of the Agreement expired on March 31, 1998 and the Fund and the Advisor desire to renew the term of the Agreement and to make certain changes with respect to the Advisory Fee to be paid to the Advisor by the Fund hereunder. WHEREAS, pursuant to Section 4.9 and 6.2 of the Bylaws of the Fund, the Independent Directors of the Fund have (i) evaluated the performance of the Advisor and (ii) determined that the Advisor's compensation is reasonable in relation to the nature and quality of services performed. WHEREAS, the Fund is desirous of renewing the Agreement and the Advisor is willing to continue to perform services under the Agreement. NOW, THEREFORE, in consideration of the promises and the mutual covenants in this Amendment, the parties agree as follows: 1. Paragraph 9 of the Agreement is hereby amended to read in full as follows: "Compensation - Advisory Fee. At the end of each calendar quarter commencing on or after April 1, 1998, the Fund shall pay to the Advisor as compensation for the advisory services rendered to the Fund hereunder for said quarter an Advisory Fee of $25,000." 2. Paragraph 18 of the Agreement is hereby amended to read in full as follows: "Term: Termination of Agreement. This Agreement shall continue in force until December 31, 1998, and thereafter it may be renewed, subject to the approval of the Independent Directors. Notwithstanding any other provision to the contrary, this Agreement may be terminated without cause upon 60 days' written notice by the Fund to the Advisor or 60 days' written notice by the Advisor to the Fund." 3. Except as set forth herein, the Agreement remains in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written: FUND: METRIC INCOME TRUST SERIES, INC., a California corporation By: /s/ William A. Finelli --------------------------------------- William A. Finelli Vice President, Chief Financial Officer ADVISOR: SSR REALTY ADVISORS, INC. a Delaware corporation By: /s/ Herman H. Howerton --------------------------------------- Herman H. Howerton Managing Director, General Counsel EX-27 3 FDS
5 3-mos Dec-31-1998 Jan-01-1998 Mar-31-1998 2,948,000 1,988,000 60,000 0 0 0 828,000 0 5,883,000 0 0 0 0 6,000 3,854,000 5,883,000 0 106,000 0 0 86,000 0 0 20,000 0 20,000 (24,000) 0 0 (4,000) 0 0
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