<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/x/ Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 2000.
/ / 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 000-22091
GOLF TRUST OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
Maryland 33-0724736
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
14 North Adger's Wharf, Charleston, South Carolina 29401
(Address of principal executive offices) (Zip Code)
(843)723-4653
(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 report(s) and (2) has been subject to
such filing requirements for the past 90 days. Yes X No _.
On August 10, 2000 there were 8,143,618 common shares outstanding of the
registrant's only class of common stock. On August 10, 2000, there were
800,000 shares outstanding of the registrant's 9.25% Series A Cumulative
Convertible Preferred Stock which is the registrant's only class of
outstanding preferred stock.
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
<S> <C> <C>
Condensed Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999....... 3
Condensed Consolidated Statements of Income for the Three Months Ended June 30,
2000 and 1999...................................................................... 4
Condensed Consolidated Statements of Income for the Six Months Ended June 30,
2000 and 1999..................................................................... 5
Condensed Consolidated Statements of Stockholders' Equity for the Year Ended
December 31, 1999 and the Six Months Ended June 30, 2000........................... 6
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30,
2000 and 1999 ..................................................................... 7
Notes to Condensed Consolidated Financial Statements................................... 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....... 16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.................................. 22
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS........................................................................... 22
ITEM 2. CHANGES IN SECURITIES....................................................................... 24
ITEM 3. DEFAULTS UPON SENIOR SECURITIES............................................................. 24
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......................................... 24
ITEM 5. OTHER INFORMATION........................................................................... 25
ITEM 6. EXHIBITS INDEX AND REPORT ON FORM 8-K....................................................... 25
SIGNATURES.................................................................................. 30
</TABLE>
<PAGE>
GOLF TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
(UNAUDITED)
--------------------------------------
<S> <C> <C>
ASSETS
Property and equipment:
Land .................................................................... $ 53,779 $ 53,779
Golf course improvements ................................................ 206,529 204,635
Buildings ............................................................... 82,474 80,708
Furniture, fixtures, and equipment ...................................... 31,408 31,581
------------ ------------
Total property and equipment .............................................. 374,190 370,703
Less accumulated depreciation ........................................... 52,283 43,001
------------ ------------
Property and equipment, net ............................................... 321,907 327,702
------------ ------------
Mortgage notes receivable ................................................. 73,471 73,160
Cash and cash equivalents ................................................. 6,237 3,905
Receivable from affiliates (Note 8) ....................................... 7,891 6,952
Other assets (Notes 3 and 4) .............................................. 20,802 22,193
------------ ------------
Total assets .............................................................. $ 430,308 $ 433,912
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt ...................................................................... $ 224,921 $ 223,085
Accounts payable and other liabilities .................................... 9,236 10,796
------------ ------------
Total liabilities ......................................................... 234,157 233,881
------------ ------------
Commitments (Note 3)
Minority interest ......................................................... 69,574 69,747
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized,
800,000 shares issued .................................................. 20,000 20,000
Common stock, $.01 par value, 90,000,000 shares authorized,
8,143,618 and 7,736,450 shares issued and outstanding,
respectively ........................................................... 82 78
Additional paid-in capital ............................................. 130,231 125,218
Dividends in excess of accumulated earnings ............................ (10,104) (7,720)
Unamortized restricted stock compensation .............................. (2,026) (1,530)
Note receivable from stock sale (Note 6) ............................... (8,975) (3,298)
Loans to officers (Note 7) ............................................ (2,631) (2,464)
------------ ------------
Stockholders' equity ...................................................... 126,577 130,284
------------ ------------
Total liabilities and stockholders' equity ................................ $ 430,308 $ 433,912
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
GOLF TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 2000 JUNE 30, 1999
--------------------------------------
<S> <C> <C>
REVENUES:
Rent from affiliates (Note 6) .................. $ 4,724 $ 3,179
Rent ........................................... 7,472 8,245
Mortgage interest .............................. 2,309 2,296
------------ ------------
Total revenues ................................... 14,505 13,720
------------ ------------
EXPENSES:
Depreciation ................................... 4,622 3,942
General and administrative ..................... 1,513 1,265
------------ ------------
Total expenses ................................... 6,135 5,207
------------ ------------
Operating income ................................. 8,370 8,513
------------ ------------
OTHER INCOME (EXPENSE):
Other income ................................... 15 --
Interest income ................................ 559 240
Interest expense ............................... (4,625) (3,830)
------------ ------------
Total other income (expense) ..................... (4,051) (3,590)
------------ ------------
Net income before minority interest .............. 4,319 4,923
Income applicable to minority interest ........... 1,534 2,006
------------ ------------
Net income ....................................... $ 2,785 $ 2,917
------------ ------------
Preferred Dividends .............................. (462) (458)
------------ ------------
Net Income Available to Common Shareholders ...... $ 2,323 $ 2,459
============ ============
Earnings Per Share (EPS):
Basic ....................................... $ 0.29 $ 0.32
============ ============
Diluted ..................................... $ 0.29 $ 0.32
============ ============
Shares used in EPS calculation:
Basic ....................................... 8,121 7,728
============ ============
Diluted ..................................... 8,121 7,764
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
GOLF TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
-------------------------------------
<S> <C> <C>
REVENUES:
Rent from affiliates (Note 6) ........................................... $ 10,607 $ 6,359
Rent .................................................................... 13,718 16,095
Mortgage interest ....................................................... 4,618 4,591
------------ ------------
Total revenues ............................................................ 28,943 27,045
------------ ------------
EXPENSES:
Depreciation ............................................................ 9,282 7,953
General and administrative .............................................. 3,180 2,776
------------ ------------
Total expenses ............................................................ 12,462 10,729
------------ ------------
Operating income .......................................................... 16,481 16,316
------------ ------------
OTHER INCOME (EXPENSE):
Other income............................................................. 209 --
Interest income ......................................................... 1,163 373
Interest expense ........................................................ (8,979) (7,508)
------------ ------------
Total other income (expense) .............................................. (7,607) (7,135)
Net income before minority interest ....................................... 8,874 9,181
Income applicable to minority interest .................................... 3,222 3,550
------------ ------------
Net income ................................................................ $ 5,652 $ 5,631
------------ ------------
Preferred Dividends ....................................................... (925) (458)
------------ ------------
Net Income Available to Common Shareholders ............................... $ 4,727 $ 5,173
============ ============
Earnings Per Share (EPS):
Basic ................................................................ $ 0.59 $ 0.67
============ ============
Diluted .............................................................. $ 0.59 $ 0.67
============ ============
Shares used in EPS calculation:
Basic ................................................................ 8,012 7,705
============ ============
Diluted .............................................................. 8,013 7,745
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
GOLF TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
NOTE
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE
--------------- -------------- PAID-IN ACCUMULATED UNEARNED FROM STOCK
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS COMPENSATION SALE
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE at January 1, 1999......... - - 7,637 $76 $120,253 $(3,958) $(1,533) $(3,298)
Issuance of preferred stock........ 800 $20,000 - - - - - -
Cost of preferred stock issuance... - - - - (878) - - -
Issuance and cancellation of
restricted stock ............... - - 32 1 555 - (1,001) -
Amortization and cancellation of
restricted stock................ - - - - - - 1,004 -
Value of unvested options for non-
employees....................... - - - - 72 - - -
Adjustments for minority interest
in operating partnership........ - - - - 3,503 - - -
Conversion of OP units into common
stock........................... - - 63 1 1,671 - - -
Loans to officers.................. - - - - - - - -
Issuance of shares of employee
stock purchase plan............. - - 4 42 - - -
Dividends.......................... - - - - - (14,993) - -
Net income......................... - - - - - 11,231 - -
-----------------------------------------------------------------------------------------
BALANCE at December 31, 1999....... 800 $20,000 7,736 $78 $125,218 $(7,720) $(1,530) $(3,298)
-----------------------------------------------------------------------------------------
(UNAUDITED)
Conversion/redemption of OP units.. - - 361 4 8,423 45 - (5,677)
Stock repurchase program........... - - (10) (167) - -
Redeposit of shares of employee
stock purchase plan (ESPP)...... - - 2 - (2) - -
Adjustments for Minority Interest
in operating partnership........ - - - - (4,132) - - -
New restricted stock grant......... - - 55 - 949 - (949) -
Amortization of restricted stock... - - - - - - 453 -
Amortization of registration costs. - - - - (28) - - -
Cost of preferred stock............ - - - - (30) - - -
Loans to officers.................. - - - - - - - -
Dividends.......................... - - - - - (8,081) - -
Net income......................... - - - - - 5,652 - -
-----------------------------------------------------------------------------------------
BALANCE at June 30, 2000........... 800 $20,000 8,144 $82 $130,231 $(10,104) $(2,026) $(8,975)
-----------------------------------------------------------------------------------------
<CAPTION>
TOTAL
LOANS TO STOCKHOLDERS'
OFFICERS EQUITY
---------------------------
<C> <C>
BALANCE at January 1, 1999......... $(1,893) $109,647
Issuance of preferred stock........ - $20,000
Cost of preferred stock issuance... - (878)
Issuance and cancellation of
restricted stock ............... - (445)
Amortization of restricted stock... - 1,004
Value of unvested options for non-
employees....................... - 72
Adjustments for minority interest
in operating partnership........ - 3,503
Conversion of OP units into common
Stock........................... - 1,672
Loans to officers.................. (571) (571)
Issuance of shares of employee
stock purchase plan............. - 42
Dividends.......................... - (14,993)
Net income......................... - 11,231
---------------------------
BALANCE at December 31, 1999....... $(2,464) $130,284
---------------------------
(UNAUDITED)
Conversion/redemption of OP units.. - 2,795
Stock repurchase program........... - (167)
Redeposit of shares of employee
stock purchase plan (ESPP)...... - (2)
Adjustments for Minority Interest
in operating partnership........ - (4,132)
New restricted stock grant......... - -
Amortization of restricted stock... 453
Amortization of registration costs. - (28)
Cost of preferred stock............ - (30)
Loans to officers.................. (167) (167)
Dividends.......................... - (8,081)
Net income......................... - 5,652
---------------------------
BALANCE at June 30, 2000........... $(2,631) $126,577
---------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements
6
<PAGE>
GOLF TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2000 JUNE 30, 1999
---------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ......................................................... $ 5,652 $ 5,631
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization .................................... 9,282 7,953
Loan cost amortization ........................................... 623 421
Straight-line interest and rent .................................. (349) (640)
Amortization of restricted stock compensation .................... 428 279
Redeposit of employee stock purchase plan (ESPP) shares .......... (2) -
Income applicable to minority interest ........................... 3,222 3,550
Income applicable to redemption of collateral .................... (308) -
Increase in receivable from affiliates ........................... (939) (30)
Increase in other assets ......................................... (1,891) 221
Decrease (increase) in accounts payable and other
liabilities ...................................................... (1,570) (2,561)
--------- ---------
Net cash provided by operating activities ............................ 14,148 14,824
--------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Golf course acquisitions and improvements .......................... (2,063) (12,263)
Increase in mortgage notes receivable .............................. 8 (104)
Cash proceeds from sale of land .................................... 1,191 975
--------- ---------
Net cash used in investing activities ................................ (864) (11,392)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on line of credit ................................... 2,000 (1,025)
Payments on notes .................................................. (164) (5,169)
Loan fees .......................................................... (233) (1,399)
Loans to officers .................................................. (167) (648)
Preferred stock proceeds ........................................... -- 20,000
Preferred stock cost ............................................... (30) (878)
Redemption of OP units ............................................. -- (1,775)
Distributions to partners .......................................... (4,277) (4,671)
Dividends paid ..................................................... (8,081) (7,258)
--------- ---------
Net cash provided by (used in) financing activities .................. (10,952) (2,823)
--------- ---------
Net increase in cash ................................................. 2,332 609
Cash and cash equivalents, beginning of period ....................... 3,905 1,891
--------- ---------
Cash and cash equivalents, end of period ............................. $ 6,237 $ 2,500
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements
7
<PAGE>
GOLF TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2000 JUNE 30, 1999
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid during the period ........................................ $ 8,979 $ 7,508
NON-CASH INVESTING AND FINANCING TRANSACTIONS
OP Units issued in golf course acquisitions and financing................ $ - $ 979
</TABLE>
8
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
GENERAL
The accompanying consolidated financial statements include the
accounts of Golf Trust of America, Inc. ("GTA"), its wholly owned subsidiary
corporations and their majority-owned and controlled partnership and its
limited liability companies. The outside equity interests in the consolidated
partnership not owned and controlled by GTA are reflected as the minority
interest in the consolidated financial statements. All significant
inter-company balances and transactions have been eliminated in consolidation.
GTA is a self-administered real estate investment trust ("REIT")
formed to capitalize upon consolidation opportunities in the ownership of
upscale golf courses throughout the United States. We hold our golf course
interests through Golf Trust of America, LP, a Delaware limited partnership
and, in one instance, through a wholly owned subsidiary of Golf Trust of
America, LP. Currently, we hold participating interests in 47 golf courses
(the "Golf Courses"), 43 of which are owned by us and four of which serve as
collateral for a 30-year participating mortgage loan wherein we are the
lender. Of the 43 courses that we own, 41 are held in fee simple and two are
held pursuant to long-term ground leases. The golf courses are located in
Florida (14), South Carolina (6), Michigan (3.5), Illinois (3.5), Ohio (3),
California (2.5), Georgia (2), Virginia (2), Nebraska (1.5), Missouri (1.5),
Texas (1.5), Alabama, Kansas, Kentucky, North Carolina, New Mexico and West
Virginia. Golf course quantities are stated in terms of 18-hole equivalents,
therefore, one 27-hole golf course facility would be counted as 1.5 golf
courses.
Because of the tax rules applicable to REIT's, we are generally not
allowed to operate our Golf Courses. As an exception to this rule, however, we
are allowed to operate a Golf Course for the 90-day period following a
foreclosure or eviction of the tenant under the participating leases wherein
we are landlord. After this period, the gross revenue from Golf Course
operations from any such Golf Course is disqualified income for REIT tax
purposes. The tax code's REIT rules limit the amount of disqualified income
that we may receive. Thus, when we acquire a Golf Course, we lease it back to
an affiliate of the seller or to another Golf Course operator. Often times, we
lease the Golf Course back to the seller's affiliate in instances where we
believe that the seller's familiarity with local conditions and continuity of
management facilitates the Golf Course's growth and profitability (which we
participate in under certain conditions as described below). However, we also
have developed strong relationships with multi-course operators who lease a
number of our Golf Courses. We would take over direct operations of a Golf
Course if we are forced to foreclose on a Golf Course due to a tenant's
default under their Participating Lease, such as occurred with Tierra Del Sol
Golf Club. In the event of a foreclosure, we explore opportunities to (i)
re-let the Golf Course, (ii) enter into a management agreement with a more
experienced golf operator than the original tenant, or (iii) potentially sell
the Golf Course. As of the date of the filing, we have not yet elected any of
these options, for Tierra Del Sol Golf Club. The 90-day grace period allowed
by the Internal Revenue Service during which the gross revenues from Golf
Course operations are qualifying income for REIT tax purposes expired on May
6, 2000; therefore, gross revenues from the operations of Tierra Del Sol Golf
Club subsequent to this date are disqualified for REIT tax purposes.
INTERIM STATEMENTS
The accompanying condensed consolidated financial statements for the
three and six months ended June 30, 2000 and 1999, respectively, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
and pursuant to the instructions to Form 10-Q and Article 10 of Regulation
S-X. These financial statements have not been audited by independent public
accountants, but include all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial condition, results of operations and cash flows
for such periods. However, these results are not necessarily indicative of
results for any other interim period or for the full year. The accompanying
consolidated balance sheet as of December 31, 1999 has been derived from the
audited financial statements, but does not include all disclosures required by
GAAP.
9
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
Certain information and footnote disclosures normally included in
financial statements in accordance with GAAP have been omitted pursuant to
requirements of the Securities and Exchange Commission (the "SEC"). Management
believes that the disclosures included in the accompanying interim financial
statements and footnotes are adequate to make the information not misleading
but should be read in conjunction with the consolidated financial statements
and notes thereto included in GTA's annual report on Form 10-K/A for the year
ended December 31, 1999.
MINORITY INTEREST
The accompanying consolidated balance sheets have been adjusted to
reflect an accounting allocation for reporting purposes from additional
paid-in capital to minority interest for the limited partners' percentage
interest in the net assets of Golf Trust of America, LP, the operating
partnership. This adjustment had no effect on earnings per share or results of
operations or allocations of net income to the general and limited partners of
Golf Trust of America, LP. The reallocation for the six month period ended
June 30, 2000 and the year ended December 31, 1999 was approximately $4.1
million and $3.5 million, respectively.
EARNINGS PER SHARE
The computation of basic earnings per share is computed by dividing
net income by the weighted average number of outstanding common shares during
the period. The computation of diluted earnings per share is based on the
weighted average number of outstanding common shares during the period and the
incremental common shares, using the treasury stock method for stock options.
The incremental common shares for the six months ended June 30, 2000 and 1999
were 700 and 40,000, respectively. Since the conversion of our preferred
shares would be anti-dilutive, these amounts are not included in the
calculations of diluted shares; however, the net income is reduced by the
amount of Preferred Dividends paid to derive net income available to common
shareholders.
2. LEASES
All of our Golf Course leases are Participating Leases that require
the lessees to make payments of a fixed amount of base rent and a variable
amount of additional rent based on growth in revenue at the Golf Course.
Participating rent will generally be paid each year in the amount, if any, by
which the sum of 33 1/3% of gross golf revenue exceeds the cumulative base
rent escalation since the commencement date of such Participating Leases. The
base rent generally increases annually by the lesser of 3% to 5%, or a
multiple of the change in the consumer price index ("CPI"). Annual increases
in lease payments are generally limited to between 5% and 7% during the first
five years of the lease term. No participating rent (or participating mortgage
interest under the mortgage note receivable) was recognized for the three and
six months ended June 30, 2000 and 1999, respectively.
3. COMMITMENTS
LESSEES
Typically, we lease our Golf Courses to affiliates of the prior
owners and other initial operators believed to be qualified under
non-cancelable Participating Leases for an initial term of ten years, with
options to extend the initial term of each Participating Lease up to a maximum
of forty years. From the lease payments, we are generally required to make
available a reserve of between 2% and 5% of the annual gross golf revenue of
each Golf Course for the replacement and enhancement of the existing
facilities. These reimbursements are allocated between short and long-term
categories and,
10
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
therefore, the balance (at June 30, 2000 and 1999 of $2,347,000 and
$2,056,000, respectively) may not be currently available to the lessees.
3. COMMITMENTS (CONTINUED)
Under certain circumstances, the underlying base rent for a Golf
Course will be increased when we agree to pay for significant capital
improvements or to expand existing Golf Courses. In addition, in limited
circumstances, we may agree to provide working capital loans to existing
lessees. Currently, we have funded $16,137,000 of our total commitments to
date of $23,471,000. We anticipate that we will fund the balance of $7,334,000
over the next two years.
We have agreed to maintain minimum loan balances of approximately
$17.2 million for up to ten years to accommodate certain prior owner's efforts
to seek to minimize certain adverse tax consequences from their contribution
of their Golf Courses to our Operating Partnership.
Under the Performance Option for the Participating Leases, during
years three through five of each Participating Lease, the operator or its
affiliate, subject to certain qualifications and restrictions, may elect one
time to increase the base rent in order to receive additional OP units in the
Operating Partnership or common stock in us. An operator's ability to exercise
the Performance Option and the number of OP units or common stock issuable to
such prior owner in connection therewith, will depend on future operating
results at the applicable Golf Course and, therefore, cannot be determined in
advance.
4. OTHER ASSETS
The balance of Other Assets includes Rent Receivable totaling
approximately $1,182,000 attributed to Mystic Creek Golf Club and Palm Desert
Country Club which are currently in legal proceedings initiated by us for
lessees' defaults under their Participating Leases. The value of the
collateral held by the Operating Partnership against the lessees' obligations
under the Participating Leases exceeds the total amount due at this time. The
collateral held for two other Participating Lease defaults by lessees that are
currently in legal proceedings (Osage and Brentwood) was executed upon by the
Operating Partnership effective June 20, 2000 and applied to their Rent
Receivable balance resulting in a zero balance in Rent Receivable at June 30,
2000. No Rent Revenue was recognized for Brentwood for the month of June since
there was not sufficient collateral to cover the full month's rent. Due to the
fact that the collateral on these two courses has been exhausted, subsequent
to June 30, 2000 Rent Revenue will not be recognized on these two Golf Courses
until the legal proceedings are concluded at the earliest.
11
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. DEBT
Debt consists of the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
JUNE 30, DECEMBER 31,
(IN THOUSANDS) 2000 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REVOLVING CREDIT FACILITY
$200.0 million unsecured revolving credit facility with a weighted
average interest rate of 7.9% per annum maturing April 2002 $200,000 $200,000
--------------------------------------------------------------------------------------------------------------
LINE OF CREDIT
$25.0 million unsecured line of credit with a weighted average interest
rate of 7.9% per annum maturing October 1, 2000 2,700 700
--------------------------------------------------------------------------------------------------------------
NOTE PAYABLE
Secured financing, net book value of the property of $20.0 million with 12,221 12,385
a variable interest rate of 8.75% per annum to 10% per annum maturing
November 2016
--------------------------------------------------------------------------------------------------------------
NOTE PAYABLE
Secured financing, net book value of the property is $10.0 million with 10,000 10,000
a variable interest rate of prime (9.0% per annum at June 30, 2000)
maturing July 2002
--------------------------------------------------------------------------------------------------------------
TOTAL $224,921 $223,085
--------------------------------------------------------------------------------------------------------------
</TABLE>
6. NOTE RECEIVABLE FOR STOCK SALE
In the first quarter of 2000, concurrent with the conversion to
common stock of 274,039 OP units belonging to Golf Host Resorts, Inc., the
related note receivable was reclassified from Minority Interest to Note
Receivable from Stock Sale.
7. STOCK OPTIONS AND AWARDS
EMPLOYEE STOCK PURCHASE PLAN
On March 1, 1998, we adopted an Employee Stock Purchase Plan ("the Plan")
to provide most employees with an opportunity to purchase common shares in us
through payroll deductions of up to 10% of eligible compensation with a
$25,000 maximum deferral. Semi-annually, participant account balances will be
used to purchase common shares at the lesser of 85% of the fair market value
of common shares at the beginning or ending of such six-month period. The Plan
expires on February 28, 2008. A total of 250,000 common shares are available
for purchase under the Plan. Common shares were issued under the Plan as
follows: 1,315 in July 2000; 1,592 in January 2000; 2,152 in July 1999; and
1,768 in January 1999. Compensation expense related to the Plan was
approximately $3,000 and $8,000 for the six months ended June 30, 2000 and
1999, respectively.
RESTRICTED STOCK
For the six months ended June 30, 2000 and 1999, we granted 55,000
and 44,000 common shares, respectively, of restricted stock to employees under
our 1998 and 1997 Stock-Based Incentive Plans. The market value of the
restricted stock grants in 2000 and 1999 totaled $949,000 and $1,001,000,
respectively. Unearned compensation is being amortized to an expense item over
the vesting period, which ranges from three to five years. Such expense
amounted to approximately
12
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
$213,000 and $159,000 for the three months ended June 30, 2000 and 1999,
respectively, and $428,000 and $273,000 for the six months ended June 30, 2000
and 1999, respectively.
LOANS TO OFFICERS
In 1997, our Board of Directors approved a Company Policy, which has
subsequently been amended and restated with respect to loans to executive
officers and certain key employees relating to purchases of our common shares
(the "Loan Program"). Pursuant to the Loan Program, we may lend amounts to
certain of our executive officers for one or more of the following purposes:
(1) to finance the purchase of common shares by certain executive officers on
the open market at the then-current market prices; or (2) to finance an
executive officer's payment of the exercise price of options to purchase
common shares granted to such employee under our option plans. In addition, we
may lend amounts to finance the annual tax liability of certain executive
officers related to the vesting of shares of common shares which constitute a
portion of a restricted stock award granted to such employees under our option
plans. The maximum aggregate amount we may loan to an executive officer is
determined on a case-by-case basis by our Compensation Committee. Common
shares, which are the subject of a loan, serve as collateral for the repayment
of the note until the note has been paid in full. Each note bears interest at
the applicable federal rate, as defined by the Internal Revenue Service, in
effect on the execution date of the loan. Interest is paid on an annual basis
and varies from 4.5% to 6.3% per annum. Each note becomes due and payable at
the earlier of (i) three years of the applicable employee termination; (ii)
five years after the making of the loan; and, for those specific loans granted
to officers for the purchase of our shares on the open market, (iii) at the
time of sale of such common shares at a price greater then $25 per share.
These notes are recourse to the borrower. As of June 30, 2000, we had
outstanding loans in the amount of approximately $2,631,000.
8. TRANSACTIONS WITH AFFILIATE AND SIGNIFICANT LESSEE
Legends Golf Management, LLC is a significant lessee of Golf Courses
in our portfolio. Legends Golf is a golf course management group consisting of
eight companies affiliated through common ownership that operates a portfolio
of thirteen Golf Courses owned by us under triple net Participating Leases.
Legends Golf derives revenues from the operation of Golf Courses principally
through receipt of green fees, membership fees, golf cart rentals, and sales
of food, beverage and merchandise.
Effective July 1, 1999, Larry D. Young, one of our directors and the
principle owner of Legends Golf, acquired the stock of the lessee of the
Bonaventure Golf Courses.
Effective August 17, 1999, Mr. Young, through an affiliated entity
named "Legend National Golf Management, LLC," also became the lessee at four
Golf Courses previously leased to Granite Golf Group or its affiliates prior
to their default under the Participating Leases. These Golf Courses are
Persimmon Ridge Golf Club, Silverthorn Country Club, Black Bear Golf Club and
Tiburon Golf Club.
13
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table sets forth certain combined condensed financial
information for Legends Golf.
<TABLE>
<CAPTION>
June 30, December 31,
(IN THOUSANDS) 2000 1999
--------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Current assets $ 5,724 $ 4,912
Non-current assets 28,102 29,884
------- -------
Total assets $33,826 $34,796
======= =======
Payable to Golf Trust of America, L.P. $ 7,891 $ 6,952
Other current liabilities 34,185 33,244
Long-term liabilities 1,705 1,960
Owners' equity (capital deficit) (9,955) (7,360)
------- -------
Total liabilities and owners' equity (capital deficit) $33,826 $34,796
======= =======
</TABLE>
Included in the balance of "Payable to Golf Trust of America, LP" are
working capital advances totaling approximately $5,773 which bear interest at
10% per annum. Advances of $1,031 are due in August 2000 with the balance due
at the end of the Participating Lease term.
<TABLE>
<CAPTION>
For the three months ended For the six months ended
(IN THOUSANDS) June 30, June 30,
2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Total Revenues $10,940 $7,859 $19,786 $13,610
Operating Income (Loss) $ (28) $ 743 $(1,074) $ (280)
Net Income $ 886 $2,016 $ 908 $ 2,140
</TABLE>
Total revenues from Golf Course operations for Legends Golf increased
by $3.1 million, or 39.2%, to $10.9 million for the three months ended June
30, 2000. The increase was primarily attributable to the revenue of $3.1
million from the additional six Golf Courses which were under Participating
Leases with Legends subsequent to June 30, 1999.
Operating income decreased from $0.7 million to approximately
break-even for the three months ended June 30, 1999 and 2000, respectively.
The decrease is primarily due to the operating losses of the additional
Participating Leases offset by a reduction of the allocation of administrative
overhead and advertising of approximately $158,000 and $137,000, respectively.
Net income decreased from $2.0 million to $0.9 million for the three
months ended June 30, 1999 and 2000, respectively. The decrease is primarily
due to the net losses of the additional leases of $0.8 million and increases
in interest expense and lease payments to Golf Trust of America, Inc. of
approximately $123,000 and $154,000, respectively, for Myrtle Beach and
Virginia.
Total revenue from golf course operations for Legends Golf increased
by $6.2 million to $19.8 million for the six months ended June 30, 2000. The
increase was primarily attributable to the revenue produced by the six
additional courses under lease.
14
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Operating loss increased by $.8 million to $1.1 million for the six
months ended June 30, 2000. The increase in operation loss was primarily
attributable to the losses of the additional leases of $1.4 million partially
offset by a reduction in the operating loss in Myrtle Beach and Virginia of $.6
million. This reduction in operating loss was primarily a result of a reduction
in the allocation of administrative overhead and adverting by approximately
$376,000 and $141,000, respectively.
9. PAYMENT OF DIVIDENDS
On June 15, 2000, our Board of Directors declared a quarterly dividend
distribution of $0.44 per common share for the quarter ended June 30, 2000, to
stockholders of record on June 30, 2000, which was paid on July 14, 2000. Also,
on July 14, 2000, the Series A Preferred Stockholder was paid a dividend of
$0.58 per share which was also declared on June 15, 2000.
15
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW AND FORMATION
Golf Trust of America, Inc. ("GTA") conducts business through Golf
Trust of America, L.P. (the "Operating Partnership"), of which GTA, as of
August 14, 2000, owns 65.0% interest through its two wholly owned
subsidiaries and is the general partner. Larry D. Young, a director of GTA,
along with his affiliates, owns 27.2% of the Operating Partnership and is a
significant lessee of our properties. Operators of the Golf Courses, their
affiliates and an officer of GTA hold the remaining interest in the Operating
Partnership. In this report the terms "we" and the "Company" mean GTA
together with the Operating Partnership and their consolidated subsidiaries,
considered as a whole.
Our Company was formed to capitalize upon consolidation opportunities
in the ownership of upscale Golf Courses in the United States. Our principal
business strategy, is to own upscale Golf Courses and lease these Golf Courses
to qualified third-party operators, which may include the sellers of the Golf
Courses. We believe we are highly regarded and recognized as having a
significant presence in the ownership of upscale Golf Course assets due to (i)
our utilization of a multiple independent lessee structure, (ii) management's
substantial industry knowledge, experience, and relationships within the golf
community, (iii) our strategic alliances with prominent Golf Course operators,
and (iv) our ability to issue OP units to Golf Course owners on a tax-deferred
basis.
Our primary sources of revenue are lease payments under the
Participating Leases and mortgage payments under the Participating Mortgage.
We generally participate in the increase in gross golf revenues over the base
year. Base rent will generally increase each year between 3% and 5%. Annual
increases in lease payments are generally limited to a maximum of 5% to 7% for
the first five years of the lease term.
We believe the principal source of growth in gross golf revenues at
our Golf Courses will be increased green fees, cart fees, and other related
fees (due to increases in rounds and/or rates). In order to achieve higher
revenues, we believe the lessees will need to continue to offer golfers a high
quality golf experience as it relates to the pace of play, condition of the
golf course and overall quality of the facilities and services.
APPOINTMENT OF FINANCIAL ADVISOR
On February 9, 2000 we engaged Banc of America Securities LLC to act
as our financial advisor to undertake a review of a broad range of strategic
alternatives available to us in light of the current and prospective market
conditions facing GTA and the REIT industry. Executive management and/or the
Board is meeting regularly with our financial advisor in furtherance of
consideration of alternatives to enhance shareholder value. The professional
fee structure in our agreement with Banc of America Securities LLC is not
expected to have a material impact on general and administrative expenses for
2000.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
For the three months ended June 30, 2000 and 1999, we received
$14,505,000 and $13,720,000, respectively, in revenue from the Participating
Leases and the Participating Mortgage. The increase in revenues of $785,000 is
due to (1) minimum rent increases and additional rent from improvements of
approximately $462,000 which represents a 3% average increase in minimum
rents, (2) a full quarter of rent from the one Golf Course acquired subsequent
to June 30, 1999 and the one Golf Course acquired in May of 1999 resulting in
$346,000 in additional rental revenue, (3) increase in capital expenditure
reserve of $65,000, (4) offset by a decrease in miscellaneous revenue of
$5,000 from straight-line rents and other charges billed to lessees, and (5)
$13,000 of additional income from the Participating Mortgage composed of
$102,000 of additional interest reflecting increased principal outstanding and
minimum increases under the Participating Mortgage offset by a decrease of
$89,000 in the amount of straight-line interest income recognized on the
Participating Mortgage. The
16
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
increases in rent revenues for the period ended June 30, 2000 were offset by
$96,000 in lost rental revenue from Tierra Del Sol Golf Club which was
foreclosed upon effective February 7, 2000. Since that date, we have operated
Tierra Del Sol Golf Club and recognized its net income from Golf Course
operations as Other Income.
Expenses totaling $10,760,000 and $9,037,000 for the three months
ended June 30, 2000 and 1999, respectively, reflect depreciation and
amortization, general and administrative expenses, and interest expense. The
increase of $1,723,000 reflects a full quarter of depreciation of $200,000 for
the acquisitions made in 1999, plus additional depreciation on prior
acquisitions and related improvements of $480,000, a net increase in general
and administrative costs of $248,000 and an increase in interest expense of
$795,000. The net increase in general and administrative expenses is
attributed to an increase in professional fees of $227,000, an increase in
amortization of loan fees of $105,000 offset by savings of approximately
$84,000 as a result of the reorganization of the Acquisition Department that
occurred in the fourth quarter of 1999. Expenses for professional fees include
legal, tax, audit, strategic analysis and other miscellaneous professional
services. Interest expense was $4,625,000 for the three months ended June 30,
2000 compared to $3,830,000 for the three months ended June 30, 1999,
primarily due to the increase of approximately $20,000,000 in the average
balance of outstanding debt for the second quarter of 2000 versus the second
quarter of 1999, coupled with significantly higher interest rates.
Other Income and Interest Income totaled approximately $574,000 and
$240,000 for the three months ended June 30, 2000 and 1999, respectively.
Included in Other Income for the second quarter of 2000 is $15,000 of Net
Income from Golf Course operations for Tierra Del Sol. We took over operations
of this Golf Course on February 7, 2000 as a result of the lessee's default
under the Participating Lease. Interest income for the second quarter of 2000
and 1999 was approximately $559,000 and $240,000, respectively. The increase
in interest income is primarily due to interest earned on the land and
clubhouse loans extended in the purchase of the Pete Dye Golf Club on July 28,
2000.
For the three months ended June 30, 2000 and 1999, net income was
$2,785,000 and $2,917,000, respectively. The decrease in net income is
primarily the result of the increase in interest expense, together with the
fluctuations in other categories as set forth above.
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
For the six months ended June 30, 2000 and 1999, we received
$28,943,000 and $27,045,000, respectively, in revenue from the Participating
Leases and the Participating Mortgage. The increase in revenues of $1,898,000
is due to (1) minimum rent increases and additional rent for improvements of
approximately $1,111,000, which equates to a 4% increase period over period,
(2) a full six months of rent from the two Golf Courses acquired in 1999,
resulting in $777,000 in additional rental revenue, (3) increase in capital
expenditure reserve of $127,000, (4) miscellaneous revenue of $12,000 from
straight-line rents and other charges billed to lessees, and (5) $29,000 of
additional income from the Participating Mortgage composed of $206,000 of
additional interest reflecting increased principal outstanding and minimum
increases under the Participating Mortgage offset by a decrease of $177,000 in
the amount of straight-line interest income recognized on the Participating
Mortgage.
The increases in rent revenues for the period ended June 30, 2000
were offset by $158,000 in lost rental revenue from Tierra Del Sol Golf Club,
which we foreclosed upon effective February 7, 2000 as a result of the
lessee's default under the Participating Lease. Since that date, we have
operated Tierra Del Sol Golf Club and recognized its net income from Golf
Course operations of $24,000 for the period February 8, 2000 through June 30,
2000 as Other Income on our financial statements. In addition, excess
collateral for this Golf Course valued at $184,000 was recognized as Other
Income on our financial statements on the date of the foreclosure.
Expenses totaling $21,441,000 and $18,237,000 for the six months
ended June 30, 2000 and 1999, respectively, reflect depreciation and
amortization, general and administrative expenses, and interest expense. The
increase of $3,204,000 reflects a full six months of depreciation of $410,000
for the 1999 acquisitions, plus additional depreciation on prior acquisitions
and related improvements of $919,000, a net increase in general and
administrative costs of $404,000 and an
17
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
increase in interest expense of $1,471,000. The net increase in general and
administrative expenses is attributed to an increase in professional fees of
$614,000, an increase in amortization of loan fees of $204,000, offset by
savings of approximately $414,000 as a result of the reorganization of the
Acquisition Department that occurred in the fourth quarter of 1999 and reduced
spending in other expense categories. Expenses for professional fees include
legal, tax, audit, and strategic analysis and other miscellaneous professional
services. Interest expense was $8,979,000 for the six months ended June 30,
2000 compared to $7,508,000 for the six months ended June 30, 1999, primarily
due to the increase of approximately $14,000,000 in the average balance of
outstanding debt for the first two quarters of 2000 versus the first two
quarters of 1999, coupled with significantly higher interest rates.
Other Income and Interest Income totaled approximately $1,372,000 and
$373,000 for the six months ended June 30, 2000 and 1999, respectively.
Included in the $1,372,000 is $184,000 of Other Income from the redemption of
collateral from Tierra Del Sol Golf Club that was retained by us through
foreclosure proceedings as a result of the lessee's default on the
Participating Lease. In addition, $25,000 of Net Income from Golf Course
operations for Tierra Del Sol was recognized for the period subsequent to the
foreclosure, February 7, 2000 through June 30, 2000, during which time we
managed this Golf Course. Interest income for the first two quarters of 2000
and 1999 was approximately $1,163,000 and $373,000, respectively.
For the six months ended June 30, 2000 and 1999, net income was
$5,652,000 and $5,631,000, respectively. The increase in net income is
primarily the result of increased rental revenue offset by higher expenses.
LEGAL MATTERS
MYSTIC CREEK GOLF COURSE
It is our intention to continue the eviction action that was
automatically stayed by the bankruptcy court on February 25, 2000 as soon as
legally permissible and to seek to have an evidentiary hearing scheduled as
quickly as possible thereafter to determine the date for the lessee to assume
the Participating Lease (by bringing rent current) or reject the Participating
Lease (which would mean a return of the Golf Course to us). The lessee
continues to operate the Golf Course pending the resolution of the pending
action and its bankruptcy. The bankruptcy court has ordered the debtor to pay
us post-petition rent in the amount of $85,000 per month, due by the 25th of
each month, for the months of June through September 2000. The payments for
June and July have been received. Additionally, on July 24, 2000, the court
set the schedule in the adversary proceeding such that discovery will end by
October 24, 2000, and a trial date shall be set for the end of November 2000.
Under our current assumptions, the value of the lessee's collateral securing
the obligations of the defaulting lessee under the Participating Lease is
adequate to cover accrued rent (approximately $990,000 through July 25, 2000).
No other material developments have occurred in these proceedings since the
filing of our Quarterly Report on Form 10-Q on May 15, 2000.
OSAGE NATIONAL GOLF CLUB
Discussions with the prior owner of the Golf Course and the lessee to
terminate the lessee's Participating Lease and the lessee's possessory rights
at the Golf Course are ongoing, but in the meantime, we filed an eviction
action against the lessee on May 30, 2000 as a result of the lessee's default
under the Participating Lease. On June 20, 2000, 66,124 OP Units initially
pledged as collateral for the Participating Lease by the prior owner of the
Golf Course were redeemed at a total value of $1,055,190 and applied to past
due rent obligations and other accrued charges. Of this amount, $866,322 was
applied to outstanding rent through June 2000. The balance of $188,779 was
accrued to cover legal fees and other damages associated with these
proceedings. Until the conclusion of these proceedings, no Revenue will be
recognized for this Golf Course subsequent to June 2000. On July 21, 2000, a
judicial hearing took place in Miller County, Missouri, in which the court set
a date for a jury trial on all issues related to the eviction of the lessee
for September 12, 2000. Additionally, at the hearing, the court set a date of
September 5, 2000 for a pretrial conference in which the parties will argue
the issue of the necessity of a jury trial. No other material developments
have occurred in these proceedings since the filing of our Quarterly Report on
Form 10-Q filed on May 15, 2000.
18
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
BRENTWOOD GOLF & COUNTRY CLUB
The lessee refused to make the first escrow payment required by the
Order that was entered on March 28, 2000. In response to motions that we filed
to compel enforcement of the escrow order, the court appointed a Receiver to
review the financial situation at the Golf Course and to determine the
priority of the payables and rent at the Golf Course. The Receiver filed his
report on July 25, 2000 and recommended, among other things, that the lessees'
payment of attorney's fees and the management fee owed to Total Golf, Inc.,
operated by Jim Dewling, should be subordinated to the payment of rent. We and
the lessee are currently objecting to the report of the Receiver. We and the
lessee have scheduled depositions and each party is in the process of
obtaining and satisfying discovery requests. Additionally, on June 20, 2000,
24,482 OP Units initially pledged as collateral for the Participating Lease by
the prior owner of the Golf Course were redeemed for a total value of
$390,649. This amount plus $343,749, the proceeds from the redemption of two
certificates of deposit also pledged as collateral for the lessee's
obligations under the Participating Lease which were liquidated on June 14,
2000, were applied to outstanding rent through May 2000, which totaled
$675,415. The balance of $58,978 was accrued to cover legal fees associated
with these proceedings. Until the conclusion of these proceedings, no Revenue
will be recognized for this Golf Course subsequent to May 2000. No other
material developments have occurred in these proceedings since the filing of
our Quarterly Report on Form 10-Q on May 15, 2000.
PALM DESERT COUNTRY CLUB
On April 20, 2000, we declared an event of default under the
Participating Lease as a result of the lessee's failure to timely pay rent.
This default was cured on May 15, 2000 when the lessee paid all outstanding
rent due. On June 20, 2000 we again declared an event of default under the
Participating Lease a result of the lessee's failure to timely pay rent. We
are in the process of pursuing our legal rights against the lessee and the
collateral securing the lessee's obligations under the Participating Lease.
The lessee continues to operate the Golf Course pending a resolution to our
asserted default. Under our current assumptions, the value of the lessee's
collateral (32,986 OP Units with a current estimated value of approximately
$523,000) securing the obligations of the defaulting lessee under the
Participating Lease is adequate to cover accrued rent of approximately
$185,000 through July 25, 2000, future accrued rent through December 2000 of
approximately $295,000 and legal fees of approximately $43,000.
WEKIVA GOLF CLUB
On April 20, 2000, we declared an event of default under this
Participating Lease as a result of the lessee's failure to timely pay rent.
This default was cured on May 16, 2000 when the lessee paid all outstanding
rent due.
TIERRA DEL SOL GOLF CLUB
We have been operating this Golf Course since February 7, 2000 when
the lessee was evicted and we took possession. As of the date of this filing,
we have not yet elected to pursue any of the options available to us, such as
(i) re-letting the Golf Course, (ii) entering into a management agreement
with a more experienced golf operator than the original lessee, or (iii)
potentially selling the Golf Course. OP Units initially pledged as collateral
for the lessees' performance of its obligations under the Participating Lease
by the former lessee of the Golf Course have been redeemed and were applied
to past due rent obligations and other accrued charges. The remaining
collateral balance of $184,000 (equivalent to approximately five months of
base rent) was recognized as Other Income in the first quarter of 2000. The
90-day grace period allowed by the Internal Revenue Service during which the
Gross Golf Course Revenues are qualifying income for REIT tax purposes
expired on May 6, 2000; therefore, Gross Golf Course Revenues subsequent to
this date will be disqualified for REIT tax purposes.
19
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY
Cash flow from operating activities for the six months ended June 30,
2000 and 1999 was $14,148,000 and $14,824,000, respectively. This reflects net
income, plus non-cash charges to income for depreciation, loan cost
amortization, income applicable to minority interest restricted stock
compensation amortization, straight line rents and interest, and working
capital changes. For the six months ended June 30, 2000, $303,000 in non-cash
Income and/or offsets to Expenses is reflected in operating activities, which
resulted from the foreclosure of OP Unit collateral securing the lessees'
performance under Participating Leases. Included in this amount is $184,000
in Other Income, which was OP Unit value in excess of the outstanding debt
(approximately 10,555 OP Units) of Tierra Del Sol Golf Club.
Our investing activities reflect golf course improvements and capital
replacement reserve costs of $2,063,000 for the first six months of 2000
compared to $12,263,000 for the first six months of 1999. The 2000
improvements consisted primarily of $627,000 invested in Cypress Creek Golf
Club, $420,000 invested at Cooks Creek to replace assets destroyed in the fire
last year, $434,000 invested in Eagle Ridge for capital replacements, $153,000
invested at Sandpiper, plus $429,000 miscellaneous improvements, replacements
and capitalized costs among the other Golf Courses. The investments made in
the first six months of 1999 included the $3,300,000 acquisition of an
additional nine holes at Northgate Country Club, the cash portion of the
purchase of the Metamora Golf Course for $5,000,000, the cash portion of the
Olde Atlanta re-capitalization of $293,000 and approximately $3,600,000 for
improvements at Eagle Ridge and other Golf Courses.
During the first six months of 2000, our financing activities netted
to a use of cash of $10,952,000. We borrowed $2,000,000 under the unsecured
line of credit, paid loan fees of $233,000 related to the six-month extension
of the unsecured line of credit, made new officer loans of $167,000, paid
principle payments on the note payable of $164,000, paid dividends and
partner distributions of $12,358,000 net of a $45,000 equity adjustment for
one partner. This compares to net use of cash from financing activities of
$2,823,000 for the first six months of 1999. During that period, we sold
800,000 of our Series A preferred shares for gross proceeds of $20,000,000,
net of associated costs of $878,000. With the net proceeds, we paid down
$1,025,000 under the credit facility, repaid notes of $5,169,000, paid loans
costs associated with the amendment and restatement of the credit facility of
$1,399,000, made new officer loans of $648,000, and paid dividends and
partner distributions of $11,929,000 for the six months ended June 30, 1999.
FINANCING AND CAPITAL RESOURCES
In April 1999, GTA amended and restated our unsecured Revolving
Credit Facility ("Credit Facility") to increase the borrowing capacity to
$200.0 million with a consortium of banks led by Bank of America, as lead
agent. We pay interest-only on the Credit Facility, with the principal
balance due in April 2002. Borrowings typically bear interest at an adjusted
Eurodollar rate plus an applicable margin. The applicable margin (between
1.50% and 2.00%) is subject to adjustment based upon certain leverage ratios.
At June 30, 2000, all amounts outstanding under the Credit Facility were
based on the Eurodollar rate and a margin of 1.75% for an average interest
rate of 7.9% per annum.
The Credit Facility availability is limited to an unencumbered pool
calculation, including a 20% limitation for working capital needs. Financial
covenants include net worth, liquidity and cash flow covenants, among others.
Non-financial covenants include restrictions on loans outstanding,
construction-in-progress, loan to officers and changes in the Board of
Directors, among others. At the present time, these covenants have been met.
In addition to the amended and restated Credit Facility, on April 6,
1999, we also obtained a $25.0 million unsecured line of credit from Bank of
America which may be incorporated into the $200.0 million Credit Facility at
a later date. The rates, covenants, conditions and other material provisions
are essentially the same as the Credit Facility, except for the term, which
was one year with an expiration date of April 1, 2000. In March of 2000, a
six-month extension to the
20
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
maturity date was granted with a new maturity date of October 1, 2000. The
extension was granted with the same pricing that was in effect under the
original line plus a 3/4% up-front commitment fee. We are currently in
discussions with Bank of America regarding an additional extension of this
line of credit.
We have agreed to maintain a minimum loan balance of approximately
$17.2 million for up to ten years to accommodate certain prior owners' efforts
to minimize certain adverse tax consequences from contribution of their Golf
Courses to our Company.
We may invest in additional golf courses as suitable opportunities
arise, but we will not undertake investments unless adequate sources of
financing are available. We anticipate that future acquisitions will be funded
with debt financing provided by the line of credit, the issuance of OP Units
or with net proceeds of additional equity offerings. In the future, we may
negotiate additional credit facilities or issue corporate debt instruments.
Any debt issued or incurred by us may be secured or unsecured, long-term or
short-term, fixed or variable interest rate and may be subject to such other
terms, as the Board of Directors deems prudent.
We have on file with the Securities and Exchange Commission a
universal shelf registration statement relating to the issuance of debt
securities, common stock or preferred stock as well as re-sales of securities
issued upon redemption of certain OP Units by their holders, with a remaining
availability of approximately $280.0 million minus any registered re-sales by
OP Unit holders. The exact amount of debt, common stock or preferred stock
issued will depend on acquisitions, asset sales, our unsecured debt and
preferred stock ratings, and the general interest rate environment.
We generally intend to maintain a capital structure with consolidated
indebtedness representing no more than 50% of our total market capitalization,
although we have no express limitation in our charter documents on our ability
to incur indebtedness.
FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
We consider Funds From Operations ("FFO") as an appropriate measure
of performance of an equity REIT. In accordance with the resolution adopted by
the Board of Governors of the National Association of Real Estate Investment
Trusts, Inc. ("NAREIT"), FFO represents net income (loss) (computed in
accordance with generally accepted accounting principles ("GAAP")), excluding
gains (or losses) from debt restructuring or sales of property, plus
depreciation of real property, and after adjustments for unconsolidated
partnership and joint ventures. The depreciation that is added back in this
calculation is net of the depreciation expense for corporate assets. FFO
should not be considered as an alternative to net income or other measurements
under GAAP as an indicator of operating performance or to cash flows from
operating investing or financial activities as a measure of liquidity. FFO
does not reflect working capital changes, cash expenditures for capital
improvements or principal payments on indebtedness. We believe that FFO is
helpful to investors as a measure of the performance of an equity REIT,
because along with cash flows from operating activities, financing activities
and investing activities, it provides investors with an understanding of our
ability to incur and service debt and make capital expenditures. Compliance
with the NAREIT definition of FFO is voluntary. Accordingly, our calculation
of funds from operations in accordance with the NAREIT definition may be
different than similarly titled measures used by other REITs.
Cash available for distribution ("CAD") is defined as FFO less
capital expenditures funded by operations and straight line rent and interest
payments. We believe that in order to facilitate a clear understanding of our
consolidated historical operating results, FFO and CAD should be examined in
conjunction with net income as presented in the consolidated financial
statements and data included elsewhere in this report.
21
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
FFO and CAD for the three months ended June 30, 2000 and 1999
presented on a historical basis are summarized in the following table:
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 2000 JUNE 30, 1999
---------------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Income before minority interest ........................................ $ 4,319 $ 4,923
Depreciation and amortization for real estate assets ................... $ 4,599 3,942
---------------------------------
Funds from operations (FFO) ............................................ $ 8,918 8,865
Preferred dividends ................................................. (462) (458)
Preferred distributions ............................................. (36) (3)
---------------------------------
FFO available to common stockholders &
OP unit holders ................................................... 8,420 8,404
Adjustments:
Non-cash mortgage interest and rent .................................. (688) (321)
Capital expenditure reserve .......................................... (175) (601)
---------------------------------
Cash available for distribution to common stockholders
and OP unit holders .................................................... $ 7,557 $ 7,482
=================================
</TABLE>
Non-cash mortgage and rent interest revenue represents the difference
between revenue on the Participating Mortgage that we report in accordance
with GAAP and the actual cash payment that we receive. The Participating
Leases generally require the Operating Partnership to reserve annually between
2.0% and 5.0% of the gross golf revenues of the Golf Courses to fund a capital
replacement reserve. The lessees are obligated to fund any capital
expenditures in excess of such amounts.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have not entered into any transactions using derivative commodity
instruments. We are subject to market risk associated with changes in interest
rates. Prior to the expiration of our interest rate swap agreement on March
27, 2000, our interest rate exposure was primarily limited to our $135.9
million of debt outstanding as of that date that was priced at floating
interest rates. As of the date of this filing, we have not entered into a new
interest rate swap agreement; therefore, the total outstanding debt subject to
interest rate exposure is $212.7 million. A 25 basis point movement in the
interest rate on the floating rate debt would result in an approximate
$532,000 annualized increase or decrease in interest expense and cash flows.
The remaining debt is fixed rate debt. Reference is made to Item 2 and Note 5
of Item 1 for additional debt information.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Owners and operators of golf courses are subject to a variety of
legal proceedings arising in the ordinary course of operating a golf course,
including proceedings relating to personal injury and property damage. Such
proceedings are generally brought against the operator of a golf course, but
may also be brought against the owner. The Participating Leases provide that
each Lessee is responsible for claims based on personal injury and property
damage at the Golf Courses which are leased and require each lessee to
maintain insurance for such purposes.
22
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
LITIGATION ARISING THROUGH EVENTS OF DEFAULT
MYSTIC CREEK GOLF COURSE
It is our intention to continue the eviction action that was
automatically stayed by the bankruptcy court on February 25, 2000 as soon as
legally permissible and to seek to have an evidentiary hearing scheduled as
quickly as possible thereafter to determine the date for the lessee to assume
the Participating Lease (by bringing rent current) or reject the Participating
Lease (which would mean a return of the Golf Course to us). The lessee
continues to operate the Golf Course pending the resolution of the pending
action and its bankruptcy. The bankruptcy court has ordered the debtor to pay
us post-petition rent in the amount of $85,000 per month, due by the 25th of
each month, for the months of June through September 2000. The payments for
June and July have been received. Additionally, on July 24, 2000, the court
set the schedule in the adversary proceeding such that discovery will end by
October 24, 2000, and a trial date shall be set for the end of November 2000.
Under our current assumptions, the value of the lessee's collateral securing
the obligations of the defaulting lessee under the Participating Lease is
adequate to cover accrued rent (approximately $990,000 through July 25, 2000)
through such dates. No other material developments have occurred in these
proceedings since the filing of our Quarterly Report on Form 10-Q on May 15,
2000.
OSAGE NATIONAL GOLF CLUB
Discussions with the prior owner of the Golf Course and the lessee to
terminate the lessees' Participating Lease and the lessees' possessory rights
at the Golf Course are ongoing, but in the meantime, we filed an eviction
action against the lessee on May 30, 2000 as a result of the lessees' default
under the Participating Lease. On June 20, 2000, 66,124 OP Units initially
pledged as collateral for the Participating Lease by the prior owner of the
Golf Course were redeemed at a total value of $1,055,190 and applied to past
due rent obligations and other accrued charges. Of this amount, $866,322 was
applied to outstanding rent through June 2000. The balance of $188,779 was
accrued to cover legal fees and other damages associated with these
proceedings. Until the conclusion of these proceedings, no Revenue will be
recognized for this Golf Course subsequent to June 2000. On July 21, 2000, a
judicial hearing took place in Miller County, Missouri, in which the court set
a date for a jury trial on all issues related to the eviction of the lessee
for September 12, 2000. Additionally, at the hearing, the court set a date of
September 5, 2000 for a pretrial conference in which the parties will argue
the issue of the necessity of a jury trial. No other material developments
have occurred in these proceedings since the filing of our Quarterly Report on
Form 10-Q filed on May 15, 2000.
BRENTWOOD GOLF & COUNTRY CLUB
The lessee refused to make the first escrow payment required by the
Order that was entered on March 28, 2000. In response to motions that we filed
to compel enforcement of the escrow order, the court appointed a Receiver to
review the financial situation at the Golf Course and to determine the
priority of the payables and rent at the Golf Course. The Receiver filed his
report on July 25, 2000 and recommended, among other things, that the lessees'
payment of attorney's fees and the management fee owed to Total Golf, Inc.,
operated by Jim Dewling, should be subordinated to the payment of rent. We and
the lessee are currently objecting to the report of the Receiver. We and the
lessee have scheduled depositions and each party is in the process of
obtaining and satisfying discovery requests. Additionally, on June 20, 2000,
24,482 OP Units initially pledged as collateral for the Participating Lease by
the prior owner of the Golf Course were redeemed for a total value of
$390,649. This amount plus $343,749, the proceeds from the redemption of two
certificates of deposit also pledged as collateral for the lessee's
obligations under the Participating Lease which were liquidated on June 14,
2000, were applied to outstanding rent through May 2000, which totaled
$675,415. The balance of $58,978 was accrued to cover legal fees associated
with these proceedings. Until the conclusion of these proceedings, no Revenue
will be recognized for this Golf Course subsequent to May 2000. No other
material developments have occurred in these proceedings since the filing of
our Quarterly Report on Form 10-Q on May 15, 2000.
23
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
PALM DESERT COUNTRY CLUB
On April 20, 2000, we declared an event of default under the
Participating Lease as a result of the lessee's failure to timely pay rent.
This default was cured on May 15, 2000 when the lessee paid all outstanding
rent due. On June 20, 2000 we again declared an event of default under the
Participating Lease a result of the lessee's failure to timely pay rent. We
are in the process of pursuing our legal rights against the lessee and the
collateral securing the lessee's obligations under the Participating Lease.
The lessee continues to operate the Golf Course pending a resolution to our
asserted default. Under our current assumptions, the value of the lessee's
collateral (32,986 OP Units with a current estimated value of approximately
$523,000) securing the obligations of the defaulting lessee under the
Participating Lease is adequate to cover accrued rent of approximately
$185,000 through July 25, 2000, future accrued rent through December 2000 of
approximately $295,000 and legal fees of approximately $43,000.
TIERRA DEL SOL GOLF CLUB
We have been operating this Golf Course since February 7, 2000 when
the lessee was evicted and we took possession. As of the date of this filing,
we have not yet elected to pursue any of the options available to us, such as
(i) re-letting the Golf Course, (ii) entering into a management agreement
with a more experienced golf operator than the original lessee, or (iii)
potentially selling the Golf Course. OP Units initially pledged as collateral
for the lessees' performance of its obligations under the Participating Lease
by the former lessee of the Golf Course have been redeemed and were applied
to past due rent obligations and other accrued charges. The remaining
collateral balance of $184,000 (equivalent to approximately five months of
base rent) was recognized as Other Income in the first quarter of 2000. The
90-day grace period allowed by the Internal Revenue Service during which the
Gross Golf Course Revenues are qualifying income for REIT tax purposes
expired on May 6, 2000; therefore, Gross Golf Course Revenues subsequent to
this date will be disqualified for REIT tax purposes.
ITEM 2. CHANGES IN SECURITIES
RECENT SALES OF UNREGISTERED SECURITIES
On January 30, 2000, the Compensation Committee of our Board awarded
W. Bradley Blair, II, and Scott D. Peters, 35,000 and 20,000 shares,
respectively, of restricted common stock pursuant to GTA's 1998 Stock-Based
Incentive Plan. Such shares were sold for their aggregate par value of
$550.00 ($.01 per share). GTA subsequently registered the re-sale of these
shares on Form S-8. These issuances were effected in reliance upon an
exemption from registration under Section 4(2) of the Securities Act as a
transaction not involving a public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of GTA was held on May 22, 2000.
The matters voted upon at the meeting were: (i) the re-election of three
directors to serve until the 2003 annual meeting of stockholders; (ii) the
election of Scott D. Peters as a director to fill the position vacated by
David Dick Joseph in November of 1999 and to serve until the 2001 annual
meeting of stockholders.
The results of the voting for re-election election of Mr. Larry D.
Young, Fred W. Reams and Mr. Edwards L. Wax and the election of Mr. Peters to
the Board of Directors are as follows:
<TABLE>
<CAPTION>
Authority
Director Shares Cast For Withheld
-------- --------------- ---------
<S> <C> <C>
Larry D. Young 5,766,708 1,653,580
Fred W. Reams 5,767,329 1,652,959
Edward L. Wax 5,766,508 1,653,780
Authority
Director Shares Cast For Withheld
-------- --------------- ---------
Scott D. Peters 6,527,581 892,707
There were no broker non-votes.
</TABLE>
24
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS
In addition to the above directors, the following directors will
continue in office:
<TABLE>
<CAPTION>
Term
Name Expires
---- -------
<S> <C>
Mr. W. Bradley Blair, II 2002
Mr. Raymond V. Jones 2002
Mr. Roy C. Chapman 2001
</TABLE>
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are part of this quarterly report on
Form 10-Q for the quarterly period ended June 30, 2000 (and are numbered
in accordance with Item 601 of Regulation S-K). Items marked with an
asterisk (*) are filed herewith.
25
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
NO. DESCRIPTION
--- -----------
<S> <C>
3.1.1 Articles of Amendment and Restatement of the Company, as filed
with the State Department of Assessments and Taxation of
Maryland on January 31, 1997, (previously filed as Exhibit
3.1A to the Company's Registration Statement on Form S-11
(Commission File No. 333-15965) Amendment No. 2 (filed January
30, 1997) and incorporated herein by reference).
3.1.2 Articles of Amendment of the Company, as filed with the State
Department of Assessments and Taxation of Maryland on June 9,
1998 (previously filed as Exhibit 3.2B to the Company's
Quarterly Report on Form 10-Q, filed August 14, 1998 and
incorporated herein by reference).
3.2.1 Articles Supplementary of the Company relating to the Series A
Preferred Stock, as filed with the State Department of
Assessments and Taxation of the State of Maryland on April 2,
1999 (previously filed as Exhibit 3.1 to the Company's Current
Report on Form 8-K, filed April 13, 1999, and incorporated
herein by reference).
3.2.2 Articles Supplementary of the Company relating to the Series B
Junior Participating Preferred Stock, as filed with the State
Department of Assessments and Taxation of the State of
Maryland on August 27, 1999 (previously filed as Exhibit 3.1
to the Company's Current Report on Form 8-K, filed August 30,
1999, and incorporated herein by reference).
3.3 Bylaws of the Company, as amended by the Board of Directors on
February 16, 1998 and as currently in effect (previously filed
as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q,
filed May 15, 1998 and incorporated herein by reference).
4.1 Form of Share Certificate for the Common Stock (previously
filed as Exhibit 4.3 to the Company's Current Report on Form
8-K, filed August 30, 1999, and incorporated herein by
reference).
4.2 Form of Share Certificate for the Series A Preferred Stock
(previously filed as Exhibit 3.2 to the Company's Current
Report on Form 8-K, filed April 13, 1999, and incorporated
herein by reference).
4.3 Shareholder Rights Agreement, by and between the Company and
ChaseMellon Shareholder Services, L.L.C., as rights agent,
dated August 24, 1999 (previously filed as Exhibit 4.1 to the
Company's Current Report on Form 8-K, filed August 30, 1999,
and incorporated herein by reference).
10.1.1 First Amended and Restated Agreement of Limited Partnership
(the "Partnership Agreement") of Golf Trust of America, L.P.
(the "Operating Partnership"), dated February 12, 1997
(previously filed as Exhibit 10.1 to the Company's Annual
Report on Form 10-K, filed March 31, 1997, and incorporated
herein by reference).
10.1.2 First Amendment to the Partnership Agreement, dated as of
February 1, 1998 (previously filed as Exhibit 10.1.2 to the
Company's Annual Report on Form 10-K, filed March 31, 1998,
and incorporated herein by reference).
10.1.3 Exhibit A to the Partnership Agreement (Schedule of
Partnership Interests), as revised through March 22, 2000
(previously filed as Exhibit 10.1.3 to the Company's Annual
Report on Form 10-K, filed March 30, 2000, and incorporated
herein by reference).
26
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
10.1.4 Designation of Class B Common OP Units of the Operating
Partnership, dated February 1, 1998, which has been added as
the first entry in Exhibit D to the Partnership Agreement
(included within the First Amendment to the Partnership
Agreement, which was previously filed as Exhibit 10.1.2 to the
Company's Annual Report on Form 10-K, filed March 31, 1998,
and incorporated herein by reference).
10.1.5 Designation of Series A Preferred OP Units of the Operating
Partnership, dated April 2, 1999, which has been added to
Exhibit D to the Partnership Agreement (previously filed as
Exhibit 10.3 to the Company's Current Report on Form 8-K,
filed April 13, 1999, and incorporated herein by reference).
10.1.6 Designation of Series B Preferred OP Units of the Operating
Partnership, dated May 11, 1999, which has been added to
Exhibit D to the Partnership Agreement (previously filed as
Exhibit 10.1.6 to the Company's Annual Report on Form 10-K,
filed March 30, 2000, and incorporated herein by reference).
10.1.7 Designation of Series C Preferred OP Units of the Operating
Partnership, dated July 28, 1999, which has been added to
Exhibit D to the Partnership Agreement (previously filed as
Exhibit 10.1.7 to the Company's Annual Report on Form 10-K,
filed March 30, 2000, and incorporated herein by reference).
10.2.1 Credit Agreement, dated as of June 20, 1997, by and among Golf
Trust of America, L.P., as Borrower, Golf Trust of America,
Inc., GTA GP, Inc. and GTA LP, Inc., as Guarantors, the
Lenders referred to therein, and NationsBank N.A., as Agent
(previously filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K, dated June 20, 1997 and filed August 12,
1997, and incorporated herein by reference).
10.2.2 Amended and Restated Credit Agreement, dated as of July 8,
1998, by and among Golf Trust of America, L.P., as Borrower,
Golf Trust of America, Inc., GTA GP, Inc. and GTA LP, Inc., as
Guarantors, the Lenders referred to therein, and NationsBank
N.A., as Agent (previously filed as Exhibit 10.2.2 to the
Company's Amended Annual Report on Form 10-K/A, filed April 1,
1999, and incorporated herein by reference).
10.2.3 Amended and Restated Credit Agreement, dated as of March 31,
1999, by and among Golf Trust of America, L.P., as Borrower,
Golf Trust of America, Inc., GTA GP, Inc. and GTA LP, Inc., as
Guarantors, the Lenders referred to therein, NationsBank,
N.A., as Administrative Agent, First Union National Bank as
Syndication Agent, and BankBoston, N.A., as Documentation
Agent (previously filed as Exhibit 10.2.3 to the Company's
Annual Report on Form 10-K, filed March 30, 2000, and
incorporated herein by reference).
10.3 Credit Agreement, dated as of March 31, 1999, by and among
Golf Trust of America, L.P., as Borrower, Golf Trust of
America, Inc., GTA GP, Inc. and GTA LP, Inc., as Guarantors,
the Lenders referred to therein, and NationsBank, N.A., as
Administrative Agent for the Lenders (previously filed as
Exhibit 10.3 to the Company's Annual Report on Form 10-K,
filed March 30, 2000, and incorporated herein by reference).
10.4 Loan Agreement, dated as of June 20, 1997, by and between Golf
Host Resorts, Inc., as Borrower, and Golf Trust of America,
L.P., as Lender (previously filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K, dated June 20, 1997 and
filed August 12, 1997, and incorporated herein by reference).
10.5 1997 Non-Employee Directors' Plan of the Company (previously
filed as Exhibit 10.7 to the Company's Registration Statement
on Form S-11 (Commission File No. 333-15965) Amendment No. 1
(filed January 15, 1997) and incorporated herein by
reference).
27
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
10.6 1997 Stock Incentive Plan (the "Original 1997 Plan") of the
Company (previously filed as Exhibit 10.6 to the Company's
Registration Statement on Form S-11 (Commission File No.
333-15965) Amendment No. 1 (filed January 15, 1997) and
incorporated herein by reference).
10.7 1997 Stock-Based Incentive Plan of the Company (the "New 1997
Plan") (previously filed as Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q (Commission File No. 000-22091),
filed August 15, 1997, and incorporated herein by reference).
10.8 Form of Nonqualified Stock Option Agreement for use under the
New 1997 Plan (previously filed as Exhibit 10.4 to the
Company's Quarterly Report on Form 10-Q (Commission File No.
000-22091), filed August 15, 1997, and incorporated herein by
reference).
10.9 Form of Employee Incentive Stock Option Agreement for use
under the New 1997 Plan (previously filed as Exhibit 10.5 to
the Company's Quarterly Report on Form 10-Q (Commission File
No. 000-22091), filed August 15, 1997, and incorporated herein
by reference).
10.10 General Provisions Applicable to Restricted Stock Awards
Granted Under the New 1997 Plan (previously filed as Exhibit
10.14 to the Company's Registration Statement on Form S-11
(Commission File No. 333-36847), dated September 30, 1997 and
filed as of October 1, 1997, and incorporated herein by
reference).
10.11 Form of Restricted Stock Award Agreement for use under the New
1997 Plan (previously filed as Exhibit 10.15 to the Company's
Registration Statement on Form S-11 (Commission File No.
333-36847), dated September 30, 1997 and filed as of October
1, 1997, and incorporated herein by reference).
10.12 1998 Stock-Based Incentive Plan of the Company (previously
filed as Exhibit A to the Company's definitive Proxy
Statement, dated April 1, 1999 and filed March 29, 1999, and
incorporated herein by reference).
10.13 Employee Stock Purchase Plan of the Company (previously filed
as Exhibit 4.1 to the Company's Registration Statement on Form
S-8 (Commission File No. 333-46659), filed February 20, 1998,
and incorporated herein by reference).
10.14 Subscription Agreement for use with the Employee Stock
Purchase Plan (previously filed as Exhibit 4.2 to the
Company's Registration Statement on Form S-8 (Commission File
No. 333-46659), filed February 20, 1998, and incorporated
herein by reference).
10.15 First Amended and Restated Employment Agreement between the
Company and W. Bradley Blair, II, dated November 7, 1999
(previously filed as Exhibit 10.15 to the Company's Annual
Report on Form 10-K, filed March 30, 2000, and incorporated
herein by reference).
10.16 Second Amended and Restated Employment Agreement between the
Company and Scott D. Peters, dated November 7, 1999
(previously filed as Exhibit 10.16 to the Company's Annual
Report on Form 10-K, filed March 30, 2000, and incorporated
herein by reference).
10.17 Stock Purchase Agreement, dated April 2, 1999, by and among
Golf Trust of America, Inc., Golf Trust of America, L.P., GTA
GP, Inc., GTA LP, Inc. and AEW Targeted Securities Fund, L.P.
(previously filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K, filed April 13, 1999, and incorporated
herein by reference).
10.18 Registration Rights Agreement, dated April 2, 1999, by and
between Golf Trust of America, Inc. and AEW Targeted
Securities Fund, L.P. (previously filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K, filed April 13, 1999,
and incorporated herein by reference).
28
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
21.1 List of Subsidiaries of the Company (previously filed as
Exhibit 21.1 to the Company's Annual Report on Form 10-K,
filed March 30, 2000 and incorporated herein by reference).
27.1* Financial Data Schedule
</TABLE>
29
<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2000
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.
GOLF TRUST OF AMERICA, INC., registrant
By: /s/ W. Bradley Blair, II
----------------------------------------
W. Bradley Blair, II
President and Chief Executive Officer
/s/ W. Bradley Blair, II 8/14/00
----------------------------------------- -------
W. Bradley Blair, II Date
President, Chief Executive Officer and
Chairman of the Board of Directors
/s/ Scott D. Peters 8/14/00
----------------------------------------- -------
Scott D. Peters Date
Senior Vice President and
Chief Financial Officer
30
<PAGE>
GOLF TRUST OF AMERICA, INC.
EXHIBIT INDEX
Pursuant to Item 601(a)(2) of Regulation S-K, this exhibit index
immediately precedes the exhibits.
The following exhibits are part of this Quarterly Report on Form 10-Q
(and are numbered in accordance with Item 601 of Regulation S-K). Items marked
with an asterisk (*) are filed herewith.
<TABLE>
<CAPTION>
NO. DESCRIPTION
--- -----------
<S> <C>
3.1.1 Articles of Amendment and Restatement of the Company, as filed
with the State Department of Assessments and Taxation of
Maryland on January 31, 1997, (previously filed as Exhibit
3.1A to the Company's Registration Statement on Form S-11
(Commission File No. 333-15965) Amendment No. 2 (filed January
30, 1997) and incorporated herein by reference).
3.1.3 Articles of Amendment of the Company, as filed with the State
Department of Assessments and Taxation of Maryland on June 9,
1998 (previously filed as Exhibit 3.2B to the Company's
Quarterly Report on Form 10-Q, filed August 14, 1998 and
incorporated herein by reference).
3.2.1 Articles Supplementary of the Company relating to the Series A
Preferred Stock, as filed with the State Department of
Assessments and Taxation of the State of Maryland on April 2,
1999 (previously filed as Exhibit 3.1 to the Company's Current
Report on Form 8-K, filed April 13, 1999, and incorporated
herein by reference).
3.2.2 Articles Supplementary of the Company relating to the Series B
Junior Participating Preferred Stock, as filed with the State
Department of Assessments and Taxation of the State of
Maryland on August 27, 1999 (previously filed as Exhibit 3.1
to the Company's Current Report on Form 8-K, filed August 30,
1999, and incorporated herein by reference).
3.3 Bylaws of the Company, as amended by the Board of Directors on
February 16, 1998 and as currently in effect (previously filed
as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q,
filed May 15, 1998 and incorporated herein by reference).
4.1 Form of Share Certificate for the Common Stock (previously
filed as Exhibit 4.3 to the Company's Current Report on Form
8-K, filed August 30, 1999, and incorporated herein by
reference).
4.2 Form of Share Certificate for the Series A Preferred Stock
(previously filed as Exhibit 3.2 to the Company's Current
Report on Form 8-K, filed April 13, 1999, and incorporated
herein by reference).
4.3 Shareholder Rights Agreement, by and between the Company and
ChaseMellon Shareholder Services, L.L.C., as rights agent,
dated August 24, 1999 (previously filed as Exhibit 4.1 to the
Company's Current Report on Form 8-K, filed August 30, 1999,
and incorporated herein by reference).
10.1.1 First Amended and Restated Agreement of Limited Partnership
(the "Partnership Agreement") of Golf Trust of America, L.P.
(the "Operating Partnership"), dated February 12, 1997
(previously filed as Exhibit 10.1 to the Company's Annual
Report on Form 10-K, filed March 31, 1997, and incorporated
herein by reference).
10.1.2 First Amendment to the Partnership Agreement, dated as of
February 1, 1998 (previously filed as Exhibit 10.1.2 to the
Company's Annual Report on Form 10-K, filed March 31, 1998,
and incorporated herein by reference).
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GOLF TRUST OF AMERICA, INC.
10.1.3 Exhibit A to the Partnership Agreement (Schedule of
Partnership Interests), as revised through March 22, 2000
(previously filed as Exhibit 10.1.3 to the Company's Annual
Report on Form 10-K, filed March 30, 2000, and incorporated
herein by reference).
10.1.4 Designation of Class B Common OP Units of the Operating
Partnership, dated February 1, 1998, which has been added as
the first entry in Exhibit D to the Partnership Agreement
(included within the First Amendment to the Partnership
Agreement, which was previously filed as Exhibit 10.1.2 to the
Company's Annual Report on Form 10-K, filed March 31, 1998,
and incorporated herein by reference).
10.1.5 Designation of Series A Preferred OP Units of the Operating
Partnership, dated April 2, 1999, which has been added to
Exhibit D to the Partnership Agreement (previously filed as
Exhibit 10.3 to the Company's Current Report on Form 8-K,
filed April 13, 1999, and incorporated herein by reference).
10.1.6 Designation of Series B Preferred OP Units of the Operating
Partnership, dated May 11, 1999, which has been added to
Exhibit D to the Partnership Agreement (previously filed as
Exhibit 10.1.6 to the Company's Annual Report on Form 10-K,
filed March 30, 2000, and incorporated herein by reference).
10.1.7 Designation of Series C Preferred OP Units of the Operating
Partnership, dated July 28, 1999, which has been added to
Exhibit D to the Partnership Agreement (previously filed as
Exhibit 10.1.7 to the Company's Annual Report on Form 10-K,
filed March 30, 2000, and incorporated herein by reference).
10.2.1 Credit Agreement, dated as of June 20, 1997, by and among Golf
Trust of America, L.P., as Borrower, Golf Trust of America,
Inc., GTA GP, Inc. and GTA LP, Inc., as Guarantors, the
Lenders referred to therein, and NationsBank N.A., as Agent
(previously filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K, dated June 20, 1997 and filed August 12,
1997, and incorporated herein by reference).
10.2.2 Amended and Restated Credit Agreement, dated as of July 8,
1998, by and among Golf Trust of America, L.P., as Borrower,
Golf Trust of America, Inc., GTA GP, Inc. and GTA LP, Inc., as
Guarantors, the Lenders referred to therein, and NationsBank
N.A., as Agent (previously filed as Exhibit 10.2.2 to the
Company's Amended Annual Report on Form 10-K/A, filed April 1,
1999, and incorporated herein by reference).
10.2.3 Amended and Restated Credit Agreement, dated as of March 31,
1999, by and among Golf Trust of America, L.P., as Borrower,
Golf Trust of America, Inc., GTA GP, Inc. and GTA LP, Inc., as
Guarantors, the Lenders referred to therein, NationsBank,
N.A., as Administrative Agent, First Union National Bank as
Syndication Agent, and BankBoston, N.A., as Documentation
Agent (previously filed as Exhibit 10.2.3 to the Company's
Annual Report on Form 10-K, filed March 30, 2000, and
incorporated herein by reference).
10.3 Credit Agreement, dated as of March 31, 1999, by and among
Golf Trust of America, L.P., as Borrower, Golf Trust of
America, Inc., GTA GP, Inc. and GTA LP, Inc., as Guarantors,
the Lenders referred to therein, and NationsBank, N.A., as
Administrative Agent for the Lenders (previously filed as
Exhibit 10.3 to the Company's Annual Report on Form 10-K,
filed March 30, 2000, and incorporated herein by reference).
10.4 Loan Agreement, dated as of June 20, 1997, by and between Golf
Host Resorts, Inc., as Borrower, and Golf Trust of America,
L.P., as Lender (previously filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K, dated June 20, 1997 and
filed August 12, 1997, and incorporated herein by reference).
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GOLF TRUST OF AMERICA, INC.
10.5 1997 Non-Employee Directors' Plan of the Company (previously
filed as Exhibit 10.7 to the Company's Registration Statement
on Form S-11 (Commission File No. 333-15965) Amendment No. 1
(filed January 15, 1997) and incorporated herein by
reference).
10.6 1997 Stock Incentive Plan (the "Original 1997 Plan") of the
Company (previously filed as Exhibit 10.6 to the Company's
Registration Statement on Form S-11 (Commission File No.
333-15965) Amendment No. 1 (filed January 15, 1997) and
incorporated herein by reference).
10.7 1997 Stock-Based Incentive Plan of the Company (the "New 1997
Plan") (previously filed as Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q (Commission File No. 000-22091),
filed August 15, 1997, and incorporated herein by reference).
10.8 Form of Nonqualified Stock Option Agreement for use under the
New 1997 Plan (previously filed as Exhibit 10.4 to the
Company's Quarterly Report on Form 10-Q (Commission File No.
000-22091), filed August 15, 1997, and incorporated herein by
reference).
10.9 Form of Employee Incentive Stock Option Agreement for use
under the New 1997 Plan (previously filed as Exhibit 10.5 to
the Company's Quarterly Report on Form 10-Q (Commission File
No. 000-22091), filed August 15, 1997, and incorporated herein
by reference).
10.10 General Provisions Applicable to Restricted Stock Awards
Granted Under the New 1997 Plan (previously filed as Exhibit
10.14 to the Company's Registration Statement on Form S-11
(Commission File No. 333-36847), dated September 30, 1997 and
filed as of October 1, 1997, and incorporated herein by
reference).
10.11 Form of Restricted Stock Award Agreement for use under the New
1997 Plan (previously filed as Exhibit 10.15 to the Company's
Registration Statement on Form S-11 (Commission File No.
333-36847), dated September 30, 1997 and filed as of October
1, 1997, and incorporated herein by reference).
10.12 1998 Stock-Based Incentive Plan of the Company (previously
filed as Exhibit A to the Company's definitive Proxy
Statement, dated April 1, 1999 and filed March 29, 1999, and
incorporated herein by reference).
10.13 Employee Stock Purchase Plan of the Company (previously filed
as Exhibit 4.1 to the Company's Registration Statement on Form
S-8 (Commission File No. 333-46659), filed February 20, 1998,
and incorporated herein by reference).
10.14 Subscription Agreement for use with the Employee Stock
Purchase Plan (previously filed as Exhibit 4.2 to the
Company's Registration Statement on Form S-8 (Commission File
No. 333-46659), filed February 20, 1998, and incorporated
herein by reference).
10.15 First Amended and Restated Employment Agreement between the
Company and W. Bradley Blair, II, dated November 7, 1999
(previously filed as Exhibit 10.15 to the Company's Annual
Report on Form 10-K, filed March 30, 2000, and incorporated
herein by reference).
10.16 Second Amended and Restated Employment Agreement between the
Company and Scott D. Peters, dated November 7, 1999
(previously filed as Exhibit 10.16 to the Company's Annual
Report on Form 10-K, filed March 30, 2000, and incorporated
herein by reference).
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<PAGE>
GOLF TRUST OF AMERICA, INC.
10.17 Stock Purchase Agreement, dated April 2, 1999, by and among
Golf Trust of America, Inc., Golf Trust of America, L.P., GTA
GP, Inc., GTA LP, Inc. and AEW Targeted Securities Fund, L.P.
(previously filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K, filed April 13, 1999, and incorporated
herein by reference).
10.18 Registration Rights Agreement, dated April 2, 1999, by and
between Golf Trust of America, Inc. and AEW Targeted
Securities Fund, L.P. (previously filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K, filed April 13, 1999,
and incorporated herein by reference).
21.1 List of Subsidiaries of the Company (previously filed as
Exhibit 21.1 to the Company's Annual Report on Form 10-K,
filed March 30, 2000 and incorporated herein by reference).
27.1* Financial Data Schedule
</TABLE>
34
