UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 2)
CURRENT REPORT
-----------------------------------------------
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 22, 1998
OCWEN ASSET INVESTMENT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 001-14043 65-0736120
(STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION)
THE FORUM, SUITE 1000
1675 PALM BEACH LAKES BOULEVARD, WEST PALM BEACH, FLORIDA 33401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(561) 681-8000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) (i) Financial statements related to the following properties are
incorporated herein by reference as Exhibit 99.1:
(1) 841 Prudential Drive
(2) 450 Sansome Street
(3) Cortez Plaza
(4) Bayers Road Shopping Centre
(ii) Supplemental financial data related to the operations of the
following properties is incorporated herein by reference as
Exhibit 99.2:
(1) 841 Prudential Drive
(2) Ten United Nations Plaza
(3) 690 Market Street
(4) Park Center 1
(iii) Financial statements related to Ten United Nations Plaza are
attached hereto, and incorporated herein by reference, as
Exhibit 99.3
(b) Pro forma financial information related to the properties listed under
Item 7(a)(i) is attached hereto, and incorporated herein by reference,
as Exhibit 99.4.
(c) Exhibits
The following exhibits are filed as part of this report:
2.1 Purchase and Sale Agreement dated June 9, 1998, between
Prudential Insurance Co. of America and Ocwen Capital
Corporation (1)
2.2 Assignment and Assumption Agreement dated July 22, 1998,
between Ocwen Capital Corporation and OAIC Jacksonville, LLC
(3)
10.1 Amended and Restated Loan Agreement by and among, inter alia,
OAIC California Partnership, L.P., OAIC California Partnership
II, L.P., Salomon Brothers Realty Corp. and LaSalle National
Bank, dated as of June 10, 1998 (2)
99.1 Financial statements of certain properties acquired (3)
99.2 Supplemental financial data (3)
99.3 Pro forma financial information
99.4 Financial statements related to Ten United Nations Plaza
================================================================================
(1) Incorporated by reference to the Current Report on Form
8-K filed by the Company with the Commission on August 6,
1998.
(2) Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June
30, 1998.
(3) Incorporated by reference to the current Report on Form
8-K/A dated July 22, 1998 and filed by the Company with
the Commission on September 15, 1998.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
OCWEN ASSET INVESTMENT CORP.
(Registrant)
By: /s/ MARK S. ZEIDMAN
-----------------------------------------------------
Mark S. Zeidman
Senior Vice President and Chief Financial Officer
3
Date: January 27, 1999
<PAGE>
INDEX TO EXHIBITS FILED HEREWITH
Exhibit Description Page
------- ----------- ----
99.3 PRO FORMA FINANCIAL INFORMATION.
--------------------------------
(1) Unaudited Condensed Pro Forma Consolidated 6
Statements of Operations for the Period May
14, 1997 to December 31, 1997.
8
(2) Unaudited Condensed Pro Forma Consolidated
Statements of Operations for the Nine Months
Ended September 30, 1998.
10
(3) Unaudited Condensed Pro Forma Consolidated
Statements of Operations for the Period
October 1, 1997 to September 30, 1998.
99.4 TEN UNITED NATIONS PLAZA 12
------------------------
Statements of Revenue and Certain Expenses For
The Year Ended December 31,1996 and the Six
Months Ended June 30, 1997
4
EXHIBIT 99.3
OCWEN ASSET INVESTMENT CORP.
PRO FORMA FINANCIAL INFORMATION
5
<PAGE>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD MAY 14, 1997 TO DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
The following unaudited pro forma condensed consolidated statements of
operations are presented as if each of the following property acquisitions
occurred on May 14, 1997. The pro forma condensed consolidated statements of
operations should be read in conjunction with the Company's historical financial
statements and notes thereto.
The Company accounts for property acquisitions utilizing purchase accounting
under generally accepted accounting principles.
The unaudited pro forma condensed consolidated financial statements of
operations are not necessarily indicative of what the actual results of
operations of the company would have been assuming they had been completed as
set forth above, nor does it purport to represent the Company's results of
operations for future periods.
<TABLE>
<CAPTION>
Historical (1)
-------------------------------------------- Other Pro Forma Total Pro
Company Bush Street Prudential 10 UN Plaza Acquisitions(2) Adjustments(3) Forma
-------- ----------- ---------- ----------- --------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income .................. $ 13,462 $ -- $ -- $ -- $ -- $ -- $ 13,462
Interest expense ................. -- -- -- -- -- 6,461 6,461
-------- -------- -------- -------- -------- -------- --------
Net interest income (expense) before
Provision for loan losses ...... 13,462 -- -- -- -- (6,461) 7,001
Provision for loan losses ........ -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net interest income (expense) after
Provision for loan losses ...... 13,462 -- -- -- -- (6,461) 7,001
Real estate-operating income ..... 2,223 5,196 65 385 6,214 -- 14,083
Real estate-operating expenses ... 728 1,936 2,992 177 2,995 2,505 11,333
-------- -------- -------- -------- -------- -------- --------
Real estate-net operating income.. 1,495 3,260 (2,927) 208 3,219 (2,505) 2,750
Other expenses ................... 3,155 -- -- -- -- 1,029 4,184
(Loss) gain on securities held
for trading .................... -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
(Loss) income before minority
Interest ....................... 11,802 3,260 (2,927) 208 3,219 (9,995) 5,567
Minority interest in net (income)
loss of operating partnership .. (9) -- -- -- -- 3(4) (6)
-------- -------- -------- -------- -------- -------- --------
Net income (loss) ................ $ 11,793 $ 3,260 $ (2,927) $ 208 $ 3,219 $ (9,992) $ 5,561
======== ======== ======== ======== ======== ======== ========
Funds from operations ............ $ 11,972 $ 8,245
======== ========
</TABLE>
6
<PAGE>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD MAY 14, 1997 TO DECEMBER 31, 1997
(1) Historical results are based on the actual results of operations from
May 14, 1997 through December 31, 1997. The results of operations from
the acquisition date are included in the Company column.
(2) The following table summarizes the "Other Acquisitions":
<TABLE>
<CAPTION>
Acquisition Operating Net
Property Name Date Purchase Price Revenues Expenses Income
-------------------------------- ---------------- ----------------- ----------------- ---------------- -----------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
450 Sansome Street.......... 9/23/97 17,200 729 407 322
Cortez Plaza................ 11/10/97 19,050 1,350 421 929
Bayers Road Shopping Centre. 4/9/98 16,311 4,135 2,167 1,968
----------- ----------- -----------
6,214 2,995 3,219
(3) Pro forma adjustments:
Acquisition (a) (b) (c)
Property Name Date Interest Expense Depreciation Expense Other Expense
---------------- -------------------- ---------------------- -------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
10 UN Plaza ................. 9/3/97 $ -- $ 73 $ 34
450 Sansome Street .......... 9/23/97 -- 135 64
Cortez Plaza ................ 11/10/97 -- 258 101
221 Bush Street ............. 4/8/98 4,697 1,300 626
Bayers Road Shopping Centre . 4/9/98 -- 266 --
841 Prudential Drive ........ 7/7/98 1,764 473 204
----------------- ----------------- -----------------
Total $ 6,461 $ 2,505 $ 1,029
================= ================= =================
</TABLE>
(a) Interest expense is based on the following assumptions:
221 BUSH STREET
---------------
Salomon Brothers Realty Corp. $75.0 million loan at LIBOR plus
175 basis points (7.44 percent at April 8, 1998) and from
$25.2 million of borrowings from other sources at
approximately the same rate. If LIBOR rate were to change by
12.5 basis points, interest expense would change approximately
$123,000 during a one-year period.
841 PRUDENTIAL DRIVE
--------------------
Salomon Brothers Realty Corp. $24.1 million loan at LIBOR plus
175 basis points (7.41 percent at July 22, 1998) and from $8.6
million of borrowings from other sources at 11.50 percent. If
LIBOR rate were to change by 12.5 basis points, interest
expense would change approximately $30,200 during a one-year
period.
(b) Depreciation expense is based on a 39 year useful life.
(c) Other expense represents management fees paid to Ocwen Capital
Corporation. This fee is calculated as .25 percent of average
invested assets per quarter.
(4) Minority interest in net (income) loss of the operating partnership,
which includes historical results for Bush Street, 841 Prudential
Drive, 10 UN Plaza, and the other acquisitions, as well as the pro
forma adjustments, is calculated by using the weighted average minority
interest percentage for the period May 14, 1997 through December 31,
1997.
7
<PAGE>
<TABLE>
<CAPTION>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
Historical (1)
---------------------------------------------- Other Pro Forma Total Pro
Company Bush Street Prudential 10 Un Plaza Acquisitions(2) Adjustments(3) Forma
-------- ----------- ---------- ----------- --------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income .................... $ 43,088 $ -- $ -- $ -- $ -- $ -- $ 43,088
Interest expense ................... 16,838 -- -- -- -- 3,615 20,453
-------- -------- -------- --------- -------- -------- --------
Net interest income (expense) before
Provision for loan losses ........ 26,250 -- -- -- -- (3,615) 22,635
Provision for loan losses .......... 557 -- -- -- -- -- 557
-------- -------- -------- --------- -------- -------- --------
Net interest income (expense) after
Provision for loan losses ........ 25,693 -- -- -- -- (3,615) 22,078
Real estate-operating income ....... 14,613 2,417 60 -- 1,159 18,249
Real estate-operating expenses ..... 13,521 741 2,483 -- 668 1,102 18,515
-------- -------- -------- --------- -------- -------- --------
Real estate-net operating income.... 1,092 1,676 (2,423) -- 491 (1,102) (265)
Other expenses ..................... 6,573 -- -- -- -- 518 7,091
(Loss) gain on securities held
for trading ...................... 32,723 -- -- -- -- -- 32,723
-------- -------- -------- --------- -------- -------- --------
(Loss) income before minority
Interest ......................... (12,511) 1,676 (2,423) -- 491 (5,235) (18,001)
Minority interest in net (income)
loss of operating partnership .... 399 -- -- -- -- 297(4) 696
-------- -------- -------- --------- -------- -------- --------
Net income (loss) before
extraordinary items .............. (12,112) 1,676 (2,423) -- 491 (4,938) (17,306)
Extraordinary gain on repurchase
of debt .......................... 615 -- -- -- -- 615
-------- -------- -------- --------- -------- -------- --------
Net (loss) income .................. $(11,497) $ 1,676 $ (2,423) $ -- $ 491 $ (4,938) $(16,691)
======== ======== ======== ========= ======== ======== ========
Funds from operations .............. $ 4,068 $ (24)
======== ========
</TABLE>
8
<PAGE>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD JANUARY 1, 1998 TO SEPTEMBER 30, 1998
(1) Historical results are based on the actual results of operations for
the nine month period form January 1, 1998 through September 30, 1998.
The results of operations from this property are included in the
Company column.
(2) The following table summarizes the "other acquisitions":
<TABLE>
<CAPTION>
Operating Net
Property Name Acquisition Date Purchase Price Revenues Expenses Income
-------------------------------- ----------------- --------------- ------------- --------------- ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
450 Sansome Street.......... 9/23/97 17,200
Cortez Plaza................ 11/10/97 19,050
Bayers Road Shopping Centre. 4/9/98 16,311 1,159 668 491
----------- ----------- ----------
1,159 668 491
</TABLE>
<TABLE>
<CAPTION>
(3) Pro forma adjustments:
Acquisition (a) (b) (c)
Property Name Date Interest Expense Depreciation Expense Other Expense
---------------- -------------------- ---------------------- -----------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
450 Sansome Street ......... 9/23/97 -- -- --
Cortez Plaza ............... 11/10/97 -- -- --
221 Bush Street ............ 4/8/98 2,048 564 271
Bayers Road Shopping Centre. 4/9/98 -- 114 64
841 Prudential Drive ....... 7/7/98 1,567 424 183
----------------- ----------------- -------------
Total $ 3,615 $ 1,102 $ 518
================= ================= =============
</TABLE>
(a) Interest expense is based on the following assumptions:
221 BUSH STREET
---------------
Salomon Brothers Realty Corp. $75.0 million loan at LIBOR plus
175 basis points (7.44 percent at April 8, 1998) and from
$25.2 million of borrowings from other sources at
approximately the same rate. If LIBOR rate were to change by
12.5 basis points, interest expense would change approximately
$123,000 during a one-year period.
841 PRUDENTIAL DRIVE
--------------------
Salomon Brothers Realty Corp. $24.1 million loan at LIBOR plus
175 basis points (7.41 percent at July 22, 1998) and from $8.6
million of borrowings from other sources at 11.50 percent. If
LIBOR rate were to change by 12.5 basis points, interest
expense would change approximately $30,200 during a one-year
period.
(b) Depreciation expense is based on a 39 year useful life.
(c) Other expense represents management fees paid to Ocwen Capital
Corporation. This fee is calculated as .25 percent of average
invested assets per quarter.
(4) Minority interest in net (income) loss of the operating partnership,
which includes historical results for 221 Bush Street, 841 Prudential
Drive, 10 UN Plaza, and the other acquisitions, as well as the pro
forma adjustments, is calculated by using the weighted average minority
interest percentage for the period October 1, 1997 through September
30, 1998.
9
<PAGE>
<TABLE>
<CAPTION>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD OCTOBER 1, 1997 TO SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
Historical (1)
--------------------------------------------- Other Pro Forma Total Pro
Company Bush Street Prudential 10 Un Plaza Acquisitions(2) Adjustments(3) Forma
------- ----------- ---------- ----------- --------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income ................... $ 48,555 $ -- $ -- $ -- $ -- $ -- $ 48,555
Interest expense .................. 16,838 -- -- -- -- 6,195 23,033
-------- -------- -------- --------- -------- -------- --------
Net interest income (expense) before
Provision for loan losses ....... 31,717 -- -- -- -- (6,195) 25,522
Provision for loan losses ......... 557 -- -- -- -- -- 557
-------- -------- -------- --------- -------- -------- --------
Net interest income (expense) after
Provision for loan losses ....... 31,160 -- -- -- -- (6,195) 24,965
Real estate-operating income ...... 16,721 4,669 86 -- 2,593 24,069
Real estate-operating expenses .... 14,199 1,522 3,680 -- 1,369 1,972 22,742
-------- -------- -------- --------- -------- -------- --------
Real estate-net operating income... 2,522 3,147 (3,594) -- 1,224 (1,972) 1,327
Other expenses .................... 8,079 -- -- -- -- 930 9,009
(Loss) gain on securities held
for trading .................... 32,723 -- -- -- -- -- 32,723
-------- -------- -------- --------- -------- -------- --------
(Loss) income before minority Interest (7,120) 3,147 (3,594) -- 1,224 (9,097) (15,440)
Minority interest in net (income)
loss of operating partnership ... 390 -- -- -- -- 339(4) 729
-------- -------- -------- --------- -------- -------- --------
Net income (loss) before
extraordinary items ............... (6,730) 3,147 (3,594) -- 1,224 (8,758) (14,711)
Extraordinary gain on repurchase
of debt ......................... 615 -- -- -- -- 615
-------- -------- -------- --------- -------- -------- --------
Net (loss) income ................. $ (6,115) $ 3,147 $ (3,594) $ -- $ 1,224 $ (8,758) $(14,096)
======== ======== ======== ========= ======== ======== ========
Funds from operations ............. $ 9,522 $ 2,898
======== ========
</TABLE>
10
<PAGE>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD OCTOBER 1, 1997 TO SEPTEMBER 30, 1998
(1) Historical results are based on the actual results of operations for
the twelve month period form January 1, 1998 through September 30,
1998. The results of operations from this property are included in the
Company column.
<TABLE>
<CAPTION>
(2) The following table summarizes the "other acquisitions":
Acquisition Operating Net
Property Name Date Purchase Price Revenues Expenses Income
-------------------------------- ------------- ----------------------- ------------- ------------ -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
450 Sansome Street.............. 9/23/97 17,200
Cortez Plaza.................... 11/10/97 19,050 272 85 187
Bayers Road Shopping Centre..... 4/9/98 16,311 2,321 1,284 1,037
----------- ----------- -----------
2,593 1,369 1,224
(3) Pro forma adjustments:
Acquisition (a) (b) (c)
Property Name Date Interest Expense Depreciation Expense Other Expense
----------------- ------------------ ---------------------- ----------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
450 Sansome Street ......... 9/23/97 -- -- --
Cortez Plaza ............... 11/10/97 -- 53 21
221 Bush Street ............ 4/8/98 3,927 1,087 523
Bayers Road Shopping Centre. 4/9/98 -- 219 121
841 Prudential Drive ....... 7/7/98 2,268 613 265
-------------- --------------- ---------------
Total $ 6,195 $ 1,972 $ 930
============== =============== ===============
</TABLE>
(a) Interest expense is based on the following assumptions:
221 BUSH STREET
---------------
Salomon Brothers Realty Corp. $75.0 million loan at LIBOR plus
175 basis points (7.44 percent at April 8, 1998) and from
$25.2 million of borrowings from other sources at
approximately the same rate. If LIBOR rate were to change by
12.5 basis points, interest expense would change approximately
$123,000 during a one-year period.
841 PRUDENTIAL DRIVE
--------------------
Salomon Brothers Realty Corp. $24.1 million loan at LIBOR plus
175 basis points (7.41 percent at July 22, 1998) and from $8.6
million of borrowings from other sources at 11.50 percent. If
LIBOR rate were to change by 12.5 basis points, interest
expense would change approximately $30,200 during a one-year
period.
(b) Depreciation expense is based on a 39 year useful life.
(c) Other expense represents management fees paid to Ocwen Capital
Corporation. This fee is calculated as .25 percent of average
invested assets per quarter.
(4) Minority interest in net (income) loss of the operating partnership,
which includes historical results for 221 Bush Street, 841 Prudential
Drive, 10 UN Plaza, and the other acquisitions, as well as the pro
forma adjustments, is calculated by using the weighted average minority
interest percentage for the period October 1, 1997 through September
30, 1998.
11
Exhibit 99.4
TEN UNITED
NATIONS PLAZA
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED
DECEMBER 31,1996 AND THE SIX MONTHS ENDED JUNE 30, 1997
12
<PAGE>
TEN UNITED NATIONS PLAZA
INDEX TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
- --------------------------------------------------------------------------------
PAGE
Report of Independent Accountants......................................... 14
Statements of Revenue and Certain Expenses:
For the Year Ended December 31, 1996................................. 15
For the Six Months Ended June 30, 1997 (unaudited)................... 16
Notes to Statements of Revenue and Certain Expenses.................. 17
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Ocwen Asset Investment Corp.
We have audited the accompanying statement of revenue and certain expenses for
the property known as Ten United Nations Plaza for the year ended December 31,
1996. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses was prepared using
the basis described in Note 2, for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the
current report on Form 8-K of Ocwen Asset Investment Corp.) and is not intended
to be a complete presentation of the revenues and expenses of the property known
as Ten United Nations Plaza.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses for Ten United Nations
Plaza on the basis described in Note 2 for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
San Francisco, California
January 6, 1999
14
<PAGE>
TEN UNITED NATIONS PLAZA
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENEDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
REVENUE
Base rents .................................... $1,188,825
Escalations and other revenue ................. 86,024
----------
1,274,849
----------
CERTAIN EXPENSES
Real estate and property taxes ................ 82,189
Utilities ..................................... 109,618
Janitorial .................................... 116,030
Other operating expenses ...................... 113,345
Property management and administrative expenses 119,038
----------
540,220
----------
Revenue in excess of certain expenses ..... $ 734,629
==========
See accompanying notes to statements of revenue and certain expenses.
15
<PAGE>
TEN UNITED NATIONS PLAZA
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
REVENUE
Base rents .................................... $ 607,259
Escalations and other revenue ................. 55,123
----------
662,382
----------
CERTAIN EXPENSES
Real estate and property taxes ................ 41,421
Utilities ..................................... 50,591
Janitorial .................................... 52,798
Other operating expenses ...................... 66,139
Property management and administrative expenses 64,328
----------
275,277
----------
Revenue in excess of certain expenses ..... $ 387,105
==========
See accompanying notes to statements of revenue and certain expenses.
16
<PAGE>
TEN UNITED NATIONS PLAZA
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying statements of revenue and certain expenses,
Ten United Nations Plaza (the "Property") is an office building located in San
Francisco, CA, which was acquired by Ocwen Asset Investment Corp. (the
"Company") on September 3, 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses have been
prepared on the accrual basis of accounting.
The accompanying financial statements are not representative of the actual
operations for the periods presented, as certain revenues and expenses
which may not be comparable to the revenues and expenses to be earned or
incurred by the Company in the future operations of the Property have been
excluded. Revenues excluded consist of interest and other revenues
unrelated to the continuing operations of the Property. Expenses excluded
consist of interest and other finance changes, depreciation of the building
and improvements, amortization of organization and other intangible costs
and other expenses not directly related to the future operations of the
Property.
INTERIM STATEMENTS
The interim financial data for the six months ended June 30, 1997 is
unaudited. However, in the opinion of the Property's management, the
interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the interim
period. The results for the period presented are not necessarily indicative
of the results to be expected for the full year or any other period.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Base rents are recognized on a cash basis which does not significantly vary
from the accrual basis required under generally accepted accounting
principles.
REPAIRS AND MAINTENANCE
Expenditures for maintenance and repairs are charged to operations as
incurred. Betterments which improve or extend the life of the asset beyond
its original condition are capitalized.
3. LEASES
Leases for the Property have various remaining lease terms of up to 2002 with
options to certain tenants for renewal. In addition to base rents, the leases
provide for the tenants to pay their proportionate share of real estate taxes
and operating expenses over base year amounts.
17
<PAGE>
For the year ended December 31, 1996, the San Francisco AIDS Foundation (the "SF
AIDS Foundation"), the Social Security Administration (the "SSA") and Union Bank
accounted for 37%, 36% and 26%, respectively, of total base rents. For the six
months ended June 30, 1997, the SF AIDS Foundation, the SSA and Union Bank
accounted for 36% (unaudited), 35% (unaudited) and 27% (unaudited),
respectively, of total base rents. The San Francisco AIDS Foundation, SSA and
Union Bank are no longer tenants of the Property.
As of December 31, 1998, only two tenants remain in the Property, comprising
annual rental income of approximately $112,000. The leases related to the two
remaining tenants expire October 31, 1999 and January 31, 2002.
4. PROPERTY MANAGEMENT AND ADMINISTRATIVE EXPENSES
The Property incurs salary and benefit expenses for full-time employees. In
addition, the Property incurred management fees which totaled $48,000 for the
year ended December 31, 1996 and $24,000 for the six months ended June 30, 1997
(unaudited).
