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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
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{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
------------------------------------------
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________
Commission file number 1-12917
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Wellsford Real Properties, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 13-3926898
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
610 Fifth Avenue, New York, NY 10020
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(Address of principal executive offices)
(Zip Code)
(212) 333-2300
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----------- ------------
Number of shares of common stock, $.01 par value per share, outstanding as of
May 14, 1997: 20,009,882.
Number of shares of Class A common stock, $.01 par value per share,
outstanding as of May 14, 1997: 339,806.
=============================================================================<PAGE>
WELLSFORD REAL PROPERTIES, INC.
FORM 10-Q
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INDEX
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Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1998 (unaudited)
and December 31, 1997 3
Consolidated Statements of Income (unaudited) for
the three months ended March 31, 1998 and 1997 4
Consolidated Statements of Cash Flows (unaudited) for
the three months ended March 31, 1998 and 1997 5
Notes to Consolidated Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION 15
SIGNATURES 16
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1998 1997
------------ ------------
ASSETS (Unaudited)
Real estate assets, at cost:
Land $ 14,499,000 $ 5,225,000
Buildings and improvements 88,734,832 36,338,624
--------------- --------------
103,233,832 41,563,624
Less, accumulated depreciation (551,675) --
--------------- --------------
102,682,157 41,563,624
Construction in progress 18,551,157 17,177,824
---------------- --------------
121,233,314 58,741,448
Notes receivable 86,891,271 105,631,611
Investment in joint ventures 48,660,489 44,779,563
---------------- --------------
Total real estate assets 256,785,074 209,152,622
Cash and cash equivalents 34,097,698 29,895,212
Restricted cash 7,428,941 7,695,910
Prepaid and other assets 5,916,685 3,229,956
--------------- --------------
Total Assets $ 304,228,398 $ 249,973,700
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 65,568,316 $ 49,255,000
Credit facility -- 7,500,000
Accrued expenses and other
liabilities 13,264,716 9,763,109
--------------- --------------
Total Liabilities 78,833,032 66,518,109
--------------- --------------
Commitments and contingencies -- --
Minority interest 3,919,658 2,297,295
Shareholders' Equity:
Common Stock, 197,650,000 shares
authorized - 20,009,882 shares, $.01
par value per share, issued and out-
standing at March 31, 1998 200,099 166,567
Class A Common Stock, 350,000
shares authorized - 339,806 shares,
$.01 par value per share, issued
and outstanding at March 31, 1998 3,398 3,398
Series A 8% Convertible Redeemable
Preferred Stock, $.01 par value per
share, 2,000,000 shares authorized,
no shares issued and outstanding -- --
Paid in capital in excess of par
value 219,709,747 179,721,827
Retained Earnings 3,418,807 1,941,518
Deferred compensation (641,250) (657,014)
Treasury stock (81,015 shares) (1,215,093) --
--------------- --------------
Total Shareholders' Equity 221,475,708 181,158,296
--------------- --------------
Total Liabilities and Shareholders'
Equity $ 304,228,398 $ 249,973,700
=============== ==============
See accompanying notes.
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
--------------------------------------------
1998 1997
------------------- ----------------
REVENUE
Rental income $ 2,490,990 $ --
Interest income 3,468,312 400,500
------------ ------------
Total Revenue 5,959,302 400,500
------------ ------------
EXPENSES
Property operating and
maintenance 463,455 --
Real estate taxes 247,081 --
Depreciation and amortization 622,654 --
Property management 73,659 --
Interest 891,663 --
General and administrative 1,182,503 --
------------- -------------
Total Expenses 3,481,015 --
------------- -------------
Income from joint ventures 265,866 --
------------- -------------
Income before minority interest 2,744,153 400,500
Minority interest (18,864) --
------------- -------------
Income before taxes 2,725,289 400,500
Income tax expense 1,248,000 --
------------- -------------
Net income $ 1,477,289 $ 400,500
============= =============
Net income per common
share, basic $ 0.08 $ 0.02
============= =============
Net income per common
share, diluted $ 0.08 $ 0.02
============= =============
Weighted average number of
common shares outstanding 18,376,910 16,911,849
============= =============
See accompanying notes.<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
--------------------------------------------
1998 1997
------------------- ----------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 1,477,289 $ 401,000
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 660,923 --
Income from joint ventures (265,866) --
Decrease (increase)
in assets
Restricted cash (984,124) 2,322,000
Prepaid and other assets (2,717,768) --
(Decrease) increase in
liabilities
Accrued expenses and other
liabilities 3,429,423 --
---------------- -------------
Net cash provided by
operating activities 1,635,877 2,723,000
---------------- -------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in real estate
assets (87,775,709) (26,500,000)
Investment in notes
receivable (2,233,751) --
Investment in joint ventures (2,909,505) --
Repayments from notes receivable 27,653,521 --
Proceeds from sale of
real estate assets 59,018,737 --
---------------- --------------
Net cash provided by
(used in) investing
activities (6,246,707) (26,500,000)
---------------- --------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from credit
facility 48,000,000 --
Repayment of credit
facility (55,500,000) --
Proceeds from mortgage
notes payable 16,400,000 --
Repayment of mortgage
notes payable (86,684) --
Issuance of note payable
to Trust -- 21,611,000
Equity contributions -- 2,166,000
--------------- -------------
Net cash provided by (used
in) financing activities 8,813,316 23,777,000
--------------- -------------
Net (increase) in cash and
cash equivalents 4,202,486 --
Cash and cash equivalents,
beginning of period 29,895,212 --
---------------- --------------
Cash and cash equivalents,
end of period $ 34,097,698 $ --
================ ==============
SUPPLEMENTAL INFORMATION:
Cash paid during the
period for interest $ 903,728 $ 343,000
SUPPLEMENTAL SCHEDULE OF
NON-CASH INVESTING AND
FINANCING ACTIVITIES
Shares issued in connection
with acquisition of
commercial office properties
and notes receivable $(39,362,500) $ (2,250,000)
Warrants issued in connection
with acquistion of joint
venture investment $ (750,000) $ --
See accompanying notes.
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
Wellsford Real Properties, Inc. (the "Company") was formed on January 8,
1997, as a corporate subsidiary of Wellsford Residential Property Trust
(the "Trust"). On May 30, 1997, the Trust merged (the "Merger") with
Equity Residential Properties Trust ("EQR"). Immediately prior to the
Merger, the Trust contributed certain of its assets to the Company and
the Company assumed certain liabilities of the Trust. Immediately after
the contribution of assets to the Company and immediately prior to the
Merger, the Trust distributed to its common shareholders all the
outstanding shares of the Company owned by the Trust (the "Spin-off").
On June 2, 1997, the Company sold 12,000,000 shares of its common stock
in a private placement (the "Private Placement") to a group of
institutional investors at $10.30 per share, the Company's then book
value per share.
The Company is a real estate merchant banking firm which acquires,
develops and operates real properties and invests in the debt and equity
securities of private and public real estate companies. The Company has
established three strategic business units ("SBUs") within which it
intends to execute its business plan: an SBU for commercial property
operations which is held in its 99.9% subsidiary, Wellsford Commercial
Properties Trust ("WCPT"), an SBU for debt and equity activities and an
SBU for property development and land operations.
On August 28, 1997, the Company, through WCPT, in a joint venture with
WHWEL Real Estate Limited Partnership ("Whitehall"), an affiliate of
Goldman, Sachs & Co., formed a private real estate operating company,
Wellsford/Whitehall Properties, L.L.C. ("Wellsford Commercial").
The accompanying consolidated financial statements include the assets
and liabilities contributed to and assumed by the Company from the
Trust, from the time such assets and liabilities were acquired or
incurred, respectively, by the Trust. Such financial statements have
been prepared using the historical basis of the assets and liabilities
and the historical results of operations related to the Company's assets
and liabilities.
The accompanying consolidated financial statements and related notes of
the Company have been prepared in accordance with generally accepted
accounting principles for interim financial reporting and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, certain information and footnote disclosures normally
included in financial statements prepared under generally accepted
accounting principles have been condensed or omitted pursuant to such
rule. In the opinion of management, all adjustments considered
necessary for a fair presentation of the Company's financial position,
results of operations and cash flows have been included and are of a
normal and recurring nature. These financial statements should be read
in conjunction with the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
2. Industry Segments and Recent Activities
Commercial Property Operations
The Company's commercial property operations segment consists of
Wellsford Commercial, which is accounted for on the equity method.
Wellsford Commercial had net real estate assets of $236.8 million, total
assets of $250.9 `million, term loans and credit facility debt of $162.2
million and equity of $80.8 million at March 31, 1998. During the
quarter ended March 31, 1998, Wellsford Commercial earned $8.0 million
in total revenues, primarily rental income, and incurred $3.2 million of
operating expenses, $2.7 million of interest expense, $1.1 million of
depreciation, and $0.6 million of general and administrative expense,
resulting in net income of $0.4 million.
On February 12, 1998, Wellsford Commercial entered into an option
agreement to enter into a contribution agreement whereby a 972,000
square foot ("SF") portfolio of thirteen office buildings would be
contributed to Wellsford Commercial for $146.9 million. In April 1998,
Wellsford Commercial exercised its option to enter into the contribution
agreement.
On February 20, 1998, Wellsford Commercial acquired a 65,000SF office
building in Boston, MA for $5.5 million ("15 Broad Street") and 19 acres
of undeveloped land in Somerset, NJ for $2.0 million ("600 Atrium
Drive"), which is adjacent to four buildings currently owned by
Wellsford Commercial.
In March 1998, Wellsford Commercial purchased an 80,000SF property for
approximately $5.4 million.
Debt and Equity Activities
In January 1998, the Company acquired a 49% interest in Creamer Realty
Consultants, a real estate advisory and consulting firm, and formed
Creamer Vitale Wellsford, L.L.C. ("Creamer Vitale Wellsford").
Creamer Realty Consultants and Creamer Vitale Wellsford, together with
Prudential Real Estate Investors ("PREI"), a division of Prudential
Investment Corporation, have established the Clairborne Investors
Mortgage Investment Program to make opportunistic investments and to
provide liquidity to participants in large syndicated mortgage loan
transactions. The parties have agreed to contribute up to $150 million
to fund acquisitions approved by the parties, of which a subsidiary of
the Company will fund 10%. Creamer Vitale Wellsford will originate, co-
invest, and manage the investments of the program.
The Company's original investment in these entities was $1.3 million of
cash and 148,000 five-year warrants to purchase the Company's common
shares at $15.175 per share, valued at approximately $0.7 million.
On February 27, 1998, the Company completed the previously announced
merger (the "VLP Merger") with Value Property Trust ("VLP") for total
consideration of approximately $169 million. Thirteen of the twenty VLP
properties, which were under contract to an affiliate of Whitehall, were
subsequently sold for an aggregate of approximately $64 million.
Approximately $4.7 million of the purchase price was recorded as a net
deferred tax asset reflecting the value of VLP's net operating loss
carryforwards. $48 million was drawn on the Company's credit facility
to finance the VLP Merger, which was subsequently repaid primarily from
the proceeds of the mortgage on Sonterra at Williams Centre (see below)
and cash received from VLP.
In December 1997, a subsidiary of the Company joined with Fleet Real
Estate Inc. to advance $19.6 million under a subordinated credit
facility to Industrial Properties Holding, L.P. On February 5, 1998,
the Company's $9.8 million portion of this loan was repaid, at which
time the Company received a total of $0.8 million in interest and fees.
Land and Development Operations
In January 1998, the Company acquired Sonterra at Williams Centre, a
344-unit class A residential complex in Tucson, Arizona for
approximately $20.5 million. The Company had previously held a $17.8
million mortgage on the property.
On February 26, 1998, the Company obtained a $16.4 million mortgage on
Sonterra at Williams Centre, bearing interest at 6.87% and having a term
of 10 years and principal payments based on a 30 year amortization
schedule.
Other
In January 1998, the $7.5 million then outstanding on the Company's
credit facility was repaid.
On March 11, 1998, the Company issued additional options to purchase
common shares of the Company to two of its officers. Each of the two
officers received 100,000 options with an exercise price of $17.50 per
share and 100,000 options with an exercise price of $20.00 per share.
The options have a term of 10 years and vest, in equal amounts, over
five years.
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)(continued)
(table in thousands)
Commercial Land and
Property Debt and Equity Development
Operations Activities Operations Other Consolidated
------------------- ------------------- ------------------- ------------------- -------------------
Three Months Ended Three Months Ended Three Months Ended Three Months Ended Three Months Ended
March 31, March 31, March 31, March 31, March 31,
------------------- ------------------- ------------------- ------------------- -------------------
1998 1997 1998 1997 1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rental Income $ -- $ -- $ 454 $ -- $ 2,037 $ -- $ -- $ -- $ 2,491 $ --
Interest Income -- -- 3,076 -- -- 401 391 -- 3,467 401
-----------------------------------------------------------------------------------------------------------
Total Income -- -- 3,530 -- 2,037 401 391 -- 5,958 401
-----------------------------------------------------------------------------------------------------------
Operating Expense -- -- 204 -- 580 -- -- -- 784 --
Depreciation and
amortization -- -- 64 -- 487 -- 72 -- 623 --
Interest -- -- 237 -- 655 -- -- -- 892 --
General and
administrative -- -- 13 -- -- -- 1,169 -- 1,182 --
-----------------------------------------------------------------------------------------------------------
Total Expenses -- -- 518 -- 1,722 -- 1,241 -- 3,481 --
-----------------------------------------------------------------------------------------------------------
Income from joint
ventures 187 -- 79 -- -- -- -- -- 266 --
Minority interest -- -- (8) -- (10) -- -- -- (18) --
-----------------------------------------------------------------------------------------------------------
Income (loss) before
taxes $ 187 $ -- $ 3,083 $ -- $ 305 $ 401 $ (850) $ -- $ 2,725 $ 401
===========================================================================================================
Total Assets $46,486 $23,861 $152,513 $ -- $81,823 $45,077 $23,406 $ -- $304,228 $68,938
===========================================================================================================
/TABLE
<PAGE>
3. Earnings Per Share
In 1997, Financial Accounting Standards Board Statement ("SFAS") No. 128
"Earnings per Share" was issued. SFAS 128 replaced the calculation of
primary and fully diluted earnings per share. Unlike primary earnings
per share, basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Diluted earnings per
share is very similar to fully diluted earnings per share. All earnings
per share amounts for all periods have been presented to conform to the
SFAS 128 requirements.
Basic earnings per common share are computed based upon the weighted
average number of common shares outstanding during the period, including
Class A common shares.
Diluted earnings per common share for the three months ended March 31,
1998 are based upon the increased number of common shares that would be
outstanding assuming the exercise of dilutive common share options
(317,127) and warrants (643,533), under the treasury stock method.
Diluted earnings per common share for the three months ended March 31,
1997 are equal to basic earnings per common share.
The Company was a corporate subsidiary of the Trust prior to the Spin-
off. Earnings per share was calculated using the weighted average
number of shares outstanding assuming that the Spin-off and the
Company's $123.6 million June 1997 private placement of common shares
occurred on January 1, 1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. General
The Company is a real estate merchant banking firm which acquires,
develops and operates real properties and invests in the debt and equity
securities of private and public real estate companies. The Company has
established three strategic business units ("SBUs") within which it
intends to execute its business plan: an SBU for commercial property
operations which is held in its 99.9% subsidiary, Wellsford Commercial
Properties Trust ("WCPT"), an SBU for debt and equity activities and an
SBU for property development and land operations.
Commercial Property Operations - WCPT
The Company, through WCPT, seeks to acquire commercial properties below
replacement cost and operate and/or resell the properties after
renovation, redevelopment and/or repositioning. The Company believes
that appropriate well-located commercial properties which are currently
underperforming can be acquired on advantageous terms and repositioned
with the expectation of achieving returns which are greater than returns
which could be achieved by acquiring a stabilized property.
Debt and Equity Activities - dba Wellsford Capital Company
The Company makes loans that constitute, or will invest in, real estate-
related senior, junior or otherwise subordinated debt instruments, which
may be unsecured or secured by liens on real estate, interests therein
or the economic benefits thereof, and which have the potential for high
yields or returns more characteristic of equity ownership. These
investments may include debt that is acquired at a discount, mezzanine
financing, commercial mortgage-backed securities ("CMBS"), secured and
unsecured lines of credit, distressed loans, and loans previously made
by foreign and other financial institutions. The Company believes that
there are opportunities to acquire real estate debt, especially in the
low or below investment grade tranches, at significant returns as a
result of inefficiencies in pricing, while utilizing management's real
estate expertise to analyze the underlying properties and thereby
effectively minimizing risk.
Property Development and Land Operations - dba Wellsford Development
Company
The Company engages in selective development activities as opportunities
arise and when justified by expected returns. The Company believes that
by pursuing selective development activities it can achieve returns
which are greater than returns which could be achieved by acquiring
stabilized properties. Certain development activities may be conducted
in joint ventures with local developers who may bear the substantial
portion of the economic risks associated with the construction,
development and initial rent-up of properties. As part of its strategy,
the Company may seek to obtain bond financing from local governmental
authorities which generally bears interest at rates substantially below
rates available from conventional financing.
The principal asset of the property development and land operations SBU
is an 80% interest in Palomino Park, a 1,880 unit class A multifamily
development in a suburb of Denver, Colorado. The Company currently has
invested $18.6 million through March 31, 1998 in the following
multifamily development project, which is the second phase of Palomino
Park:
Number Estimated Estimated
Name of Units Location Total Cost Stabilization Date
---- -------- -------- ---------- ------------------
Red Canyon 304 Denver $33.6 million First Qtr. 1999
This project is being developed pursuant to a fixed-price contract. The
Company is committed to purchase 100% of this project upon completion
and the achievement of certain occupancy levels, which is anticipated to
occur at the date disclosed above.
Red Canyon is owned by Red Canyon at Palomino Park LLC ("Phase II LLC"),
a limited liability company, the members of which are Wellsford Park
Highlands Corp. (99%), a majority owned and controlled subsidiary of the
Company, and Al Feld ("Feld") (1%). Feld is a Denver-based developer
specializing in the construction of luxury residential properties. Feld
has constructed over 3,000 units since 1984.
The construction loan on Red Canyon is for approximately $29.5 million,
matures on September 29, 1999 (with a 6-month extension at the option of
the Phase II LLC upon fulfillment of certain conditions), and bears
interest at LIBOR plus 1.65%. Feld has guaranteed repayment of this
loan. An affiliate of EQR has agreed to purchase the Phase II
construction loan when due (the "EQR Take-out Commitment"), assuming
completion of construction, if it is not satisfied by the Phase II LLC
or by Feld pursuant to his guarantee, for the lesser of the loan balance
or the final agreed upon budget.
Risks Associated with Forward-Looking Statements.
This Form 10-Q, together with other statements and information publicly
disseminated by the Company, contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company or industry results
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the following, which are discussed
in greater detail in the "Risk Factors" section of the Company's
registration statement on Form S-11 (file No. 333-32445) filed with the
Securities and Exchange Commission on July 30, 1997, as may be amended,
which is incorporated herein by reference: general economic and business
conditions, which will, among other things, affect demand for commercial
and residential properties, availability and credit worthiness of
prospective tenants, lease rents and the availability of financing;
difficulty of locating suitable investments; competition; risks of real
estate acquisition, development, construction and renovation; vacancies
at existing commercial properties; dependence on rental income from real
property; adverse consequences of debt financing; risks of investments
in debt instruments, including possible payment defaults and reductions
in the value of collateral; illiquidity of real estate investments; lack
of prior operating history; and other risks listed from time to time in
the Company's reports filed with the SEC. Therefore, actual results
could differ materially from those projected in such statements.
2.Results of Operations
Comparison of the three months ended March 31, 1998 to the three months
ended March 31, 1997.
Prior to the Company's 1997 investments, the Company's operations
consisted of earning interest income on the Sonterra Mortgage
(originated in July 1996) and the initial phase of construction
development activity with respect to Palomino Park. Therefore, the
increase in operating revenues and expenses reflected in the financial
statements is a result of the acquisition of primarily all of the
Company's operating assets subsequent to March 31, 1997.
3. Liquidity and Capital Resources
The Company expects to meet its short-term liquidity requirements
generally through its working capital and cash flow provided by
operations. The Company considers its ability to generate cash to be
adequate and expects it to continue to be adequate to meet operating
requirements both in the short and long terms.
The Company expects to meet its long-term liquidity requirements such as
refinancing mortgages, financing acquisitions and development, and
financing capital improvements by long-term borrowings, through the
issuance of debt and the offering of additional debt and equity
securities.
The Company has (i) the commitment, until May 30, 2000, of an affiliate
of EQR to acquire at the Company's option up to $25 million of the
Company's Series A 8% Convertible Redeemable Preferred Stock ("Series A
Preferred"), each share of which is convertible into shares of common
stock at a price of $11.124 (the "EQR Preferred Commitment") and (ii) a
$50 million two-year line of credit (extendible for one year) from
BankBoston, N.A. and Morgan Guaranty Trust Company of New York (the
"Line of Credit") which initially bears interest at an annual rate equal
to LIBOR plus 175 basis points. The EQR Preferred Commitment is pledged
as security for the Line of Credit. If at May 30, 2000, the affiliate
of EQR has purchased less than $25 million of Series A Preferred, it has
the right to purchase the remainder of the $25 million not purchased
prior to that time. As of March 31, 1998, no balance was outstanding
under the Line of Credit.
Creamer Realty Consultants and Creamer Vitale Wellsford, together with
Prudential Real Estate Investors ("PREI"), a division of Prudential
Investment Corporation, have established the Clairborne Investors
Mortgage Investment Program to make opportunistic investments and to
provide liquidity to participants in large syndicated mortgage loan
transactions. The parties have agreed to contribute up to $150 million
to fund acquisitions approved by the parties, of which a subsidiary of
the Company will fund 10%. Creamer Vitale Wellsford will originate, co-
invest, and manage the investments of the program.
Wellsford Commercial has a $375 million loan facility (the "Wellsford
Commercial Bank Facility") from BankBoston and Goldman Sachs Mortgage
Company, consisting of a secured term loan facility of up to $225
million and a secured revolving credit facility of up to $150 million.
The term loan facility bears interest at LIBOR +1.6% and has a term of
four years; the revolving credit facility bears interest at LIBOR +2.5%
and has a term of three years, which may be renewed by Wellsford
Commercial for one additional year. As of March 31, 1998, approximately
$162.2 million was outstanding under the Wellsford Commercial Bank
Facility ($107.9 million of which was under the term loan).
<PAGE>
PART II.
OTHER INFORMATION
Item 1: Legal Proceedings - Not Applicable.
Item 2: Changes in Securities
The following table is a summary of certain information relating to
all securities of the Company sold by the Company during the period
covered by this report that were not registered under the
Securities Act (the "Private Placements"):
Persons or Class
Type of Date Amount of of Persons to
Securities of Securities Whom Securities
Sold Sale Sold Sold Consideration
---------- ------- ---------- -------------------- -------------
Warrants 1/20/98 148,000(1) Frank G. Creamer, Jr. (2)
Michael J. Vitale
(1) In connection with the Company's investment in Creamer Realty
Consultants, the Company issued 74,000 warrants to each of
Frank G. Creamer, Jr. and Michael J. Vitale to purchase shares
of Common Stock at an exercise price of approximately $15.175
per share. The Warrants are exercisable for five years.
(2) In consideration for the Company's acquisition of a 49%
interest in Creamer Realty Consultants.
The Company conducted the Private Placements pursuant to Section
4(2) of the Securities Act. There was no underwriter involved in
the Private Placements.
Item 3: Defaults upon Senior Securities - Not Applicable.
Item 4: Submission of Matters to a Vote of Security Holders - Not
Applicable.
Item 5: Other Information - Not Applicable.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits filed with this Form 10-Q:
27.1 Financial Data Schedule (EDGAR Filing Only)
(b) Reports on Form 8-K filed by the registrant during
its fiscal quarter ended March 31, 1998:
- Form 8-K filed January 8, 1998, relating to
participation by a subsidiary of the Company in
a subordinated credit facility.
- Form 8-K filed January 15, 1998, relating to
the Company's completed development of Blue
Ridge at Palomino Park.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WELLSFORD REAL PROPERTIES, INC.
By:/s/ Jeffrey H. Lynford
__________________________________________________
Jeffrey H. Lynford, Chairman of the Board
/s/ Gregory F. Hughes,
__________________________________________________
Gregory F. Hughes, Chief Financial Officer
Dated: May 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This Schedule contains summary financial information
extracted from the consolidated balance sheets and consolidated
statements of operations and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 41,526,639
<SECURITIES> 0
<RECEIVABLES> 86,891,271
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 47,443,324
<PP&E> 121,784,989
<DEPRECIATION> (551,675)
<TOTAL-ASSETS> 304,228,398
<CURRENT-LIABILITIES> 13,264,716
<BONDS> 65,568,316
<COMMON> 203,497
0
0
<OTHER-SE> 221,272,211
<TOTAL-LIABILITY-AND-EQUITY> 304,228,398
<SALES> 0
<TOTAL-REVENUES> 6,225,168
<CGS> 0
<TOTAL-COSTS> 1,406,849
<OTHER-EXPENSES> 1,182,503
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 891,663
<INCOME-PRETAX> 2,725,289
<INCOME-TAX> 1,248,000
<INCOME-CONTINUING> 1,477,289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,477,289
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
