<PAGE>
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 10-KSB/A
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 333-35063
------------------------
BARON CAPITAL TRUST (Name of Small Business Issuer as Specified in its Charter)
<TABLE>
<CAPTION>
------------------------------- --------------------
Delaware 31-1574856
------------------------------- --------------------
<S> <C>
(State or Other Jurisdiction of (I.R.S. Employer
------------------------------- --------------------
Incorporation or Organization) Identification No.)
------------------------------- --------------------
</TABLE>
<PAGE>
7826 COOPER ROAD CINCINNATI, OHIO 45242 (Address of Principal Executive
Offices including Zip Code)
(513) 984-5001 (Issuer's Telephone Number, including Area Code)
------------------------
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT: COMMON SHARES OF
BENEFICIAL INTEREST, NO PAR VALUE
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained to
the best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
The issuer's revenues for its most recent fiscal year were $396,884.
As of March 31, 1999 the aggregate market value of voting and non-voting equity
common stock held by non-affiliates (based on total shares outstanding reduced
by the number of shares held by trustees, officers, and other affiliates) of the
registrant was five million eight hundred thirty-eight thousand four hundred and
three dollars ($5,838,403) based on the actual cash paid for shares issued by
the four hundred and six (406) investors.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes______ No_______
<PAGE>
The purpose of this Form 10-KSB/A is to amend in its entirety Part
II-Item 7 Financial Statements contained in Form 10-KSB for the year ended
December 31, 1998 filed by Baron Capital Trust on May 14, 1999 with the
Commission under Commission file number 333-35063.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BARON CAPITAL TRUST
FINANCIAL STATEMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
BARON CAPITAL TRUST
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
-----------------------------
PAGE
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet F-2
Statement of Operations F-3
Statement of Shareholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6-F-26
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Trustees and Shareholders
Baron Capital Trust
Cincinnati, Ohio
We have audited the accompanying consolidated balance sheet of Baron Capital
Trust (the "Trust") as of December 31, 1998 and the related consolidated
statements of operations, shareholders' equity and cash flows from inception
(February 3, 1998) to December 31, 1998. These consolidated financial statements
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these consolidated financial statements 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 statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Baron
Capital Trust as of December 31, 1998, and the consolidated results of their
operations and their cash flows from inception (February 3, 1998) to December
31, 1998, in conformity with generally accepted accounting principles.
RACHLIN COHEN & HOLTZ LLP
Miami, Florida
April 13, 1999
<PAGE>
BARON CAPITAL TRUST
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Rental Apartments:
Land $1,178,693
Depreciable property 6,189,095
----------
7,367,788
Less accumulated depreciation 1,246,627
----------
6,121,161
Investments in Partnerships 709,970
Cash and Cash Equivalents 177,299
Restricted Cash 66,199
Property Management Reimbursements Receivable, Affiliates 155,071
Other Receivables 80,112
Advances to Affiliates 10,750
Other Property and Equipment 168,982
Other Assets 212,761
----------
$7,702,305
----------
----------
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C>
Liabilities:
Mortgages payable $ 4,039,718
Note payable 375,000
Accounts payable and accrued liabilities, including
$136,941 to Managing Shareholder 388,385
Capital lease obligation 55,984
Security deposits 38,336
-----------
Total liabilities 4,897,423
-----------
Commitments, Contingencies and Other Matters -
Shareholders' Equity:
Common shares of beneficial interest, no par value; 2,500,000
shares authorized; 463,650 shares issued and outstanding 4,454,101
Deficit (1,577,060)
Distributions (72,159)
-----------
Total shareholders' equity 2,804,882
-----------
$ 7,702,305
-----------
-----------
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
BARON CAPITAL TRUST
CONSOLIDATED STATEMENT OF OPERATIONS
FROM INCEPTION (FEBRUARY 3, 1998) TO DECEMBER 31, 1998
<TABLE>
<S> <C>
Revenues:
Property:
Rental $ 358,949
Other 35,155
Equity in net loss of unconsolidated partnership (20,360)
Interest income 2,780
-----------
376,524
-----------
Real Estate Expenses:
Depreciation 80,296
Interest 164,333
Repairs and maintenance 86,349
Personnel 53,860
Property taxes 34,496
Property insurance 20,477
Utilities 27,299
Other 138,905
-----------
606,015
-----------
Administrative Expenses:
Personnel, including officer's compensation 718,715
Management, investment and administrative fees, Managing Shareholder 324,213
Professional services 129,011
Other 275,630
-----------
1,447,569
-----------
Total expenses 2,053,584
-----------
Loss Before Minority Interest (1,677,060)
Minority Interest of Unitholders in Net Loss of Operating Partnership 100,000
-----------
Net Loss $(1,577,060)
-----------
-----------
Net Loss Per Common Share $ (7.41)
-----------
-----------
Weighted Average Number of Common Shares Outstanding 212,731
-----------
-----------
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
BARON CAPITAL TRUST
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FROM INCEPTION (FEBRUARY 3, 1998) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Common Shares of
Beneficial Interest
-------------------
Shares Amount Deficit Distributions Total
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Initial Capital Contributions:
Managing Shareholder 10 $ 100 $ - $ - $ 100
Proceeds from Sale of Common Shares of
Beneficial Interest, Net of Offering Costs 463,640 4,257,001 - - 4,257,001
Distributions Paid - - - (72,159) (72,159)
Credit for Officer's Compensation - 197,000 - - 197,000
Net Loss - - (1,577,060) - (1,577,060)
------------- ------------- ------------- ------------- -------------
Balance, December 31, 1998 463,650 $ 4,454,101 $ (1,577,060) $ (72,159) $ 2,804,882
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
BARON CAPITAL TRUST
CONSOLIDATED STATEMENT OF CASH FLOWS
FROM INCEPTION (FEBRUARY 3, 1998) TO DECEMBER 31, 1998
<TABLE>
<S> <C>
Cash Flows from Operating Activities:
Net loss $(1,577,060)
Adjustments to reconcile net loss to
net cash used by operating activities:
Provision for officer's compensation 197,000
Minority interest of unitholders in net loss of Operating Partnership (100,000)
Depreciation 80,296
Equity in net loss of unconsolidated partnership 20,360
Increase in operating assets and liabilities:
Other receivables (80,112)
Property management reimbursements receivable (155,071)
Other assets (221,611)
Accounts payable and accrued liabilities 388,385
Security deposits 38,336
Other 762
-----------
Net cash used by operating activities (1,408,715)
-----------
Cash Flows from Investing Activities:
Acquisitions of rental apartments (1,559,162)
Investment in partnerships (741,280)
Cash distributions from partnerships 10,950
Purchases of other property and equipment (117,771)
Increase in restricted cash (66,199)
Advances to affiliates (10,750)
-----------
Net cash used in investing activities (2,484,212)
-----------
Cash Flows from Financing Activities:
Proceeds from sale of common shares of beneficial interest 4,265,089
Distributions paid (72,159)
Initial capital contributions 100,100
Payment on note payable (200,000)
Payments on mortgages payable (19,019)
Payments on capital lease obligation (3,785)
-----------
Net cash provided by financing activities 4,070,226
-----------
Net Increase in Cash and Cash Equivalents 177,299
Cash and Cash Equivalents, Beginning -
-----------
Cash and Cash Equivalents, Ending $ 177,299
-----------
-----------
Supplemental Disclosure of Cash Flow Information:
Cash paid for mortgage and other interest $ 164,333
-----------
-----------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND CAPITALIZATION
Baron Capital Trust (the "Trust") was organized as a business trust
in Delaware on July 31, 1997. The Trust and its affiliate, Baron
Capital Properties, L.P. (the "Operating Partnership"), a Delaware
limited partnership, have been organized to acquire equity
interests in residential apartment properties located in the United
States and to provide or acquire debt mortgage loans secured by
such types of property.
The Managing Shareholder of the Trust is Baron Advisors, Inc., a
Delaware corporation which will manage the operations of the Trust
and the Operating Partnership subject to the supervisory authority
of the Board of the Trust over the activities of the Trust and the
Operating Partnership and the Board's prior approval authority in
respect of certain actions of the Trust and the Operating
Partnership specified in the Declaration of Trust of the Trust.
The Trust's Declaration authorizes it to issue up to 25,000,000
shares of beneficial interest, no par value per share, consisting
of common shares and of preferred shares of such classes with such
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms
or conditions of redemption as the Managing Shareholder may create
and authorize from time to time in accordance with Delaware law and
the Declaration.
The Trust commenced operations on February 3, 1998, at which time
it received its initial capital contribution.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
consolidated accounts of the Trust and the Operating Partnership.
The Trust is the general partner of the Operating Partnership and
owns approximately 81% of the limited partner units of the
Operating Partnership. The consolidated accounts of the Operating
Partnership include the accounts of three limited partnerships in
which the Operating Partnership is the controlling limited partner,
by virtue of its right to remove the general partner due to its
majority ownership percentage in those limited partnerships.
All significant intercompany transactions and balances have been
eliminated in consolidation.
The minority interest of unitholders in the Operating Partnership
represents the 1,202,160 limited partnership units owned by the
Original Investors of the Operating Partnership (see Note 9), and
is stated at the amount of the capital contribution by them to the
Operating Partnership ($100,000), reduced by their proportionate
share of the net loss of the Operating Partnership limited to the
$100,000 contribution. During 1998, the proportionate share of the
net loss of the Operating Partnership allocated to the minority
unitholders was $100,000 with
F-6
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
BASIS OF PRESENTATION (Continued)
the excess of approximately $71,000 being charged to the
majority unitholders. As of December 31, 1998, the 1,202,160
Operating Partnership limited partnership units issued to the
Original Investors are subject to escrow restrictions and
108,757 units are convertible into common shares of the Trust
(see Note 9).
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Trust to
concentrations of credit risk are comprised of cash and
receivables.
CASH
At various times during the year the Trust had deposits
in financial institutions in excess of the federally
insured limits. The Trust maintains its cash with high
quality financial institutions, which the Trust believes
limits these risks.
PROPERTY MANAGEMENT REIMBURSEMENTS AND OTHER RECEIVABLES
Receivables are comprised mainly of property management
reimbursements due to the Operating Partnership from
various properties it manages and monthly rents due. The
Operating Partnership monitors exposure to credit losses
and does not maintain an allowance for these
receivables, as it believes that these receivables are
fully collectible.
REAL ESTATE RENTAL PROPERTIES AND DEPRECIATION
Real estate rental properties are stated at cost less
accumulated depreciation. Ordinary repairs and maintenance are
expensed as incurred; replacements having an estimated useful
life of at least one year and improvements are capitalized and
depreciated over their estimated useful lives.
Depreciation is computed on a straight-line basis over the
estimated useful lives of the properties as follows:
<TABLE>
<CAPTION>
Estimated Useful
Lives (Years)
-------------
<S> <C>
Building 30
Leasehold improvements 10
Furniture and fixtures 7
Computer equipment and software 3-5
</TABLE>
Losses in carrying values of investment assets are provided by
management when the losses become apparent and the investment
asset is considered impaired in accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for the
Impairment of
F-7
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
REAL ESTATE RENTAL PROPERTIES AND DEPRECIATION (Continued)
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
Management evaluates its investment properties annually to
assess whether any impairment indications are present. If any
investment asset is considered impaired, a loss is provided to
reduce the carrying value of the property to its estimated fair
value. No such losses have been required or provided in the
accompanying consolidated financial statements.
REVENUE RECOGNITION
Apartment units are leased under operating leases with terms of
generally one year or less. Rental income is recognized when due
from tenants.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Trust considers
all investments purchased with an original maturity of three
months or less to be cash equivalents.
INVESTMENTS IN PARTNERSHIPS
The Trust, through the Operating Partnership, accounts for its
investments in limited partnerships in which it is deemed not to
have the controlling interest, but has more than a minor limited
partnership interest, utilizing the equity method of accounting.
The Operating Partnership's investment in Alexandria
Development, L.P., which represents a 12.3% interest at December
31, 1998, is accounted for using the equity method (see Note 3).
Investments in partnerships in which the Operating Partnership's
interest is so minor that the Partnership has virtually no
influence over partnership operating and financial policies are
accounted for utilizing the cost method. These investments
generally represent less than 5% of the partnership interest
(see Note 3). The Trust periodically assesses the estimated
realizable value of these investments in order to ascertain that
there has been no impairment in their recorded value.
CAPITAL RESERVE
In connection with the acquisition of the investment properties,
as required by the lending institutions, the Trust has
established a capital reserve account, which is to be used for
significant improvements to the property.
LOAN COSTS
The Trust has capitalized those costs incurred with obtaining
financing on the investment properties. Such costs (included
with other assets) are being amortized over six years, the
remaining term of the financing.
F-8
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
INCOME TAXES
The Trust has not provided for federal income taxes because the
Trust believes it qualifies as a real estate investment trust
(REIT) under Section 856 to 860 of the Internal Revenue Code. A
REIT will generally not be subject to Federal income taxation on
that portion of its income that qualifies as REIT taxable income
to the extent that it distributes substantially all of its
taxable income to its stockholders and complies with certain
other requirements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The respective carrying value of certain on-balance-sheet
financial instruments approximated their fair value. These
instruments include cash, receivables, accounts payable and
accrued liabilities. Fair values were assumed to approximate
carrying values for these financial instruments since they are
short-term in nature and their carrying amounts approximate fair
values or they are receivable or payable on demand.
The fair value of debt instruments has been estimated by using
discounted cash flow models incorporating discount rates based
on current market interest rates for similar types of
instruments. At December 31, 1998, the differences between
estimated fair value and the carrying value of debt instruments
were not material.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued
SFAS No. 130, "Reporting Comprehensive Income" and No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 establishes standards for reporting
and displaying comprehensive income, its components, and
accumulated balances. SFAS No. 131 establishes standards for the
way that public companies report information about operating
segments in annual financial statements and requires reporting
of selected information about operating segments in interim
financial statements issued to the public. Both SFAS No. 130 and
SFAS No. 131 are effective for periods beginning after December
15, 1997. The Trust adopted these new accounting standards in
1998, and their adoption had no effect on the Trust's financial
statements and disclosures.
F-9
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 requires companies to recognize all
derivatives contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated
as a hedge, the objective of which is to match the timing of the
gain or loss recognition of the hedging derivative with the
recognition of (i) the changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk or
(ii) the earnings effect of the hedged forecasted transaction.
For a derivative not designated as a hedging instrument, the
gain or loss is recognized in income in the period of change.
SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999.
Historically, the Trust has not entered into derivatives
contracts to hedge existing risks or for speculative purposes.
Accordingly, the Trust does not expect adoption of the new
standard on January 1, 2000 to affect its financial statements.
NOTE 2. RENTAL APARTMENTS
HEATHERWOOD APARTMENTS
On June 30, 1998, the Operating Partnership acquired the entire
limited partnership interest, representing a 99% partnership
interest, in Heatherwood Kissimmee, Ltd., (the "Heatherwood
Property") a Florida limited partnership which owns fee simple
title to a 67-unit residential property located at Kissimmee,
Florida for a purchase price of approximately $830,000. The
Heatherwood Property is subject to first mortgage financing with
an original balance of approximately $1,250,000 collateralized
by the property. The mortgage calls for monthly payments of
principal and interest of $8,847 and bears a fixed interest rate
of 7.625%. The entire balance, including accrued interest, is
due on December 2004 and may be prepaid with a prepayment fee
equal to 1% of the then outstanding principal balance. The
principal balance outstanding as of December 31, 1998 was
$1,238,755.
CRYSTAL COURT APARTMENTS
On July 31, 1998, the Operating Partnership acquired the entire
limited partnership interest, representing a 91% partnership
interest, in Crystal Court Apartments II, Ltd., (the "Crystal
Court Property") a Florida limited Partnership which owns fee
simple title to an 80-unit residential apartment property
located in Lakeland, Florida for a purchase price of
approximately $704,000. The Crystal Court Property is subject to
first mortgage financing with an original balance of $1,494,000
collateralized by the property. The mortgage calls for monthly
payments of principal and interest of $10,446 and bears a fixed
interest rate of 7.5%. The entire balance, including accrued
interest, is due on October 2004 and may be prepaid with
F-10
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
a prepayment fee equal to 1% of the then outstanding principal
balance. The principal balance outstanding as of December 31,
1998 was $1,477,797.
F-11
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 2. RENTAL APARTMENTS (Continued)
RIVERWALK APARTMENTS
On September 1, 1998, the Operating Partnership acquired the
entire limited partnership interest, representing a 99%
partnership interest, in Riverwalk Enterprises, Ltd., (the
"Riverwalk Property") a Florida limited partnership which owns
fee simple title to a 50-unit residential property located at
New Smyrna Beach, Florida for a purchase price of approximately
$700,000. The Riverwalk Property is subject to first mortgage
financing with an original balance of approximately $1,400,000
collateralized by the property. The mortgage calls for monthly
payments of principal and interest of $11,626 and bears a fixed
interest rate of 8.75% amortized over 25 years. The holder of
the first mortgage has the right to adjust the rate in October
1999 for the remaining five years of the loan to a rate equal to
200 basis points above the then current rate for five-year
treasury notes. The entire balance, including accrued interest,
is due on October 2004 and may be prepaid with a prescribed
prepayment fee. The principal balance outstanding as of December
31, 1998 was $1,323,166.
In connection with the purchase of the Riverwalk Property, the
Trust executed a promissory note payable to the sellers of the
Riverwalk Property with an original balance of $575,000. The
note called for a lump-sum payment of principal and accrued
interest at a rate of 18% per annum on December 1, 1998. In
December 1998, the Operating Partnership paid $226,163 of
principal and interest towards the note and exercised its option
to extend the maturity of the note to February 1, 1999 for an
extension fee of 1% of the original loan amount or $5,750. The
principal balance outstanding as of December 31, 1998 was
$375,000.
Subsequent to December 31, 1998, the Operating Partnership
exercised another option to extend the note to June 1, 1999 and
additional extensions to September 1, 1999 for an extension fee
of 1% of the outstanding loan amount or $3,750 for the June
extension and additional fees for the September extension.
NOTE 3. INVESTMENTS IN PARTNERSHIPS
<TABLE>
<S> <C>
Alexandria Property $368,690
Other Limited Partnership Interests 341,280
--------
$709,970
--------
--------
</TABLE>
ALEXANDRIA APARTMENTS
On October 14, 1998, the Operating Partnership acquired an
approximate 12% limited partnership interest in Alexandria
Development, L.P. (the "Alexandria Property"), a Delaware
limited partnership, which is the owner and developer of a
168-unit residential apartment property under construction in
Alexandria, Kentucky. The Operating Partnership paid $400,000
for eight (8) units of limited partnership interest out of a
total of sixty-five (65) units and retains an option to acquire
the remaining fifty-seven (57) units of limited partnership
F-12
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
interests for $50,000 per unit or approximately $2,850,000. The
option is exercisable as additional apartments are completed and
rented and expires on October 15,
F-13
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 3. INVESTMENTS IN PARTNERSHIPS (Continued)
ALEXANDRIA APARTMENTS (Continued)
1999. An affiliate of the Trust sold the partnership interest in
the Alexandria Property to the Operating Partnership and also
serves as the managing general partner of the Alexandria
Property. During the construction stage of the apartment
property, the Operating Partnership's limited partnership
interest in the Alexandria Property is entitled to an annual 12%
preferential return, which is senior to the other limited
partnership interests and the general partner's nominal 1%
interest.
Subsequent to December 31, 1998, the Operating Partnership
exercised its option to purchase an additional eighteen (18)
units of limited partnership interest for $885,000, thereby
increasing its ownership interest to approximately 40%.
The following is an analysis of the investment in the Alexandria
Property from inception (February 3, 1998) to December 31,1998:
<TABLE>
<S> <C>
Balance, beginning $ -
Investments 400,000
Distributions (10,950)
Equity in net loss (20,360)
--------
Balance, ending $368,690
--------
--------
</TABLE>
The following is a summary of the financial position and results
of operations of the Alexandria Property as of and for the
period ended December 31, 1998:
<TABLE>
<S> <C>
Financial Position:
Rental apartments $ 2,790,402
Construction in progress 6,497,912
Other assets 1,446,086
------------
Total assets $ 10,734,400
------------
------------
Mortgage payable $ 7,750,000
Other liabilities 2,366,369
------------
Total liabilities 10,116,369
Partners' Capital 618,031
$ 10,734,400
------------
------------
Results of Operations:
Rental income $ 85,971
Other income 266,685
Costs and expenses (518,186)
------------
Net loss $ (165,530)
------------
------------
</TABLE>
F-14
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 3. INVESTMENTS IN PARTNERSHIPS (Continued)
OTHER LIMITED PARTNERSHIP INTERESTS
In July 1998, the Operating Partnership also was admitted as a
limited partner in 13 real estate limited partnerships managed
by affiliates of the Managing Shareholder. The Operating
Partnership acquired the interests in consideration of a capital
contribution ranging from approximately $2,900 to $83,300 in
each such partnership. The aggregate contribution made by the
Operating Partnership was approximately $341,000. The percentage
interest acquired by the Operating Partnership (less than 4% in
each case) was calculated at fair market value. In each
instance, the Operating Partnership agreed that its right to
receive distributions from cash flow or from a capital event
would be subordinate to the right of the existing limited
partners to receive any preferred return described in the
partnership agreement of the respective partnership.
NOTE 4. OTHER PROPERTY AND EQUIPMENT
<TABLE>
<S> <C>
Furniture and equipment $112,272
Computer equipment and software 44,455
Leasehold improvements 20,813
--------
177,540
Less accumulated depreciation 8,558
--------
$168,982
--------
--------
</TABLE>
NOTE 5. MORTGAGES PAYABLE
<TABLE>
<CAPTION>
Balance at
Original Maturity Interest December 31,
Property Amount Date Rate 1998
-------- ------ ---- ---- ----
<S> <C> <C> <C> <C>
Heatherwood Apartments $1,250,000 12/31/2004 7.625% $1,238,755
Crystal Court Apartments 1,494,000 10/31/2004 7.5 1,477,797
Riverwalk Apartments 1,400,000 10/31/2004 8.75 1,323,166
--------- ---------
Total mortgage note payables $4,139,000 $4,039,718
--------- ---------
--------- ---------
</TABLE>
All mortgage notes payable are collateralized by the underlying
properties described in Note 2 above.
The aggregate maturities of mortgages payable for each of the five
years subsequent to December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Principal
---------
<S> <C>
Year ending December 31:
1999 $ 50,544
2000 54,799
2001 59,415
2002 64,420
2003 69,872
</TABLE>
F-15
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<S> <C>
Thereafter (2004) 3,740,668
----------
Total $4,039,718
----------
----------
</TABLE>
F-16
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 6. CAPITAL LEASE OBLIGATION
During 1998, the Operating Partnership purchased office
furniture financed through a capital lease obligation. The loan
is non-interest bearing secured by the office furniture
purchased and requires forty-eight (48) monthly payments of
$1,245. Future minimum capital lease payments and the net
present value of the future minimum lease payments at December
31, 1998 are as follows:
<TABLE>
<S> <C>
Year Ending December 31:
1999 $14,942
2000 14,942
2001 14,942
2002 11,158
-------
Total minimum lease payments $55,984
-------
-------
</TABLE>
NOTE 7. COMMITMENTS AND CONTINGENCIES
CONTRACT TO PURCHASE ADDITIONAL PROPERTIES
In September 1998, the Trust entered in an agreement with three
real estate development companies to acquire two luxury
residential apartment properties in the development stage upon
the completion of construction. The development companies
(Brentwood at Southgate, Ltd., Burlington Residential, Ltd. and
The Shoppes at Burlington, Ltd.) are controlled by one of the
Trust's founders and chief executive officer. The properties are
scheduled to have a total of 652 units, comprised of one, two
and three bedroom/one or two bathroom apartments. Construction
of one of the properties, located in Louisville, Kentucky, is
expected to be completed prior to the end of 2000, and
construction of the other property, located in Burlington,
Kentucky (part of the Cincinnati metropolitan area), is expected
to be completed by the end of 2001. The aggregate purchase price
for the two properties is in the range of approximately
$41,000,000 to $43,000,000. The closing of each acquisition,
which is expected to occur shortly following the completion of
construction, is conditioned on, among other things, the
completion of the respective apartment property, the
availability of first mortgage financing and the Trust's raising
the balance of the funds necessary for the acquisition in its
ongoing Cash Offering or otherwise have funds available to make
the acquisition.
In connection with the transaction and in exchange for certain
benefits described below, the Trust agreed to co-guarantee
(along with the chief executive officer), up to 35% (or
approximately $12,500,000) of the development portion of
long-term construction loans with an aggregate principal amount
of up to $36,000,000 to be provided by a bank to the development
companies. As of December 31, 1998, approximately $4,600,000 of
such loans had been drawn down, resulting in outstanding
guarantees of approximately $1,600,000. Subject to the
fulfillment of certain closing and funding conditions, the
construction loans will be made to the development companies in
connection with the development and construction of the two
apartment properties and of an 111,000 square foot shopping
center
F-17
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 7. COMMITMENTS AND CONTINGENCIES (Continued)
CONTRACT TO PURCHASE ADDITIONAL PROPERTIES (Continued)
being developed in Burlington, Kentucky. The interest rates on
the construction loans range from 7.36% to 7.52%. The Trust also
agreed that, if the loans were not repaid prior to the
expiration of the guarantee, it would either buy out the bank's
position on the entire amount of the construction loans or
arrange for a third party to do so. The construction loans are
expected to be replaced by a long-term credit facility.
The Trust expects to receive significant benefits from the
transaction in addition to the acquisition of two large luxury
apartment properties located in attractive communities. In
exchange for the guarantee of the development portion of the
construction loans, the Trust will receive a discount of
approximately $212,500 (representing a one-half of one percent
reduction) on the purchase price of the properties. The Trust
and the development companies are negotiating a further price
reduction which would apply if the development portion of the
loans is not repaid prior to the expiration of the guarantee
period and the Trust is required to buy out or arrange for the
buyout of the lender's position on the loans.
OFFICERS' COMPENSATION
A founder of the Trust and the Operating Partnership serves as
Chief Executive Officer of the Trust, the Operating Partnership
and the Managing Shareholder. He has agreed to serve a Chief
Executive Officer for the first year in exchange for
compensation in the form of common shares or units of the
Operating Partnership in an amount not to exceed 25,000 shares
or units, as applicable, to be determined by the Executive
Compensation Committee based upon his performance, in addition
to benefits and eligibility for participation in any option plan
and bonus incentive compensation plan which may be implemented
by the Trust. During 1998, no common shares of the Trust or
units of the Operating Partnership were issued to the Chief
Executive Officer as compensation. However, in order to reflect
all appropriate administrative expenses of the Partnership, a
provision of $197,000 has made in the accompanying financial
statement for the estimated fair value of the services rendered
by the Chief Executive Officer for 1998. This amount has been
charged to compensation expense for 1998, with a corresponding
credit to partners' capital. This estimate of the fair value of
such services was determined by management based upon an
analysis of compensation paid to chief executive officers of a
number of comparable real estate investment trusts during 1998.
After the first year of operations, compensation and benefits
for the Chief Executive Officer will be determined annually by
the Executive Compensation Committee of the Board of the Trust.
The other founder of the Trust and Operating Partnership serves
as the Chief Operating Officer of the Trust, the Operating
Partnership and the Managing Shareholder. His initial annual
salary has been set at $100,000, in addition to benefits, and
eligibility for participation in any common share option plan
and bonus incentive compensation plan which may be implemented
by the Trust.
F-18
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 7. COMMITMENTS AND CONTINGENCIES (Continued)
OPERATING LEASES
During 1998, the Operating Partnership executed an operating
lease for its office facilities. The lease, which expires in
June 15, 2003, requires monthly payments of $5,000. The
Operating Partnership has three options of five years each to
extend its lease for a total of fifteen additional years.
Minimum future lease payments on this lease are as follows:
<TABLE>
<S> <C>
Year ending December 31:
1999 $ 60,000
2000 60,000
2001 60,000
2002 60,000
2003 30,000
--------
Total $270,000
--------
--------
</TABLE>
Rent expense was approximately $24,000 for 1998.
NOTE 8. RELATED PARTY TRANSACTIONS
TRUST MANAGEMENT AGREEMENT
The Trust has entered into a Trust Management Agreement with the
Managing Shareholder under which the Managing Shareholder is
obligated to provide management, administrative and investment
advisory services to the Trust. The services to be rendered
include, among other things, communicating with and reporting to
investors, administering accounts, providing to the Trust of
office space, equipment and facilities and other services
necessary for the Trust's operation, and representing the Trust
in its relations with custodians, depositories, accountants,
attorneys, brokers and dealers, corporate fiduciaries, insurers,
banks and others, as required. The Managing Shareholder is also
responsible for determining which real estate investments and
non-real estate investments (including the temporary investment
of the Trust's available funds prior to their commitment to
particular real estate investments) the Trust will make and for
making divestment decisions, subject to the provisions of the
Declaration. The Trust Management Agreement has an initial term
of one year and may be extended on a year-to-year basis on
approval of (i) the Board or a majority of the stockholders
entitled to vote on such matter or (ii) a majority of the
Independent Trustees.
F-19
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 8. RELATED PARTY TRANSACTIONS (Continued)
TRUST MANAGEMENT AGREEMENT (Continued)
The Trust will reimburse the Managing Shareholder for all Trust
expenses in an amount not to exceed 2% of gross proceeds from
the sale by the Trust of common shares in the Trust's initial
offering. Under the Trust Management Agreement, the Trust will
reimburse the Managing Shareholder, on a monthly basis during
the term of the agreement, for its operating expenses relating
to the business of the Trust and the Operating Partnership in an
amount up to the sum of (i) 1% of the gross proceeds from the
sale by the Trust of common shares in the Trust's initial
offering, and (ii) 1% of the initial stock price for each unit
of limited partnership interest ("Unit") in the Operating
Partnership issued in connection with a Proposed Exchange
Offering of Units as contemplated in the Trust's Prospectus. The
Managing Shareholder in its sole discretion may elect to receive
payment for its service in the form of common shares with an
equivalent value. The Trust will also reimburse the Managing
Shareholders for expenses incurred prior to and during the Cash
Offering in investigating and evaluating investment
opportunities and assisting the Trust in consummating its
investments in an amount not to exceed 4% of the gross proceeds
from the sale by the Trust of common shares in the Trust's
initial offering for the Managing Shareholder's services.
During 1998, the Trust paid the Managing Shareholder $92,393 for
reimbursable expenses incurred during the Cash Offering,
$185,456 for reimbursable investment expenses and $46,364 for
reimbursable management expenses. As of December 31, 1998,
$136,941 is due to the Managing Shareholder for reimbursable
expenses and investment fees.
TRANSACTIONS WITH AFFILIATED ENTITIES
During 1998, the Operating Partnership paid approximately
$12,000 to an affiliated corporation for computers being used by
the Operating Partnership.
REIMBURSED ADMINISTRATIVE EXPENSES
The Partnership shares certain administrative expenses with a
number of other partnerships that are related to the Operating
Partnership by means of a common person who is the sole
stockholder and officer of the general partner of these
partnerships and an officer of the general partner of the
Operating Partnership. These administrative expenses are
allocated as described below, and the allocated expenses are
reimbursed to the Partnership by these other partnerships. The
allocation of the costs was determined based upon an analysis of
those administrative costs directly associated with or
reasonably allocated to the activities of each entity. Personnel
costs were allocated based upon estimates of the time devoted by
individual employees to each entity's activities on a monthly
basis. Other administrative costs were allocated on a direct
basis to the extent practicable, and the balance on a pro rata
basis. In the opinion of management, the method used to allocate
costs to all of the entities was considered to be reasonable
under the circumstances.
F-20
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 8. RELATED PARTY TRANSACTIONS (Continued)
REIMBURSED ADMINISTRATIVE EXPENSES (Continued)
During 1998 the Partnership was reimbursed approximately
$496,000 for administrative expenses, which has been presented
as a reduction of the specific related category of
administrative expenses in the accompanying financial
statements.
ADVANCES
From time to time, the Operating Partnership advances funds to
affiliates. These advances do not accrue interest and are due on
demand. As of December 31, 1998, the Operating Partnership had
advanced $10,750 to two affiliates.
NOTE 9. SHAREHOLDERS' EQUITY
CASH OFFERING
On May 15, 1998, pursuant to a registration statement on Form
SB-2, the Trust commenced an initial public offering of a
maximum of 2,500,000 common shares of beneficial interest in the
Trust at $10 per common share, which is payable in full upon
subscription, for proposed total gross proceeds of $25,000,000
(the Cash Offering). All of the common shares to be issued or
sold by the Trust in the offering will be tradable without
restriction under the Securities Act, but will be subject to
certain restrictions designed to permit the Trust to qualify and
maintain its status as a Real Estate Investment Trust under the
Internal Revenue Code. The Cash Offering will terminate no later
than November 30, 1999.
EXCHANGE OFFERING
The Operating Partnership has filed a registration statement on
Form S-4 with the Securities and Exchange Commission covering up
to 2,500,000 units of limited partnership interest ("Units") to
be registered under the Securities Act of 1933, as amended (the
"Act") ("Exchange Offering").
It is proposed that these units would be exchanged for units of
limited partnership interest in 23 limited partnerships (the
"Exchange Partnerships"), which directly or indirectly own
equity and/or mortgage interests in one or more residential
apartment properties. The Exchange Partnerships are managed by
corporate general partners who are affiliated with one of the
founders of the Operating Partnership, who is the sole
stockholder and director of the Managing Shareholder of the
Trust. This registration statement has not yet become effective.
F-21
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 9. SHAREHOLDERS' EQUITY (Continued)
EXCHANGE OFFERING (Continued)
The number of Units being offered in exchange for the limited
partnership interests in the Exchange Partnerships will be based
on appraisals prepared by qualified and licensed independent
appraisal firms for each underlying residential apartment
property. For purposes of the Exchange Offering, each Unit has
been arbitrarily assigned an initial value of $10, which
corresponds to the offering price of each Trust Common Share
currently being offered to the public pursuant to the Cash
Offering. The value of each Unit and Common Share outstanding
will be substantially identical since Unit holders, including
recipients of Units in the Exchange Offering, will be entitled
to exchange all or a portion of their Units at any time and from
time to time for an equivalent number of Trust Common Shares, so
long as the exchange would not cause the exchanging party to own
(taking into account certain ownership attribution rules) in
excess of 5% of the then outstanding shares in the Trust,
subject to the Trust's right to cash out any holder of Units who
requests an exchange and subject to certain other exceptions. To
facilitate such exchanges of Units into Common Shares, 2,500,000
Common Shares (in addition to the 2,500,000 Common Shares being
offered by the Trust in the Cash Offering) have been registered
with the Commission.
As its initial investment targets in the Exchange Offering, the
Operating Partnership is offering to acquire equity and/or
subordinated mortgage interests in 26 properties (the "Exchange
Properties") directly or indirectly owned by the 23 Exchange
Partnerships. The Operating Partnership will acquire interests
in a particular property and/or mortgages by acquiring from
limited partners their units of limited partnership interest in
the respective Exchange Partnership. Each of the Exchange
Partnerships directly or indirectly owns equity and/or mortgage
interests in one or more properties. Certain of the Exchange
Partnerships directly or indirectly own equity interests in 16
properties which consist of an aggregate of 1,012 residential
units (comprised of studio, one, two, three and four bedroom
units). Certain of the Exchange Partnerships directly or
indirectly own mortgage interests in 10 properties, which
consist of an aggregate of 813 existing residential units
(studio and one and two bedroom units) and 168 units (two and
three bedroom units) under development. Of the Exchange
Properties, 21 properties are located in Florida, three
properties in Ohio and one property each in Georgia and Indiana.
OPERATING PARTNERSHIP LIMITED PARTNERSHIP UNITS
In connection with the formation of the Trust and the Operating
Partnership, the Original Investors each subscribed for 601,080
limited partnership units of the Operating Partnership (a total
of 1,202,160 units). In consideration for the units subscribed
for by them, the Original Investors made a $100,000 capital
contribution to the Operating Partnership. If the Cash Offering
and the Exchange Offering are fully subscribed, those Units
would represent 19% of the total Common Shares outstanding after
completion of the Cash Offering and exchange by the Operating
Partnership of 2,500,000 of its Units for units of limited
partnership interest in real estate limited partnerships
(including any exchange pursuant to the Exchange Offering),
F-22
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
calculated on a fully diluted basis assuming all then
outstanding Units (other than those acquired by the Trust) have
been exchanged into an equivalent number of
F-23
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 9. SHAREHOLDERS' EQUITY (Continued)
OPERATING PARTNERSHIP LIMITED PARTNERSHIP UNITS (Continued)
Common Shares. If, however, as of November 30, 1999, the Cash
Offering and/or the Exchange Offering has been completed and the
number of Units subscribed for by each Original Investment
represents a percentage greater than 19% of the then outstanding
Common Shares, calculated on a fully diluted basis assuming that
all then outstanding Units (other than those acquired by the
Trust) have been exchanged into an equivalent number of Common
Shares, each Original Investor has agreed to return any excess
Units to the Operating Partnership for cancellation. The
Original Investors have deposited Units subscribed for by them
into a security escrow account for six to nine years, subject to
earlier release under certain conditions.
The fair value of the units issued to the Original Investors
amounted to $100,000, based upon a determination made by the
Independent Trustees of the Trust as of the date of subscription
for these units (February 3, 1998). The determination of the
fair value took into consideration that (a) at the time of the
subscription for the units, the Trust and the Partnership were
development stage companies, with no cash or other significant
tangible assets, operating history or revenue and no certainty
of successful offerings or future operations; the founders had
at risk their initial capital contributions plus certain
additional unreimbursed advances to cover certain offering and
operating expenses; the founders have significant experience and
developed know-how critical to the success of the Trust and the
Partnership; and the founders' units are subject to significant
transfer restrictions. The Partnership has accounted for the
units as being issued and outstanding, but subject to escrow
restrictions, in the accompanying consolidated financial
statements, and has included the units as outstanding in
determining the weighted average shares outstanding for purposes
of calculating net loss per partnership unit in the accompanying
consolidated financial statements. Because the release of the
units from escrow is not dependent upon the achievement of any
specified level of profits, the release of the units from escrow
is not considered to be compensatory and, accordingly, no
accounting measurement will be given to the release of the units
from escrow.
Under the subscription agreement, the Original Investors agreed
to waive future administrative fees for managing Participating
Exchange Partnerships; agreed to assign to the Operating
Partnership the right to receive all residual economic rights
attributable to the general partner interests in Participating
Exchange Partnerships; and, in order to permit management of the
Exchange Properties by the Operating Partnership, caused the
Exchange Partnerships to cancel the partnerships' prior property
management agreements and agreed to forego the right to have a
property management firm controlled by the Original Investors
assume the property management role in respect of properties in
which the Trust or the Operating Partnership invest.
F-24
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 9. SHAREHOLDERS' EQUITY (Continued)
OPERATING PARTNERSHIP LIMITED PARTNERSHIP UNITS (Continued)
After the exchange with the limited partners and assignment of
economic rights of the general partner, the Operating
Partnership will control the Participating Exchange Partnerships
by virtue of its ownership of at least 90% of the limited
partnership interests, which will provide the Operating
Partnership the ability to remove the general partner under the
provisions of the limited partnership agreements that limited
partners holding over 50% of total partnership interest have the
right to remove the general partner.
DISTRIBUTIONS
During 1998, the Board of Trustees authorized the payment of two
quarterly distributions aggregating $72,159 ($.225 per common
share of beneficial interest) from the surplus of the Trust.
This amount is presented in the accompanying consolidated
financial statements as a deduction from shareholders' equity
under the caption "Distributions".
NOTE 10. NET LOSS PER SHARE
The Trust computes per share data in accordance with Statement
of Financial Accounting Standards No. 128 (SFAS 128), "Earnings
Per Share". SFAS 128 requires dual presentation of basic and
diluted earnings per share on the face of the income statement.
Basic net loss per share equals net loss divided by the weighted
average shares outstanding during the year. The computation of
diluted net loss per share that includes dilutive common stock
equivalents in the weighted average shares outstanding has not
been presented, as it is anti-dilutive in 1998.
The components used in calculating basic net loss per share are
as follows:
<TABLE>
<CAPTION>
Weighted
Average Loss
Net Loss Shares Per Share
----------- ----------- -----------
<S> <C> <C> <C>
1998 $(1,577,060) 212,731 $(7.41)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Assuming that the Original Investors had exchanged their limited
partnership units for an equivalent net amount of 122,561 Common
Shares, the net loss per share on an as-converted basis would
have been $4.70 per share.
F-25
<PAGE>
BARON CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 11. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
During 1998, the Operating Partnership acquired three rental
apartment properties through the assumption of mortgage payables
and a note payable, as follows:
<TABLE>
<S> <C>
Mortgages payable $4,058,737
Note payable 575,000
----------
$4,633,737
----------
----------
</TABLE>
Also, the Operating Partnership acquired furniture and equipment
in 1998 by means of capital lease financing in the amount of
$59,769.
F-26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BARON CAPITAL TRUST
September 17, 1999 By: /s/ GREGORY K. MCGRATH
-----------------------
Gregory K. McGrath
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ GREGORY K. MCGRATH Chief Executive Officer September 17, 1999
------------------- (Principal Executive Officer)
Gregory K. McGrath
/s/ MARK L. WILSON Interim Chief Financial Officer September 17, 1999
------------------- (Principal Financial and Accounting
Mark L. Wilson Officer)
/s/ JAMES H. BOWNAS Trustee September 17, 1999
-------------------
James H. Bownas
/s/ PETER M. DICKSON Trustee September 17, 1999
--------------------
Peter M. Dickson
/s/ GREGORY K. MCGRATH Corporate Trustee September 17, 1999
----------------------
Gregory K. McGrath
President, Chief Executive
Officer of Baron Capital
Properties, Inc.
</TABLE>
