<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
Form 10-Q
_________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended
September 30, 1998
Commission file number: 001-11081
Merry Land LLC
as successor by merger to
Merry Land & Investment Company, Inc.
Two North Riverside Plaza
Suite 400
Chicago, Illinois 60606
312-454-1300
____________
State of Incorporation: I.R.S. Employer Identification Number:
Georgia 58-2419946
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 twelve months, and (2) has been subject to such filing
requirements for the past ninety days: Yes . No X .
--- ---
The number of shares of common stock of Merry Land & Investment Company, Inc.,
the predecessor to the Registrant, as of October 19, 1998, the date of the
merger, was 43,026,292.
================================================================================
<PAGE>
Form 10-Q - Merry Land LLC
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1998 and December 31, 1997
Consolidated Statements of Income - Three months ended September 30,
1998 and 1997, and nine months ended September 30, 1998 and 1997.
Consolidated Statements of Cash Flows - Nine months ended September 30,
1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
Form 10-Q - Part I. Financial Information
Item 1-Financial Statements
Merry Land & Investment Company, Inc.
Predecessor to Merry Land LLC
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1998 1997
------------ -----------
<S> <C> <C>
PROPERTIES AT COST
Apartments $1,860,929 $1,496,109
Apartments under development 44,670 48,342
Commercial rental property 5,425 5,363
Land held for investment or future development 2,924 4,090
Operating equipment 2,005 3,676
---------- ----------
1,915,953 1,557,580
Less accumulated depreciation and depletion (181,220) (142,617)
---------- ----------
1,734,734 1,414,963
CASH AND SECURITIES
Cash and cash equivalents 778 570
Marketable securities 1,663 1,963
---------- ----------
2,441 2,533
OTHER ASSETS
Notes receivable 1,358 1,412
Other receivable 264 249
Deferred loan costs 4,691 4,639
Other 8,138 4,085
---------- ----------
14,451 10,385
---------- ----------
TOTAL ASSETS $1,751,626 $1,427,881
========== ==========
NOTES PAYABLE
Mortgage loans $ 183,160 $ 70,282
Senior notes 460,000 460,000
Note payable-credit line 83,000 67,800
---------- ----------
726,160 598,082
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accrued interest 10,218 6,622
Resident security deposits 1,797 1,597
Accrued property taxes 21,180 10,780
Accrued employee compensation 1,077 3,471
Other 12,528 9,997
---------- ----------
46,800 32,467
Minority interest 21,915 --
STOCKHOLDERS' EQUITY
Preferred stock, at $25 and $50 liquidation preference,
20,000 shares authorized 369,194 269,677
Common stock, at $1 stated value, 100,000 shares authorized
43,022 and 39,177 shares issued 43,022 39,177
Capital surplus 614,069 525,744
Cumulative undistributed net earnings (40,310) (15,730)
Notes receivable from stockholders and ESOP (29,078) (21,691)
Accumulated other comprehensive income (146) 155
---------- ----------
956,751 797,332
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY $1,751,626 $1,427,881
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
3
<PAGE>
Form 10-Q -- Part I. Financial Information
Item 1 -- Financial Statements
Merry Land & Investment Company, Inc.
Predecessor to Merry Land LLC
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
Sept. 30, Sept. 30,
------------------ --------------------
1998 1997 1998 1997
------- ------- -------- --------
<S> <C> <C> <C> <C>
Rental income $70,554 $53,742 $196,984 $150,616
Mineral royalties 428 441 1,289 995
Mortgage interest 27 17 83 63
Other interest 102 154 922 1,595
Dividends 0 81 88 682
Other income 37 15 538 5,066
------- ------- -------- --------
$71,148 $54,450 $199,904 $159,017
Rental expense 19,905 15,110 51,527 40,339
General and administrative expense 1,432 946 4,375 3,327
Interest 9,762 6,461 27,811 17,433
Taxes and insurance 7,788 5,682 22,655 17,060
Depreciation -- real estate 14,361 10,560 40,634 29,523
Depreciation -- other 191 111 461 279
Amortization -- financing costs 496 219 1,224 504
------- ------- -------- --------
53,935 39,089 148,687 108,465
Income before net realized gains (losses) 17,213 15,363 51,217 50,553
Net realized gains (losses) (10) 680 (410) 1,535
------- ------- -------- --------
Income before minority interests 17,203 16,043 50,807 52,088
Minority interests 292 0 620 0
------- ------- -------- --------
NET INCOME 16,911 16,043 50,187 52,088
Dividends to preferred shareholders 7,695 5,812 22,166 17,462
------- ------- -------- --------
NET INCOME AVAILABLE FOR COMMON SHARES $ 9,216 $10,231 $ 28,021 $ 34,626
======= ======= ======== ========
Weighted average common shares
-- basic 43,022 38,618 41,908 38,320
-- diluted 44,460 38,680 42,899 38,369
EARNINGS PER COMMON SHARE
-- basic $.21 $.26 $ .67 $ .90
==== ==== ===== =====
-- diluted $.21 $.26 $ .67 $ .90
==== ==== ===== =====
CASH DIVIDENDS DECLARED PER COMMON SHARE $.41 $.39 $1.23 $1.17
==== ==== ===== =====
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE>
Form 10-Q - Part I. Financial Information
Item 1-Financial Statements
Merry Land & Investment Company, Inc.
Predecessor to Merry Land LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months ended Sept. 30,
---------------------------
1998 1997
----------- ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Rents and royalties received $ 198,574 $ 151,837
Interest received 1,157 1,881
Dividends received 88 682
Rental expense (52,661) (39,772)
General and administrative expense (4,849) (3,497)
Interest expense (24,215) (14,164)
Property taxes and insurance expense (12,705) (8,707)
Other 606 810
--------- ---------
Net cash provided by operating activities 105,995 89,070
--------- ---------
INVESTING ACTIVITIES:
Principal received on notes receivable 56 36
Sale of securities 0 26,949
Sale of real property 3,169 20,974
Purchase of real property (154,896) (231,725)
Development of real property (50,118) (45,660)
Recurring capital expenditures (7,391) (5,552)
Improvements to existing properties (4,500) (5,319)
Other (2,162) 6,027
--------- ---------
Net cash (used for) investing activities (215,842) (234,270)
--------- ---------
FINANCING ACTIVITIES:
Senior unsecured notes 0 50,000
Net borrowings - note payable - credit line 15,200 88,550
Net borrowings (repayments) - mortgage loans (528) 24,086
Cash dividends paid - common (52,584) (44,842)
Cash dividends paid - preferred (22,166) (17,462)
Sale of common stock 74,097 12,873
Sale of preferred stock - public offering 96,593 (138)
Distributions to minority interests (558) 0
--------- ---------
Net cash provided by financing activities 110,055 113,067
--------- ---------
NET INCREASE (DECREASE) IN CASH 208 (32,133)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 570 32,793
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 778 $ 660
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE>
Form 10-Q - Part I. - Financial Information
Item 1 - Financial Statements
Merry Land & Investment Company, Inc.
Predecessor to Merry Land LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliation of Net Income to Cash Flows from Operating Activities
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months ended Sept. 30,
---------------------------
1998 1997
------------ -----------
<S> <C> <C>
Net income $50,187 $52,088
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 42,319 30,306
Gain on the sale of real property & marketable securities 410 1,535
Minority interest 620 0
(Increase) decrease in interest and accounts receivable (15) 289
(Increase) in other assets (4,053) (1,731)
Increase in accounts payable and accrued interest 16,527 6,583
-------- -------
Net cash provided by operating activities $105,995 $89,070
======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
6
<PAGE>
Merry Land & Investment Company, Inc.
Predecessor to Merry Land LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(Unaudited)
1. Nature of Business
Merry Land & Investment Company, Inc., the predecessor to Merry Land LLC
("Merry Land" or the "Company"), was a real estate investment trust (REIT),
which owned and operated upscale apartment communities in nine Southern states
including Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina,
Tennessee, Texas, and Virginia. As a qualified REIT the Company paid no
corporate income taxes on earnings distributed to stockholders.
The consolidated financial statements for the nine month periods ended
September 30, 1998 and September 30, 1997 reflect all adjustments (consisting of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of the financial position and operating results for the
interim period.
On April 1, 1998 and September 30, 1998 the Company issued partnership
units in connection with the purchase of thirteen communities. As a result of
these transactions, Merry Land created a subsidiary DownREIT partnership.
2. Marketable Securities
The cost and market value of securities by major classification at
September 30, 1998 were as follows (dollars in thousands):
<TABLE>
<CAPTION>
Unrealized
Cost Market Gain (Loss)
------ ------ -----------
<S> <C> <C> <C>
Common stock $1,809 $1,663 $(146)
</TABLE>
3. Non-Cash Investing and Financing Activities
The Company's 1998 property acquisition activity was net of the assumption
of mortgage notes of $113,406,610 and the issuance of Minority Partnership units
valued at $36,057,898. These non-cash items are not reflected on the
Consolidated Statements of Cash Flows.
4. Borrowings
Borrowings at September 30, 1998 were as follows (dollars in thousands):
<TABLE>
<S> <C>
9.760% mortgage notes (a) $ 12,579
7.750% mortgage note (b) 9,600
7.625% mortgage note (c) 5,083
7.210% mortgage note (d) 9,344
7.125% mortgage note (e) 14,524
7.570% mortgage note (f) 9,753
8.250% mortgage note (g) 8,871
9.250% mortgage notes (h) 16,737
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
4.850% mortgage notes (i) 5,995
4.850% mortgage note (j) 6,925
4.850% mortgage note (k) 11,640
4.850% mortgage note (l) 10,370
5.350% mortgage note (m) 10,240
5.350% mortgage note (n) 12,090
4.010% mortgage note (o) 21,170
floating mortgage note (p) 9,540
floating mortgage note (q) 8,700
6.625% senior unsecured notes (r) 120,000
7.250% senior unsecured notes (s) 40,000
6.875% senior unsecured notes (t) 40,000
6.875% senior unsecured notes (u) 40,000
7.250% senior unsecured notes (v) 120,000
6.690% senior unsecured notes (w) 50,000
6.900% senior unsecured notes (x) 50,000
Advances under unsecured line of credit (y) 83,000
---------
$ 726,160
=========
</TABLE>
(a) $10.6 million and $2.0 million, 9.760% mortgage notes, principal and
interest payable monthly, maturity 2001.
(b) 7.750% mortgage note, interest payable monthly only until November 1998 at
which both principal and interest will be payable monthly, maturity 2002.
(c) 7.625% mortgage note, principal and interest payable monthly, maturity
2005.
(d) 7.210% mortgage note, principal and interest payable monthly, maturity
2001.
(e) 7.125% mortgage notes, principal and interest payable monthly, maturity
2006.
(f) 7.570% mortgage note, principal and interest payable monthly, maturity
2001.
(g) 8.250% mortgage note, principal and interest payable monthly, maturity
2001.
(h) 9.250% mortgage note, principal and interest payable monthly, maturity
2002.
(i) 4.850% mortgage notes, interest payable semi-annually, maturity 2005.
(j) 4.850% mortgage note, interest payable semi-annually, maturity 2005.
(k) 4.850% mortgage note, interest payable semi-annually, maturity 2008.
(l) 4.850% mortgage note, interest payable semi-annually, maturity 2005.
(m) 5.350% mortgage note, interest payable semi-annually, maturity 2005.
(n) 5.350% mortgage note, interest payable semi-annually, maturity 2005.
(o) 4.010% mortgage note, interest payable semi-annually, maturity 2007.
(p) Mortgage note, floating interest rate payable monthly, based on average
weekly remarketing rate, maturity 2007.
(q) Mortgage note, floating interest rate payable quarterly, based on average
weekly remarketing rate, maturity 2006.
(r) 6.625% notes, interest payable semi-annually, principal installments of
$40.0 million each due 1999, 2000, and 2001.
(s) 7.250% notes, interest payable semi-annually, maturity 2002.
(t) 6.875% notes, interest payable semi-annually, maturity 2003.
(u) 6.875% notes, interest payable semi-annually, maturity 2004.
(v) 7.250% notes, interest payable semi-annually, maturity 2005.
(w) 6.690% notes, principal and interest payable semi-annually, maturity 2006.
(x) 6.900% notes, principal and interest payable semi-annually, maturity 2007.
(y) $200 million line of credit bearing interest equal to floating LIBOR plus
0.60%, maturity September, 2000.
The Company estimates that the fair value of borrowings approximates their
carrying value at September 30, 1998. Maturities of borrowings at September 30
were as follows (dollars in thousands):
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
1998 $ 196
1999 40,959
2000 124,152
2001 80,391
2002 65,911
2003 40,489
2004 40,526
2005 170,424
2006 70,762
2007 and after 92,350
--------
$726,160
========
</TABLE>
5. Earnings Per Share and Share Information
In 1997, the Company adopted SFAS 128, "Earnings Per Share". In accordance
with this standard, basic earnings per share are computed on the basis of the
weighted average number of shares outstanding during the periods presented.
Diluted earnings per share is computed giving effect to dilutive stock options,
dilutive preferred stock, and partnership units. Basic and diluted earnings per
share are computed as follows (dollars in thousands):
<TABLE>
<CAPTION>
Three months ended Sept. 30, Nine months ended Sept. 30,
---------------------------- ---------------------------
1998 1997 1998 1997
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
BASIC:
Net Income $16,911 $16,043 $ 50,187 $ 52,088
Preferred dividend requirement (7,695) (5,812) (22,166) (17,462)
------- ------- -------- --------
Net income available for common shares $ 9,216 $10,231 $ 28,021 $ 34,626
======= ======= ======== ========
Average common shares outstanding 43,022 38,618 41,908 38,320
Basic earnings per share $ 0.21 $ 0.26 $ 0.67 $ 0.90
DILUTED:
Net income $16,911 $16,043 $ 50,187 $ 52,088
Preferred dividend requirement (7,695) (5,812) (22,166) (17,462)
Minority interest 292 -- 620 --
------- ------- -------- --------
Net income available for common - diluted $ 9,508 $10,231 $ 28,641 $ 34,626
======= ======= ======== ========
Dilutive stock options 76 62 78 49
Average operating partnership units outstanding 1,362 -- 913 --
Average common shares outstanding 43,022 38,618 41,908 38,320
------- ------- -------- --------
Average diluted common shares outstanding 44,460 38,680 42,899 38,369
======= ======= ======== ========
Diluted earnings per share $ 0.21 $ 0.26 $ 0.67 $ 0.90
======= ======= ======== ========
</TABLE>
6. Income Taxes and Dividend Policy
As discussed in Note 1, the Company has elected to be taxed as a REIT. The
Internal Revenue Code provides that a REIT, which in any taxable year meets
certain requirements and
9
<PAGE>
distributes to its stockholders at least 95% of its ordinary taxable income,
will not be subject to federal income taxation on taxable income which is
distributed. The Company intends to distribute the required amounts of income in
1998 to qualify as a REIT and to avoid paying income taxes. On September 30,
1998, the Company paid dividends per share as follows:
<TABLE>
<CAPTION>
<S> <C>
Series A Preferred $ .4375
Series B Preferred $ .55125
Series C Preferred $ .5375
Series D Preferred $1.03625
Series E Preferred $ .4765
Common $ .41
</TABLE>
7. Recent Accounting Pronouncements
In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income." The Company had comprehensive income, which is comprised of net income
and unrealized gains or losses on marketable securities held as available for
sale of $16,715,000 and $16,094,000 for the three month period ending September
30, 1998 and 1997, respectively, and of $49,886,000 and $49,061,000 for the nine
month period ending September 30, 1998 and 1997, respectively.
8. Subsequent Events
On October 19, 1998 the Company was acquired by Equity Residential
Properties Trust ("EQR"). The acquisition integrates Merry Land's portfolio into
that of EQR. Pursuant to the acquisition, Merry Land & Investment Company, Inc.
was merged with and into Merry Land LLC, a Georgia limited liability company,
now a subsidiary of ERP Operating Limited Partnership, the general partner of
which is EQR. Merry Land LLC is the successor by merger to Merry Land &
Investment Company, Inc.
10
<PAGE>
Merry Land LLC
Part I - Financial Information
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands except apartment and per share data)
Overview
Until its acquisition on October 19, 1998 by Equity Residential Properties
Trust ("EQR"), Merry Land was an apartment operating company and was one of the
largest owners and operators of upscale garden apartments in the United States.
At September 30, 1998, the Company had a total market capitalization of $2.1
billion and owned a high quality portfolio of 121 apartment communities
containing 34,585 units. The communities are geographically diversified
throughout the Southern United States, located in twenty-eight metropolitan
areas, each with a population in excess of 250,000, extending from the
Washington, D.C. area to Texas and Florida. Substantially all of the Company's
apartment communities command rental rates in the upper range of their markets.
Operating Strategy. The Company's strategy has been to own and operate a
significant number of communities in every major market in the Southern United
States, and to establish a reputation recognized among apartment dwellers
throughout this region for high quality communities and first class service. The
Company has added to its holdings by buying existing apartment communities, by
buying communities under construction and in the initial lease-up stage
(primarily from merchant builders) and by developing communities from the ground
up. The following table further describes the Company's apartment holdings by
major market as of September 30, 1998 (dollars in millions except rental
rates):
<TABLE>
<CAPTION>
Average Average
Occupancy(1) Rental Rate (2)
% of ----------------------- --------------------
Market Units Cost Total Cost 1998 1997 1998 1997
- ------ ----- ------ ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Dallas 3,824 $ 262.7 14.1% 90.2% 93.7% $892 $837
Atlanta 4,283 214.6 11.5 93.2 91.2 713 699
Orlando 3,963 197.7 10.6 94.8 96.2 753 681
Tampa 2,861 152.0 8.2 96.0 97.7 700 667
Jacksonville 3,237 183.1 9.8 95.2 94.5 636 625
Charlotte 2,459 114.3 6.1 95.6 93.9 662 647
Houston 1,457 89.1 4.8 94.5 n/a 849 n/a
Austin 1,249 81.1 4.4 90.8 96.1 815 845
Ft. Lauderdale 1,144 73.0 3.9 94.0 93.2 845 845
Ft. Myers 1,268 59.7 3.2 95.4 96.4 691 667
Savannah 1,173 57.3 3.1 94.5 92.4 686 661
Raleigh 1,256 49.6 2.7 95.4 94.7 629 630
Charleston 880 34.3 1.8 97.9 96.5 565 550
All others 5,531 292.5 15.8 95.0 91.7 692 670
------ -------- ----- ---- ---- ---- ----
34,585 $1,860.9 100.0% 94.3% 93.8% $727 $696
</TABLE>
11
<PAGE>
__________
(1) Represents the average of physical occupancy at each month end for the
nine months ended September 30, 1998.
(2) Represents weighted average monthly rent charged for occupied units
and rents asked for unoccupied units at September month end.
Growth. The Company increased its holdings of apartments primarily through
the acquisition of apartment communities and also through apartment development.
The following table summarizes the Company's growth in recent years (dollars in
thousands):
<TABLE>
<CAPTION>
1998(1) 1997 1996 1995
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Units acquired 4,610 4,104 2,475 3,444
Units developed 576 936 414 --
Total units owned at end of period 34,585 29,526 24,936 22,296
Total cost of apartments $1,860,929 $1,496,109 $1,175,427 $1,009,056
Total apartment rental income $ 196,600 $ 208,363 $ 176,053 $ 144,283
</TABLE>
__________
(1) Represents totals at September 30, 1998.
Acquisition of Communities under Development. The Company has also agreed
to acquire the Villages of Prairie Creek II to be built by an unrelated third
party. The community has 228 units and is located in Dallas, Texas. The Company
expects the acquisition of this property to close in the first quarter of 1999
at a cost of approximately $19.5 million. For the Villages at Prairie Creek II,
the Company will pay the seller an amount equal to the lesser of the budgeted
cost or the seller's actual cost plus additional amounts upon the attainment of
specified occupancy and net operating cash flow levels based on agreed upon
formulas. Although the third party developer bears the development and
construction risk, the Company actively monitors construction quality of the
communities.
Development. At September 30, 1998, the Company had six communities with
1,958 units under development (of which 552 units have been delivered). These
communities will be completed at an expected total cost of $155.7 million. In
addition, the Company owns land suitable for the construction of 1,240
additional units. The communities under development offer features typical of
very high end properties, including nine foot ceilings, high levels of trim and
finish, garages and extensive amenities.
The following table summarizes the Company's current development
communities and recently completed communities. Estimated cost consists of land,
direct construction costs and indirect costs, including projected fees to third
party development managers and allocated overhead (dollars in thousands, except
cost per unit):
<TABLE>
<CAPTION>
Cost of
Units
Total Total Placed
Estimated Cost Cost Units in in Estimated
Location Community Units Cost Per Unit (2) to Date Service Service Completion
- -------- --------- ----- --------- ------------ ------- -------- ------- ------------
Completed
- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nashville Cherry Creek II 280 $67,679 $18,950 280 $18,950
Greensboro Adams Farm II (1) 200 65,005 13,001 200 13,001
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta River Sound 586 72,299 42,367 586 42,367
Savannah Long Point I 308 75,429 23,232 308 23,232
----- ------- ------- ----- -------
1,374 $70,997 $97,550 1,374 $97,550
Under Development
- -----------------
Richmond Wyndham 264 $ 27,000 $92,803 $26,929 264 $26,929 4Q 1998
Greensboro Bridford Lake I 320 24,500 76,563 21,218 240 18,317 4Q 1998
Atlanta Merritt at Satellite 424 34,000 80,189 21,257 48 3,889 1999
Nashville Cherry Creek III (1) 220 16,600 75,455 6,128 -- -- 1999
Richmond Spring Oak 506 38,800 76,680 7,747 -- -- 1999
Charleston Quarterdeck II 224 14,800 66,071 1,298 -- -- 1999
----- -------- ------- ------- ----- -------
1,958 $155,700 $79,520 $84,576 552 $49,135
Future Development
- ------------------
Savannah Long Point II (1) 352 $ 1,712
Nashville Cherry Creek-Com n/a 2,251
Nashville Bell Road I & II 688 3,845
Greensboro Bridford Lake II(1) 200 1,419
----- -------
1,240 $ 9,226
</TABLE>
__________
(1) Adjoins an existing community owned by the Company.
(2) Represents weighted average total cost per unit for each category.
Recent Events
Merger Agreement with Equity Residential Properties Trust. On October 19,
1998, the Company was acquired by EQR. The transaction was approved by
shareholders of both companies on October 15, 1998. Boone Knox and Michael
Thompson have joined EQR's Board of Trustees.
The transaction valued Merry Land at approximately $2.0 billion. For each
Merry Land share of common stock held, a Merry Land shareholder received .53 EQR
common shares in a tax-free exchange. In addition, for every 20 shares of Merry
Land common stock held, each shareholder received, as a taxable dividend, a
share of a newly formed, publicly traded "C" corporation, Merry Land Properties
Inc.
EQR assumed all of the Company's outstanding debt of approximately $726
million and preferred stock of approximately $370 million. The five series of
the Company's preferred stock were exchanged for five new series of EQR's
preferred shares.
Acquisition of Development Communities. On July 29, 1998, the Company
closed the purchase of Creekside Homes at Legacy in Dallas, a 380 unit luxury
community that was built for the Company by a local developer. The purchase
price was $31.6 million paid in an all cash transaction. The property was 90%
occupied at September 30, 1998.
Acquisition of Communities from Trammell Crow Residential. On September 30,
1998, the Company closed the purchase of Lenox Place, a 456 unit apartment
community in Orlando, for a total cost of $37.0 million paid in a combination of
cash and partnership units. This transaction completed the purchase of thirteen
communities from Trammell Crow Residential, a national development and
management company, and its affiliates. On April 1, 1998, the Company closed the
purchase of twelve apartment communities. The purchase price for all thirteen
communities totaled $248.0 million, including the issuance of $36.0 million in
partnership units in Merry Land's
13
<PAGE>
newly created subsidiary DownREIT partnership, cash and the assumption of $113.4
million of debt including $96.7 million of tax-exempt debt bearing interest at
an average rate of approximately 4.57%.
Year 2000. The year 2000 issue ("Year 2000") is the result of computer
programs being written using two digits rather than four to define the
applicable year. Any of the Company's computer programs that have time-sensitive
hardware and software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, collect rents, or engage in similar normal
business activities.
Subsequent to October, 19, 1998, the Company, through its merger with EQR,
believes that it has identified all of its information technology ("IT") and
non-IT systems to assess their Year 2000 readiness. Critical systems include,
but are not limited to: accounts receivable and rent collections, accounts
payable and general ledger, human resources and payroll (both property and
corporate levels), cash management, fixed assets, all IT hardware (such as
desktop/laptop computers, data networking equipment, telephone systems, fax
machines, copy machines, etc.) and software, and property environmental, health
safety and security systems (such as elevators and alarm systems).
The Company anticipates that previously scheduled system upgrades to many
of its IT systems will remediate any existing Year 2000 problems. The Company is
currently in the process of testing and implementing the majority of its Year
2000 IT and non-IT system projects with completion anticipated during the second
quarter of 1999. The Company has estimated that the total Year 2000 project cost
will approximate $1 million, of which approximately 70% has been incurred as of
September 30, 1998. This estimate is based on management's best estimates, which
were derived utilizing numerous assumptions of future events, and there can be
no guarantees that these estimates will be achieved.
In some cases, various third party vendors have been queried on their Year
2000 readiness. The Company continues to query its significant suppliers and
vendors to determine the extent to which the Company's interface systems are
vulnerable to those third parties' failure to remediate their own Year 2000
issues. To date, the Company is not aware of any significant suppliers or
vendors with a Year 2000 issue that would materially impact the Company's
results of operations, liquidity, or capital resources. However, there can be no
assurances that the systems of other companies, on which the Company's systems
rely, will be timely converted and would not have an adverse effect on the
Company's systems.
Management of the Company believes it has an effective program in place to
resolve the Year 2000 issue in a timely manner. In addition, the Company has
commenced its contingency planning for critical operational areas that might be
affected by the Year 2000 issue if compliance by the Company is delayed. Aside
from catastrophic failure of banks or governmental agencies, the Company
believes that it could continue its normal business operations if compliance by
the Company is delayed. The Company does not believe that the Year 2000 issue
will materially impact its results of operations, liquidity or capital
resources.
14
<PAGE>
Results of Operations for the Nine Months Ended September 30, 1998 and 1997.
Rental Markets. In the aggregate, the Company's Southern rental markets
were in equilibrium for the third quarter of 1998. Occupancy totaled 95.4% at
stabilized communities, all except development communities under lease-up,
compared with 94.1% for the third quarter of 1997. While levels of new
construction throughout the South remain high, the Company believes that if
general economic activity, job growth and household formation in the South
remain strong, occupancy and rent growth should remain satisfactory.
Rental Operations - Total Portfolio. The operating performance of the
Company's apartment portfolio is summarized in the following table (dollars in
thousands except average monthly rent):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
Change from -------------------------------
% Change 1997 to 1998 1998 1997
-------- ------------ -------- --------
<S> <C> <C> <C> <C>
Rents 30.9% $46,377 $196,600 $150,223
Operating expenses (1) 28.4 11,361 51,370 40,009
Taxes and insurance 33.3 5,571 22,287 16,716
---- ------- -------- --------
Subtotal (1) 29.9 16,932 73,657 56,725
31.5% $29,445 $122,943 $ 93,498
Average occupancy (2) 0.5%(3) 94.3% 93.8%
Average monthly rent (4) 4.5% $ 727 $ 696
Expense ratio (5) (0.3)%(3) 37.5% 37.8%
</TABLE>
__________
(1) Excludes depreciation and amortization.
(2) Represents the average physical occupancy at each month end for the period
held.
(3) Represents increase or decrease between periods.
(4) Represents weighted average monthly rent charged for occupied units and
rents asked for unoccupied units at September 30.
(5) Represents total of operating expenses, taxes and insurance divided by
rental revenues.
Acquisitions in the last seven quarters and the delivery of 1,334 units
from the Company's development program since the first quarter of 1997 increased
the weighted average number of apartments owned to 32,263 in the nine month
period of 1998 from 26,007 in the nine month period of 1997. Rental revenues,
expenses and taxes and insurance rose accordingly.
The 4.5% increase in portfolio average rental rates in the nine month
period of 1998 from the nine month period of 1997 resulted from both higher
rents at the Company's continuing properties and also the higher rents charged
at the communities the Company acquired and put in service in 1997 and 1998,
whose monthly rents averaged $794 at September 30, 1998, versus the total
portfolio average of $727.
Rental Operations - Same Store. The performance of the 23,518 units which
the Company held for the nine month period of both 1998 and 1997 ("same store"
results), is
15
<PAGE>
summarized in the following table (dollars in thousands, except average monthly
rent; see footnotes above):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
Change from --------------------------------
% Change 1997 to 1998 1998 1997
-------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Rental income 2.7% $3,692 $140,737 $137,045
Personnel (1.7) (246) 14,609 14,855
Utilities (8.4) (492) 5,381 5,873
Operating 7.4 550 8,011 7,461
Maintenance and grounds 12.9 1,089 9,512 8,424
Taxes and insurance (1.2) (189) 15,084 15,273
---- ------ ------ --------
Subtotal (1) 1.4 712 52,597 51,885
3.5% $2,980 $88,140 $ 85,160
Average occupancy (2) 0.5% (3) 95.1% 94.6%
Average monthly rent (4) 2.1% $694 $680
Expense ratio (5) (0.5)% (3) 37.4% 37.9%
</TABLE>
Rental income rose by $3.7 million or 2.7% for those properties held for
all of both periods, as a result of 0.5% higher occupancy and 2.1% higher
average rental rates. At September 30, 1998, same store occupancy was 96.2%
compared with 96.1% at September 30, 1997.
Total operating expenses rose by $0.7 million or 1.4% in 1998 from the same
period in 1997. Personnel costs decreased by $0.2 million or 1.7% due to lower
on-site bonuses. Operating costs increased 7.4% due to higher marketing and
advertising costs, while utilities expense decreased 8.4% as the Company has
passed a portion of its water expense to the residents. Maintenance and grounds
expense was up 12.9% due to a higher number of units turned over in 1998.
Rental Operations - Development Communities. In the nine month period ended
September 30, 1998, the Company expended $50.1 million for apartments under
development, including capitalized interest of $12.7 million. Some dilution of
earnings may occur to the extent that leasing lags behind the delivery of units.
140 units of Bridford Lake I, 126 units of Carriage Homes at Wyndham and 48
units of Merritt at Satellite were delivered in the third quarter of 1998. The
operating results for the nine months ended September 30, 1998 and 1997 for all
development communities is summarized in the following table (dollars in
thousands; see footnotes above):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Units 1,946 1,567
Rental income $8,874 $6,515
Operating expense (1) 2,735 1,895
Taxes and insurance 931 398
------ ------
Subtotal (1) 3,666 2,293
$5,208 $4,222
</TABLE>
16
<PAGE>
As of September 30, 1998, 85.9% of the 1,946 units delivered at Merritt at
Satellite, Bridford Lake I, Carriage Homes at Wyndham, Hammocks at Long Point,
Madison at River Sound and Madison at Adams Farm were leased at an average
rental rate of $814 per unit, or $1.07 per square foot.
Rental Operations - Other Communities. "Other communities" are those
communities not included in same store communities or development communities.
These include communities bought or sold in part or in whole in 1997 or 1998.
As of September 30, 1998, these communities included 8,121 units. The
performance of the other communities for the nine months ended September 30,
1998 and 1997 is summarized in the following table (dollars in thousands; see
footnotes above):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Units 8,121 4,006
Rental income $46,989 $6,663
Operating expense (1) 11,123 1,502
Taxes and insurance 6,272 1,045
------ -----
Subtotal (1) 17,395 2,547
$29,594 $4,116
</TABLE>
Interest, Dividend and Other Investment Income. Interest, dividend, and
other income decreased as the Company substantially completed the liquidation of
its holdings of marketable securities in the third quarter of 1997 and invested
the proceeds in apartments. Interest, dividend and other investment income are
summarized in the following table (dollars in thousands):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1998 1997
------------- ------------
<S> <C> <C>
Interest income $1,005 $1,658
Dividend income 88 682
Other investment income
538 5,066
----- -----
Total $1,631 $7,406
</TABLE>
Interest Expense. Interest expense totaled $27.8 million in the nine month
period of 1998, up from $17.4 million in the nine month period of 1997. Average
debt outstanding rose to $623.1 million in the nine month period of 1998 from
$418.7 million in the nine month period of 1997, primarily as a result of the
assumption of $113.4 million in debt related to the Trammell Crow transaction,
the issuance of the 6.90% senior unsecured notes in July, 1997, the issuance of
the 6.69% senior unsecured notes in October, 1997, and the assumption of
mortgage notes in 1997 related to apartment acquisitions. The weighted average
interest rate charged on all the Company's debt decreased to 6.9% in the nine
month period of 1998 from 7.1% for the nine month period in 1997 as a result of
an average interest rate of approximately 4.6% on the $96
17
<PAGE>
million tax-exempt debt assumed during 1998 and an average interest rate of
6.80% on the $100 million senior unsecured notes issued during 1997. During the
nine month period of 1998, $4.0 million of interest related to the Company's
development projects was capitalized versus $4.1 million in the nine month
period of 1997.
General and Administrative Expenses. General and administrative expenses in
the nine month period of 1998 were $4.4 million, or 2.2% of rental revenues as
compared to 2.1% for the same period of 1997. General and administrative
expenses increased $1.0 million in the first nine months in 1998 versus the
first nine months in 1997 due primarily to additional corporate personnel and
their associated costs.
Net Income. Net income totaled $50.2 million in the nine month period of
1998 and $52.1 million for the nine month period of 1997. Net income available
for common shareholders totaled $28.0 million in the nine month period of 1998
and $34.6 million for the nine month period of 1997. The decreases in net income
and net income available for common shareholders for 1998 when compared to 1997
rose principally from the decrease in other income as a result of discontinuing
cash management activities. Rental operations (rental income less rental
expense, depreciation and taxes and insurance) increased due to an increase in
owned apartments but was offset by higher interest expense and preferred
dividends. Net income per common share in the nine month period of 1998
decreased to $.67 from $.90 in the nine month period of 1997.
Dividends to Preferred Shareholders. Dividends to preferred shareholders
totaled $22.2 million in the nine month period of 1998 and $17.5 million in the
nine month period of 1997. Preferred dividends are summarized in the following
table (dollars in thousands):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Series A Preferred share dividends $242 $321
Series B Preferred share dividends 6,615 6,615
Series C Preferred share dividends 7,417 7,417
Series D Preferred share dividends 3,109 3,109
Series E Preferred share dividends 4,783 --
----- -----
Total preferred dividends $22,166 $17,462
</TABLE>
The increase in preferred dividends arose from the issuance of $100.0
million of Series E preferred shares in February, 1998. Holders of the Company's
Series A Preferred Stock have converted 4.4 million of the 4.6 million Series A
shares originally issued in June 1993 into 6.1 million shares of the Company's
common stock as the common dividend was raised above the equivalent preferred
dividend.
Liquidity and Capital Resources
Financial Structure. The Company's senior notes and its preferred stock are
rated investment grade by Standard & Poor's Corporation (BBB+/BBB), Moody's
Investors Services, Inc. (Baa2/Baa3) and Duff & Phelps Credit Rating Co.
(BBB+/BBB). As of September 30, 1998, total debt equaled 43% of total
capitalization at cost, and 35% of total capitalization with
18
<PAGE>
common stock valued at market. At that date, the Company's financial structure
was as follows (dollars in thousands):
<TABLE>
<CAPTION>
Common Stock
% of at Market % of
Cost Total Value Total
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advances under line of credit $ 83,000 5% $ 83,000 4%
Mortgage loans 86,670 6 86,670 4
Tax exempt bonds 96,670 6 96,670 5
6.625% senior unsecured notes, 1999 40,000 2 40,000 2
6.625% senior unsecured notes, 2000 40,000 2 40,000 2
6.625% senior unsecured notes, 2001 40,000 2 40,000 2
7.25% senior unsecured notes, 2002 40,000 2 40,000 2
6.875% senior unsecured notes, 2003 40,000 2 40,000 2
6.875% senior unsecured notes, 2004 40,000 2 40,000 2
7.25% senior unsecured notes, 2005 120,000 7 120,000 6
6.69% senior unsecured notes, 2006 50,000 4 50,000 2
6.90% senior unsecured notes, 2007 50,000 4 50,000 2
---------- -- --------- --
Total debt 726,160 43% 726,160 35%
---------- ---------
Series D preferred stock 50,000 3% 50,000 2%
Series E preferred stock 100,000 6% 100,000 5%
Common stock (1) 806,750 48% 1,226,785 58%
---------- -- --------- --
Total equity 956,750 57% 1,376,785 65%
---------- ---------
Total capitalization $1,682,910 100% $2,102,945 100%
========== === ========== ===
</TABLE>
__________
(1) Assumes conversion of all outstanding convertible preferred stock and
DownREIT partnership units into common stock.
As of September 30, 1998, the Company had $83 million outstanding under its
line of credit. Borrowings under the line bear interest at 0.60% above the
thirty day London Interbank Offered Rates. As of September 30, 1998, the
Company's loan agreements and the covenants under its senior unsecured notes
would have allowed it to borrow $258.9 million on an unsecured basis.
It generally is not the practice of the Company to finance its acquisitions
using mortgage debt, though at times the Company finds it advantageous to assume
such debt in order to successfully negotiate and close property acquisitions. As
of September 30, 1998, the Company had eleven conventional mortgage loans
outstanding, which were assumed in 1998, 1997 and 1996 in connection with the
purchase of eight communities. In addition, as of September 30, 1998, the
Company had $96.7 million of tax-exempt mortgage debt outstanding with respect
to nine Trammell Crow Residential properties acquired during the second quarter
of 1998.
Liquidity. The Company expects to meet its short-term liquidity
requirements with cash provided by operating activities and by borrowing under
its line of credit. The Company's primary short-term liquidity needs are
operating expenses, apartment acquisitions, apartment development and capital
improvements. The Company substantially completed the liquidation of its
holdings of marketable securities which were acquired as a temporary investment
pending the acquisition or development of additional apartment communities.
19
<PAGE>
Subsequent to October 19, 1998, the Company, through its merger with EQR,
expects to meet its long-term liquidity requirements, such as scheduled mortgage
debt maturities, reduction of outstanding amounts under its line of credit,
property acquisitions, financing of construction and development activities and
capital improvements, through the issuance of unsecured notes and equity
securities including additional OP Units as well as from undistributed FFO and
proceeds received from the disposition of certain Properties. In addition, the
Company has certain uncollateralized Properties available for additional
mortgage borrowings in the event that the public capital markets are unavailable
to the Company or the cost of alternative sources of capital to the Company is
too high.
Capital Expenditures. The Company, prior to its merger with EQR,
capitalized the direct and indirect cost of expenditures for the acquisition or
development of apartments and for replacements and improvements. Replacements
are non-revenue producing capital expenditures which recur on a regular basis,
but which have estimated useful lives of more than one year, such as carpet,
vinyl flooring and exterior repainting. Improvements are expenditures which
significantly increase the revenue producing capability or which significantly
reduce the cost of operating assets. At newly acquired communities, the Company
often finds it necessary to upgrade the physical appearance of the properties
and to complete maintenance and repair work which had been deferred by prior
owners. These activities often result in heavier capital expenditures in the
early years of Company ownership, and some of these expenditures which would be
considered replacements at stabilized communities (as defined below) are
classified as improvements at newly acquired properties. Interest, real estate
taxes and other carrying costs incurred during the development period of
apartments under construction are capitalized and, upon completion of the
project, depreciated over the lives of the projects.
The following table summarizes the capital expenditures for the nine month
periods of 1998 and 1997 (dollars in thousands, except per unit data):
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Apartment communities:
Acquisitions $292,957 $231,725
Development projects:
Development costs 46,085 41,579
Capitalized interest 4,033 4,081
Replacements for stabilized communities (1) 6,274 5,552
Improvements (2) 8,300 3,399
Commercial properties 205 172
Corporate level expenditures 433 1,747
--- --------
Total capital expenditures $358,287 $288,255
======== ========
Per Unit:
Replacements for stabilized communities (1) $267 $262
Improvements (2) $240 $117
</TABLE>
- ----------
(1) Stabilized communities are those properties which have been owned for
at least one full calendar year. In the nine month period of 1998,
23,518 units were stabilized as compared to 21,156 units in the nine
month period of 1997.
(2) Improvements include expenditures for all properties owned during the
period, including replacements at newly acquired communities.
20
<PAGE>
Forward Looking Statements. This filing includes statements that are
"forward looking statements" regarding expectations with respect to market
conditions, development projects, acquisitions, occupancy rates, capital
requirements, sources of funds, expense levels, operating performance and other
matters. These assumptions and statements are subject to various factors,
unknown risks and uncertainties, including general economic conditions, local
market factors, delays and cost overruns in construction, completion and rent up
of development communities, performance of consultants or other third parties,
environmental concerns, and interest rates, any of which may cause actual
results to differ from the Company's current expectations.
21
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits:
(3i) By-laws (incorporated herein by reference to Exhibit 3(i) of Item
14 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1993), as amended by First Amendment to Bylaws dated
July 8, 1998 attached as Exhibit 3i.
(10) Material Contracts.
(10.1) Agreement and Plan of Merger dated July 8, 1998 between the Company
and Equity Residential Properties Trust and First Amendment thereto
(incorporated herein by reference to Appendix A to Equity
Residential Properties Trust Registration Statement on Form S-4/A
(SEC FILE NO. 333-61449)).
(27) Financial Data Schedules
b. Reports on Form 8-K. The Company filed reports on Form 8-K during the
third quarter of 1998 as follows with respect to the following matters.
Form Items Dated Filed
- ---- ----- -------------
8-K 5 & 7 (Agreement and Plan of Merger with
Equity Residential Properties Trust) July 13, 1998
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MERRY LAND LLC,
as successor to
MERRY LAND & INVESTMENT COMPANY, INC.
BY: ERP OPERATING LIMITED PARTNERSHIP,
its managing member
BY: EQUITY RESIDENTIAL PROPERTIES TRUST,
its general partner
/s/ Michael J. McHugh
---------------------------------
Michael J. McHugh
Executive Vice President, Treasurer and
Chief Accounting Officer
November 11, 1998
23
<PAGE>
EXHIBIT (3.i)
AMENDMENT TO BY-LAWS
MERRY LAND & INVESTMENT COMPANY, INC.
JULY 8, 1998
Article VII is hereby deleted in its entirety and replaced with the
following:
ARTICLE VII
INDEMNIFICATION
---------------
The corporation shall indemnify its directors and officers, whether serving
the corporation or at its request any other entity, to the full extent required
or permitted by the Georgia Business Corporation Code now in force, including
the advance of expenses to the full extent permitted by law. The foregoing
rights of indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. No amendment of the Articles of
Incorporation or By-laws of the corporation or repeal of any of its provisions
shall limit or eliminate the right to indemnification provided hereunder with
respect to acts or omissions occurring prior to such amendment or repeal. For
purposes of this Article VII, reference to "the corporation" shall be defined in
Section 14-2-850 O.C.G.A. The indemnification and advancement of expenses
provided by or granted pursuant to this Article VII shall, unless otherwise
provided when a director's term is terminated, continue as to a person who has
ceased to be a director, and shall inure to the benefit of the heirs, executors
and administrator of such a person.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 778
<SECURITIES> 1,663
<RECEIVABLES> 1,622
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,138
<PP&E> 1,915,953
<DEPRECIATION> (181,220)
<TOTAL-ASSETS> 1,751,626
<CURRENT-LIABILITIES> 46,800
<BONDS> 726,160
0
369,194
<COMMON> 43,022
<OTHER-SE> 544,535
<TOTAL-LIABILITY-AND-EQUITY> 1,751,626
<SALES> 0
<TOTAL-REVENUES> 199,904
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 78,557
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,811
<INCOME-PRETAX> 51,217
<INCOME-TAX> 0
<INCOME-CONTINUING> 51,217
<DISCONTINUED> (410)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,641
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.67
</TABLE>
