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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
September 27, 1996
Date of Report (Date of earliest event reported) . . . . . . . . . . . . . . .
NATIONAL INCOME REALTY TRUST
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Exact name of registrant as specified in its charter)
California 0-9211 94-2537061
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
280 Park Avenue, East Building, 20th Floor, New York, NY 10017
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Address of principal executive offices) (Zip Code)
(212) 949-5000
Registrant's telephone number, including area code . . . . . . . . . . . . . .
Not Applicable
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 27, 1996, National Income Realty Trust (the "Trust") entered into a
Purchase and Sale Agreement with Massachusetts Mutual Life Insurance Company, a
major east coast life insurance company not affiliated with the Trust or any of
its officers or trustees, pursuant to which the Trust agreed to sell Century
Centre II (the "Property"), a fully leased 171,000 square foot office building
located in San Mateo, California, for $28.2 million. The carrying value of the
Property, which was subject to a $21.0 million first lien mortgage loan,
exceeded 10% of the Trust's total assets. The sale closed on September 27,
1996, with the Trust receiving net cash proceeds of $6.2 million after the
payoff of the $21.0 million mortgage loan and funding closing costs and
prorations. As a result of the disposition, the Trust recorded a gain of $3.7
million.
ITEM 5. OTHER EVENTS
At its September 1996 meeting, the Board of Trustees authorized the Trust to
repurchase up to 150,000 additional shares of its beneficial interest. In May
1994, the Board of Trustees had authorized the Trust to repurchase up to
300,000 additional shares of beneficial interest, of which 294,702 had been
purchased through October 2, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December
31, 1995, and the six months ended June 30, 1996. A pro forma balance sheet as
of June 30, 1996, is also presented.
The pro forma statements of operations present the Trust's operations as if the
transaction described in Item 2. had occurred at the beginning of each of the
periods presented. Pro forma adjustments related to the pro forma balance
sheet have been computed assuming the transaction was consummated on June 30,
1996.
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NATIONAL INCOME REALTY TRUST
PRO FORMA
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Sale of
Century
Actual Centre II (1) Pro forma
--------------- --------------- --------------
(dollars in thousands)
Assets
------
<S> <C> <C> <C>
Real estate
Held for investment, net of
accumulated depreciation . . . $ 176,891 $ - $ 176,891
Held for sale, net of
accumulated depreciation . . . 35,447 (23,191) 12,256
--------------- ---------------- --------------
212,338 (23,191) 189,147
Notes and interest receivable
Performing . . . . . . . . . . . 2,700 - 2,700
Nonperforming, nonaccruing . . . 977 - 977
--------------- ---------------- --------------
3,677 - 3,677
Less - allowance for estimated
losses . . . . . . . . . . . . . (3,274) - (3,274)
---------------- ---------------- --------------
403 - 403
Investments in partnerships . . . . . 4,245 - 4,245
Cash and cash equivalents . . . . . . 1,315 6,156 7,471
Restricted cash . . . . . . . . . . . 5,760 - 5,760
Other assets . . . . . . . . . . . . 5,308 (683) 4,625
--------------- ---------------- --------------
$ 229,369 $ (17,718) $ 211,651
=============== ================ ==============
</TABLE>
- -------------------------
(1) Assumes the Trust sold Century Centre II on June 30, 1996.
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NATIONAL INCOME REALTY TRUST
PRO FORMA
CONSOLIDATED BALANCE SHEET (Continued)
JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Sale of
Century
Actual Centre II (1) Pro forma
------------- ------------- -------------
(dollars in thousands)
Liabilities and Shareholders' Equity
- ------------------------------------
<S> <C> <C> <C>
Liabilities
Notes, debentures, and interest
payable . . . . . . . . . . . . $ 151,578 $ (21,004) $ 130,574
Other liabilities . . . . . . . . . . 7,727 (349) 7,378
------------- ------------- -------------
159,305 (21,353) 137,952
Commitments and contingencies . . . .
Shareholders' equity
Shares of beneficial interest, no
par value; authorized shares,
unlimited; issued and outstanding,
3,448,286 shares (after deducting
487,912 shares held in
treasury) . . . . . . . . . . . 10,354 - 10,354
Paid-in capital . . . . . . . . . . . 277,071 - 277,071
Accumulated distributions in excess
of accumulated earnings . . . . . (217,361) 3,635 (213,726)
------------- ------------- -------------
70,064 3,635 73,699
------------- ------------- -------------
$ 229,369 $ (17,718) $ 211,651
============= ============= =============
</TABLE>
- -------------------------
(1) Assumes the Trust sold Century Centre II on June 30, 1996.
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NATIONAL INCOME REALTY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Century
Actual Centre II (1) Pro forma
------------- --------------- --------------
(dollars in thousands, except per share data)
<S> <C> <C> <C>
Income
Rentals . . . . . . . . . . . . . $ 23,713 $ (1,628) $ 22,085
Interest . . . . . . . . . . . . . 360 - 360
Equity in income of partnerships 1,180 - 1,180
------------- -------------- --------------
25,253 (1,628) 23,625
Expenses
Property operations . . . . . . . . 13,813 (757) 13,056
Interest . . . . . . . . . . . . . 6,322 (753) 5,569
Depreciation . . . . . . . . . . . 2,643 - 2,643
Advisory fees to affiliate . . . . 536 - 536
General and administrative . . . . 1,066 - 1,066
------------- -------------- --------------
24,380 (1,510) 22,870
------------- -------------- --------------
Income before gains on sale of
real estate and insurance
settlement . . . . . . . . . . . . 873 (118) 755
Gain on sale of real estate . . . . . 11 - 11
Gain on insurance settlement . . . . 451 - 451
------------- -------------- --------------
Net income . . . . . . . . . . . . . $ 1,335 $ (118) $ 1,217
============= ============== ==============
Earnings per share
Net income . . . . . . . . . . . . . $ .39 $ .35
============= ==============
Weighted average shares of
beneficial interest used in
computing earnings per share . . . 3,440,058 3,440,058
============= ==============
</TABLE>
- -------------------------
(1) Assumes the Trust sold Century Centre II on January 1, 1996,
and accordingly represents operations for the property for
the six months ended June 30, 1996.
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NATIONAL INCOME REALTY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Century
Actual Centre II (1) Pro forma
-------------- ------------- ---------------
(audited) (unaudited) (unaudited)
(dollars in thousands, except per share data)
<S> <C> <C> <C>
Income
Rentals . . . . . . . . . . . . . $ 43,381 $ (3,048) $ 40,333
Interest . . . . . . . . . . . . . 1,089 - 1,089
Equity in income of partnerships . 770 - 770
-------------- ----------- ---------------
45,240 (3,048) 42,192
Expenses
Property operations . . . . . . . 25,279 (1,402) 23,877
Interest . . . . . . . . . . . . . 12,306 (1,638) 10,668
Depreciation . . . . . . . . . . . 5,959 (802) 5,157
Advisory fees to affiliate . . . . 1,037 - 1,037
General and administrative . . . . 2,058 - 2,058
Provision for losses . . . . . . . (425) - (425)
-------------- ----------- ---------------
46,214 (3,842) 42,372
-------------- ----------- ---------------
(Loss) before gains on sales of real
estate and investments and
extraordinary gain . . . . . . . . (974) 794 (180)
Gain on sale of real estate . . . . . 533 - 533
Gain on sale of investments . . . . . 412 - 412
-------------- ----------- ---------------
(Loss) income from continuing
operations . . . . . . . . . . . . $ (29) $ 794 $ 765
============== =========== ===============
Earnings per share
(Loss) income from continuing
operations . . . . . . . . . . . . $ - .22
============== ===============
Weighted average shares of
beneficial interest used in
computing earnings per share . . . 3,439,191 3,439,191
============== ===============
</TABLE>
- -------------------------
(1) Assumes the Trust sold Century Centre II on January 1, 1995,
and accordingly represents operations for the property for
the year ended December 31, 1995.
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SIGNATURE
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 hereunto duly authorized.
NATIONAL INCOME REALTY TRUST
By:/s/ Robert C. Irvine
-------------------------
Robert C. Irvine
Chief Financial Officer
DATED: October 15, 1996
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