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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
July 31, 1995
------------------------------------------------
Date of Report (Date of Earliest Event Reported)
CONTINENTAL MORTGAGE AND EQUITY TRUST
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(Exact Name of Registrant as Specified in its Charter)
California 0-10503 94-2738844
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(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Form 8-K/A amends a Form 8-K Current Report dated July 31, 1995 and filed
August 16, 1995 by Continental Mortgage and Equity Trust (the "Trust") and
provides required financial statements that were not available at the date of
the original filing.
(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December
31, 1994 and the six months ended June 30, 1995. A pro forma balance sheet as
of June 30, 1995 is also presented.
A summary of the pro forma transactions follows:
In July 1995, the Trust purchased McCallum Glen Apartments, a 275 unit
apartment complex in Dallas, Texas for $6.0 million, exclusive of commissions
and closing costs. The Trust paid $1.8 million in cash and obtained mortgage
financing of $4.2 million. The mortgage bears interest at a variable rate,
currently 8.6% per annum, requires monthly payments of principal and interest
of $34,000 and matures in August 2002. The $6.0 million purchase price of
McCallum Glen Apartments is approximately 3.3% of the Trust's consolidated
assets at December 31, 1994. Although not a significant acquisition in itself,
when aggregated with the other acquisitions completed by the Trust prior to
July 1995, as described below, such acquisitions constitute a significant
acquisition.
In addition to the McCallum Glen Apartments acquisition discussed above, the
Trust purchased one other apartment complex and two commercial properties in
1995. The properties, located in Virginia, Texas and Florida, were purchased
for a total of $20.0 million in separate transactions from unaffiliated
sellers, and represent approximately 10.9% of the Trust's consolidated assets
at December 31, 1994. The Trust paid a total of $3.3 million in cash and
financed the remainder of the purchase prices. The mortgages bear interest at
rates ranging from 6.0% to 9.9% and mature from 1997 to 2001.
The pro forma statements of operations present the Trust's operations as if the
transactions described above had occurred at the beginning of each of the
periods presented.
(b) Financial statements of property acquired:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------------------------------------------------------------
<S> <C>
99.0 McCallum Glen Apartments Audited Statement of Operations for the
year ended December 31, 1994.
</TABLE>
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
CONSOLIDATED BALANCE SHEET
JUNE 30, 1995
<TABLE>
<CAPTION>
McCallum Glen
Actual Apartments(1) Pro forma
--------------- ------------- --------------
(dollars in thousands)
<S> <C> <C> <C>
Assets
------
Notes and interest receivable
Performing....................... $ 4,317 $ - $ 4,317
Nonperforming, nonaccruing....... 4,603 - 4,603
--------------- ------------- --------------
8,920 - 8,920
Real estate held for sale, net of
accumulated depreciation......... 25,407 - 25,407
Less - allowance for estimated
losses........................... (9,207) - (9,207)
--------------- ------------- --------------
25,120 - 25,120
Real estate held for investment,
net of accumulated depreciation.. 144,312 5,938 150,250
Investments in marketable equity
securities of affiliates, at
market........................... 4,396 - 4,396
Investments in partnerships......... 13,472 - 13,472
Cash and cash equivalents........... 6,567 (1,788) 4,779
Other assets........................ 6,848 - 6,848
--------------- ------------- --------------
$ 200,715 $ 4,150 $ 204,865
=============== ============= ==============
Liabilities and Shareholders' Equity
- ------------------------------------
Liabilities
Notes and interest payable.......... $ 118,059 $ 4,150 $ 122,209
Other liabilities................... 5,435 - 5,435
--------------- ------------- --------------
123,494 4,150 127,644
Commitments and contingencies
Shareholders' equity
Shares of Beneficial Interest, no
par value; authorized shares,
unlimited; issued and outstanding,
2,918,109 shares................. 8,766 - 8,766
Paid-in capital..................... 260,060 - 260,060
Accumulated distributions in excess
of accumulated earnings.......... (194,277) - (194,277)
Net unrealizable gains on
marketable equity securities..... 2,672 - 2,672
--------------- ------------- --------------
77,221 - 77,221
--------------- ------------- --------------
$ 200,715 $ 4,150 $ 204,865
=============== ============= ==============
</TABLE>
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(1) Assumes acquisition of McCallum Glen Apartments by the Trust on January
1, 1995. The effects of all other 1995 property purchases, foreclosures
and sales are included in the June 30, 1995 actual balances.
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
McCallum Glen Other Property
Actual Apartments(1) Acquisitions(1) Pro forma
------------- --------------- --------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Income
Rentals...................... $ 17,706 $ 623 $ 622 $ 18,951
Interest..................... 404 - - 404
Equity in income of
partnerships............... 185 - - 185
------------- --------------- -------------- ---------------
18,295 623 622 19,540
Expenses
Property operations.......... 10,560 338 302 11,200
Interest..................... 4,517 181 347 5,045
Depreciation................. 2,030 63 75 2,168
Advisory fee to affiliate.... 745 - - 745
General and administrative... 629 - - 629
Provision for losses......... 541 - - 541
------------- --------------- -------------- ---------------
19,022 582 724 20,328
Net income (loss)............. $ (727) $ 41 $ (102) $ (788)
============= =============== ============== ===============
Earnings per share
Net (loss)................... $ (.25) $ (.27)
============= ===============
Shares of beneficial interest
outstanding.................. 2,918,118 2,918,118
============= ===============
</TABLE>
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(1) Assumes acquisition by the Trust on January 1, 1994.
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
McCallum Glen Other Property
Actual Apartments(1) Acquisition(1) Pro forma
------------- --------------- -------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Income
Rentals...................... $ 27,042 $ 1,245 $ 2,772 $ 31,059
Interest..................... 2,699 - - 2,699
Other........................ (479) - - (479)
------------- --------------- -------------- ---------------
29,262 1,245 2,772 33,279
Expenses
Property operations.......... 16,888 676 1,032 18,596
Interest..................... 7,711 362 1,260 9,333
Depreciation................. 3,214 126 444 3,784
Advisory fee to affiliate.... 1,326 - - 1,326
General and administrative... 1,235 - - 1,235
Provision for losses......... 1,429 - - 1,429
------------- --------------- -------------- ---------------
31,803 1,164 2,736 35,703
Income (loss) before gain on
sale of real estate.......... (2,541) 81 36 (2,424)
Gain on sale of real estate... 1,708 - - 1,708
------------- --------------- -------------- ---------------
Net income (loss)............. $ (833) $ 81 $ 36 $ (716)
============= =============== ============== ===============
Earnings per share
(Loss) before gain on sale of
real estate................ $ (.87) $ (.83)
Gain on sale of real estate.. .58 .58
------------- ---------------
Net (loss)................... $ (.29) $ (.25)
============= ===============
Shares of beneficial interest
outstanding.................. 2,919,815 2,919,815
============= ===============
</TABLE>
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(1) Assumes acquisition by the Trust on January 1, 1994.
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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 hereto duly authorized.
CONTINENTAL MORTGAGE AND
EQUITY TRUST
Date: September 7, 1995 By: /s/ Thomas A. Holland
----------------------- ---------------------------------
Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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CONTINENTAL MORTGAGE AND EQUITY TRUST
EXHIBIT TO ITS
CURRENT REPORT ON FORM 8-K/A
Dated December 22, 1994
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------- ----------------------------------------- ------
<S> <C> <C>
99.0 McCallum Glen Apartments Audited 8
Statement of Operations for the year ended
December 31, 1994.
</TABLE>
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EXHIBIT 99.0
MCCALLUM GLEN APARTMENTS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1994
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Independent Auditors' Report
To the Board of Trustees
Continental Mortgage and Equity Trust
We have audited the accompanying statement of revenues and direct operating
expenses of McCallum Glen Apartments for the year ended December 31, 1994.
This statement of revenues and direct operating expenses is the responsibility
of the Property's management. Our responsibility is to express an opinion on
this statement of revenues and direct operating expenses 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 statement of revenues and direct
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of revenues and direct operating expenses. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall statement of revenues and
direct operating expenses presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of Continental Mortgage & Equity Trust) and, as described
in Note 1, is not intended to be a complete presentation of the results of
operations.
In our opinion, the statement of revenues and direct operating expenses
referred to above presents fairly, in all material respects, the revenues and
direct operating expenses of McCallum Glen Apartments for the year ended
December 31, 1994, in conformity with generally accepted accounting principles.
Dallas, Texas
August 31, 1995
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MCCALLUM GLEN APARTMENTS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
REVENUES
Rental revenues $ 1,204,177
Other 40,730
------------
Total Revenues 1,244,907
------------
OPERATING EXPENSES
Administration 21,392
Insurance 27,793
Management Fees 62,579
Marketing 22,960
Payroll & benefits 184,083
Property Taxes 163,161
Repairs & Maintenance 90,773
Utilities 103,062
------------
Total Operating Expenses 675,803
------------
NET OPERATING INCOME $ 569,104
============
</TABLE>
The accompanying notes are an integral part of this statement.
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MCCALLUM GLEN APARTMENTS
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
DECEMBER 31, 1994
NOTE 1: ORGANIZATION
McCallum Glen Apartments is a 275 unit apartment complex located in
Dallas, Texas. During 1994, the property was owned by SII - Glen,
Ltd., a Texas limited partnership.
The accompanying financial statement does not include a provision for
depreciation and amortization, interest expense or income taxes.
Accordingly, this statement is not intended to be a complete
presentation of the results of operations.
NOTE 2: OTHER INCOME
Other income consists of the following:
<TABLE>
<S> <C>
Reletting Income $ 21,039
Late fees 9,355
Application Fees 4,715
Vending income 4,621
NSF fees 1,000
----------
Total Other Income $ 40,730
==========
</TABLE>
NOTE 3: MANAGEMENT FEES
The property has a management agreement with North American Property
Associates, Ltd. which calls for a fee equal to 5% of gross monthly
receipts, as defined.
NOTE 4: SUBSEQUENT EVENTS
In March 1995, SII - Glen, Ltd. filed for protection under Chapter 11
of the United States Bankruptcy Code.
The property was sold to Continental Mortgages and Equity Trust, a
California business trust on July 31, 1995.
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