<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 1995
Commission File Number 0-10503
CONTINENTAL MORTGAGE AND EQUITY TRUST
(Exact Name of Registrant as Specified in Its Charter)
California 94-2738844
- ------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, Texas 75231
- -------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(214) 692-4700
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Securities Registered Pursuant to Section 12(g) of the Act:
Shares of Beneficial Interest, no par value
Indicate by check mark whether the Registrant (1) has filed all reports
required to filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to
this Form 10-K. [X]
As of March 15, 1996, the Registrant had 4,246,868 shares of beneficial
interest outstanding. Of the total shares outstanding, 2,149,254 were held by
other than those who may be deemed to be affiliates, for an aggregate value of
$20,686,570 based on the last trade as reported on The Nasdaq Stock Market on
March 15, 1996. The basis of this calculation does not constitute a
determination by the Registrant that all of such persons or entities are
affiliates of the Registrant as defined in Rule 405 of the Securities Act of
1933, as amended.
Documents Incorporated by Reference:
NONE
1
<PAGE> 2
This Form 10-K/A amends the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995 as follows:
ITEM 6. SELECTED FINANCIAL DATA - page 25
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - pages 29, 30, 31, 32
and 33
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - pages 37, 40
and 42
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON
FORM 8-K - EXHIBIT 27.0 FINANCIAL DATA SCHEDULE - page 95
<PAGE> 3
ITEM 5. MARKET FOR THE REGISTRANT'S SHARES OF BENEFICIAL INTEREST AND
RELATED SHAREHOLDER MATTERS (Continued)
may have owned, the limitation should no longer apply to Mr. Friedman or his
affiliates. The Board of Trustees also determined that there was no reason to
object to the purchase of additional shares of the Trust by the shareholder
group and on August 23, 1994, the Trust's Board of Trustees adopted a
resolution to the effect that they do not object to the acquisition of up to
49% of the Trust's outstanding shares of beneficial interest by Mr. Phillips
and his affiliates. In determining total ownership, shares of beneficial
interest of the Trust, if any, owned by Mr. Friedman and his affiliates are no
longer to be included. Pursuant to this action, Mr. Phillips and his
affiliates may not acquire more than 49% of the Trust's outstanding shares of
beneficial interest without the prior action of the Trust's Board of Trustees
to the effect that they do not object to such increased ownership. At March
15, 1996, Mr. Phillips and his affiliates, primarily ART and BCM, owned
approximately 51% of the Trust's outstanding shares of beneficial interest.
The increase in ownership above 49% is the result of the Trust repurchasing its
shares in 1996.
On March 21, 1996, the Trust's Board of Trustees reconsidered the share
ownership limitation and determined that there was no reason to object to the
purchase by Mr. Phillips and his affiliates of additional shares in excess of
49% of the Trust's outstanding shares. Accordingly, there is no longer any
limitation on the percentage of shares of the Trust which may be acquired by
Mr. Phillips and his affiliates.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
-------- --------- --------- --------- ---------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C>
EARNINGS DATA
Revenues................ $ 38,309 $ 29,741 $ 24,288 $ 21,162 $ 15,486
Expenses................ 39,982 31,803 23,460 20,443 15,812
--------- --------- --------- --------- ---------
Income (loss) from
operations............ (1,673) (2,062) 828 719 (326)
Equity in income (loss)
of partnerships....... 230 98 (213) (344) (308)
Gain on sale of
real estate........... - 1,131 - 383 91
Extraordinary gain...... - - - - 930
--------- --------- --------- --------- ---------
Net income (loss)....... $ (1,443) $ (833) $ 615 $ 758 $ 387
========= ========= ========= ========= =========
EARNINGS PER SHARE DATA
Income (loss) before
extraordinary gain.... $ (.33) $ (.19) $ .13 $ .15 $ (.10)
Extraordinary gain...... - - - - .17
--------- --------- --------- --------- ---------
Net income (loss)....... $ (.33) $ (.19) $ .13 $ .15 $ .07
========= ========= ========= ========= =========
Distributions per share. $ .40 $ .40 $ .33 $ - $ .71
Weighted average
shares outstanding.... 4,377,165 4,379,722 4,521,384 5,058,762 5,308,398
</TABLE>
25
<PAGE> 4
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
$1.8 million is due to the acquisition of four apartment complexes and three
commercial properties in 1995, $1.7 million is due to the acquisition of seven
apartment complexes and one commercial property in 1994, which did not
contribute to net rental income for the full year in 1994, and $804,000 of the
increase is attributable to two apartment complexes obtained through
foreclosure in 1994. An additional increase of $640,000 is attributable to
generally higher rents and occupancy at the Trust's apartment complexes. These
increases are offset in part by a $244,000 decrease in net rental income at one
of the Trust's commercial properties and one of the Trust's apartment complexes
due to a decrease in occupancy and higher operating expenses incurred in an
effort to increase occupancy. Net rental income is expected to continue to
increase in 1996, primarily from a full year of operations from the four
apartment complexes and three commercial properties acquired in 1995 and from
the anticipated purchase of additional real estate in 1996.
Interest income decreased from $2.7 million in 1994 to $723,000 in 1995. Of
this decrease, $1.7 million is attributable to a $14.0 million wraparound
mortgage note receivable which was paid in full in December 1994 and $99,000 is
attributable to the discounted payoff of a $1.5 million first mortgage note
receivable in May 1995. An additional $486,000 is due to the foreclosure of
two properties during 1994 and one property during 1995 which secured three of
the Trust's other mortgage notes receivable. These decreases are partially
offset by an increase of $299,000 attributable to a $1.4 million first mortgage
note receivable which was received in December 1994 in connection with the
payoff of the $14.0 million mortgage note receivable discussed above. Interest
income is expected to continue at the current level in 1996, as the Trust is
generally not considering new mortgage lending except in connection with
purchase money financing of sales of the Trust's properties.
Interest expense increased from $7.7 million in 1994 to $10.0 million in 1995.
Of this increase, $2.4 million is due to interest expense recognized on
mortgages secured by properties acquired in 1994 and 1995. An additional
$766,000 is due to interest expense on six borrowings in 1994 and 1995, secured
by mortgages on previously unencumbered apartment complexes and refinancing of
existing mortgages. These increases are partially offset by a decrease of
$855,000 due to the payoff of the underlying lien related to the payoff of a
$14.0 million wraparound mortgage note receivable in December 1994.
Depreciation expense increased from $3.2 million in 1994 to $4.3 million in
1995. This increase is due to the acquisition of four apartment complexes and
three commercial properties in 1995 and seven apartment complexes and one
commercial property in 1994.
A provision for losses of $541,000 was recorded in 1995 to provide for the loss
on the discounted payoff of the mortgage note receivable secured by Alderwood
Apartments. A provision for losses of $1.2 million
29
<PAGE> 5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
was recorded in 1994 to write down the Genessee Towers, an office building, to
the amount of the nonrecourse mortgage debt. In addition, a provision for
losses of $200,000 was recorded in 1994 to provide for the loss on the sale of
Oak Forest Apartments, one of the Trust's foreclosed properties held for sale.
See NOTE 4. "REAL ESTATE AND DEPRECIATION."
Advisory fee to affiliate was comparable at $1.3 million in 1995 and 1994.
Although the Trust's gross assets, the basis for the advisory fee, increased in
1995, the advisory agreement requires a portion of the advisory fee be refunded
if certain operating expenses exceed limits specified in the Declaration of
Trust. The effect of this limitation was to require that BCM refund $250,000
of the annual advisory fee for 1995.
General and administrative expenses were comparable at $1.2 million in 1995 and
1994. A decrease in legal fees was offset by expenses incurred in connection
with the Trust's annual meeting.
The Trust's equity in earnings of partnerships improved from $98,000 in 1994 to
$230,000 in 1995. Included in the 1994 equity in earnings of partnerships is a
$577,000 gain on sale of real estate, the Trust's equity share of the gain
recognized by Indcon, L.P. ("Indcon"), a joint venture partnership, on the sale
of one of its industrial warehouses. Excluding such gain, the Trust's equity in
earnings of partnerships would have been a loss of $479,000 in 1994. The
improvement in equity earnings of partnerships in 1995 over 1994 is primarily
due to higher rents and occupancy at the 31 industrial warehouse facilities
owned by Indcon. This improvement is partially offset by an increase in losses
in Sacramento Nine ("SAC 9"), also a joint venture partnership, due to increased
interest expense, as a result of new mortgage financing secured by a previously
unencumbered office building. In February and March 1996, Indcon completed the
sale of 25 of its 31 industrial warehouse facilities. See NOTE 6. "INVESTMENT
IN EQUITY METHOD PARTNERSHIPS."
For the year 1994, the Trust recognized a gain of $1.1 million on the
settlement of a profit participation related to the December 1994 payoff of one
of the Trust's wraparound mortgage note receivable. See NOTE 2. "NOTES AND
INTEREST RECEIVABLE."
1994 compared to 1993. For the year 1994, the Trust had a net loss of
$833,000, as compared to net income of $615,000 for the year 1993. The primary
factors contributing to the decrease in the Trust's net income are discussed in
the following paragraphs.
Net rental income (rents income less expenses applicable to rents) increased
from $8.2 million in 1993 to $10.2 million in 1994. Of this increase, $1.5
million is due to the acquisition of seven apartment complexes and one
commercial property in 1994. An additional $284,000 of the increase is
attributable to two apartment complexes obtained through foreclosure in 1994
and $1.1 million is due to the acquisition
30
<PAGE> 6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
of three apartment complexes and one commercial property in 1993. An
additional increase of approximately $400,000 is attributable to generally
higher rents and occupancy at the Trust's properties. These increases are
offset in part by a $1.3 million decrease in net rental income at four of the
Trust's commercial properties and three of the Trust's apartment complexes due
to a decrease in occupancy and higher operating expenses incurred in an effort
to increase occupancy.
Interest income decreased from $3.3 million in 1993 to $2.7 million in 1994.
Of this decrease, $356,000 is attributable to a loan on which the borrower
filed for bankruptcy protection in November 1993 and began making cash flow
only payments in April 1994. The Trust completed foreclosure of the property
securing this loan in October 1994. Of the decrease, an additional $191,000 is
attributable to three loans which were paid off subsequent to August 1993 and
$38,000 is attributable to loans which were classified as nonperforming in
1994. Interest income is expected to decline further in 1995 due to a $14.0
million wraparound mortgage note receivable being paid in full in December 1994
and due to the foreclosure during 1994 of two properties securing two of the
Trust's other mortgage notes receivable.
Interest expense increased from $5.5 million in 1993 to $7.7 million in 1994.
Of this increase, $1.5 million is due to interest expense recorded on mortgages
secured by properties acquired in 1993 and 1994. An additional $597,000 is due
to interest expense on a borrowing in September 1993 and four borrowings in
1994, all secured by mortgages on previously unencumbered apartment complexes.
Depreciation expense increased from $2.4 million in 1993 to $3.2 million in
1994. This increase is due to the acquisition of seven apartment complexes and
one commercial property in 1994 and four apartment complexes and one commercial
property in 1993.
A provision for losses of $1.2 million was recorded in 1994 to write down the
Genessee Towers, an office building, to the amount of the nonrecourse mortgage
debt. In addition, a provision for losses of $200,000 was recorded in 1994 to
provide for the loss on the sale of Oak Forest Apartments, one of the Trust's
foreclosed properties held for sale. (See NOTE 4. "REAL ESTATE AND
DEPRECIATION.") A provision for loss of $221,000 was recorded in 1993 to
provide for the loss on the sale of English Hills Apartments, also a foreclosed
property held for sale.
Advisory fee to affiliate increased from $1.2 million in 1993 to $1.3 million in
1994. This increase is due to an increase in the Trust's gross assets, the
basis for the advisory fee, as a result of the Trust's acquisition of eight
properties in 1994 and five properties in 1993.
General and administrative expenses decreased from $1.3 million in 1993 to $1.2
million in 1994. A decrease in legal fees and expenses incurred in connection
with the Trust's annual meeting were offset in part by an increase in cost
reimbursements to the Trust's advisor.
31
<PAGE> 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
The Trust's equity in earnings of partnerships improved from a loss of $213,000
in 1993 to income of $98,000 in 1994. The 1993 equity in earnings of
partnerships includes a gain on the sale of real estate of $365,000 related to
the sale of three properties of SAC 9, a joint venture partnership. The 1994
equity in earnings of partnerships includes a gain on the sale of real estate
of $577,000 related to the sale of an industrial warehouse facility by Indcon,
also a joint venture partnership. Excluding such gains, equity in earnings of
partnerships would have improved from a loss of $578,000 in 1993 to a loss of
$479,000 in 1994. This improvement in equity earnings of partnerships is
primarily due to higher rents and occupancy at the industrial warehouse
facilities owned by Indcon.
For the year 1994, the Trust recognized a gain of $1.1 million on the
settlement of a profit participation related to the 1994 payoff of one of the
Trust's notes receivable. The Trust recognized no such gains in 1993.
Environmental Matters
Under various federal, state and local environmental laws, ordinances and
regulations, the Trust may be potentially liable for removal or remediation
costs, as well as certain other potential costs relating to hazardous or toxic
substances (including governmental fines and injuries to persons and property)
where property-level managers have arranged for the removal, disposal or
treatment of hazardous or toxic substances. In addition, certain environmental
laws impose liability for release of asbestos-containing materials into the
air, and third parties may seek recovery from the Trust for personal injury
associated with such materials.
The Trust's management is not aware of any environmental liability relating to
the above matters that would have a material adverse effect on the Trust's
business, assets or results of operations.
Inflation
The effects of inflation on the Trust's operations are not quantifiable.
Revenues from property operations fluctuate proportionately with increases and
decreases in housing costs. Fluctuations in the rate of inflation also affect
the sales values of properties and, correspondingly, the ultimate gains to be
realized by the Trust from property sales. Inflation also has an effect on
the Trust's earnings from short-term investments.
Tax Matters
For the years ended December 31, 1995, 1994 and 1993, the Trust elected and in
the opinion of the Trust's management, qualified to be treated as a REIT as
defined under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"). To continue to qualify for
32
<PAGE> 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Tax Matters (Continued)
federal taxation as a REIT under the Code, the Trust is required to hold at
least 75% of the value of its total assets in real estate assets, government
securities, cash and cash equivalents at the close of each quarter of each
taxable year. The Code also requires a REIT to distribute at least 95% of its
REIT taxable income plus 95% of its net income from foreclosure property, as
defined in Section 857 of the Code, on an annual basis to shareholders.
Recent Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121 - "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of".
The statement requires that long-lived assets be considered impaired "...if the
sum of the expected future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the asset." If impairment exists,
an impairment loss shall be recognized, by a charge against earnings, equal to
"...the amount by which the carrying amount of the asset exceeds the fair value
of the asset." If impairment of a long-lived asset is recognized, the carrying
amount of the asset shall be reduced by the amount of the impairment, shall be
accounted for as the asset's "new cost" and such new cost shall be depreciated
over the asset's remaining useful life.
SFAS No. 121 further requires that long-lived assets held for sale "...be
reported at the lower of carrying amount or fair value less cost to sell." If
a reduction in a held for sale asset's carrying amount to fair value less cost
to sell is required, a provision for loss shall be recognized by a charge
against earnings. Subsequent revisions, either upward or downward, to a held
for sale asset's fair value less cost to sell shall be recorded as an
adjustment to the asset's carrying amount, but not in excess of the asset's
carrying amount when originally classified or held for sale. A corresponding
charge or credit to earnings is to be recognized. Long-lived assets held for
sale are not to be depreciated. SFAS No. 121 is effective for fiscal years
beginning after December 15, 1995.
The Trust's management estimates that if the Trust had adopted SFAS No. 121
effective January 1, 1995, the Trust's depreciation for 1995 would have been
reduced by $229,000, its net loss would have been reduced by a like amount and
a provision for loss for either impairment of its properties held for
investment or for a decline in estimated fair value less cost to sell of its
properties held for sale would not have been required. The Trust adopted SFAS
No. 121 effective January 1, 1996.
33
<PAGE> 9
CONTINENTAL MORTGAGE AND EQUITY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------
1995 1994 1993
---------- ---------- ---------
(dollars in thousands, except per share)
<S> <C> <C> <C>
Revenues
Rents.............................. $ 37,586 $ 27,042 $ 20,996
Interest (including $20 in 1993
from affiliates)................. 723 2,699 3,292
--------- --------- ---------
38,309 29,741 24,288
Expenses
Property operations (including
$806 in 1995, $570 in 1994 and
$296 in 1993 to affiliates)...... 22,682 16,888 12,791
Interest........................... 10,009 7,711 5,531
Depreciation....................... 4,279 3,214 2,431
Provision for losses............... 541 1,429 221
Advisory fee to affiliate.......... 1,264 1,326 1,160
General and administrative
(including $506 in 1995, $524
in 1994 and $453 in 1993 to
affiliate)....................... 1,207 1,235 1,326
--------- --------- ---------
39,982 31,803 23,460
--------- ---------
Income (loss) from operations........ (1,673) (2,062) 828
Equity in income (loss) of
partnerships........................ 230 98 (213)
Gain on sale of real estate.......... - 1,131 -
--------- --------- ---------
Net income (loss).................... $ (1,443) $ (833) $ 615
========= ========= =========
Earnings per share
Net income (loss).................... $ (.33) $ (.19) $ .13
======== ========= =========
Weighted average shares of
beneficial interest used in
computing earnings per share....... 4,377,165 4,379,722 4,521,384
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
37
<PAGE> 10
CONTINENTAL MORTGAGE AND EQUITY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------
1995 1994 1993
---------- ----------- ---------
(dollars in thousands)
<S> <C> <C> <C>
Cash Flows from Financing Activities
Proceeds from notes payable......... $ 12,506 $ 10,078 $ 2,389
Payments on notes payable........... (7,590) (3,666) (808)
Proceeds from margin borrowings..... - - 500
Distributions to shareholders....... (1,751) (1,752) (1,504)
Repurchase of shares of beneficial
interest.......................... - (84) (2,320)
Distribution from partnership's
financing cash flows.............. 1,025 - -
------------- ------------ ------------
Net cash provided by (used in)
financing activities.......... 4,190 4,576 (1,743)
------------- ------------ ------------
Net increase (decrease) in cash and
cash equivalents.................... (1,092) 5,707 (606)
Cash and cash equivalents, beginning
of year............................. 7,478 1,771 2,377
------------- ------------ ------------
Cash and cash equivalents, end of
year................................ $ 6,386 $ 7,478 $ 1,771
============= ============ ============
Reconciliation of net income (loss) to
net cash provided by operating
activities
Net income (loss)................. $ (1,443) $ (833) $ 615
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities
Gain on sale of real estate....... - (1,131) -
Depreciation and amortization..... 4,240 3,307 2,663
Equity in (income) loss of
partnerships.................... (230) (98) 213
Provision for losses.............. 541 1,429 221
(Increase) decrease in interest
receivable...................... (1) 309 (219)
(Increase) decrease in other
assets.......................... 432 (785) 98
Increase (decrease) in other
liabilities..................... 204 468 407
Increase in interest payable...... 756 156 80
Distributions from partnerships'
operating cash flow............. 41 191 -
------------- ------------ ------------
Net cash provided by
operating activities........ $ 4,540 $ 3,013 $ 4,078
============= ============ ============
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
40
<PAGE> 11
CONTINENTAL MORTGAGE AND EQUITY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying Consolidated Financial Statements of Continental Mortgage and
Equity Trust and consolidated entities (the "Trust") have been prepared in
conformity with generally accepted accounting principles, the most significant
of which are described in NOTE 1. "SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES".
These, along with the remainder of the Notes to the Consolidated Financial
Statements, are an integral part of the Consolidated Financial Statements. The
data presented in the Notes to Consolidated Financial Statements are as of
December 31 of each year and for the year then ended, unless otherwise
indicated. Dollar amounts in tables are in thousands, except per share
amounts.
Certain balances for 1994 and 1993 have been reclassified to conform to the
1995 presentation. Shares and per share data have been restated for the three
for two forward share split effected February 15, 1996.
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Trust business. Continental Mortgage and Equity Trust
("CMET") is a California business trust organized on August 27, 1980. The
Trust may invest in real estate through direct ownership, leases and
partnerships and it may also invest in mortgage loans on real estate, including
first, wraparound and junior mortgage loans.
Basis of consolidation. The Consolidated Financial Statements include the
accounts of CMET and partnerships and subsidiaries which it controls. All
intercompany transactions and balances have been eliminated.
Accounting estimates. In the preparation of the Trust's Consolidated Financial
Statements in conformity with generally accepted accounting principles it was
necessary for the Trust's 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 Consolidated Financial
Statements and the reported amounts of revenues and expenses for the year then
ended. Actual results could differ from these estimates.
Interest recognition on notes receivable. It is the Trust's policy to cease
recognizing interest income on notes receivable that have been delinquent for
60 days or more. In addition, accrued but unpaid interest income is only
recognized to the extent that the net realizable value of the underlying
collateral exceeds the carrying value of the receivable.
Allowance for estimated losses. Valuation allowances are provided for
estimated losses on notes receivable and properties held for sale to the extent
that the investment in the notes or properties exceeds the Trust's estimate of
net realizable value of the property or collateral securing each such note, or
fair value of the collateral if foreclosure is probable. In estimating net
realizable value, consideration is given to the current estimated collateral or
property value adjusted for costs
42
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 6,386
<SECURITIES> 4,753
<RECEIVABLES> 6,539
<ALLOWANCES> 6,305
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 205,269
<DEPRECIATION> 17,735
<TOTAL-ASSETS> 218,568
<CURRENT-LIABILITIES> 0
<BONDS> 135,590
0
0
<COMMON> 0
<OTHER-SE> 75,985
<TOTAL-LIABILITY-AND-EQUITY> 218,568
<SALES> 0
<TOTAL-REVENUES> 37,586
<CGS> 0
<TOTAL-COSTS> 22,682
<OTHER-EXPENSES> 4,279
<LOSS-PROVISION> 541
<INTEREST-EXPENSE> 10,009
<INCOME-PRETAX> (1,673)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,673)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,443)
<EPS-PRIMARY> (.33)
<EPS-DILUTED> (.33)
</TABLE>
