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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
December 28, 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
- --------------------------------------------------------------------------------
(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
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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 December 28, 1995 and
filed January 12, 1996 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 nine months ended September 30, 1995. A pro forma balance
sheet as of September 30, 1995 is also presented.
A summary of the pro forma transactions follows:
In December 1995, the Trust purchased Brookfield Corporate Center, a 63,504
square foot industrial facility in Chantilly, Virginia for $3.5 million,
exclusive of commissions and closing costs. The Trust paid $650,000 in cash
and the seller provided mortgage financing in the amount of $2.8 million. The
mortgage bears interest at a rate of 7.6% per annum, requires monthly payments
of principal and interest of $21,000 and matures in December 1998.
The $3.5 million purchase price of Brookfield Corporate Center is approximately
1.9% 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 in 1995 as described below, such acquisitions constitute
a significant acquisition.
In addition to the Brookfield Corporate Center acquisition discussed above, the
Trust purchased four apartment complexes and two other commercial properties in
1995. The properties, located in Virginia, Texas, South Carolina and Florida,
were purchased for a total of $35.4 million in separate transactions from
unaffiliated sellers, and represent approximately 19.3% of the Trust's
consolidated assets at December 31, 1994. The Trust paid a total of $7.1
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 2013.
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 Brookfield Corporate Center Audited Statement of Revenues and Direct Operating Expenses for the year ended
December 31, 1994.
</TABLE>
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Brookfield Other
Corporate Property
Actual Center (1) Acquisitions (1) Pro forma
-------------- ----------- ---------------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Assets
------
Notes and interest receivable
Performing . . . . . . . . . . . $ 4,344 $ - $ - $ 4,344
Nonperforming, nonaccruing . . . 4,456 - - 4,456
-------------- ---------- ---------- ----------
8,800 - - 8,800
Real estate held for sale, net of
accumulated depreciation . . . . 25,333 - - 25,333
Less - allowance for estimated
losses . . . . . . . . . . . . . (9,207) - - (9,207)
-------------- ---------- ---------- ----------
24,926 - - 24,926
Real estate held for investment,
net of accumulated depreciation 150,024 3,450 9,465 162,939
Investments in marketable equity
securities of affiliates, at
market . . . . . . . . . . . . . 4,824 - - 4,824
Investments in partnerships . . . . 12,248 - - 12,248
Cash and cash equivalents . . . . . 6,954 (650) (2,034) 4,270
Other assets . . . . . . . . . . . 5,665 - - 5,665
-------------- ---------- ---------- ----------
$ 204,641 $ 2,800 $ 7,431 $ 214,872
============== ========== ========== ==========
</TABLE>
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<PAGE> 4
CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
CONSOLIDATED BALANCE SHEET - Continued
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Brookfield Other
Corporate Property
Actual Center (1) Acquisitions (1) Pro forma
-------------- ------------ ---------------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
- ------------------------------------
Liabilities
Notes and interest payable . . . . $ 121,920 $ 2,800 $ 7,431 $ 132,151
Other liabilities . . . . . . . . . 5,848 - - 5,848
-------------- ---------- ---------- ----------
127,768 2,800 7,431 137,999
Commitments and contingencies
Shareholders' equity
Shares of Beneficial Interest,
no par value; authorized shares,
unlimited; issued and out-
standing, 2,918,100 shares . . . 8,766 - - 8,766
Paid-in capital . . . . . . . . . . 260,060 - - 260,060
Accumulated distributions in
excess of accumulated earnings . (195,053) - - (195,053)
Net unrealizable gains on market-
able equity securities . . . . . 3,100 - - 3,100
-------------- ---------- ---------- ----------
76,873 - - 76,873
-------------- ---------- ---------- ----------
$ 204,641 $ 2,800 $ 7,431 $ 214,872
============== ========== ========== ==========
</TABLE>
- ---------------------------------
(1) Assumes acquisition of Brookfield Corporate Center and other
properties purchased by the Trust subsequent to September 30, 1995 to
be on January 1, 1995. The effect of all other 1995 property
purchases are included in the September 30, 1995 actual balances.
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Brookfield Other
Corporate Property
Actual Center (1) Acquisitions (1) Pro forma
---------- ----------- ---------------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Income
Rentals . . . . . . . . . . . . . . . . . $ 27,318 $ 313 $ 2,847 $ 30,478
Interest . . . . . . . . . . . . . . . . 600 - - 600
Equity in income of partnerships . . . . 213 - - 213
---------- ---------- ----------- ----------
28,131 313 2,847 31,291
Expenses
Property operations . . . . . . . . . . . 16,456 76 1,662 18,194
Interest . . . . . . . . . . . . . . . . 6,998 160 1,052 8,210
Depreciation . . . . . . . . . . . . . . 3,133 52 290 3,475
Advisory fee to affiliate . . . . . . . . 1,139 - - 1,139
General and administrative . . . . . . . 928 - - 928
Provision for losses . . . . . . . . . . 541 - - 541
---------- ---------- ----------- ----------
29,195 288 3,004 32,487
---------- ---------- ----------- ----------
Net income (loss) . . . . . . . . . . . . . $ (1,064) $ 25 $ (157) $ (1,196)
========== ========== =========== ==========
Earnings per share
Net (loss) . . . . . . . . . . . . . . . $ (.36) $ (.41)
========== ==========
Shares of beneficial interest outstanding . 2,918,114 2,918,114
========== ==========
</TABLE>
- -----------------------------
(1) Assumes acquisition by the Trust on January 1, 1995.
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CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Brookfield Other
Corporate Property
Actual Center (1) Acquisitions (1) Pro forma
---------- ----------- ---------------- ------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Income
Rentals . . . . . . . . . . . . . . . . . $ 27,042 $ 418 $ 6,072 $ 33,532
Interest . . . . . . . . . . . . . . . . 2,699 - - 2,699
Other . . . . . . . . . . . . . . . . . . (479) - - (479)
--------- ---------- ----------- ------------
29,262 418 6,072 35,752
Expenses
Property operations . . . . . . . . . . . 16,888 101 2,975 19,964
Interest . . . . . . . . . . . . . . . . 7,711 213 2,284 10,208
Depreciation . . . . . . . . . . . . . . 3,214 69 759 4,042
Advisory fee to affiliate . . . . . . . . 1,326 - - 1,326
General and administrative . . . . . . . 1,235 - - 1,235
Provision for losses . . . . . . . . . . 1,429 - - 1,429
--------- ---------- ----------- ------------
31,803 383 6,018 38,204
--------- ---------- ----------- ------------
Income (loss) before gain on sale of real
estate . . . . . . . . . . . . . . . . . (2,541) 35 54 (3,452)
Gain on sale of real estate . . . . . . . . 1,708 - - 1,708
--------- ---------- ----------- ------------
Net income (loss) . . . . . . . . . . . . . $ (833) $ 35 $ 54 $ (744)
========= ========== =========== ============
Earnings per share
(Loss) before gain on sale of real estate $ (.87) $ (.84)
Gain on sale of real estate . . . . . . . .58 .58
--------- ------------
Net (loss) . . . . . . . . . . . . . . . $ (.29) $ (.26)
========= ============
Shares of beneficial interest outstanding . 2,919,815 2,919,815
========= ============
</TABLE>
- ----------------------------
(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: February 20, 1996 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 28, 1995
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------- ------------------------------------------- ------
<S> <C> <C>
99.0 Brookfield Corporate Center Audited State- 9
ment of Revenues and Direct Operating
Expenses for the year ended December 31,
1994.
</TABLE>
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BROOKFIELD CORPORATE CENTER
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 Brookfield Corporate Center 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 and 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 Brookfield Corporate Center for the year ended
December 31, 1994, in conformity with generally accepted accounting principles.
Farmer, Fuqua, Hunt & Munselle, P.C.
Dallas, Texas
February 8, 1996
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BROOKFIELD CORPORATE CENTER
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
REVENUES
Rental revenues $ 332,793
Common area maintenance charges 84,971
-----------------
Total Revenues 417,764
-----------------
OPERATING EXPENSES
Insurance 10,030
Postage and freight 1,220
Property taxes 28,158
Repairs and maintenance 31,442
Utilities 7,206
Other 2,032
-----------------
Total Operating Expenses 80,088
-----------------
REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 337,676
=================
</TABLE>
The accompanying notes are an integral part of this statement.
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BROOKFIELD CORPORATE CENTER
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
DECEMBER 31, 1994
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Brookfield Corporate Center consists of two warehouses with 32,020
and 31,484 square feet respectively, located in Fairfax County,
Virginia. The warehouses can be utilized as office space, as
well as storage space. During 1994, the property was owned by
Reynolds Metals Development Company.
The accompanying financial statement does not include a provision
for depreciation and amortization, bad debt expense, interest
expense or income taxes. Accordingly, this statement is not
intended to be a complete presentation of the results of
operations.
NOTE 2: OTHER EXPENSE
Other expense consists of the following:
<TABLE>
<S> <C>
Property owner's fees $ 1,171
Miscellaneous 861
------------
Total Other Expense $ 2,032
============
</TABLE>
NOTE 3: SUBSEQUENT EVENT
The property was sold to Continental Mortgages and Equity Trust, a
California business trust, on December 28, 1995.
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