SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended
September 30, 1996
MERRY LAND & INVESTMENT COMPANY, INC.
P.O. Box 1417
Augusta, Georgia 30903
706 722-6756
Commission file number: 001-11081
State of Incorporation: Georgia
I.R.S. Employer Identification Number: 58-0961876
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, no par value New York Stock Exchange
$1.75 Series A Cumulative Convertible
Preferred Stock New York Stock Exchange
$2.15 Series C Cumulative Convertible
Preferred Stock New York Stock Exchange
Number of shares outstanding as of September 30, 1996:
Common Stock 37,560,181
Series A Preferred Stock 389,407
Series C Preferred Stock 4,599,800
Indicate by check mark whether the registrant 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 (or for such shorter time as required),
and (2) has been subject to such filing requirements for the past ninety days:
Yes X . No .
---- ----
<PAGE>
Form 10-Q - Merry Land & Investment Company, Inc.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance sheets - September 30, 1996 and December 31, 1995
Statements of income - Three months ended September 30, 1996 and 1995
and nine months ended September 30, 1996 and 1995.
Statements of cash flows - Nine months ended September 30, 1996 and
1995
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.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1996 1995
------------- -----------
<TABLE>
<CAPTION>
<S>
PROPERTIES AT COST
<C> <C>
Apartments $1,133,143,267 $1,009,056,178
Apartments under development 43,856,874 20,942,118
Commercial rental property 6,754,078 6,412,275
Land held for investment
or future development 4,089,470 3,815,405
Operating equipment 1,767,079 1,397,410
-------------- -------------
1,189,610,768 1,041,623,386
Less accumulated depreciation
and depletion (93,384,257) (68,347,362)
-------------- -------------
1,096,226,511 973,276,024
Cash and cash equivalents 23,232,601 43,833,846
Marketable securities 30,148,284 48,467,978
------------- -------------
53,380,885 92,301,824
OTHER ASSETS
Notes receivable 733,323 815,689
Deferred loan costs 3,638,988 4,022,226
Other 3,570,163 2,423,981
------------- -------------
7,942,474 7,261,896
------------- -------------
TOTAL ASSETS
$1,157,549,870 $1,072,839,744
------------- -------------
DEBT
9.76% Mortgage note, due 2001 $ 10,734,863 -
9.76% Mortgage note, due 2001 1,997,184 -
7.75% Mortgage note, due 2002 9,600,000 -
6.625% Senior unsecured notes,
due 1999-2001 120,000,000 120,000,000
7.25% Senior unsecured notes, due 2002 40,000,000 40,000,000
6.875% Senior unsecured notes, due 2003 40,000,000 40,000,000
6.875% Senior unsecured notes, due 2004 40,000,000 40,000,000
7.25% Senior unsecured notes, due 2005 120,000,000 120,000,000
------------- -------------
382,332,047 360,000,000
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accrued interest 6,303,333 4,294,768
Resident security deposits 1,889,335 2,577,913
Accrued property taxes 12,696,663 4,294,312
Other 5,405,334 5,814,021
-------------- -------------
26,294,665 16,981,014
STOCKHOLDERS' EQUITY
Preferred stock, at $25 liquidation preference,
20,000,000 shares authorized:
389,407 shares $1.75 Series A Cumulative
Convertible 9,735,175 16,688,000
4,000,000 shares $2.205 Series B Cumulative
Convertible 100,000,000 100,000,000
4,599,800 shares, $2.15 Series C Cumulative
Convertible 114,995,000 114,995,000
Common stock, at $1 stated value, 100,000,000
shares authorized 37,560,181 and 33,876,102
shares issued 37,560,181 33,876,102
Capital surplus 495,954,430 425,610,937
Cumulative undistributed net earnings 3,879,473 11,786,179
Notes receivable from stockholders and ESOP (16,406,466) (15,795,762)
Unrealized gain on securities 3,205,365 8,698,274
------------- ------------
748,923,158 695,858,730
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
$1,157,549,870 $1,072,839,744
------------- --------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Form 10-Q - Part I. Financial Information
Item 1- Financial Statements
Merry Land & Investment Company, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended 9/30, Nine months ended 9/30,
1996 1995 1996 1995
------------ --------- -------------- -------------
<S> <C> <C> <C> <C>
Rental income $44,816,304 $37,967,793 $129,868,877 $104,958,169
Mineral royalties 99,028 142,820 272,232 347,075
Mortgage interest 13,373 20,243 51,978 59,567
Other interest 672,239 1,852,423 1,677,569 3,268,373
Dividends 316,207 281,872 2,246,266 620,089
Other income 2,471,789 1,206,875 5,105,715 1,346,647
----------- ---------- ----------- ------------
48,388,940 41,472,026 139,222,637 110,599,920
Rental expense 12,828,201 10,700,426 36,067,113 29,109,421
Interest 5,642,709 4,559,827 17,073,832 9,858,979
Depreciation -
real estate 8,597,426 6,629,733 24,863,138 18,612,128
Depreciation - other 64,988 53,950 194,964 138,679
Amortization -
financing costs 142,383 156,218 427,149 330,209
Taxes and insurance 4,561,556 4,852,739 13,808,328 11,396,414
General and administrative
expense 921,372 625,357 2,190,148 1,538,007
Other non-recurring
expense - - - (200,000)
------------ ---------- ----------- -----------
32,758,635 27,578,250 94,624,672 70,783,837
Income before net realized
gains 15,630,305 13,893,776 44,597,965 39,816,083
Net realized gains 523,600 1,544,136 2,238,424 1,641,148
------------- ---------- ----------- ----------
NET INCOME 16,153,905 15,437,912 46,836,389 41,457,231
Dividends to preferred
shareholders 4,847,758 4,980,763 14,766,464 13,159,682
------------ ----------- ---------- -----------
NET INCOME AVAILABLE
FOR COMMON SHARES $11,306,147 $10,457,149 $32,069,925 $28,297,549
------------ ------------ ----------- -----------
Weighted average common
shares outstanding
- primary 37,352,442 33,714,729 35,302,961 33,231,507
- fully diluted 47,851,622 44,610,428 46,029,175 42,737,912
NET INCOME PER COMMON
SHARE $.30 $.31 $0.91 $0.85
---- ---- ----- -----
CASH DIVIDENDS DECLARED
PER COMMON SHARE $.37 $.35 $1.11 1.05
---- ---- ----- -----
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Form 10-Q - Part I. Financial Information
Item 1- Financial Statements
Merry Land & Investment Company, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months ended Sept. 30,
---------------------------
1996 1995
OPERATING ACTIVITIES: ---------------------------
<S> <C> <C>
Rents and royalties received $130,141,109 $105,323,753
Interest received 1,953,539 2,392,862
Dividends received 2,988,266 620,089
Rental expense (36,846,015) (28,845,133)
General and administrative expense (1,894,233) (1,767,752)
Interest expense (15,065,267) (9,473,767)
Property taxes and insurance expense (5,954,461) (2,705,411)
Other (830,410) (102,126)
------------ ------------
Net cash provided by operating activities 74,492,528 65,442,515
INVESTING ACTIVITIES:
Principal received on notes receivable 78,365 119,084
Sale of securities 25,521,643 16,566,751
Purchase of securities (5,408,313) (48,412,920)
Sale of real property 109,163 66,653
Purchase of real property (98,991,197) (131,308,581)
Development of real property (38,420,724) (4,954,041)
Recurring capital expenditures (4,752,870) (3,503,911)
Improvements to existing properties (5,317,189) (7,280,965)
Other (1,965,647) (2,868,097)
------------ -------------
Net cash (used) by operating activities (129,146,769) (181,576,027)
FINANCING ACTIVITIES:
Senior unsecured notes - 160,000,000
Net borrowings (repayments) - bank debt - (57,600,000)
Net borrowings (repayments) - mortgage loans 22,332,047 6,596,201
Repurchase agreements - (17,375,000)
Cash dividends paid - common (39,976,632) (34,918,264)
Cash dividends paid - preferred, Series A (734,286) (1,133,017)
Cash dividends paid - preferred, Series B (6,615,000) (6,615,000)
Cash dividends paid - preferred, Series C (7,417,178) (5,411,665)
Common stock retired (675,250) (238,816)
Sale of common stock - reinvested dividends 6,434,056 6,506,525
Sale of common stock - stock purchase plan 3,468,191 1,783,272
Sale of common stock - employees 1,167,807 774,538
Sale of common stock - public offering 56,094,328 -
Sale of preferred stock - public offerin (25,088) 109,699,733
Net cash provided (used) by financing ----------- -----------
activities 34,052,995 162,068,507
---------- -----------
NET INCREASE (DECREASE) IN CASH (20,601,246) 45,934,995
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 43,833,846 717,957
----------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $23,232,601 $45,642,952
----------- ------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Form 10-Q - Part I. Financial Information
Item 1- Financial Statements
Merry Land & Investment Company, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliation of Net Income to Cash Flows from Operating Activities
(Unaudited)
<TABLE>
<CAPTION>
Nine Months ended Sept. 30,
---------------------------
1996 1995
------------- ------------
<S> <C> <C>
Net income $46,836,389 $41,457,232
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 25,485,251 19,081,016
Increase) decrease in interest and
accounts receivable 992,656 (1,502,662)
(Increase) decrease in other assets (1,751,601) (2,805,859)
Increase (decrease) in accounts
payable and accrued interest 5,168,257 10,853,936
Gain on the sale of marketable securities (2,180,830) (1,572,902)
Gain on the sale of real property (57,594) (68,246)
------------ -----------
Net cash provided by operating activities $74,492,528 $65,442,515
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE)
Merry Land & Investment Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
1. Nature of Business
Merry Land & Investment Company, Inc. is a real estate investment trust
(REIT), which owns and operates upscale apartment communities in nine Southern
states including Alabama, Florida, Georgia, Maryland, North Carolina, South
Carolina, Tennessee, Texas and Virginia and also in Ohio. As a qualified REIT
the Company pays no corporate income taxes on earnings distributed to
stockholders.
The consolidated financial statements for the nine month periods ended
September 30, 1996 and September 30, 1995 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.
2. Marketable Securities
The cost and market value of securities by major classification at
September 30, 1996 were as follows:
Unrealized
Cost Market Gain
----------- ----------- ----------
Common stock $25,037,169 $27,710,409 $2,673,240
Corporate debentures 1,905,750 2,437,875 532,125
------------ ----------- ----------
$26,942,919 $30,148,284 $3,205,365
------------ ----------- ----------
3. Borrowings
Borrowings at September 30, 1996 were as follows:
9.76% mortgage notes (a) $ 12,732,047
7.75% mortgage note (b) 9,600,000
6.625% senior unsecured notes (c) 120,000,000
7.25% senior unsecured notes (d) 40,000,000
6.875% senior unsecured notes (e) 40,000,000
6.875% senior unsecured notes (f) 40,000,000
7.25% senior unsecured notes (g) 120,000,000
Advances under unsecured line of
credit (h) 0
------------
$382,332,047
------------
(a) $10.7 million and $2.0 million, 9.76% mortgage notes, principal and
interest payable monthly, maturity 2001.
(b) $9.6 million, 7.75% mortgage note, interest payable monthly, maturity
2002.
(c) $120 million, 6.625% notes, interest payable semi-annually, principal
installments of $40 million each due 1999, 2000, and 2001.
(d) $40 million, 7.25% notes, interest payable semi-annually, maturity
2002.
(e) $40 million, 6.875% notes, interest payable semi-annually, maturity
2003.
(f) $40 million, 6.875% notes, interest payable semi-annually, maturity
2004.
(g) $120 million, 7.25% notes, interest payable semi-annually, maturity
2005.
(h) $100 million line of credit, bearing interest equal to LIBOR plus
0.65%, maturity June 1997.
The Company estimates that the fair value of borrowings approximates
their carrying value at September 30, 1996. Maturities of borrowings at
September 30 were as follows:
1996 $ 12,213
1997 77,584
1998 85,504
1999 40,094,233
2000 40,103,853
2001 52,358,660
2002 49,600,000
2003 40,000,000
2004 40,000,000
2005 120,000,000
------------
$382,332,047
------------
4. 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 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 1996 to qualify as a REIT and to avoid paying
income taxes. On September 30, 1996, the Company paid dividends per share as
follows:
Series A Preferred $.43750
Series B Preferred $.55125
Series C Preferred $.53750
Common $.37000
<PAGE>
Form 10-Q - Merry Land & Investment Company, Inc.
Part I - Item 2
Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands except apartment and per share data)
This filing includes statements that are "forward looking statements"
regarding expectations with respect to market conditions, development
projects, occupancy rates, capital requirements and sources. These
assumptions and statements are subject to various factors, risks and
uncertainties, including general economic conditions, local market factors,
delays in construction, completion and rent up of development communities, and
performance of consultants of other third parties, any of which may cause
actual results to differ from the Company's current expectations.
Overview
Merry Land & Investment Company, Inc. is one of the largest
publicly owned real estate investment trusts in the United States and is
one of the nation's largest owners and operators of upscale garden
apartments. At September 30, 1996 the Company had a total equity market
capitalization of $1.0 billion and owned a high quality portfolio of 88
apartment communities containing 24,256 units, having an aggregate cost
of $1.1 billion.
Substantially all of the Company's apartment communities command
rental rates in the upper range of their markets. The communities are
geographically diversified, located in twenty-eight metropolitan areas
primarily in the Southern United States, each with a population in excess
of 250,000, extending from the Washington D.C. area to Texas and to
Florida. The Company expects eventually to own and operate a significant
number of communities in most of the major markets in the Southern United
States. The following table further describes the Company's apartment
holdings by major market as of September 30, 1996:
<TABLE>
<CAPTION>
% of Average Sept. Average
Total Occupancy(1) Rental Rate(2)
Market Units Cost Cost 1996 1995 1996 1995 1995
- ------ ----- -------- -------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta 3,368 $140,906 13% 96% 98% $648 $613
Dallas 1,830 117,811 10 91 90 829 821
Jacksonville 2,550 105,634 9 96 97 613 591
Orlando 1,902 91,015 8 94 95 657 640
Austin 1,249 79,664 7 89 (3) 860 (3)
Ft. Lauderdale 1,144 71,468 6 93 95 847 830
Tampa 1,449 64,411 6 95 96 652 639
Ft. Myers 1,268 63,888 6 93 96 661 641
Charlotte 1,623 59,090 5 95 95 588 563
Raleigh 1,256 47,735 4 95 97 603 584
Charleston 880 33,560 3 91 93 532 515
Savannah 865 32,977 3 97 98 614 583
All others 4,872 224,984 20 92 95 636 615
----- ------- --- --- --- ---- ---
24,256 $1,133,143 100% 93% 95% $666 $624
</TABLE>
----------
(1) Represents the average of physical occupancy at each month end
for the period held.
(2) Represents weighted average monthly rent charged for occupied
units and rents asked for unoccupied units at September month
end.
(3) Units first acquired in December 1995.
Portfolio Growth
Merry Land seeks to expand its apartment holdings in order to establish
a presence recognized by renters throughout the Southern United States. The
Company adds 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. From 1984 until April 1996, all portfolio growth occurred through
acquisitions. In 1996, the Company expects to deliver 500 units under its
development program.
Acquisitions. The following table describes the
growth of the Company's apartment holdings through acquisitions in recent
years:
<TABLE>
<CAPTION>
Units Ending Cost of Ending
Acquired Units Increase Acquisitions Cost(2) Increase
-------- ------ -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
1994 4,872 18,852 35% $226,174 $ 796,436 44%
1995 3,444 22,296 18 196,275 1,009,056 27
1996,
through
Sept. 30 1,739 24,256(2) 9 97,899 1,133,143(2) 9
</TABLE>
----------
1) Represents the total acquisition cost of apartment communities
plus the capitalized cost of improvements made subsequent to
acquisition.
2) Includes 200 units placed in service from the Cherry Creek II
development community and 22 units placed in service from the
Madison at River Sound development community.
Development. In December 1994, Merry Land commenced a program of
apartment development. At September 30, 1996, the Company had five
communities with 1,638 units under construction (of which 222 units have
been delivered) and three communities with 1,230 units under development as
outlined below. These communities will be completed at an expected total
cost of $208.5 million. In addition, the Company owns land for 752
additional units to be built in subsequent phases in Greensboro, Nashville
and Savannah. 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 Company has engaged experienced apartment developers to provide
development and construction management services to the Company on a project
by project basis. The developers fees are computed as a share of the value of
the completed projects, based on agreed upon formulas, less actual costs.
Merry Land s employees supervise development activities with the assistance of
architects and engineers as required. The Company owns all land and
improvements, directly contracts for construction and bears essentially all
risks of project development. While the Company has added several individuals
to its acquisition and development department as a result of this program, it
does not intend to establish a large, specialized development organization.
The Company believes that this system of constructing new communities will
allow it the flexibility to develop communities in a number of markets and to
expand, reduce or terminate such activities as conditions warrant. Merry
Land will manage these new communities during and after construction.
The following table summarizes the Company's current development
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
Total Esti- of
Esti- mated Total Units Placed Esti-
mated Cost Cost in in -mated
Location Community Units Cost Per unit to Date Service Service Completion
- -------- --------- ----- -------- -------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nashville Cherry Creek 280 $ 18,700 $66,785 $16,382 200 $13,420 4Q 1996
Atlanta River Sound 586 42,200 72,013 17,294 22 1,509 4Q 1997
Greensboro Adams Farm
II(1) 200 13,100 65,500 2,383 - - 3Q 1997
Savannah Long Point 308 20,500 66,558 5,853 - - 4Q 1997
Richmond Wyndham 264 23,000 87,121 2,871 - - 1Q 1998
----- -------- ------- ------- --- -------
1,638 $117,500 $71,734 $44,783 222 $14,929
Under Development
- -----------------
Greensboro Bridford
Lake 300 $20,300 $67,667 $ 1,873 - $ - 2Q 1998
Richmond Spring Oak 506 38,700 76,482 4,134 4Q 1998
Atlanta Sweetwater
Creek 424 32,000 75,472 3,484 - - 3Q 1999
----- ------- ------- ------ --- -------
1,230 $91,000 $73,984 $9,491
Future Development
- ------------------
Nashville Cherry
Creek II 200 $2,735
Savannah Long Point II 352 583
Greensboro Bridford
Lake II 200 1,193
--- ------
752 $4,511
</TABLE>
----------
(1) Adjoins the Company's Adams Farm community.
Recent Events
Sale of Common Stock. In a public offering completed on June 14, 1996,
the Company issued 2,500,000 shares of common stock at $21.50 per share for
net proceeds of $50.6 million. On July 16, 1996 pursuant to the exercise of
the overallotment option given to the underwriters, the Company issued an
additional 272,900 shares of common stock for net proceeds of $5.5 million.
The Company intends to use the net proceeds to acquire and develop additional
apartment properties. Pending such uses, the Company has invested the excess
proceeds in marketable securities.
Acquisitions. In the nine month period ended September 30, 1996, the
Company acquired the following communities (dollars in thousands):
Community Location Units Cost
---------- -------- ----- -------
Crestview Austin, Texas 161 $10,100
Sedona Springs Austin, Texas 396 27,324
Mariner Club Ft. Lauderdale,
Florida 304 18,000
Essex Place Tampa, Florida 148 5,075
Shoal Run Birmingham,
Alabama 276 10,800
Estate on
Quarry Lake Austin, Texas 302 18,000
Country Club Place Ft. Lauderdale,
Florida 152 8,600
----- -------
1,739 $97,899
Acquisition of Communities under Development. The Company has also
agreed to acquire the following communities to be built by unrelated third
parties pursuant to detailed plans and specifications agreed to by the Company
(dollars in thousands):
Community Location Units Cost Completion
--------- -------- ----- --------- ----------
Creekside at Homes at
Legacy Dallas, Texas 380 $28,500 2Q 1998
Villages of Prairie
Creek I Dallas, Texas 236 17,700 2Q 1998
Villages of Prairie
Creek II Dallas, Texas 200 15,000 3Q 1999
--- -------
816 $61,200
The Company will acquire title to these communities upon completion of
construction for an amount equal to the lesser of the seller s actual cost or
the budgeted cost agreed to by the Company. The Company will pay the seller
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 will
actively monitor construction quality of the communities.
Development Activity. During the nine month period of 1996, the Company
bought one tract of land in Atlanta for $3.5 million on which a 424 unit
community to be named Madison at Sweetwater Creek will be built. The Company
also bought two tracts in Richmond for $3.9 million on which a 506 community
to be named Madison at Spring Oak will be built.
Credit Line. On June 28, 1996, the Company renewed its $100.0 million
unsecured, revolving credit agreement with its primary commercial bank.
Borrowings under the line bear interest at 0.65% above the thirty day London
Interbank Offered Rates, and subject to the bank s approval, may be renewed
annually. On October 8, 1996, the Company entered into an additional $30.0
million unsecured, revolving credit agreement with a second commercial bank.
Borrowings under this line bear interest at 0.75% above the thirty day London
Interbank Offered Rates, and may be renewed annually subject to the bank's
approval. The Company maintains the credit lines to finance apartment
acquisitions and development and for general corporate purposes.
Credit Rating Assigned. On July 10, 1996, Duff & Phelps Credit Rating
Co. assigned its BBB+ rating to the Company's outstanding $360.0 million of
senior notes and its BBB rating to the Company's cumulative convertible
preferred stock. The Company had previously received ratings on its senior
notes of BBB+ from Standard & Poor's and Baa2 from Moody's Investors Service.
All these ratings are "investment grade".
Results of Operations for the Nine Months Ended September 30, 1996 and 1995.
Rental Markets. Rental markets were weaker in the nine month period of
1996 than in the same period in 1995 primarily as a result of new apartment
construction, and the Company s apartment portfolio has experienced occupancy
in 1996 approximately 2.0% below the 95% average occupancy experienced
throughout 1995 as the result of both weaker markets and the purchase of
several communities still in their initial lease up. The Company believes that
if general economic activity, job growth and household formation remain
strong, serious weakness should not develop in 1996 or 1997 as a result of
overbuilding.
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>
Change from Nine Months
% Change 1995 to 1996 1996 1995
------- ------------ -------- --------
<S> <C> <C> <C> <C>
Rents 24% $24,845 $129,448 $104,603
Operating expenses 25 7,153 35,907 28,754
Taxes and insurance 21 2,310 13,352 11,042
--- ------- -------- -------
Subtotal 24 9,463 49,259 39,796
Depreciation 34 6,270 24,770 18,500
--- ------- -------- -------
Total expenses 27 15,733 74,029 58,296
--- ------- -------- -------
Net operating income 20% $9,112 $55,419 $46,307
Average occupancy(1) (1.9)%(4) 93.3% 95.2%
Average monthly rent(2) 6.7% $666 $624
Expense ratio(3) 0.1% (4) 38.1% 38.0%
</TABLE>
----------
(1) Represents the average physical occupancy at each month end for the
period held.
(2) Represents weighted average monthly rent charged for occupied units
and rents asked for unoccupied units at September 30.
(3) Represents total of operating expenses, taxes and insurance divided
by rental revenues.
(4) Represents increase or decrease between periods.
With Merry Land's acquisition of new communities and the delivery of 222
units from the Company's development program, the weighted average number of
apartments owned rose to 23,167 in the nine month period of 1996 from 19,858
in the nine month period of 1995, and rental revenues and expenses rose
accordingly. Company wide occupancy at September 30, 1996 totaled 94.4%, down
from 96.0% at the same date in 1995.
The 6.7% increase in portfolio average rental rates in the nine month
period of 1996 from the nine month period of 1995 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 1995 and 1996,
whose monthly rents averaged $775 at September 30, 1996, versus the total
portfolio average of $666.
Rental Operations - Comparable Communities. The performance of the
18,410 units which the Company held for the nine month period of both 1996 and
1995 ("comparable communities" results), is summarized in the following table
(dollars in thousands, except average monthly rent; see footnotes above):
<TABLE>
<CAPTION>
Change from Nine Months
% Change 1995 to 1996 1996 1995
-------- ------------ -------- -------
<S> <C> <C> <C> <C>
Rental income 2.7% $2,663 $100,223 $97,560
Personnel 5.2 513 10,318 9,805
Utilities (1.3) (77) 5,868 5,945
Operating 13.3 605 5,171 4,566
Maintenance and grounds 5.8 400 7,283 6,883
Taxes and insurance (9.1) (939) 9,375 10,314
----- ------ ------- ------
Subtotal 1.3 502 38,015 37,513
Depreciation 3.2 554 17,987 17,433
----- ----- ------- ------
Total Expenses 1.9 1,056 56,002 54,946
----- ----- ------- ------
Net operating income 3.8% $1,607 $44,221 $42,614
Average occupancy(1) (1.3)%(4) 93.9% 95.2%
Average monthly rent(2) 3.4% $632 $611
Expense ratio(3) (0.6)%(4) 37.9% 38.5%
</TABLE>
----------
Comparable community results do not include Gwinnett Crossing, a 314
unit community, or Cherry Creek, a 127 unit community, which were owned
for the nine month periods of 1996 and 1995. A 260 unit community
adjacent to Gwinnett Crossing was acquired in 1995 and combined with
that community. The Cherry Creek community was acquired in December
1994 and is currently being renovated. It has been combined with a
development community which contains 280 additional units.
Rental income rose by $2.7 million or 2.7% for those properties held for
all of both periods, as a result of 1.3% lower occupancy and 3.4% higher
average rental rates. At September 30, 1996 same property occupancy was 95.0%,
down from 96.3% at September 30, 1995, as newly completed apartment
construction reduced occupancy in some of the Company s markets.
Operating expenses increased $0.5 million or 1.3% in 1996 from the same
period in 1995. An unusually severe winter caused higher than expected
operating and maintenance expenses and also led to a number of out of service
units due to frozen pipes. Personnel costs accounted for $0.5 million of the
increase, resulting primarily from higher life and health insurance premiums
(because the Company extended coverage to its employees dependents) and the
vesting of additional employees in the Company's ESOP. Utilities expense
decreased by $0.1 million or 1.3% as the Company has begun passing through a
portion of its water expense to the residents. Off site property management
expense, which is allocated to the communities, rose $0.3 million as the
Company established additional corporate positions in training, marketing and
maintenance. Accruals for property taxes and insurance decreased by $0.9
million to reflect lower than expected millage rates, the successful appeal of
the assessed values for several properties and discounts allowed for early
payment.
Rental Operations - Development Communities. $38.4 million was expended
in the nine month period of 1996 for apartments under development, bringing
the cumulative investment to $58.8 million, including capitalized interest of
$3.5 million. The Company expects to put approximately 500 units in service in
1996. Some dilution of earnings may occur to the extent that leasing lags
behind the delivery of units.
200 units of the Cherry Creek II community and 22 units of the Madison
at River Sound community, in the Company's development program, were delivered
in the second and third quarters of 1996. As discussed above, the 280 Cherry
Creek II community is adjacent to the existing 127 unit Cherry Creek community
which is being renovated and these two communities are operated together. The
operating results for the nine month period of 1996 and 1995 for both phases
of Cherry Creek and the Madison at River Sound are summarized in the following
table (dollars in thousands):
Nine months
-------------------
1996 1995
---- ----
Units 349 127
Rental income $1,052 $473
Operating expens 358 195
Taxes and insurance 31 31
---- ----
Subtotal 389 226
Depreciation 77 74
---- ----
Total expenses 466 300
---- ----
Net operating income $586 $173
At September 30, 1996, 86% of the 222 units delivered in the Cherry
Creek phase II and the Madison at River Sound were leased at an average rental
rate of $810 per unit, or $.81 per square foot.
Rental Operations - Other Communities. The Company defines "other
communities" as those not included in comparable communities or development
communities. At September 30, 1996, these communities included 5,497 units, of
which 1,739 units were bought in the nine month period of 1996. The remaining
units were bought in 1995, except for the 314 units of Gwinnett Crossing
described above. The performance of the other communities for the nine month
period of 1996 and 1995 are summarized in the following table (dollars in
thousands):
Nine months
----------------------
1996 1995
------- ------
Units 5,497 2,698
Rental income $28,172 $6,571
Operating expense 6,909 1,362
Taxes and insurance 3,946 696
------ ------
Subtotal 10,855 2,058
Depreciation 6,706 993
------ ------
Total expenses 17,561 3,051
------ ------
Net operating income $10,611 $3,520
Interest, Dividend and Other Income. Interest, dividend and other income
are summarized in the following table (dollars in thousands):
Nine months
---------------------
1996 1995
------ ------
Interest income $1,730 $3,328
Dividend income 2,246 620
Other income 5,106 1,347
------ ------
Total $9,082 $5,295
The increase in 1996 when compared to 1995 is due to higher dividend
and other income. Interest income decreased as the Company liquidated a
portion of its interest-bearing investments and acquired equity security
investments. For the nine month period of 1996, the Company realized dividend
income of $2.2 million and other income of $5.0 million on its equity
security investments. The $5.0 million in other income was generated from the
sale of a portion of the equity security investments. At September 30, 1996
the Company's equity security investments totaled $27.7 million, down from
$46.0 million at December 31, 1995 and an average of $43.5 million for the
nine months of 1996.
Interest Expense. Interest expense totaled $17.1 million in the nine
month period of 1996, up from $9.9 million in the nine month period of 1995.
Average debt outstanding rose to $369.3 million in the nine month period of
1996 from $227.6 million in the nine month period of 1995, primarily as a
result of the issuance of the 6.875% and 7.25% senior unsecured notes in 1995
and the assumption of $22.3 million of mortgage debt when the Mariner Club and
Estate of Quarry Lake communities were acquired in April and September of
1996. The weighted average interest rate charged on all the Company s debt
increased to 7.0% in the nine month period of 1996 from 6.7% for the nine
month period in 1995, primarily as a result of the replacement of short-term
financing with the 6.875% and 7.25% senior unsecured notes and an average
interest rate of 8.9% on the mortgage debt assumed. During the nine month
period of 1996, $2.0 million of interest related to the Company's development
projects was capitalized.
General and Administrative Expenses. General and administrative expenses
in the nine month period of 1996 were $2.2 million, representing 1.7% of
rental revenues and 3.2% of funds from operations. For all of 1995, expenses
averaged 1.7% of rental revenues and 3.0% of funds from operations.
Gains on Sales of Assets. Net gains recognized on the sale of assets
totaled $2.2 million in the nine month period of 1996 and $1.6 million in the
nine month period of 1995. Gains in both years came primarily from the sale of
securities. In the nine month period of 1996, 162,000 shares of First
Financial Holdings, Inc. were sold on the open market. At September 30, 1996,
the Company owned 38,000 shares of First Financial, which were sold on the
open market after the end of the quarter.
Net Income. Net income totaled $46.8 million in the nine month period of
1996 and $41.5 million for the nine month period of 1995. Net income available
for common shareholders totaled $32.1 million in the nine month period of 1996
and $28.3 million for the nine month period of 1995. The increases in net
income and net income available for common shareholders for 1996 when compared
to 1995 arose principally from substantially increased operating income from
apartments due to the growth of the Company s apartment holdings, as well as
increases in other income and net realized gains. Net income per common share
in the nine month period of 1996 increased to $.91 from $.85 in the nine month
period of 1995.
Dividends to preferred shareholders. Dividends to preferred shareholders
totaled $14.8 million in the nine month period of 1996 and $13.2 million in
the nine month period of 1995. Preferred dividends are summarized in the
following table (dollars in thousands):
Nine months
--------------------
1996 1995
------ -----
Series A Preferred share dividends $ 734 $ 1,133
Series B Preferred share dividends 6,615 6,615
Series C Preferred share dividends 7,417 5,412
------ -----
Total preferred dividends $14,766 $13,160
The increase in preferred dividends arose from an increase in the amount
of preferred stock outstanding during the period. Holders of the Company s
Series A Preferred Stock have converted 4.2 million of the 4.6 million Series
A shares originally issued in June 1993 into 5.6 million shares of the
Company s common stock as the common dividend was raised above the equivalent
preferred dividend. In March and April 1995 the Company issued 4.6 million
shares of the Series C Convertible Preferred Stock.
Funds From Operations. Funds from operations rose 19% to $69.5 million
in the nine month period of 1996 as compared to $58.2 million in the nine
month period of 1995. Funds from operations available to common shares rose
21% to $54.7 million in the nine month period of 1996 compared to $45.1
million in the nine month period of 1995. These increases were principally due
to increased rental operating income resulting from the growth of the
Company s apartment holdings and increased other income. On a fully diluted
per share basis, funds from operations increased 11% to $1.51 in 1996 from
$1.36.
The following is a reconciliation of net income to funds from operations
(data in thousands, except per share data):
Nine Months
--------------------
1996 1995
------- -------
Net income $46,836 $41,457
Less preferred dividends paid 14,766 13,160
------- -------
Net income available for common shares 32,070 28,297
Add depreciation of real estate owned 24,863 18,612
Less net realized gains 2,238 1,641
Plus non-recurring expenses - (200)
------- ------
Funds from operations available to
common shares 54,695 45,068
Add preferred dividends 14,766 13,160
------- -------
Funds from operations-fully diluted $69,461 $58,228
Weighted average common shares
outstanding -
Primary 35,303 33,232
Fully diluted 46,029 42,738
Funds from operations per share-
Primary $1.55 $1.36
Fully diluted $1.51 $1.36
The Company believes that funds from operations is an important measure
of its operating performance. Funds from operations does not represent cash
flows from operations as defined by generally accepted accounting principles,
GAAP, and should not be considered as an alternative to net income or as an
indicator of the Company s operating performance, or as a measure of the
Company s liquidity. Based on published recommendations of a task force of the
National Association of Real Estate Investment Trusts, the Company defines
funds from operations as net income computed in accordance with GAAP,
excluding non-recurring costs and net realized gains, plus depreciation of
real property. This revised definition eliminates from funds from operations
any amortization of debt costs and any non-real estate depreciation. Revision
of the definition reduced the Company s funds from operations by $0.6 million
and $0.5 million in the nine month periods of 1996 and 1995, respectively.
Liquidity and Capital Resources
Financial Structure. At September 30, 1996, total debt equaled 34% of
total capitalization at cost, and 27% of total capitalization with equity
valued at market. At that date, the Company's financial structure was as
follows (dollars in thousands):
<TABLE>
<CAPTION>
Equity at
% of Market % of
Cost Total Value Total
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Advances under line of
credit $ - $ -
Mortgage loans 22,332 22,332
6.625% senior unsecured notes,
1999 40,000 40,000
6.625% senior unsecured notes,
2000 40,000 40,000
6.625% senior unsecured notes,
2001 40,000 40,000
7.25% senior unsecured notes,
2002 40,000 40,000
6.875% senior unsecured notes,
2003 40,000 40,000
6.875% senior unsecured notes,
2004 40,000 40,000
7.25% senior unsecured notes,
2005 120,000 120,000
------- -------
Total debt 382,332 34% 382,332 27%
Common and preferred
equity (1) 748,923 66% 1,027,269 73%
--------- ---- ---------- ----
Total capitalization $1,131,255 100% 1,409,601 1 00%
--------- ---- ---------- ----
</TABLE>
(1) Assumes conversion of all outstanding preferred stock into common
stock.
At September 30, 1996, the Company had no borrowings outstanding under
its line of credit. Borrowings under the line bear interest at 0.65% above the
thirty day London Interbank Offered Rates.
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. At September 30, 1996, the Company had two mortgage
loans outstanding, which were assumed in April and September of 1996 in
connection with the purchase of the Mariner Club and Estate on Quarry Lake
communities.
The Company's preferred stock and its senior notes are rated investment
grade by Standard & Poor's Corporation, Moody's Investors Services, Inc., and
Duff & Phelps Credit Rating Co.
Liquidity. Merry Land expects to meet its short-term liquidity
requirements with cash provided by operating activities, by liquidating
marketable securities and short term investments and by borrowing under its
line of credit. The Company's primary short-term liquidity needs are operating
expenses, apartment acquisitions and development and capital improvements. The
Company has reduced its holdings of marketable securities which were acquired
as a temporary investment pending the acquisition or development of additional
apartment communities. The Company intends to continue to liquidate its
portfolio of marketable securities as market conditions allow and invest in
additional apartment communities.
The Company expects to meet its long-term liquidity requirements,
including scheduled debt maturities and permanent financing for property
acquisitions and development, from a variety of sources, including operating
cash flow, additional borrowings and the issuance and sale of debt and equity
securities in the public and private markets. The following table summarizes
the estimated future capital requirements for apartment communities under
development and capital sources as of September 30, 1996 through completion of
all committed developments without considering additional acquisitions, debt
repayments or possible additional sales of debt or equity securities (dollars
in thousands):
Estimated capital requirements:
-------------------------------
Development communities expected costs $208,500
Less development costs paid thru 9/30/96 (58,800)
--------
149,700
Acquisition of communities under development 61,200
--------
Total future development commitments 210,900
Estimated capital sources:
-------------------------
Cash on hand at 9/30/96 $ 23,233
Marketable securities held at 9/30/96 30,148
Funds available under line of credit 123,500
--------
Total capital sources 176,881
Excess of capital requirements over sources $ 34,019
--------
Additional new developments or acquisitions of existing apartment
communities will further increase the Company's capital requirements.
The Company expects to fund the excess of capital requirements
over capital sources with cash provided by operating activities and proceeds
from the issuance of stock under the Company's Dividend Reinvestment and
Stock Purchase Plans. At September 30, 1996, the Company's loan agreements
and the covenants under its senior unsecured notes would have allowed it to
borrow only $123.5 million on an unsecured basis.
Cash Flows. The following table summarizes cash flows for the nine month
periods of 1996 and 1995 (dollars in thousands):
Sources and Uses of Cash:
-------------------------
Nine Months
-------------------------
1996 1995
------------ ----------
Operating activities $ 74,493 $ 65,443
Sales of Merry Land common and
preferred stock 66,464 118,525
Net borrowings 22,332 91,621
Other 187 6,346
------- --------
Total sources of cash 163,476 281,935
Acquisitions of and improvements
to properties (109,061) (142,093)
Development of properties (38,421) (4,954)
Dividends paid (54,743) (48,078)
Other (172) (2,871
--------- ---------
Total uses (202,397) (197,996)
--------- ---------
Increase (decrease) in cash, cash
equivalents and marketable
securities ($38,921) $83,939
Cash, cash equivalents and marketable securities decreased by $38.9
million in 1996 as the Company invested funds raised in the debt and equity
offerings in 1995 in apartments. With the expansion of the Company s apartment
holdings, operating cash flow has grown to $74.5 million in the nine month
period of 1996 from $65.4 million in the nine month period of 1995. In the
first nine months of 1996, sales of Merry Land common stock included the
issuance of 2,772,900 shares of common stock in a public offering at $21.50
per share for net proceeds of $56.1 million and $9.5 million issued under the
Company's Dividend Reinvestment and Stock Purchase Plans. The primary use of
cash has been apartment acquisitions and improvements. Expenditures for
apartment communities under development increased to $38.4 million in the
first nine months of 1996 from $5.0 million in the first nine months of 1995
as the level of construction increased. The Company expects development
expenditures to increase further for the remainder of 1996 and in 1997 as
construction of additional apartment communities commences. Dividends paid in
the nine month period of 1996 increased from the same period in 1995 due to an
increase in the average amount of stock outstanding and in the case of the
Company's common stock, an increase in the quarterly dividend per share to
$0.37 in the first quarter of 1996 from $0.35 per share.
Capital Expenditures. The Company capitalizes 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 project.
The following table summarizes the capital expenditures for the nine
month periods of 1996 and 1995 (dollars in thousands, except per unit data):
Nine Months
-------------------
1996 1995
------- -------
Apartment communities:
Acquisitions $98,991 $131,308
Development projects:
Development costs 36,459 4,235
Capitalized interest 1,962 719
Replacements for stabilized
communities (1) 3,992 2,286
Improvements 5,356 7,863
Commercial properties 342 310
Corporate level expenditures 380 326
------ -------
$147,482 $147,047
Per Unit:
Replacements for stabilized
communities (1) $217 $167
Improvements (2) $221 $370
----------
(1) Stabilized communities are those properties which have been owned
for at least one full calendar year. In the nine month period of
1996, 18,410 units were stabilized as compared to 13,665 units in
the nine month period of 1995.
(2) Improvements include expenditures for all properties owned during
the period, including replacements at newly acquired communities.
Inflation. Substantially all of the Company's leases are for terms of
one year or less, which should enable the Company to replace existing leases
with new leases at higher rentals in times of rising prices. The Company
believes that this would offset the effect of cost increases
stemming from inflation.
<PAGE>
Merry Land & Investment Company, Inc.
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
3. Exhibits.
(3.I) Amended and Restated Articles of Incorporation (incorporated
herein by reference to Exhibit 4(a) to the Company's Shelf
Registration Statement on Form S-3 filed December 15, 1995,
file number 33-65067).
(3.ii) By-laws (incorporated herein by reference to Exhibit 3(ii) of Item 14
of the Company's Annual Report on Form 10-K for the year ended
December 31, 1993).
(4) Instruments Defining Rights of Security Holders, Including Indentures
(4.1) The Company's $120,000,000 7 1/4% Notes due 2005 (incorporated
herein by reference to Item 7, Exhibit 4A to the Company s Form 8-K
filed June 23, 1995).
(4.2) Indenture (incorporated herein by reference to Item 7, Exhibit
4B to the Company's Form 8-K filed June 23, 1995).
(4.3) First Supplemental Indenture (incorporated herein by reference
to Item 7, Exhibit 4C to the Company's Form 8-K filed June 23,
1995).
(4.4) The Company s $40,000,000 7 1/4% Notes due 2002 (incorporated
herein by reference to Exhibit 4A to the Company's current report
on Form 8-K filed September 1, 1995).
(4.5) The Company's $40,000,000 6.875% Notes due 2003 and $40,000,000
6.875% Notes due 2004 incorporated herein by reference to Exhibit 4A
to the Company's current report on Form 8-K filed November 8, 1995.
(10) Material Contracts.
(10.1) Credit Agreement between the Company and Lenders for a $100 million
credit facility (incorporated herein by reference to Item 7, Exhibit
10 to the Company's current report on Form 8-K filed July 15, 1996).
(10.2) Credit Agreement between the Company and Lenders for a $160 million
credit facility (incorporated herein by reference to Item 7, Exhibit
10 to the Company's current report on Form 8-K filed July 14, 1995).
(10.3) $120,000,000 6.625% Senior Notes/Note Purchase Agreement
(incorporated herein by reference to Exhibit 10.ii of Item 6 of the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993).
(10.4) 1993 Incentive Stock Option Plan (incorporated herein by reference to
Exhibit (10.2.1) of item 14 of the Company's Annual Report on Form
10-K for the year ended December 31, 1993).
(10.5) Executive Officer Restricted Stock Loan Plan, as amended
(incorporated herein by reference to Exhibit (10.2.2) of the
Company's Annual Report on Form 10-K for the year ended December
31, 1993).
(10.6) Employee Stock Ownership Plan and Trust Agreement (incorporated
herein by reference to Exhibit (10.2.3) of Item 14 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1993).
(10.7) 1994 Stock Option and Incentive Plan (incorporated herein by
reference to Exhibit (10.2.4) of Item 14 of the Company's Annual
Report of Form 10-K for the year ended December 31, 1993).
(10.8) 1995 Stock Option and Incentive Plan (incorporated herein by
reference to Appendix "B" to the Company's 1995 Proxy Statement on
Form DEF-14A filed March 27, 1995).
(10.9) Line of Credit Agreement (unsecured) (incorporated herein by
reference to Item 7, Exhibit 10 to the Company's current report on
Form 8-K filed October 23, 1996).
(27) Financial Data Schedules
b. Reports on Form 8-K and K-/A:
Form Date Filed Items Reported Financial Statements Filed
---- ---------- -------------- --------------------------
8-K August 2, 1996 Acquisition of Financial Statements
Mariner Club and were filed on the
Sedona Springs Company's current report
Apartments. on Form 8-K filed 8/2/96.
<PAGE>
Form 10-Q - Merry Land & Investment Company, Inc.
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 & INVESTMENT COMPANY, INC.
/s/ W. Tennent Houston
----------------------
W. Tennent Houston
President
Principal Financial Officer
December 5, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 23,233
<SECURITIES> 30,148
<RECEIVABLES> 195
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,951
<PP&E> 1,141,664
<DEPRECIATION> 93,355
<TOTAL-ASSETS> 1,157,550
<CURRENT-LIABILITIES> 26,295
<BONDS> 360000
0
224,730
<COMMON> 37,560
<OTHER-SE> 486,633
<TOTAL-LIABILITY-AND-EQUITY> 1,157,550
<SALES> 129,869
<TOTAL-REVENUES> 141,461
<CGS> 36,067
<TOTAL-COSTS> 94,625
<OTHER-EXPENSES> 427
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,074
<INCOME-PRETAX> 46,836
<INCOME-TAX> 0
<INCOME-CONTINUING> 46,836
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,836
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
</TABLE>
