- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
Form 10K
___________
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 1995
___________
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:
<TABLE>
<CAPTION>
<S> <S>
Common Stock, no par value 33,876,102 New York Stock Exchange
$1.75 Series A Cumulative Convertible Preferred Stock 667,520 New York Stock Exchange
$2.15 Series C Cumulative Convertible Preferred Stock 4,599,800 New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
Shares outstanding as of December 31, 1995:
Common Stock, no par value 33,876,102
Series A Convertible Preferred Stock 667,520
Series C Convertible 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, and (2) has been
subject to such filing requirements for the past ninety days:
Yes X . No____.
----
The aggregate market value of the voting stock held by non
affiliates of the registrant on December 31, 1995: Common Stock, no
par value - $657,831,000 (all shares other than those owned or
controlled by officers, directors, and 5% shareholders).
Documents incorporated by reference: The 1996 definitive proxy
statement to be mailed to shareholders for the annual meeting
scheduled for April 15, 1996, is incorporated by reference into Part
III of this form 10-K.
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.
----
<PAGE>
Table of Contents
Part I
Item 1 Business
Item 2 Properties
Item 3 Legal Proceeding
Item 4 Submission of Matters to a Vote of Security Holders
Part II
Item 5 Market for the Registrant's Common Stock and Related
Shareholders' Matters
Item 6 Selected Financial Data
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8 Financial Statements and Supplementary Data
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Part III
Item 10 Directors and Executive Officers of the Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and
Management
Item 13 Certain Relationships and Related Transactions
Part IV
Item 14 Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
<PAGE>
Part I
Item 1 - Business
The Company
Merry Land & Investment Company, Inc. is one of the largest
real estate investment trusts in the United States and is one of the
nation's largest owners and operators of upscale garden apartments.
At December 31, 1995, the Company had a total equity market
capitalization of $1.1 billion and owned a high quality portfolio of
80 apartment communities containing 22,296 units located primarily
in the Southern United States.
Merry Land's objective is to increase funds from operations and
distributions to shareholders by producing greater cash flows at its
existing apartment communities through effective management and also
by purchasing and developing additional apartment properties. The
Company intends to establish a significant presence in most of the
South's major markets.
In recent years, Merry Land has conducted an active program of
apartment acquisition. The Company buys properties located within
its market areas which it expects will produce attractive initial
rates of return and which have the potential for cash flow growth.
The following table summarizes the Company's acquisitions in recent
years (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Units acquired 3,444 4,872 7,452 2,845 986
Total units owned at end of period 22,296 18,852 13,981 6,529 3,711
Total cost of apartments $1,009,056 $796,436 $554,589 $209,694 $121,285
Total apartment rental income $ 144,283 $101,667 $ 54,565 $ 22,460 $ 15,376
_________
</TABLE>
In December 1994, Merry Land began a program of apartment
development to complement its acquisition activities. At December 31,
1995, the Company had begun construction on three communities, had
commenced development activities on five others and had acquired land
for one more. The Company expects these properties will be completed
throughout 1996, 1997 and 1998 for a total cost of about $165.0
million, producing 2,690 apartment units. Although the Company
intends that the acquisition of apartments will remain its primary
means of further expanding its apartment holdings, development also
will add a significant number of units.
Merry Land considers its market area to be the Southern United
States, extending from the Washington D.C. area, to Texas and to
Florida. The Company believes that it is presently the largest
owner and operator of upscale apartment units in this area.
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-seven metropolitan
areas primarily in the Southern United States, each with a population
in excess of 250,000.
Merry Land, headquartered in Augusta, Georgia, became an
independent publicly owned company in 1981. It is not an "UPREIT",
nor does it manage apartments for or provide other services to third
parties.
Recent Developments
1995 Acquisitions. In 1995, the Company acquired ten apartment
communities containing 3,444 units at a cost of $196.3 million:
<TABLE>
<CAPTION>
Community Location Units
--------- -------- -----
<S> <S> <C>
Gwinnett Club* Atlanta, Georgia 260
Laurel Gardens Ft. Lauderdale, Florida 384
Beach Club Ft. Myers, Florida 320
Madison at Cedar Springs Dallas, Texas 380
Madison on the Parkway Dallas, Texas 376
Kimmerly Glen Charlotte, North Carolina 260
Madison at Round Grove Dallas, Texas 404
Madison at Chase Oaks Dallas, Texas 470
Madison at Stone Creek Austin, Texas 390
Madison at Melrose Dallas, Texas 200
-----
</TABLE> 3,444
*This adjoins the Company's Gwinnett Crossing apartments and
was consolidated with that community.
Investment in Texas Properties. In 1995, Merry Land bought its
first apartment communities in the state of Texas and by year end owned 1,830
units in Dallas and 390 units in Austin. The Company expects Texas, the
largest state in the South, to become one of its major markets. In several
of the transactions the Company acquired limited partnerships which owned the
communities, using two newly created, wholly-owned subsidiaries of Merry
Land, which are consolidated in the Company's financial statements. Under
these agreements Merry Land agreed to close the purchases upon completion of
construction and the attainment of specified occupancy and rent levels.
Development Activity. In 1995 the Company bought two tracts of
land in Greensboro, North Carolina and one tract in Richmond, Virginia for
apartment development, bringing its total number of development sites to
nine at December 31, 1995. During 1995, the Company commenced construction on
three communities, located in Nashville, Atlanta and Savannah and began
development activities on five others. During the year the Company spent
$12.8 million for land acquisitions and for construction and other develop-
ment costs. The Company expects to begin leasing the first of its newly
constructed units in the second quarter of 1996.
Defeasance of Mortgage Debt. On November 30, 1995 the Company
defeased all its remaining mortgage debt by transferring government
securities totaling $17.9 million to a trust account with First Union
National Bank of Georgia. The $17.4 million of mortgage debt defeased is
secured by the Claire Point and Lakeridge communities. A non-recurring loss
of $1.6 million was recognized, of which $1.1 million related to the write-
off of unamortized deferred loan costs, and the remainder was a prepayment
penalty.
Issuance of Senior Unsecured Notes. In 1995 the Company sold
senior unsecured notes on three occasions, raising a total of $240.0 million.
The following table summarizes these offerings (dollars in thousands):
<TABLE>
<CAPTION>
Issue Date Amount Rate Maturity
---------- ------- ------- --------
<S> <C> <C> <C>
June $120,000 7.25% 2005
August 40,000 7.25% 2002
November 40,000 6.875% 2003
November 40,000 6.875% 2004
</TABLE>
In issuing these notes, the Company incurred and capitalized
$2.0 million of costs and will amortize the costs over the terms of the
notes. The notes rank equally with the Company's other unsecured and
unsubordinated indebtedness. The senior unsecured notes contain covenants
which limit the levels of debt the Company may incur. Under these covenants
the Company may not incur secured debt in excess of 40% of total assets; may
not incur total debt in excess of 60% of total assets; and the coverage
ratio of net operating income divided by interest on debt and regularly
scheduled principal debt amortization may not be less than 1.5 times. The
Company is also required to maintain unencumbered assets of not less than
150% of outstanding unsecured debt.
Credit Line Increase. On June 30, 1995, the Company increased
its existing $100.0 million unsecured line of credit to $160.0 million. The
Company's primary bank provides the Company with the first $100.0 million of
the line of credit, which bears interest at 0.65% above the thirty day
London Interbank Offered Rate (LIBOR) and a group of five other banks
provide the additional $60.0 million portion of the line of credit at a rate
of interest at 1.65% above LIBOR. The Company maintains the credit line to
finance apartment acquisitions and development and for general corporate
purposes. At December 31, 1995 only $107.4 million could be drawn under this
line of credit under the 6.625% senior notes covenants.
Debt Rating Raised. Standard & Poor's raised its credit rating
on the Company's senior unsecured notes from BBB to BBB+ in connection with
the debt offerings discussed above. Moody's Investors Service held its
rating of the Company's senior unsecured notes at Baa2. Both ratings are
considered "investment grade".
Sale of Preferred Stock. In a public offering on March 8,
1995, the Company issued 4.0 million shares of $2.15 Series C Cumulative
Convertible Preferred Stock at $25.00 per share for net proceeds of $95.4
million. On April 7, 1995, the Company issued an additional 0.6 million
shares of the Series C Preferred Stock for net proceeds of $14.4 million
under the overallotment option given to the underwriters in the March 8
offering. The Series C Preferred Stock pays a coupon rate of 8.6% and each
share is convertible into 1.136 shares of common stock.
Shelf Registration. On February 10, 1995, the Company filed
a shelf registration statement for up to $400.0 million in debt securities,
preferred and common stock, depository shares and common stock warrants.
During the year, $355.0 million of securities were issued under the shelf
registration statement including the $115.0 million Series C Cumulative
Convertible Preferred Stock and $240.0 million of senior unsecured notes.
On December 15, 1995, the Company filed another shelf registration state-
ment for an additional $455.0 million which when combined with the $45.0
million still available under the previous registration statement will
allow the Company to sell up to $500.0 million in new securities. Proceeds
will be used for general corporate purposes, including repaying debt and
the acquisition, development and improvement of apartment communities.
Organization
Merry Land maintains a centralized corporate structure,
managing all its communities and conducting all its corporate level
activities including accounting, general property management activities and
acquisitions and development from its offices in Augusta. The Company does
not provide services to third parties and has no partners in any of its
investments or other activities.
The Company has 718 employees. Of this number, 659 work at its
apartment communities, 27 are employed in accounting, administration and
general management, 23 in corporate level property management and 9 in
acquisitions and development.
The Company manages its properties under the trade name "Merry
Land Apartment Communities". Each community functions as an individual
business unit according to well developed policies and procedures. Each
apartment community is operated by an on-site Property Manager and staff
who are extensively trained by the Company in sales, management, accounting,
maintenance and other disciplines. Property Managers report to eleven
Regional Property Managers who report to the Company's three Vice Presidents
of Property Management. Regional Property Managers are located at
communities in Raleigh, Charlotte, Augusta, Atlanta (2), Charleston,
Jacksonville, Orlando, Tampa, Ft. Lauderdale and Dallas.
Market Conditions
The Company believes that a generally favorable relationship
between aggregate supply and demand exists for apartment rentals in its
markets. The twenty-seven metropolitan areas in which the Company operates
contain 13% of the country's total households and have experienced growth in
households, a key determinant of apartment demand, well in excess of
national averages during the 1980's and 1990's. U.S. Census data indicate
that from 1984 to 1994 total households in these cities increased 27% versus
an increase of 11% nationally. From 1993 to 1994, households increased 1.2%
in these cities versus an increase of 0.7% nationally and from 1994 to 2000,
households are expected to increase 11% versus 6% nationally. In 1994 and
1995 the Company enjoyed average occupancy levels of over 95% at its
apartment communities and expects occupancy to total slightly less than this
in 1996.
Apartment construction has risen significantly from very low
levels in recent years, and the Company believes that in 1996, increased
supply will lead to somewhat softer markets in some locations. Even so, based
on currently available information, the Company expects generally strong
markets to prevail throughout the South and does not expect any of its
markets to suffer significant weakness as a result of excessive building.
Multi-family housing starts in the Company's markets fell from a high of
174,015 units in 1985 to a low of 22,562 in 1992, and totaled 58,495 for
1994. Preliminary data indicate that starts in 1995 had leveled out, totaling
slightly more than in 1994.
The Company owns apartments in a number of cities with
significant military employment. The reduction of the nation's armed forces
has cut military payrolls in some of these cities and has adversely affected
the rental market for some of the Company's properties, particularly in
Charleston and Augusta. At December 31, 1995, the percentages of the
Company's residents serving in the military were as follows: Augusta, 15%;
Charleston, 12%; Savannah, 14%; Jacksonville, 10%; Melbourne, 6%; Columbia,
Md. 5%; Orlando, 3%, Tampa, 1% and Columbia, S.C., 1%. Military employment is
not a significant factor for the Company, since leases with military
personnel account for less than 3% of the Company's total leases.
History
Merry Land conducted its initial public stock offering in 1981
after having been spun off earlier that year from Merry Companies, Inc., one
of the nation's largest brick manufacturers, in connection with the latter's
acquisition by an Australian company. Merry Land was incorporated in 1966
and had remained a passive asset holding subsidiary of Merry Companies, Inc.
until the 1981 spin-off, when active operations began. At that time, the
Company's major asset was 4,700 acres of clay land, most of which it still
owns and from which it continues to receive clay and sand royalties.
The Company began a period of rapid growth in 1991 as tax law
changes and significant reductions in the amount of capital available
nationally for real estate investment led to a substantial decline in the
sales prices of apartment communities. In 1992, the Company conducted its
first public stock offering in six years, hired additional personnel for its
acquisition effort, and commenced an accelerated program of apartment
acquisitions. In 1994 the Company began to buy newly completed communities
and communities under construction from merchant builders and initiated a
program of apartment development to complement its acquisition program.
The Company is a Georgia corporation. It has its principal
office at 624 Ellis Street, Augusta, Georgia 30901 and its telephone number
is (706) 722-6756.
<PAGE>
Part I
Item 2 - Properties
Apartments
The Company owns high quality apartment communities,
substantially all of which command rental rates in the upper range of their
markets. They are generally newer "garden apartments", in wood frame two-
and three-story buildings without elevators, with individually metered
electric and gas service and individual heating and cooling systems. The
Company's apartments are 48% one bedroom units, 46% two bedroom units and 6%
three bedroom units. The units average 901 square feet in area, seven years
of age, are generally well equipped with modern appliances and other
conveniences. The communities are generally heavily landscaped and offer
extensive amenities. Most include swimming pools, tennis courts, club rooms,
exercise facilities and hot tubs. Some of the Company's communities also
offer racquetball courts, saunas, alarm systems and other features,
including 1,326 enclosed garages.
Residents at the Company's apartments typically earn middle and
upper middle levels of incomes. They include young professionals, white
collar workers, medical personnel, teachers, members of the military,
single parents, single adults and young families. These residents often have
the means to own homes but choose to live in apartment communities because
of their current employment, family or other personal circumstances. The
Company believes that demand for its apartments is primarily dependent on
the general economic strength of each market's economy and its level of job
creation and household formation, and is less sensitive to prevailing
interest rate levels for home mortgage loans. There is a steady turnover of
leases at the Company's communities, allowing rents to be adjusted upward
as demand allows. Leases are generally for terms of from six to twelve
months. About two-thirds of the Company's units turn over each year, a rate
the Company believes is typical for higher end apartment communities.
Merry Land's apartment communities are located in 27
metropolitan areas, each with a population in excess of 250,000 and none
containing more than 14% of the Company's portfolio. The Company believe
that this diversification reduces the volatility of its aggregate rental
occupancy and rental income. The Company also believes that specializing in
high end Southern apartment communities will allow it to establish a
recognized franchise in its market area and will allow it to achieve
economies in marketing and operating its communities.
The Company owns all its communities in fee simple. Of its
communities, only two are subject to encumbrances. As discussed elsewhere,
these two mortgage loans have been defeased by the Company through transfer
of government securities to a trust account held by First Union National
Bank of Georgia. These encumbrances will be removed upon repayment of the
mortgage debt by the trust in February and July of 1996. The following table
describes the Company's apartment communities.
<PAGE>
<TABLE>
Item 102. Description of Property
Apartments
Average Average December Rent (2) Average
---------------------
Date Date Cost(1) Cost Unit Size Per Month Per Sq. Ft. Occupancy(3)
------------ ------------ ----------
Location Built Acquired Units Thousands Per Unit(1) (Sq.Ft.) 1994 1995 1994 1995 1994 1995
-------- ----- -------- ----- --------- ----------- -------- ---- ---- ---- ---- ----- ----
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Florida
Indigo
Lakes Daytona 1989 1994 304 $11,385 $37,451 882 $544 $549 $0.62 $0.62 90% 92%
Waterford
Village Delray Beach 1989 1994 236 13,522 57,297 910 731 758 0.80 0.83 94% 95%
Laurel
Gardens Ft. Lauderdale 1989 1995 384 25,993 67,690 1,192 (4) 865 (4) 0.73 (4) 92%
Welleby
Lake Club Ft. Lauderdale 1991 1993 304 18,222 59,941 1,061 789 785 0.74 0.74 96% 91%
--- ------ ------ ----- --- --- ---- ---- --- ---
688 44,215 64,266 1,134 789 830 0.74 0.73 96% 92%
Beach Club Ft. Myers 1990 1995 320 12,167 38,022 872 (4) 582 (4) 0.67 (4) 96%
Colony Place Ft. Myers 1991 1993 300 18,203 60,677 1,136 709 739 0.62 0.65 97% 98%
Polos Ft. Myers 1991 1993 328 15,177 46,271 955 616 632 0.65 0.66 95% 96%
Viridian
Lake Ft. Myers 1991 1992 320 12,598 39,369 863 614 638 0.71 0.74 95% 95%
----- ------ ------ ----- --- --- ---- ---- --- ---
1,268 58,145 45,856 953 645 646 0.66 0.68 96% 96%
Bermuda Cove Jacksonville 1989 1994 350 15,331 43,803 912 640 661 0.70 0.72 99% 99%
Claire Point Jacksonville 1986 1993 256 13,593 53,098 1,010 634 674 0.63 0.67 98% 98%
Deerbrook Jacksonville 1983 1993 144 7,054 48,986 1,293 664 703 0.51 0.54 98% 96%
Princeton
Square Jacksonville 1984 1992 288 8,140 28,264 738 477 495 0.65 0.67 95% 96%
Royal Oaks Jacksonville 1991 1993 284 12,313 43,356 816 574 607 0.70 0.74 98% 98%
Spicewood
Springs Jacksonville 1986 1992 512 16,341 31,916 759 484 511 0.64 0.67 97% 97%
Timberwalk Jacksonville 1987 1993 284 12,738 44,852 851 559 575 0.66 0.68 95% 98%
Waterford Jacksonville 1988 1993 432 19,173 44,382 1,066 617 662 0.58 0.62 98% 97%
----- ------- ------ ----- --- --- ---- ---- --- ---
2,550 104,683 41,052 902 571 600 0.64 0.67 97% 97%
Cypress Cove Melbourne 1990 1993 326 15,322 47,000 1,027 626 657 0.61 0.64 96% 91%
Lakeridge
at Moors Miami 1991 1993 175 11,929 68,166 970 851 871 0.88 0.90 98% 94%
Auvers
Village Orlando 1991 1993 480 22,450 46,771 1,021 632 651 0.62 0.64 92% 94%
Bishop Park Orlando 1991 1993 324 16,850 52,006 903 600 616 0.66 0.68 85% 93%
Conway
Station Orlando 1987 1993 242 11,222 46,372 787 559 575 0.71 0.73 90% 93%
Copper
Terrace Orlando 1989 1992 300 11,773 39,243 902 644 657 0.71 0.73 95% 92%
Lexington
Park Orlando 1988 1993 252 11,113 44,099 799 566 585 0.71 0.73 95% 92%
Mission Bay Orlando 1991 1993 304 17,047 56,076 1,087 726 748 0.67 0.69 97% 92%
----- ------ ------ ----- --- --- ---- ---- --- ---
1,902 90,455 47,558 933 625 643 0.67 0.69 92% 93%
Augustine
Club Tallahassee 1988 1993 222 8,330 37,523 900 593 625 0.66 0.69 98% 95%
Audubon
Village Tampa 1990 1993 447 20,117 45,004 849 583 615 0.69 0.72 95% 96%
Falls Tampa 1985 1993 240 8,337 34,738 655 496 504 0.75 0.77 93% 95%
Lofton Place Tampa 1988 1993 280 14,706 52,521 953 627 657 0.66 0.69 95% 96%
Promenade Tampa 1994 1994 334 20,890 62,545 978 777 767 0.79 0.78 92% 95%
----- ------ ------ --- --- --- ---- ---- --- ---
1,301 64,050 49,231 869 626 643 0.72 0.74 93% 96%
Georgia
Belmont
Crossing Atlanta 1988 1993 316 13,288 42,051 1,023 587 615 0.57 0.60 96% 97%
Belmont
Landing Atlanta 1988 1993 424 16,087 37,941 911 556 582 0.61 0.64 93% 97%
Champion's
Park Atlanta 1987 1994 252 11,467 45,504 806 628 626 0.78 0.78 98% 98%
Gwinentt
Crossing (6) Atlanta 1990/89 1992/95 574 20,258 35,293 874 (4) 588 (4) 0.67 (4) 99%
Harvest
Grove Atlanta 1986 1992 376 10,989 29,226 927 538 574 0.58 0.62 98% 97%
Lexington
Glen Atlanta 1990 1993 480 31,141 64,877 1,095 740 807 0.68 0.74 95% 98%
Shadowlake Atlanta 1989 1994 228 9,790 42,939 1,018 579 611 0.57 0.60 98% 99%
Sweetwater
Glen Atlanta 1986 1992 200 5,969 29,845 802 533 556 0.66 0.69 96% 97%
Willow Trail Atlanta 1985 1993 224 7,693 34,344 860 532 561 0.62 0.65 94% 97%
Windridge Atlanta 1982 1994 272 11,623 42,732 845 578 604 0.68 0.71 98% 99%
----- ------- ------ --- --- --- ---- ---- --- ---
3,346 138,305 41,334 928 494 797 0.64 0.67 96% 98%
Downtown Augusta (5) (5) 76 3,415 44,934 961 442 448 0.46 0.47 94% 93%
SouthAugusta Augusta 1950 1984 114 1,755 15,395 682 289 305 0.42 0.45 82% 74%
Woodcrest Augusta 1982 1982 248 8,367 33,738 875 494 502 0.56 0.57 88% 83%
Woodknoll Augusta 1975 1982 52 1,488 28,615 900 432 451 0.48 0.50 98% 99%
Other Augusta 1984 1984 1 72 72,000 1,300 675 675 0.52 0.52 100% 100%
----- ------- ------ ----- --- --- ---- ---- --- ---
491 15,097 30,747 847 400 432 0.52 0.51 89% 84%
Greentree Savannah 1983 1986 194 7,092 36,557 852 533 544 0.63 0.64 93% 98%
Huntington Savannah 1986 1992 147 5,147 35,014 812 570 578 0.70 0.71 99% 99%
Magnolia
Villa Savannah 1986 1986 144 5,473 38,007 1,119 548 572 0.49 0.51 98% 98%
Marsh Cove Savannah 1983 1986 188 7,896 42,000 1,053 587 609 0.56 0.58 97% 98%
West Wind
Landing Savannah 1985 1993 192 7,048 36,708 1,124 594 628 0.53 0.56 99% 99%
----- ------- ------ ----- --- --- ---- ---- --- ---
865 32,656 37,753 994 567 587 0.58 0.60 97% 98%
Maryland
Clarys
Crossing Baltimore 1984 1994 198 11,983 60,520 938 782 786 0.83 0.84 98% 96%
North Carolina
Timber
Hollow Chapel Hill 1986 1991 198 6,464 32,646 735 576 614 0.78 0.84 99% 99%
Berkshire
Place Charlotte 1982 1990 240 8,792 36,633 882 540 594 0.61 0.67 98% 96%
English
Hills Charlotte 1984 1994 280 10,311 36,825 688 520 536 0.76 0.78 98% 93%
Hunt Club Charlotte 1990 1992 300 10,676 35,587 891 622 653 0.70 0.73 98% 98%
Kimmerly
Glen Charlotte 1986 1995 260 9,265 35,635 750 (4) 533 (4) 0.71 (4) 95%
Lake Point Charlotte 1984 1989 296 10,161 34,328 918 515 553 0.56 0.60 97% 97%
Steeplechase Charlotte 1986 1994 247 9,099 36,838 724 533 537 0.74 0.74 91% 93%
----- ------- ------ --- --- --- ---- ---- --- ---
1,623 58,304 35,924 811 547 569 0.67 0.71 97% 95%
Adams Farm Greensboro 1987 1994 300 14,793 49,310 1,005 633 661 0.63 0.66 98% 98%
Chatham Wood High Point 1986 1990 208 7,125 34,255 811 479 504 0.59 0.62 98% 97%
Duraleigh
Woods Raleigh 1987 1994 362 18,024 49,790 784 625 635 0.80 0.81 96% 96%
Misty Woods Raleigh 1984 1991 360 10,411 28,919 766 532 554 0.69 0.72 98% 96%
Sailboat Bay Raleigh 1986 1993 192 6,270 32,656 641 492 524 0.77 0.82 98% 98%
Sommerset
Place Raleigh 1983 1990 144 5,401 37,507 780 562 610 0.72 0.78 98% 97%
----- ------- ------ --- --- --- ---- ---- --- ---
1,058 40,106 37,907 751 561 584 0.75 0.78 98% 96%
Ohio
Hunters
Chase Cleveland 1987 1994 244 14,054 57,598 890 708 715 0.80 0.80 97% 98%
Saw Mill Columbus 1987 1994 340 19,872 58,447 1,161 722 758 0.62 0.65 93% 91%
South Carolina
Quarterdeck Charleston 1986 1989 230 9,486 41,243 810 531 551 0.66 0.68 98% 100%
Summit Place Charleston 1985 1985 226 8,084 35,770 892 459 459 0.51 0.51 88% 89%
Waters Edge Charleston 1985 1988 200 7,696 38,480 911 527 539 0.58 0.59 95% 96%
Windsor
Place Charleston 1984 1989 224 7,855 35,067 953 512 524 0.54 0.55 90% 90%
----- ------ ------ --- --- --- ---- ---- --- ---
880 33,121 37,638 892 507 518 0.57 0.58 93% 94%
Hollows Columbia 1987 1991 212 6,435 30,354 762 482 497 0.63 0.65 95% 96%
Haywood
Pointe Greenville 1985 1991 216 6,832 34,255 848 511 537 0.60 0.63 98% 98%
Tennessee
Cherry Creek Nashville 1986 1994 127 3,569 28,102 676 (4) 489 (4) 0.72 (4) 93%
The Landings Memphis 1986 1994 292 11,640 39,863 786 546 562 0.70 0.72 95% 89%
Texas
Madison at Stone
Creek(7) Austin 1995 1995 390 23,639 60,613 862 (4) 790 (4) 0.92 (4) 82
Madison at Cedar
Springs Dallas 1995 1995 380 24,419 64,261 898 (4) 850 (4) 0.95 (4) 91%
Madison at
Chase Oaks(7)Dallas 1995 1995 470 29,301 62,343 895 (4) 800 (4) 0.89 (4) 88%
Madison at
Melrose(7) Dallas 1995 1995 200 13,983 69,915 947 (4) 877 (4) 0.93 (4) 68%
Melrose on
the Parkway Dallas 1995 1995 376 24,829 66,035 904 (4) 862 (4) 0.95 (4) 89%
Madison at
Round Grove Dallas 1995 1995 404 25,094 62,114 933 (4) 789 (4) 0.85 (4) 91%
----- ------- ------ --- --- --- --- ---- --- ---
1,830 117,626 64,277 912 (4) 829 (4) 0.91 (4) 87%
Virginia
Champion's
Club Richmond 1988 1994 212 10,301 48,590 776 650 629 0.84 0.81 93% 96%
Hickory
Creek Richmond 1984 1994 294 15,098 51,354 851 668 639 0.79 0.75 92% 96%
----- ------- ------ --- --- --- ---- ---- --- ---
506 25,399 50,196 820 660 635 0.81 0.78 92% 96%
------ --------- ------ --- --- --- ---- ---- --- ---
TOTALS 22,296 $1,009,056 $45,257 901 $591 $639 $0.61 $0.71 95% 95%
(1) Represents the total acquisition cost of the property plus the capitalized cost of the improvements made subsequent to
acquisition.
(2) Represents the weighted average of rent charged for occupied units and rent asked for unoccupied units at month end.
(3) Represents average physical occupancy at each month end for the period held.
(4) Properties not owned during period indicated.
(5) These units consist of three locations, built and acquired at various times.
(6) Includes 260 units acquired on April 28, 1995.
(7) At December 31, 1995 these communities were in initial lease-up.
<PAGE>
Development in Progress
Merry Land has recently commenced a program of apartment
development in order to provide an additional means of expanding its apartment
holdings. The communities under development will 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 (dollars in thousands, except cost per unit):
</TABLE>
<TABLE>
<CAPTION>
Budgeted Rentals
Budgeted Cost Cost Expected Estimated
Location Community Units Cost Per Unit to Date to Begin Completion
-------- --------- ----- -------- -------- ------- -------- ----------
Under Construction
------------------
<S> <S> <C> <C> <C> <C> <C> <C>
Atlanta Madison 586 $37,400 $63,823 $ 5,400 3Q1996 4Q1997
Nashville Cherry Creek 280 17,000 60,714 5,081 2Q1996 4Q1996
Savannah Long Point 308 17,300 56,169 1,689 4Q1996 2Q1997
----- ------- ------- -------
1,174 $71,700 $61,073 $12,170
Under Development
----------------
Greensboro Adams FarmII* 200 $11,300 $56,500 $ 898 1996 1997
Greensboro Lake site 300 18,000 60,000 1,795 1996 1997
Nashville Cherry CreekII 200 12,000 60,000 2,421 1997 1998
Richmond Wyndham 264 21,000 79,545 1,997 1996 1997
Savannah Long Point II 362 20,400 57,955 543 1997 1998
----- ------- ------- ------
1,316 $82,700 $62,842 $7,654
Future Development
------------------
Greensboro Lake site II 200 $12,000 $60,000 $1,118
*Adjoins the Company's Adams Farm Community.
</TABLE>
Merry Land intends to expand its apartment holdings in its
market area through a variety of sources, including acquisitions, the
purchase of new communities planned, under construction or newly completed by
merchant builders, and through ground up development. The Company believes
that there is more risk associated with such activities than with buying
operating communities. Such risks include those associated with obtaining
regulatory approvals and entitlement, timely completion of construction,
cost control and marketing and lease up. Any one or more these factors could
cause adverse changes in the construction budgets referred to in the table.
The Company believes that potentially higher returns on development projects
merit the assumption of this additional risk. The Company's present
intention is to limit the total cost of development underway at any given
time to no more than 10% of its total assets.
Other Assets
Unimproved Land. The Company owns 5,363 acres of undeveloped
land with a book value of $3.8 million. Most of this land was acquired by
the Company's predecessor for clay reserves and is located in Georgia and
South Carolina. Since 1981, brick manufacturer Boral Bricks, Inc. has had a
long term clay mining lease on 2,622 acres of the Company's land.
The Company also leases 100 acres to another company for the mining of sand
and gravel, leases other tracts for agriculture, and grows timber on much of
the remaining land. The Company expects that some of its land eventually may
be developed or sold for development by others.
Commercial Properties. The Company owns eight small commercial
properties in the Augusta area, primarily office buildings, including the
Company's headquarters building, which were acquired before the Company
began to focus on apartments. These properties, aggregating 206,000 square
feet, have a book value of $4.8 million. The Company intends to sell these
properties other than the Company's headquarters as circumstances allow.
REIT Securities. In 1995 the Company invested excess funds in
liquid investments, primarily U.S. Treasury securities, while waiting to
invest them permanently in apartments. $36.5 million has been invested in
the equity securities of eight publicly traded apartment REITs which operate
in the Company's market areas. The market value of these REIT securities at
December 31, 1995 was $42.0 million.
The Company has purchased these securities for several reasons:
-- the securities return high yields relative to other
available investments;
-- the Company believes that the annual dividend rates they
pay exceed the yields available on real estate similar to
the underlying real estate owned
by the companies;
-- the Company believes that business combinations among
apartment REITs are likely and may produce further
appreciation in the stock prices of companies involved;
-- the Company would consider participating in such
combinations as an acquiror or would sell its shares
in other REITs if better opportunities in apartment
acquisitions and development present themselves.
Environmental Issues
Landfill Sites. Portions of the Company's land holdings in
Richmond County, Georgia were used by the County for two municipal landfills
during the late 1960's and early 1970's. One site is comprised of 7 acres
and the other, the "New Savannah Road Landfill", 96 acres. Both landfills
were closed in the mid-1970's and have been held by the Company and its
predecessors as unimproved land since that time. Although the sites were
used primarily as municipal landfills, there have been some reports that
some industrial wastes may have been disposed of at the sites.
In 1992, a contractor for the U. S. Environmental Protection
Agency tested the New Savannah Road landfill and found that some
contamination was present in soil samples but that sufficient data had not
been taken to permit a complete evaluation of the site. Accordingly, the
contractor recommended that further action be taken which the Company
believes would consist principally of additional testing of the site's
groundwater and surface water. The Company has had no further contact with
the EPA or its agents since that time and the site has not been included on
the National Priorities List.
As a result of the EPA's review of the site in 1992, Merry Land
retained an environmental consultant to conduct studies of both sites. The
consultant reported that its studies did not reveal the presence on either
site of contaminants in amounts likely to result in the EPA listing either
on the NPL. However, the studies were limited in nature and did not
represent an examination of all portions of the landfill sites. There can be
no assurance that a more complete investigation or further testing would not
reveal higher levels or different types of contamination at the sites. In
1994 the Environmental Protection Division of the State of Georgia published
its initial Hazardous Site Inventory under its "Superfund" law, which
requires investigation, and if appropriate, remedial action of listed sites.
The 96 acre tract was included on this list. In the third quarter of 1994
the Company accrued $200,000 as a non-recurring charge, representing the
Company's estimate of its share of the potential cost if further
investigation of the site was required. On April 24, 1995, the Georgia EPD
notified the Company that it had determined that there was insufficient
evidence to include the site on its Hazardous Site Inventory and removed
the site from the inventory as of that date. The Company reversed the
$200,000 non-recurring charge in the second quarter of 1995.
Should further investigation or remedial action be required for
the landfill, the Company believes that there will likely be other entities
which will be responsible for a portion of the cost of the investigation or
remediation. These entities include Richmond County, which operated the
landfills, any identified company or municipality whose waste was placed in
the landfill, and the company that owned the site at the time of the
disposal of the waste. There can be no assurances that the Company will not
have material liability with respect to these landfill sites.
Southern Wood Piedmont-Augusta Site. A portion of the
Company's land holdings is located adjacent to a site formerly operated as
a wood treatment facility by Southern Wood Piedmont-Augusta. Southern Wood
Piedmont-Augusta was the subject of a property damage class action lawsuit
arising from the alleged contamination of that site and neighboring
properties, including the Company property. The Company received
approximately $0.8 million in a 1990 settlement of its property damage
claim. In June 1992, the Company sold 16 acres of land which may have been
contaminated by Southern Piedmont-Augusta to that company. The contamination
at the Southern Wood Piedmont-Augusta site is the subject of current
remediation by Southern Wood Piedmont-Augusta under state oversight. This
includes remediation of contamination on the remaining Company property in
the area of the former plant. Although the Company expects that the state-
supervised efforts will sufficiently address the contamination on the
Company's property, there is no assurance that some remediation liability
may not attach to the Company.
<PAGE>
Part I
Item 3 - Legal Proceedings
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
<PAGE>
Part II
Item 5 - Market for the Registrant's Common Stock and Related
Shareholders' Matters
Common Stock
Merry Land's common stock is traded on the New York Stock
Exchange under the symbol "MRY". The following table sets forth the reported
high and low sales prices of the common stock on the NYSE, and the cash
dividends declared per share of common stock.
<TABLE>
<CAPTION>
Dividends
High Low Declared
---- --- --------
<S> <C> <C> <C>
1995
Fourth quarter........ $24.00 $20.25 $.35
Third quarter.......... 22.38 20.13 .35
Second quarter......... 21.50 18.88 .35
First quarter.......... 21.63 19.00 .35
1994
Fourth Quarter......... $21.88 $16.25 $.35
Third Quarter.......... 20.75 18.75 .30
Second Quarter......... 24.00 20.00 .30
First Quarter.......... 24.38 18.75 .30
On December 31, 1995 the Company had 3,654 shareholders of
record. The Company estimates that an additional 16,500 shareholders hold
their shares in "street name".
On January 15, 1996, the Board of Directors declared a dividend
of $0.37, up from $0.35, per share of common stock to be paid on March 29,
1996 to holders of record on March 15, 1996. The current annual dividend
rate is $1.48 per share. The $.37 quarterly dividend represents a payout of
79% of funds from operations available for common shares for the quarter
ended December 31, 1995, a payout ratio which the Company believes is
conservative relative to its REIT peers.
Under the REIT rules of the Internal Revenue Code, the Company
must pay at least 95% of its REIT taxable income as dividends in order to
avoid taxation as a regular corporation. The Board makes decisions with
respect to the distribution of capital gains on a case-by-case basis. A
portion of the Company's dividends paid to its shareholders may be deemed
either capital gain, ordinary income or a return of capital, or all of
these. None of the Company's distributions have yet been classified as
return of capital, though the Company expects that based on its calculation
a portion of 1996 distributions will be so classified. The Company annually
provides its shareholders a statement as to its designation of the
taxability of the dividends. Future dividends will be declared at the
discretion of the Board of Directors after considering the Company's
distributable funds, financial requirements, tax considerations and other
factors.
The federal income tax status of dividends paid to holders of
common stock was as follows:
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Ordinary income........ $1.34 $1.24 $.53
Capital gains.......... .06 .01 .37
Return of capital...... - - -
----- ---- ----
Total dividends paid... $1.40 $1.25 $.90
----- ----- ----
</TABLE>
The loan agreement for the Company's $120.0 million 6.625%
Senior notes prohibits the payment of any dividends or other distributions
upon the occurrence of an event of default and otherwise limits dividends
and distributions after September 30, 1993 to a cumulative amount which is
not more than the Company's net earnings plus depreciation and amortization
after that date, plus or minus any increase or decrease in stockholder's
equity from the issuance or redemption of stock. The Company does not
expect distributions to exceed this amount.
Series A Preferred Stock
Merry Land's $1.75 Series A Cumulative Convertible Preferred
Stock is traded on the New York Stock Exchange under the symbol "MRYpr". The
following table sets forth the reported high and low sales prices of the
Series A Preferred Stock on the NYSE, and the cash dividends declared per
share of Series A preferred stock.
<TABLE>
<CAPTION>
Dividends
High Low Declared
---- --- ---------
<S> <C> <C> <C>
1995
Fourth quarter......... $32.00 $27.00 $.4375
Third quarter.......... 29.50 27.00 .4375
Second quarter......... 28.63 25.13 .4375
First quarter.......... 28.25 25.50 .4375
The federal income tax status of dividends paid to holders
Series A Preferred stock was as follows:
1995 1994
----- -----
Ordinary income........ $1.68 $1.75
Capital gains.......... .07 .02
Return of capital...... - -
----- -----
Total dividends paid... $1.75 $1.75
</TABLE>
The Series A Preferred Stock has an annual dividend rate of
$1.75 per share, payable quarterly, and is convertible into common shares at
a conversion price of $18.65 per share of common stock. The Series A
Preferred Stock may not be redeemed for cash at any time, but may be
redeemed by the Company for common shares after June 30, 1998, at a rate of
1.34 shares of common for each share of preferred, provided the common
shares are trading above $18.65, subject to adjustments for certain circum-
stances.
Series B Preferred Stock
On November 1, 1994, the Company completed the private
placement of $100.00 million of its $2.205 Series B Cumulative Convertible
Preferred Stock with a small group of institutional investors. It has an
annual dividend rate of $2.205 per year, payable quarterly, and is
convertible into common shares at a conversion price of $21.04 per common
share. The Series B Preferred Stock may not be redeemed for cash at any
time, but may be redeemed by the Company for common shares after October 31,
1999, at a rate of 1.188 shares of common stock for each share of preferred,
provided the Company's common shares are trading above the conversion price
of $21.04 per share, subject to adjustments for certain circumstances. The
shares were not registered with the Securities and Exchange Commission at
the time of issue and are not publicly traded. The Company has granted to
the holders of the Series B Preferred Stock certain registration rights.
During 1995, the Company paid a dividend of $2.205 per share, of which $.09
was capital gains.
Series C Preferred Stock
In a public offering on March 8, 1995, the Company issued 4.0
million shares of $2.15 Series C Cumulative Convertible Preferred Stock at
$25.00 per share for net proceeds of $95.4 million. On April 7, 1995 the
Company issued an additional 0.6 million shares of the Series C Preferred
Stock for proceeds of $14.4 million under the overallotment option given to
the underwriters in the March 8 offering. The Series C Preferred Stock is
traded on the New York Stock Exchange under the symbol "MRYprc". The
following table sets forth the high and low sales price of the Series C
Preferred Stock on the NYSE, and the cash dividends declared per share of
Series C Preferred Stock:
1995
Fourth quarter.......... $29.00 $26.75 $.5375
Third quarter........... 28.00 26.38 .5375
Second quarter.......... 27.00 24.25 .6390
First quarter........... 25.25 24.50 -
The second quarter dividend declared included dividends
accrued from the original issue date in March. The federal income tax status
of dividends paid to holders of Series C Preferred Stock was as follows:
Ordinary income........ $1.642
Capital gains.......... .072
Return of capital...... -
Total dividends paid... $1.714
The Series C Preferred Stock may not be redeemed for cash at
any time, but may be redeemed by the Company for common shares after
March 31, 2000, at a rate of 1.136 shares of common for each share of Series
C Preferred Stock provided the common shares are trading above $22.00,
subject to adjustments for certain circumstances.
Dividend Reinvestment and Stock Purchase Plan
The Company has adopted a Dividend Reinvestment and Stock
Purchase Plan under which any holder of common or preferred stock may
reinvest cash dividends or optional cash payments of up to $5,000 per quarter
in additional shares of common stock purchased directly from the Company at
a 5% discount. Optional cash payments are subject to the limitation that the
number of shares of common stock which can be purchased with optional cash
payments cannot exceed the number of shares of common stock and preferred
stock owned by the shareholder. All common and preferred shareholders are
eligible to join the plan including shareholders whose shares are held in
the name of a nominee or broker. During 1995, the Company issued 551,872
shares under the plans at an average of $20.24 per share. These shares
provided the Company $11.2 million in new equity capital.
<PAGE>
Part II Item 6
<TABLE>
(Dollars in thousands except apartment units and SELECTED FINANCIAL DATA
per share amounts) Years Ended December 31,
------------------------
<CAPTION>
Operating Data
Income from property operations: 1995 1994 1993 1992 1991
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Rental and mineral royalty revenue $145,214 $103,169 $56,181 $23,479 $16,447
Rental expenses, property tax and
insurance 58,527 38,409 22,611 9,604 7,065
Depreciation of real estate owned 26,265 17,877 9,066 4,156 3,022
------- ------- ------ ------ -------
60,422 46,883 24,504 9,719 6,360
Income from mortgage
backed securities:
Interest income - - - 3,978 12,832
Interest expense - - - 1,558 8,543
------ ------ ------ ----- ------
- - - 2,420 4,289
Other income:
Other interest and dividend income 6,908 2,440 2,463 1,940 1,709
Other 4,476 (655) (10) 249 297
------ ------ ------ ----- -----
11,384 1,785 2,473 2,189 2,006
Expenses:
Interest unrelated to mortgage backed
securities 15,646 10,394 5,640 4,230 4,261
General and administrative 2,396 1,773 1,433 1,304 1,277
Depreciation - other, amortization 670 470 180 44 112
Other non-recurring costs 1,370 200 1,308 - -
------ ------ ----- ----- -----
20,082 12,837 8,561 5,578 5,650
Gains on sales of assets:
Gains on sales of investments 1,673 881 6,960 332 (698)
Gains on sales of land 68 196 1,023 377 803
Gains on sales of depreciable real estate 72 77 9 83 -
Gains on mortgage backed securities - - - 1,903 1,681
------ ------ ------ ------ -----
1,813 1,154 7,992 2,695 1,786
Net income 53,537 36,985 26,408 11,445 8,791
Preferred dividends paid 18,129 7,934 4,025 - -
------ ------ ------ ------ -----
Net income available for common shares $35,408 $29,051 $22,383 $11,445 $8,791
------ ------ ------ ------ -----
Weighted average common shares 33,368 26,430 17,268 10,652 9,326
Weighted average fully diluted
common shares 43,112 32,562 20,381 10,753 9,449
Fully diluted earnings per common share $1.06 $ 1.10 $ 1.30 $ 1.07 $ .94
Common dividends paid $46,734 $33,467 $16,934 $7,285 $4,116
Common dividends paid per share $1.40 $ 1.25 $ .90 $ .66 $ .44
December 31,
-------------------------------------------------
Balance Sheet Data 1995 1994 1993 1992 1991
------- ------- ------- ------- -------
Properties, at cost $1,041,622 $815,306 $565,111 $220,615 $132,355
Mortgage backed securities - - - - 115,973
Debt related to mortgage backed
securities - - - - 112,854
Senior notes 360,000 120,000 120,000 - -
Mortgage debt - 17,835 37,173 8,238 8,351
Other debt - 74,975 - 109,358 62,588
Total shareholders' equity 695,859 584,851 397,715 106,831 73,919
Total assets $1,072,840 $806,655 $562,172 $235,695 $262,881
Other Data
Funds from operations $79,360 $53,907 $28,790 $12,906 $10,027
Funds from operations available
to common $61,231 $45,973 $24,764 $12,906 $10,027
Apartment units acquired during year 3,444 4,872 7,452 2,845 986
Total apartment units at end of year 22,296 18,852 13,981 6,529 3,711
</TABLE>
The Company uses the National Association of Real Estate Investment
Trust's task forces recently published definition of funds from
operations. Funds from operations is defined as net income computed in
accordance with generally accepted accounting principles, excluding
non-recurring costs and net realized gains, plus depreciation of real
property. Funds from operations should be considered along with, and
not as a substitution for net income and cash flows as a measure of
the Company's operating performance and liquidity.
<PAGE>
Part II
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
(Dollars in thousands except apartment and per share data)
Overview
In recent years Merry Land has grown rapidly through the
acquisition of apartment communities. Its investment in apartments grew by
18% in 1995, 35% in 1994, 114% in 1993, 76% in 1992 and 36% in 1991, and
revenue, expenses, net income and funds from operations all reflect this
growth. The Company believes that its access to public and private debt and
equity, its experience as an apartment owner, its knowledge of the Southern
apartment markets and its acquisition expertise have allowed it to take
advantage of favorable conditions to make acquisitions at attractive yields.
Merry Land considers its market area to include the Southern United States,
extending from the Washington, D.C. area to Texas and to Florida. The
Company believes that it is the largest owner and operator of high end
apartment communities in this area. The Company also believes that
specializing in high end Southern apartment communities will allow it to
establish a franchise recognized among renters and allow it to achieve
economies in marketing and operating its communities.
The Company believes that conditions in the real estate and
financial markets will allow it to continue to expand its apartment holdings
through a variety of sources, including acquisitions, the purchase of
communities planned, under construction or newly completed by merchant
builders, and through ground up development. It should be noted, however,
that as the Company's absolute size has increased it is likely that its rate
of growth will slow and that increases in earnings and cash flow will become
increasingly dependent on improved results of its existing communities
rather than from portfolio growth. However, there can be no assurance that
market conditions will allow any rental increase.
Results of Operations for the Years Ended December 31, 1995, 1994,
and 1993.
Markets. Southern apartment markets were generally strong in
1995 with Merry Land communities averaging 95.2% occupancy, the same as
1994, and achieving rent rate increases of 4.6%. The Company operates in 27
metropolitan areas, and has no more than 14% of its portfolio by cost
located within any one city. The Company believes that this diversification
of its apartment portfolio reduces the volatility of its aggregate rental
occupancy and rental income. The following table summarizes property
information in the Company's largest markets (dollars in thousands, except
average rental rates):
<TABLE>
<CAPTION>
%of Average Dec.1995
Total 1995 Average
Market Units Cost Cost Occupancy Rental Rate
------ ----- ------- ----- --------- -----------
<S> <C> <C> <C> <C> <C>
Atlanta 3,346 $138,306 14% 98% $622
Dallas 1,830 117,626 12 87 829
Jacksonville 2,550 104,683 10 97 600
Orlando 1,902 90,455 9 93 643
Charlotte 1,623 58,303 6 95 569
Tampa 1,301 64,050 6 96 642
Ft. Myers 1,268 58,146 6 96 646
Raleigh 1,256 46,569 5 96 589
Charleston 880 33,121 3 94 518
Savannah 865 32,656 3 98 587
All others 5,475 265,141 26 93 659
------ ---------- ---- --- ----
22,296 $1,009,056 100% 95% $639
----------
(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 December month end.
</TABLE>
Rental Operations - Total Portfolio. The Company expects its
apartment portfolio to experience occupancy in 1996 slightly below the 95%
level of 1995 and 1994. While construction of new apartments has picked up in
many of its markets and occupancy levels have moderated in some cities, the
Company does not expect serious weakness to develop either from overbuilding
or from adverse local economic changes. The operating performance of the
Company's apartment portfolio is summarized in the following table (dollars
in thousands except average monthly rent):
<TABLE>
<CAPTION>
Percent Change from
Increase 1994 to 1995 1995 1994 1993
-------- ------------ -------- -------- -------
<S> <C> <C> <C> <C> <C>
Rents 42% $42,616 $144,283 $101,667 $54,565
Operating expenses 48% 13,148 40,726 27,578 16,572
Taxes and insurance 54% 5,407 15,465 10,058 5,420
Depreciation 47% 8,403 26,138 17,735 8,924
--- ------- ------- ------- -------
Operating income 34% $15,658 $61,954 $46,296 $23,649
Average occupancy (1) 0.0% 0.0% 95.2% 95.2% 92.2%
Average monthly rent (2) 8.1% $48 $639 $591 $551
Expense ratio (3) 5.1% 1.9% 38.9% 37.0% 39.2%
</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
December month end.
(3) Represents total of operating expenses, taxes and insurance
divided by rental revenues.
With Merry Land's acquisition of new communities, the weighted
average number of apartments owned rose to 20,290 in 1995 from 15,278 in
1994, and rental revenues and expenses rose accordingly. Rental revenues also
increased because most of the rental markets in which Merry Land operates
experienced strong job growth and household formation, and this was reflected
in high occupancy levels and rising rent rates. Company wide occupancy at
December 31, 1995 totaled 94.0%, down from 96.0% at the same date in 1994.
This decline was due in large part to 86% occupancy in Dallas where the
Company acquired several communities still in the initial lease up period
following completion of construction.
The 8.1% increase in portfolio average rental rates in 1995
from 1994 resulted from higher rents at its continuing properties, and also
reflects the higher rents charged at the communities the Company acquired in
1995, whose monthly rents averaged $751 at December 31, 1995 versus total
portfolio average of $639.
Rental Operations - Same Properties. The performance of the
13,666 units which the Company held for all of both 1995 and 1994 ("same
property" results), is summarized in the following table
(dollars in thousands, except average monthly rent; see footnotes above):
<TABLE>
Percent Change from
Increase 1994 to 1995 1995 1994
-------- ------------ ------- -------
<S> <C> <C> <C> <C>
Rent 4.1% $3,569 $91,168 $87,599
Other income 16.8% 709 4,935 4,226
----- ------ ------- -------
Total income 4.7% 4,278 96,103 91,825
Personnel 17.0% 1,534 10,550 9,016
Utilities 3.9% 226 6,052 5,826
Operating 9.6% 482 5,490 5,008
Maintenance & grounds (2.9%) (172) 5,720 5,892
Taxes and insurance 3.6% 330 9,597 9,267
------ ------ ------ ------
6.9% 2,400 37,409 35,009
Depreciation 5.3% 862 17,131 16,269
------ ------ ------
Operating income 2.5% $1,016 $41,563 $40,547
Average occupancy for year 0.0% 0.2% 95.4% 95.2%
Average monthly rent 4.5% $26 $606 $580
Expense ratio 2.1% 0.8% 38.9% 38.1%
</TABLE>
Reflecting generally strong rental markets, total income rose
by $4.3 million or 4.7% for those properties held for all of both periods,
as a result of flat average occupancy during the year, 4.5% higher average
rental rates and a $0.7 million increase in other income. At December 31,
1995 same property occupancy was 95.2%, down from 96.4% at December 31,
1994, as newly completed apartment construction moderated strong occupancy
in some of the Company's markets.
Operating expenses increased $2.4 million or 6.9% in 1995 as
compared to the same period in 1994. Personnel costs accounted for $1.5
million of this increase as a result of $0.4 million higher performance
bonuses, $0.3 million higher ESOP contributions, $0.2 million higher workers
compensation insurance premiums and higher levels of staffing as formerly
vacant positions were filled at communities acquired in late 1993. Off site
property management expense, which is allocated to the communities, rose
$0.4 million as the Company established additional corporate level positions
in marketing, training and maintenance. Insurance costs rose $0.3 million
due to increases in premiums for communities located in Florida.
For those 6,528 apartments owned by the Company for both 1994
and 1993, rental revenues increased $3.1 million or 8.2% in 1994 over 1993
as monthly rental rates increased 3.9% to $530 per month from $510 per
month, while occupancy for those units rose to 95.7% for 1994 from 92.6% for
all of 1993. Operating expenses decreased $0.7 million in 1994 from 1993. Of
this decrease, $0.5 million came from a change in capitalization of certain
expenditures which had previously been expensed, including painting the
exterior of apartment communities, replacement of mini blinds and replacement
of vinyl floor covering. The remaining decrease in expenses came from lower
personnel costs.
Rental Operations - Development Properties. The Company
capitalizes the direct and indirect cost of expenditures, including
interest, taxes, and insurance for communities currently under development.
Operating costs, such as administration and maintenance, will be expensed
as apartment units are completed and ready for occupancy. At that time,
interest, taxes and insurance are allocated to the units in service
and also expensed. No units were placed in service in 1995. In 1996 as units
are delivered and put in service some dilution of earnings may occur if
leasing lags behind the delivery of units. The Company expects to put
approximately 1,000 units in service in 1996.
During 1995 the Company had nine communities under active
development with three under construction at year end. Construction is
scheduled to begin on four more communities in 1996. $12.8 million was
expended in 1995 for apartments under development, bringing the cumulative
investment to $20.9 million, including capitalized interest of $1.1 million.
In 1996, the Company expects to spend $98.0 million on development.
Mineral Royalty and Commercial Property Income. These amounts
decreased to $0.9 million in 1995 from $1.4 million in 1994 and $1.6 million
in 1993, largely as the result of the expiration in late 1994 of one of two
contracts for the sale of sand and also because of lower occupancies at the
Company's non-apartment properties.
Interest and Dividend Income. Interest and dividend income rose
to $6.9 million in 1995 from $2.4 million in 1994 and $2.5 million in 1993
due to the temporary investment of proceeds from the $115.0 million Series
C Preferred Stock offering in March, the $160.0 million 7.25% senior
unsecured notes offerings in June and August and the $80.0 million 6.875%
senior unsecured notes offering in November. Average securities investments
rose to $92.0 million in 1995 from $40.1 in 1994 and $13.2 million in 1993,
while the average annual return on investments in 1995 averaged 7.1%, up
from 5.8% in 1994 and 5.2% in 1993.
Other Income. Other income totaled $4.5 million in 1995 as
compared to a loss of $0.7 million in 1994. Other income in 1995 included
profits of $4.4 million from cash management activities and $0.1 million from
the sale of timber, while the loss in 1994 came from cash management
activities. Cash management activities include the purchase and sale of
liquid securities and the purchase and sale of options related to such
securities. In 1995, income from cash management activities included $2.4
million from the sale of options and $1.9 million from the sale of
securities, while the loss in 1994 came from the sale of securities.
The profits and losses from cash management activities of the
Company's uncommitted cash and temporary investments are included in other
income, but were included in net realized gains prior to the third quarter
of 1995. Gains and losses from the sale of long-term investments continue to
be included in net realized gains and losses. The Company believes that this
accounting for cash management activities is consistent with the recent
interpretations by the National Association of Real Estate Investment Trusts
of its definition of funds from operations with respect to sales of
undepreciated assets incidental to the Company's operations.
Interest Expense. Interest expense totaled $15.6 million in
1995, up from $10.4 million in 1994 and $5.6 million in 1993. Average debt
outstanding rose to $264.6 million in 1995 from $165.2 million in 1994 and
$95.2 million in 1993, primarily as a result of financing apartment
purchases and development through the issuance of the 7.25% and 6.875%
senior unsecured notes discussed above. The weighted average interest rate
charged on all the Company's debt increased to 6.9% in 1995 from 6.4% in
1994 and 5.4% for 1993, primarily as a result of rising short term rates
and the replacement of short-term financing with the 7.25% and 6.875%
senior unsecured notes.
Amortization-Financing Costs. Amortization of deferred loan
costs increased to $0.5 million in 1995 from $0.3 million in 1994 and $0.1
million in 1993 as a result of additional amortization relating to $2.0
million in deferred loan costs incurred and capitalized upon the issuance of
$240.0 million in senior unsecured notes issued during 1995. Partially
offsetting this increase for 1995 and future years is a decrease in
amortization of deferred loan costs relating to the Claire Point loan.
These loan costs were written off in their entirety on November 30, 1995
when this loan was defeased.
General and Administrative Expenses. General and administrative
expenses in 1995 were $2.4 million, only 1.7% of rental revenues and 3.0% of
funds from operations. For 1994 these expenses averaged 1.7% of rental
revenues and 3.2% of funds from operations and for 1993 averaged 2.6% of
revenues and 5.0% of FFO. The significant improvements since 1993 reflect
continuing efforts to control overhead costs and the significant increase in
the Company's revenues.
Non Recurring Costs. In 1995, the Company recorded a $1.6
million loss on the retirement of $17.4 million of mortgage debt. Of this
amount, $1.1 million was unamortized deferred loan cost and the remainder
was a prepayment penalty. Partially offsetting this loss, the Company
reversed a $0.2 million charge reserved in 1994 as the estimated potential
cost of its share of a possible environmental investigation of a landfill
located on land the Company owns in Richmond County, Georgia. (See "Part I.
Item 2 - Properties - Environmental Matters"). In 1993 the Company sold
$120.0 million of 6.625% unsecured senior notes and used the $119.0 million
net proceeds to repay substantially all other debt. Prepayment penalties and
the cost of closing out an interest rate swap agreement totaled $1.3 million.
Gains on Sales of Assets. Net gains recognized on the sale of
assets totaled $1.8 million in 1995, $1.2 million for 1994 and $8.0 million
for 1993. Gains in 1995 came primarily from the sale of 281,400 shares of
First Financial Holdings, Inc. and included losses on the sale of Treasury
securities and the unwinding of an interest rate lock. At December 31, 1995,
the Company owned 200,000 shares of First Financial with an unrealized gain
of $2.6 million. Gains in 1994 came from the sale of securities and real
estate. Gains in 1993 came primarily from the sale of thrift stocks.
Net Income. Net income totaled $53.5 million for 1995, $37.0
million for 1994 and $26.4 million for 1993. Net income available for common
shareholders totaled $35.4 million for 1995, $29.1 million for 1994 and
$22.4 million for 1993. The increases in net income and net income available
for common shareholders for 1995 when compared to 1994 arose principally
from substantially increased operating income from apartments due to the
growth of the Company's apartment holdings. Net income per common share in
1995 decreased to $1.06 from $1.10 in 1994 and $1.30 in 1993.
Dividends to preferred shareholders. Dividends to preferred
shareholders totaled $18.1 million for 1995 and $7.9 million for 1994 and
$4.0 million for 1993. The increase in preferred dividends arose from an
increase in the amount of preferred stock outstanding during the period.
In 1995 the Company sold 4.6 million shares of Series C Cumulative
Convertible Preferred Stock in a public offering. In November 1994, the
Company completed a private placement of 4.0 million shares of its Series B
Cumulative Convertible Preferred Stock. In June 1993, the Company sold 4.6
million shares of Series A Cumulative Convertible Preferred Stock in a
public offering.
Preferred dividends are summarized in the following table
(dollars in thousands):
<TABLE>
Twelve months ended Dec. 31,
----------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Series A Preferred shares $1,425 $6,454 $4,025
Series B Preferred shares 8,820 1,480 -
Series C Preferred shares 7,884 - -
------ ------ ------
Total preferred dividends $18,129 $7,934 $4,025
</TABLE>
Holders of the Company's Series A Preferred Stock have
converted 3.9 million of the 4.6 million Series A shares originally issued
in June 1993 into 5.3 million shares of the Company's common stock.
Conversions have occurred because the common dividend was raised above the
equivalent preferred dividend.
Funds From Operations. Funds from operations rose 47% to $79.4
million in 1995 as compared to $53.9 million in 1994 and $28.8 million in
1993. Funds from operations available to common shares rose 33% to $61.2
million in 1995 compared to $46.0 million in 1994 and $24.8 million in 1993.
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 to $1.84 in 1995 from $1.66 per share in 1994, or 11%. In 1993,
funds from operations was $1.41 per share.
The following is a reconciliation of net income to funds from
operations (data in thousands, except per share data):
<TABLE>
<CAPTION>
1995 1994 1993
_______ _______ _______
<S> <C> <C> <C>
Net income $53,537 $36,985 $26,408
Less preferred dividends paid 18,129 7,934 4,025
------- ------- -------
Net income available for common shares 35,408 29,051 22,383
Add depreciation of real estate owned 26,265 17,877 9,066
Add non-recurring costs 1,370 200 1,308
Less net realized gains 1,812 1,153 7,992
------- ------- -------
Funds from operations available to common
shares 61,231 45,973 24,765
Add preferred dividends 18,129 7,934 4,025
------- ------- -------
Funds from operations-fully diluted $79,360 $53,907 $28,790
------- ------- -------
Weighted average common shares outstanding-
primary 33,368 26,430 17,268
fully diluted 43,112 32,562 20,381
Funds from operations per share-
primary $1.84 $1.74 $1.43
fully diluted $1.84 $1.66 $1.41
</TABLE>
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 recently 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 $0.7 million, $0.5 million and $0.2
million 1995, 1994 and 1993, respectively.
Liquidity and Capital Resources
Financial Structure. At December 31, 1995, total debt equaled
34% of total capitalization at cost, and 25% 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
Market
Cost Total Value Total
------- ----- --------- -----
<S> <C> <C> <C> <C>
Advances under line of credit $ - $ -
Mortgage loans - -
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 360,000 34% 360,000 25%
Common and preferred equity (1) 695,859 66% 1,055,640 75%
------- --- --------- ---
Total capitalization $1,055,859 100% $1,415,640 100%
--------- ---- ---------- ----
</TABLE>
----------
(1) Assumes conversion of all outstanding preferred stock into
common stock.
At December 31, 1995, the Company had no borrowings outstanding
under its $160.0 million line of credit. The line matures on June 29, 1996,
and subject to the bank's approval, is expected to be renewed annually. 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. During 1995, the Company repaid approximately $24.4 million of
mortgage debt previously assumed in property acquisitions. Of this amount,
$17.4 million was defeased by transferring government securities totaling
$17.9 million to a trust account with First Union National Bank of Georgia.
The Company's Preferred Stock and its senior notes are rated
investment grade by Standard & Poor's Corporation and Moody's Investors
Service, Inc.
Liquidity. Merry Land expects to meet its short-term liquidity
requirements with cash provided by operating activities, by liquidating
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.
Expenditures for the Company's development projects under way totaled $12.8
million in 1995. Over the next three years, the Company expects to spend
$150.0 million to complete its communities under development. During this
period no principal amounts of the Company's debt become due. Capital
resources available to the Company at December 31, 1995 included cash and
marketable securities of $92.3 million and amounts available under the
Company's $160.0 million line of credit. Currently, there is no amount
outstanding under the line of credit, but the Company is limited in the
amount of debt it may incur under the terms of its existing loan
agreements. At December 31, 1995, the Company's loan agreements and the
covenants under its senior unsecured notes would have allowed it to borrow
an additional $107.4 million on an unsecured basis.
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.
Cash Flows. The following table summarizes cash flows for 1995,
1994, and 1993 (dollars in thousands):
<TABLE>
<CAPTION>
Sources and Uses of Cash:
------------------------------
1995 1994 1993
-------- --------- ---------
<S> <C> <C> <C>
Operating activities $ 82,224 $ 56,099 $ 30,911
Sales of common and preferred stock 116,845 187,939 283,560
Net borrowings 148,234 55,637 1,429
Other 11,788 3,977 17,660
------- ------- -------
Total sources of cash 359,091 303,652 333,560
Acquisitions of and improvements to
properties (213,521) (242,134) (307,048)
Development of properties (12,813) (8,129) -
Dividends paid (64,868) (41,401) (20,959)
Other (4,021) _ (23)
------- ------- -------
Total uses (295,223 (291,664) (328,030)
Increase (decrease) in cash,
securities and temporary
investments $ 63,868 $ 11,988 $ 5,530
</TABLE>
Operating cash flow has grown significantly with the expansion
of the Company's apartment holdings. In 1995, the Company raised $347.8
million from the issuance of preferred stock and senior notes described
above. During the year, the Company used $196.3 million to acquire
apartments and has invested the remainder in short term investments and
marketable securities. Dividends paid in 1995 and 1994 increased from
levels in prior years 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 $0.35 in the fourth quarter of 1994 from
$0.30 per share. In 1995, 4.6 million shares of Series C Preferred Stock
were issued. In 1994, 4.0 million shares of Series B Preferred Stock were
issued. Marketable securities and short term increased significantly in
1995 because all of the proceeds from the senior unsecured notes offering
had not been invested in additional apartments at year end.
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 1995, 1994 and 1993 (dollars in thousands, except per unit data):
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Apartment communities:
Acquisitions $198,339 $226,041 $296,514
Development projects:
Development costs 11,749 8,129 -
Capitalized interest 1,064 - -
Replacements for stabilized
communities (1) 3,178 1,710 564
Improvements (2) 11,103 14,169 9,783
Commercial properties 373 153 26
Corporate level expenditures 528 61 161
-------- -------- --------
$226,334 $250,263 $307,048
Per Unit:
Replacements for stabilized
communities (1) $233 $262 $168
Improvements (2) $498 $752 $700
</TABLE>
__________
(1) Stabilized communities are those properties which have been
owned for at least one full calendar year. In 1995, 13,666
units were stabilized as compared to 6,528 in 1994 and
3,361 in 1993.
(2) Improvements include expenditures for all properties owned
during the period and replacements for 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>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Merry Land & Investment Company, Inc.:
We have audited the accompanying consolidated balance sheets of
Merry Land & Investment Company, Inc. (a Georgia corporation) as of
December 31, 1995 and 1994 and the related consolidated statements
of income, changes in stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Merry Land & Investment Company, Inc. as of December 31,
1995 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995,
in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Atlanta, Georgia
January 15, 1996
<PAGE>
Part II
Item 8 - Financial Statements and Supplementary Data
<TABLE>
Merry Land & Investment Company, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31,
1995 1994
---------- ----------
<S> <C> <C>
PROPERTIES AT COST
Apartments $1,009,056 $ 796,436
Apartments under development 20,942 8,129
Commercial rental property 6,412 6,040
Land held for investment or future development 3,815 3,831
Operating equipment 1,397 870
----------- ---------
1,041,622 815,306
Less accumulated depreciation and depletion (68,346) (41,874)
----------- ---------
973,276 773,432
CASH AND SECURITIES
Cash and cash equivalents 43,834 718
Marketable securities 48,468 27,716
---------- ---------
92,302 28,434
OTHER ASSETS
Notes receivable 816 941
Deferred loan costs 4,022 2,066
Other 2,424 1,782
7,262 4,789
---------- ---------
TOTAL ASSETS $1,072,840 $ 806,655
---------- ---------
NOTES PAYABLE
Mortgage loans $ - $ 17,835
Senior notes 360,000 120,000
Note payable-credit line - 57,600
Repurchase agreement - 17,375
---------- ---------
360,000 212,810
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accrued interest 4,295 2,224
Resident security deposits 2,578 3,012
Accrued property taxes 4,294 1,205
Other 5,814 2,553
---------- ---------
16,981 8,994
STOCKHOLDERS' EQUITY
Preferred stock, at $25 liquidation preference, 20,000
shares authorized;
667 shares $1.750 Series A Cumulative Convertible 16,688 62,908
4,000 shares $2.205 Series B Cumulative Convertible 100,000 100,000
4,600 shares, $2.15 Series C Cumulative Convertible 114,995 -
Common stock without par value at $1 stated value,
100,000 shares authorized; 33,876 and 30,744 shares 33,876 30,744
Capital surplus 425,611 375,170
Cumulative undistributed net earnings 11,787 23,112
Notes receivable from stockholders and ESOP (15,796) (10,283)
Unrealized gain on securities 8,698 3,200
---------- ----------
695,859 584,851
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY $1,072,840 $ 806,655
---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Part II
Item 8 -Financial Statements and Supplementary Data
Merry Land & Investment Company, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share date)
<TABLE>
<CAPTION>
Years Ended December 31,
-------- -------- --------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
INCOME
Rental income $144,778 $102,352 $55,262
Mineral royalties 436 817 919
Mortgage interest 79 95 510
Other interest 5,435 2,070 1,709
Dividends 1,394 275 244
Other income 4,476 (655) 10
-------- ------- ------
156,598 104,954 58,654
EXPENSES
Rental expense 42,180 27,953 16,996
Interest 15,646 10,394 5,640
Depreciation - real estate 26,265 17,877 9,066
Depreciation - other 208 122 59
Amortization - financing costs 462 348 121
Taxes and insurance 16,347 10,456 5,615
General and administrative expense 2,396 1,773 1,433
Other non-recurring expense 1,370 200 1,308
------- ------- ------
104,874 69,123 40,238
Income before net realized gains 51,724 35,831 18,416
Net realized gains 1,813 1,154 7,992
------- ------ ------
NET INCOME 53,537 36,985 26,408
------- ------ ------
Dividends to preferred shareholders 18,129 7,934 4,025
------- ------ ------
NET INCOME AVAILABLE
FOR COMMON SHARES $35,408 $29,051 $22,383
------- ------- -------
Weighted average common shares
- outstanding 33,368 26,430 17,268
- fully diluted 43,112 32,562 20,381
NET INCOME - PER SHARE $1.06 $1.10 $1.30
FULLY DILUTED $1.06 $1.10 $1.30
----- ----- -----
CASH DIVIDENDS DECLARED
PER COMMON SHARE $1.40 $1.25 $0.90
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Part II
Item 8 - Financial Statements and Supplementary Data
Merry Land & Investment Company, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
Cumulative Total
Preferred Stock Common Stock Capital Undistributed Stockholders'
Shares Amount Shares Amount Surplus Net Earnings Equity
--------------- --------------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 - - 12,575 12,575 72,176 22,080 106,831
1993 net income - - - - - 26,408 26,408
Sale of common stock - - 9,950 9,950 164,962 - 174,912
Sale of preferred stock 4,600 115,000 - - (5,781) - 109,219
Common stock issued in
conversion of debentures - - 55 55 410 - 465
Sale of common stock to
employees - - 135 135 1,910 - 2,045
Increase in notes receivable
from stockholders - - - - (1,838) - (1,838)
Common stock dividends - - - - (16,934) (16,934) (16,934)
Stock dividends reinvested - - 99 99 1,661 - 1,760
Preferred stock dividends
($.875 per share) - - - - - (4,025) (4,025)
Stock purchase plan - - - - 164 - 173
Common stock redeemed - - (72) (72) (1,480) - (1,552)
Sale of common stock to ESOP - - 75 75 1,284 - 1,359
Increase in notes receivable
from ESOP - - - - - - (1,108)
----- ------- ------- ------- -------- ------ ------
Balance, December 31, 1993 4,600 115,000 22,826 22,826 232,360 27,529 397,715
1994 net income - - - - - 36,985 36,985
Sale of common stock - - 4,600 4,600 82,907 - 87,507
Sale of preferred stock 4,000 100,000 - - (3,288) - 96,712
Common stock issued in
conversion of preferred
stock, Series A (2,084) (52,092) 2,792 2,792 49,300 - -
Sale of common stock to
employees - - 389 389 6,888 - 7,277
Purchase of common stock
from employees - - (9) (9) (186) - (195)
Increase in notes receivable
from stockholders - - - - (6,687) - (6,687)
Common stock dividends - - - - - (33,467) (33,467)
Stock dividends reinvested - - 194 194 3,741 - 3,935
Preferred stock dividends - - - - - (7,934) (7,934)
Stock purchase plan - - 128 128 2,411 - 2,539
Common stock redeemed - - (176) (176) (2,972) - (3,148)
Decrease in notes receivable
from ESOP - - - - 412 - 412
Unrealized gain on securities - - - - 3,200 - 3,200
----- ----- ----- ----- ------- ------ -------
Balance, December 31, 1994 6,516 162,908 30,744 30,744 368,086 23,113 584,851
1995 net income - - - - - 53,537 53,537
Sale of preferred stock 4,600 115,000 - - (5,314) - 109,686
Common stock issued in
conversion of preferred
stock, Series A (1,849) (46,225) 2,478 2,478 43,747 - -
Sale of common stock to
employees - - 236 236 4,194 - 4,430
Purchase of common stock
from employees - - (10) (10) (228) - (238)
Increase in notes receivable
from stockholders - - - - (3,453) - (3,453)
Common stock dividends - - - - - (46,734) (46,734)
Common stock dividends
reinvested - - 423 423 8,124 - 8,547
Preferred stock dividends - - - - - (18,129) (18,129)
Stock purchase plan - - 129 129 2,494 - 2,623
Common stock redeemed - - (124) (124) (2,576) - (2,700)
Sale of common stock to
the ESOP - - - - (2,059) - (2,059)
Unrealized gain on securities - - - - 5,498 - 5,498
------ ------- ------ ------ ------- ------ --------
Balance, December 31, 1995 9,267 231,683 33,876 33,876 418,513 11,787 695,859
------ ------- ------ ------ ------- ------ --------
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
Item 8 - Financial Statements and Supplementary Data
Merry Land & Investment Company, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Rents and royalties received $145,232 $103,149 $56,347
Interest received 4,887 2,011 2,035
Dividends received 1,394 275 244
Rental expense (40,981) (27,804) (15,988)
General and administrative expense (2,257) (1,229 (1,767)
Interest expense (13,575) (10,158) (4,395)
Property taxes and insurance expense (12,461) (10,282) (5,880)
Other (15) 137 315
Net cash provided by operating ------ ------ ------
activities: 82,224 56,099 30,911
INVESTING ACTIVITIES:
Principal received on notes receivable 125 116 10,272
Sale of securities and temporary
investments 274,944 7,030 117,494
Purchase of securities and temporary
investments (284,189) (15,477) (114,085)
Sale of real property 156 302 428
Purchase of real property (198,339) (226,041) (296,514)
Development of real property (12,813) (8,129) -
Improvements to real property (15,182) (16,093) (10,534)
Nonrecurring expenditures (1,546) - -
Other (2,475) 158 (23)
Net cash Provided by operating -------- ------- -------
activities (239,319) (258,134) (292,962)
FINANCING ACTIVITIES:
Net borrowings (repayments) -
repurchase agreements (17,375) 17,375 -
Net borrowings (repayments) - bank debt (57,600) 57,600 (109,358)
Net borrowings - senior notes 240,000 - 119,025
Assumption of mortgage loans 7,041 - -
Repayments of mortgage loans (23,832) (19,338) (8,238)
Cash dividends paid - common (46,739) (33,467) (16,934)
Cash dividends paid - preferred, Series A (1,425) (6,454) (4,025)
Cash dividends paid - preferred, Series B (8,820) (1,480) -
Cash dividends paid - preferred, Series C (7,884) (1,480) -
Sale of common stock - public offerings - 87,507 171,949
Sale of common stock - reinvested dividends 8,547 3,935 1,760
Sale of common stock - stock purchase plan 2,623 2,538 173
Sale of common stock - employees 977 395 459
Sale of preferred stock - public offering 109,686 96,712 109,219
Common stock retired (2,938) (3,148) -
Loan to ESOP (2,050) - -
------- ------- -------
Net cash provided by financing activities 200,211 202,175 264,030
------- ------- -------
NET INCREASE (DECREASE) IN CASH 43,116 140 1,979
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 718 578 349
------- ------- -------
CASH AND CASH EQUIVALENTS $ 43,834 $ 718 $ 2,328
AT END OF PERIOD ------- ------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Part II
Item 8 - Financial Statements and Supplementary Data
Statements of Cash Flows (Continued)
Reconciliation of Net Income to Cash Flows from Operating Activities
[CAPTION]
<TABLE>
Years Ended December 31,
------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Net income $53,537 $36,985 $26,408
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 26,935 18,347 9,246
(Increase) decrease in interest and accounts
receivable (586) (110) (168)
(Increase) decrease in other assets (2,012) (282) (9)
Increase (decrease) in accounts payable and
accrued interest 6,163 1,479 3,426
Gain on the sale of marketable securities (1,673) (202) (6,961)
Gain on the sale of real estate (140) (273) (1,031)
ESOP contributions - 154 -
------- ------- -------
Net cash provided by operating activities $82,224 $56,099 $30,911
------- ------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Part II
Item 8 - Financial Statements and Supplementary Data
MERRY LAND & INVESTMENT COMPANY, INC.
Notes to Financial Statements
1. Nature of Business
Merry Land & Investment Company, Inc. is a real estate
investment trust (REIT), which acquires, builds and operates upscale
apartment communities throughout the Southern United States.
2. Summary of Significant Accounting Policies
Recognition of Income
The Company leases its apartment properties generally for terms
of one year or less. Rental income is recognized when collected.
Depreciation and Amortization
Depreciation of buildings and equipment is computed on the
straight-line method for financial reporting purposes
using the following estimated useful lives:
Apartments.................................40-50 years
Land improvements.......................... 50 years
Commercial rental buildings................40-50 years
Furniture, fixtures, equipment and carpet...5-15 years
Operating equipment.........................3-5 years
Straight line and accelerated methods are used for income tax
reporting purposes. Betterments, renewals and extraordinary repairs that
extend the lives of assets are capitalized; other repairs and maintenance
are expensed.
Income Taxes
As a real estate investment trust, the Company does not pay
income taxes on its distributed income. It does pay income taxes on that
income which is not distributed, and it may be subject to excise taxes on
income distributed after certain dates. See Note 5 for a further discussion
of income taxes.
Earnings Per Share and Share Information
Earnings per share are computed on the basis of the weighted
average number of shares outstanding during the year. Earnings per share
assuming full dilution are computed based on the assumption that convertible
preferred stock was converted at the beginning of the year with an
applicable reduction in preferred dividends.
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly-owned limited partnerships. Any significant inter-
company transactions and accounts have been eliminated in consolidation.
Use of Estimates
The preparation of these financial statements required the use
of certain estimates by management in determining the Company's assets,
liabilities, revenue and expenses.
Cash and Cash Equivalents
For purposes of the statement of cash flows, all investments
purchased with an original maturity of three months or less are considered to
be cash equivalents.
Development Activities
The cost of developed properties includes interest, property
taxes, insurance and allocated development overhead incurred during the
construction period.
3. Marketable Securities
The cost and market value of securities by major classification
at December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
Cost Market Cost Market Cost Market
------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Common stocks $37,864 $46,018 $ 3,323 $ 7,702 $ 3,920 $ 9,512
Corporate debentures 1,906 2,450 1,906 2,401 1,906 2,376
U.S. treasury notes - - 19,287 17,613 8,292 8,250
Repurchase agreements - - - - 1,750 1,750
------ ------ ------ ------ ------ -------
$39,770 $48,468 $24,516 $27,716 $15,868 $21,888
------ ------ ------ ------ ------ ------
</TABLE>
In 1995, the Company sold 281,400 shares of First Financial
Holdings for a gain of $1.8 million, and recorded other income of $4.4
million related to the buying and selling of Treasury Notes and options for
the sale of Treasury Notes. The Company also bought common shares of other
apartment REITs which operate in the Company's market area for a cost of
$36.5 million. These securities had a market value of $42.0 million at
December 31, 1995.
On January 1, 1994, the Company adopted SFAS 115 and reports
its marketable securities at market value with unrealized gains and losses
as a separate component of shareholder's' equity. Changes in net unrealized
gains are recorded as adjustments to this account and not as credits or
charges to earnings.
4. Borrowings and Assets Subject to Lien
During the second quarter of 1995 the Company completed a
public offering of $120.0 million of 7.25% senior unsecured notes. In the
third quarter of 1995 the Company completed a public offering of $40.0
million of 7.25% senior unsecured notes. Also in the fourth quarter of 1995,
the Company completed a public offering of two $40.0 million tranches of
6.875% senior unsecured notes. The senior unsecured notes contain covenants
which limit the levels of debt the Company may incur. At December 31, 1995
these covenants would have allowed the Company to borrow on an unsecured
basis.
On November 30, 1995 the Company defeased all its remaining
mortgage debt by transferring government securities totaling $17.9 million
to a trust account with First Union National Bank of Georgia. The $17.4
million of mortgage debt defeased is secured by the Claire Point and
Lakeridge communities. These encumbrances will be removed upon repayment of
the mortgage debt by the trust in February and July of 1996.
Borrowings outstanding at December 31 were as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
6.625% senior unsecured notes (a) $120,000 $120,000
7.250% senior unsecured notes (b) 40,000 -
6.875% senior unsecured notes (c) 40,000 -
6.875% senior unsecured notes (d) 40,000 -
7.25% senior unsecured notes (e) 120,000
Mortgage loans - 17,835
Advance under unsecured line of
credit (f) - 57,600
Repurchase agreement - 17,375
------- --------
$360,000 $212,810
</TABLE>
(a) $120 million, 6.625% notes, interest payable semi-annually,
principal installments of $40 million each due 1999, 2000,
and 2001.
(b) $40 million, 7.25% notes, interest payable semi-annually,
maturity 2002.
(c) $40 million, 6.875% notes, interest payable semi-annually,
maturity 2003.
(d) $40 million, 6.875% notes, interest payable semi-annually,
maturity 2004.
(e) $120 million, 7.25% notes, interest payable semi-annually,
maturity 2005.
(f) $160 million line of credit, interest equal to LIBOR plus
0.65%, maturity 1996.
The Company estimates that the fair value of borrowings approxi-
mates their carrying value at December 31, 1995. Maturities of borrowings at
December 31 were as follows (in thousands):
Loan
Amount
--------
1996 $ -
1997 -
1998 -
1999 40,000
2000 40,000
2001 40,000
2002 40,000
2003 40,000
2004 40,000
2005 120,000
-------
$360,000
--------
5. Income Taxes
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 distributed the
required amounts of income for the periods reported. Accordingly, no
provision for income taxes is required.
The Company's taxable income differs from its income reported in
the accompanying financial statements because of the difference in the
timing of recognition of certain items of income and expense for tax
purposes. A reconciliation of tax and book income follows:
1995 1994 1993
------- ------- -------
Net income $53,537 $36,985 $26,408
Adjustment of securities to
market value - - 457
Excess of tax over accounting
depreciation (6,944) (5,724) (9,837)
Other (366) (94) 218
------- ------- -------
Estimated taxable income $46,227 $31,167 $17,236
6. Incentive Stock Option Plan
Under the Company's incentive stock option plan, at
December 31, 1995, there were 1,304,000 shares available for grant and
215,000 exercisable options outstanding. Options granted under the plan
expire ten years from date of grant and may not be exercised at a rate
greater than 20% per year. Shares under option which subsequently expire or
are canceled are available for subsequent grant. The option price is equal
to the market price of the shares on the date of the option grants.
Options outstanding for the years ended December 31, 1995, 1994,
and 1993, are as follows:
Balance December 31, 1993 155,000
Issued (at between $17.50 and
$20.88 per share) 400,000
Exercised (at $8.25 per share) (9,000)
-------
Balance December 31, 1994 546,000
Exercised (at between $8.25 and $19.00
per share) (11,000)
Canceled (25,000)
Balance December 31, 1995 (at between -------
$8.25 and $20.88 per share) 510,000
During 1995, 1994 and 1993, the Company loaned officers and
employees $4.4 million, $7.2 million and $2.0 million respectively, to
purchase shares of the Company's common stock. The loans are secured by the
shares purchased, carry a 0% interest rate, and are due upon demand. The
Company requires that at least two thirds of dividends paid on these shares
be used to repay the indebtedness. $0.9 million, $0.5 million and $0.3
million was repaid in 1995, 1994 and 1993. At December 31, 1995, the balance
of such additional loans was $13.0 million.
During 1993 and 1992, the Company loaned officers and employees
approximately $0.1 million and $0.3 million, respectively, to exercise
incentive stock options. The terms of these loans are the same as for the
loans to exercise options, as discussed above. At December 31, 1995, the
balance of such loans was $0.1 million.
7. Employee Stock Ownership Plan
The Company maintains an Employee Stock Ownership Plan. Under
the plan, the Company makes annual contributions to a trust for the benefit
of eligible employees in the form of either cash or common shares of the
Company. The amount of the annual contribution is discretionary. The Company
contributed $0.8 million, $0.5 million and $0.3 million in 1995, 1994 and
1993. In 1995, the Company loaned the ESOP $2.1 million to buy 100,000
shares of the Company's common stock. At December 31, 1995, the balance of
this note was $2.1 million and bears an interest rate equal to the thirty-
day LIBOR rate plus 65 basis points. The note is due December 31, 2002. In
1993, the Company advanced the ESOP $1.4 million to buy 75,000 shares of the
Company's common stock on the open market. The note bears an interest rate
equal to the thirty-day LIBOR rate plus 65 basis points and is due November
30, 2000. At December 31, 1995, the balance of this note was $0.65 million.
8. Preferred Stock
In a public offering on March 8, 1995, the Company issued 4.0
million shares of Series C Cumulative Convertible Preferred Stock for net
proceeds of $95.4 million. On April 7, 1995, the Company issued an
additional 0.6 million shares of the Series C Preferred Stock for net
proceeds of $14.4 million. On November 1, 1994, the Company sold 4.0 million
shares of Series B Cumulative Convertible Preferred Stock for net proceeds
of $96.7 million. The Series B Preferred Stock was sold in a private
placement to a small group of institutional investors. The shares were not
registered under the Securities Act of 1933, but the Company has granted to
the holders certain registration rights. In 1993, the Company sold to the
public 4.6 million shares of Series A Cumulative Convertible Preferred Stock
for net proceeds of $109.2 million. Preferred stock at December 31, 1995 was
as follows:
Preferred A Preferred B Preferred C
----------- ----------- -----------
Price per share $25.00 $25.00 $25.00
Shares issued 4,600,000 4,000,000 4,600,000
Shares outstanding 667,520 4,000,000 4,599,800
Dividend per share $1.75 $2.205 $2.15(a)
Redemption date June 30,1998 October 31,1999 March 31,2000
Conversion price $18.65 $21.04 $22.00
(a) The Series C Preferred Stock contains a "ratchet" provision
which provides that the preferred dividend rate shall be
increased if necessary so that it will always be the greater
of $2.15 per share or the dividends payable on the number
of shares of common stock into which the Series C Preferred
Stock is convertible.
9. Dividends
In 1995, the Company paid dividends as follows:
<TABLE>
<CAPTION
Common Preferred A Preferred B Preferred C
------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
March 31 $.35 $.4375 $.55125 $ -
June 30 .35 .4375 .55125 .6390
September 29 .35 .4375 .55125 .5375
December 29 .35 .4375 .55125 .5375
----- ------- ------- -------
Total $1.40 $1.7500 $2.2050 $1.7140
</TABLE>
Of the total dividends paid in 1995, 95.8% are ordinary income
and 4.2% are capital gains. On January 15, 1996 the Company declared a $.37
per common share, $.4375 per Preferred A share, $.55125 per Preferred B
share, and $.5375 per Preferred C share dividend payable on March 29, 1996.
The Company's dividend reinvestment plan allows any shareholder
to elect to use all or a portion of cash dividends paid to acquire
additional shares of the Company's common stock at a price equal to 95% of
the higher of: (a) the average of the high and low sales prices of the
Company's common stock on the dividend payment date, or (b) the average of
the daily high and low sales prices for the ten trading days prior to the
dividend payment date. During 1995, 423,489 shares were issued at a total
value of $8.5 million.
In December 1993 the Company established a Stock Purchase Plan
which provides holders of the Company's common stock and preferred stock
with a method of purchasing additional common stock of the Company through
optional cash payments without fees and at a 5% discount. Optional cash
payments are subject to the limitation that the number of shares of common
stock which can be purchased cannot exceed the number of shares of common
and preferred stock owned by the shareholder. During 1995, 128,383 shares
were issued for a total value of $2.6 million.
10. Environmental Matters
Portions of the Company's land holdings in Richmond County,
Georgia were used by the County for two municipal landfills during the late
1960's and early 1970's. One site is comprised of 71 acres and the other,
the "New Savannah Road Landfill", 96 acres. Both landfills were closed in
the mid-1970's and have been held by the Company and its predecessors as
unimproved land since that time. Although the sites were used primarily as
municipal landfills, there have been some reports that some industrial
wastes may have been disposed of at the sites.
In 1992, a contractor for the U. S. Environmental Protection
Agency tested the New Savannah Road landfill and found that some
contamination was present in soil samples but that sufficient data had not
been taken to permit a complete evaluation of the site. Accordingly, the
contractor recommended that further action be taken which the Company
believes would consist principally of additional testing of the site's
groundwater and surface water. The Company has had no further contact with
the EPA or its agents since that time and the site has not been included on
the National Priorities List.
As a result of the EPA's review or the site in 1992, Merry Land
retained an environmental consultant to conduct studies on both sites. The
consultant reported that its studies of the sites do not reveal the presence
on either site of contaminants in amounts likely to result in the EPA
listing either site on the NPL. However, the studies were limited in nature
and did not represent an examination of all portions of the landfill sites.
There can be n assurance that a more complete investigation or further testing
would not reveal higher levels or different types of contamination at the
sites. In 1994 the Environmental Protection Division of the State of
Georgia published its initial Hazardous Site Inventory under its "Superfund"
law, which requires investigation, and if appropriate, remedial action of
listed sites. The 96 acre tract was included on this list. In the third
quarter of 1994 the Company accrued $200,000 as a non-recurring charge,
representing the Company's estimate of its share of the potential cost if
further investigation of the site was required. On April 24, 1995, the
Georgia EPD notified the Company that it had determined that there was
insufficient evidence to include the site on its Hazardous Site Inventory
and removed the site from the inventory as of that date. The Company
reversed the $200,000 non-recurring charge in the second quarter of 1995.
Should further investigation or remedial action be required for
the landfill, the Company believes that there will likely be other entities
which will be responsible for a portion of the cost of the investigation or
remediation. These entities include Richmond County, which operated the
landfills, any identified company or municipality whose waste was placed in
the landfill, and the company that owned the site at the time of the
disposal of the waste. There can be no assurance that the Company will not
have material liability with respect to these landfill sites.
<PAGE>
Part II
Item 9 - Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None
Part III
Item 10 - Directors and Executive Officers of the Registrant
Incorporated by reference to the Company's definitive
proxy statement to be filed
with the Securities and Exchange Commission.
Item 11 - Executive Compensation
Incorporated by reference to the Company's definitive
proxy statement to be filed
with the Securities and Exchange Commission.
Item 12 - Security Ownership of Certain Beneficial Owners and
Management
Incorporated by reference to the Company's definitive
proxy statement to be filed with
the Securities and Exchange Commission.
Item 13 - Certain Relationships and Related Transactions
Incorporated by reference to the Company's definitive
proxy statement to be filed with
the Securities and Exchange Commission.
<PAGE>
To the Shareholders of
Merry Land & Investment Company, Inc.
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in this
Form 10-K, and have issued our report thereon dated January 15,
1996. Our audit was made for the purpose of forming an opinion on
those statements taken as a whole. The schedules listed in Item 14
are the responsibility of the Company's management and are presented
for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements
and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the
basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Atlanta, Georgia
January 15, 1996
<PAGE>
PART IV
Item 14-Schedule XI - Real Estate and Accumulated Depreciation for the Year
Ending December 31, 1995:
<TABLE>
<CAPTION>
Cost Capitalized
Initial Cost Subsequent to Gross Amount at Which
to Company Acquisition Carried at December 31,1995
-------------------------- ----------------------------- --------------------------------
Buildings Buildings Acccum- Date De-
and and Depredia- Const- prec-
improve- Improve- Carrying improve- Total tion truc- Date iable
Land ments ments Cost Land ments (a) (a) tion Acqui'd Life
------------ ----------- ----------- ---------- ---------- ----------- ----------- ---------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. $1,500,000 $12,712,085 $ 581,142 $1,500,000 $13,293,227 $14,793,227 $ 684,588 1987 1994 5-50 yr.
2. 3,576,000 15,671,192 869,693 3,576,000 16,540,885 20,116,885 1,297,580 1990 1993 5-50 yr.
3. 1,110,000 6,330,825 889,517 1,110,000 7,220,342 8,330,342 631,262 1988 1993 5-50 yr.
4. 3,840,000 17,219,224 1,390,752 3,840,000 18,609,976 22,449,976 1,527,571 1991 1993 5-50 yr.
5. 2,080,000 9,957,175 129,745 2,080,000 10,086,920 12,166,920 244,529 1990 1995 5-50 yr.
6. 1,580,000 10,983,800 723,644 1,580,000 11,707,474 13,287,474 920,443 1988 1993 5-50 yr.
7. 2,120,000 13,195,900 771,202 2,120,000 13,967,102 16,087,102 1,095,405 1988 1993 5-50 yr.
8. 805,550 7,166,331 820,195 805,550 7,986,526 8,792,076 1,573,944 1982 1990 5-50 yr.
9. 1,503,000 13,553,192 275,097 1,503,000 13,828,289 15,331,289 453,598 1989 1994 5-50 yr.
10. 2,592,000 13,375,363 882,792 2,592,000 14,258,155 16,850,155 1,019,899 1991 1993 5-50 yr.
11. 65,000 259,675 1,530,296 65,000 1,789,971 1,854,971 476,176 1918(b)1983 5-50 yr.
12. 954,000 9,083,755 262,869 954,000 9,346,624 10,300,624 303,001 1988 1994 5-50 yr.
13. 1,134,000 10,158,363 174,805 1,134,000 10,333,168 11,467,168 336,360 1987 1994 5-50 yr.
14. 700,000 5,620,292 804,290 700,000 6,424,582 7,124,582 1,606,971 1986 1990 5-50 yr.
15. 635,000 2,901,168 32,328 635,000 2,933,496 3,568,496 99,878 1986 1994 5-50 yr.
16. 2,048,000 9,710,500 1,834,311 2,048,000 11,544,811 13,592,811 646,386 1986 1993 5-50 yr.
17. 891,000 10,883,905 208,034 891,000 11,091,939 11,982,939 355,026 1984 1994 5-50 yr.
18. 1,500,000 16,142,858 560,518 1,500,000 16,703,376 18,203,376 1,248,644 1991 1993 5-50 yr.
19. 1,936,000 7,939,000 1,347,466 1,936,000 9,286,466 11,222,466 601,555 1987 1993 5-50 yr.
20. 1,200,000 9,985,256 587,480 1,200,000 10,572,736 11,772,736 1,143,679 1989 1992 5-50 yr.
21. 1,630,000 12,880,863 811,082 1,630,000 13,691,945 15,321,945 1,171,007 1990 1993 5-50 yr.
22. 1,008,000 5,133,133 912,778 1,008,000 6,045,911 7,053,911 534,383 1983 1993 5-50 yr.
23. 1,629,000 15,936,411 458,822 1,629,000 16,395,233 18,024,233 536,496 1987 1994 5-50 yr.
24. 1,260,000 8,584,736 466,537 1,260,000 9,051,273 10,311,273 306,923 1984 1994 5-50 yr.
25. 1,440,000 6,210,000 686,771 1,440,000 6,896,771 8,336,771 507,525 1985 1993 5-50 yr.
26. 325,000 6,001,731 765,144 325,000 6,766,875 7,091,875 1,664,441 1983 1986 5-50 yr.
27. 2,632,000 16,839,075 786,561 2,632,000 17,625,636 20,257,636 1,255,313 1990 1992 5-50 yr.
28. 752,000 9,759,351 477,565 752,000 10,236,916 10,988,916 1,123,576 1986 1992 5-50 yr.
29. 480,000 5,917,041 435,316 480,000 6,352,357 6,832,357 975,429 1985 1991 5-50 yr.
30. 1,323,00 12,864,616 910,663 1,323,000 13,775,279 15,098,279 449,881 1984 1994 5-50 yr.
31. 450,000 5,256,127 729,304 450,000 5,985,431 6,435,431 976,844 1987 1991 5-50 yr.
32. 990,000 9,016,445 669,293 990,000 9,685,738 10,675,738 1,010,864 1990 1992 5-50 yr.
33. 1,098,000 12,703,582 252,732 1,098,000 12,956,314 14,054,314 417,478 1987 1994 5-50 yr.
34. 485,100 4,371,125 290,395 485,100 4,661,520 5,146,620 493,382 1986 1992 5-50 yr.
35. 1,520,000 9,414,575 450,747 1,520,000 9,865,322 11,385,322 478,167 1989 1994 5-50 yr.
36. 2,470,000 21,562,604 385,962 2,470,000 21,948,566 24,418,566 426,347 1995 1995 5-50 yr.
37. 3,055,000 25,957,233 289,207 3,055,000 26,246,440 29,301,440 85,133 1995 1995 5-50 yr.
38. 1,300,000 12,613,527 69,500 1,300,000 12,683,027 13,983,027 - 1995 1995 5-50 yr.
39. 2,626,000 22,060,707 407,492 2,626,000 22,468,199 25,094,199 290,743 1995 1995 5-50 yr.
40. 2,535,000 20,986,021 117,500 2,535,000 21,103,521 23,638,521 - 1995 1995 5-50 yr.
41. 2,444,000 22,020,109 364,493 2,444,000 22,384,602 24,828,602 362,227 1995 1995 5-50 yr.
42. 1,040,000 8,071,809 152,789 1,040,000 8,224,598 9,264,598 140,458 1986 1995 5-50 yr.
43. 1,058,975 8,096,736 1,004,932 1,058,975 9,101,668 10,160,643 1,410,927 1984 1989(c)5-50 yr.
44. 2,100,000 9,600,000 229,250 2,100,000 9,829,250 11,929,250 640,690 1991 1993 5-50 yr.
45. 1,314,000 9,978,363 347,129 1,314,000 10,325,492 11,639,492 345,777 1986 1994 5-50 yr.
46. 4,800,000 20,742,850 450,415 4,800,000 21,193,265 25,993,265 491,301 1989 1995 5-50 yr.
47. 5,760,000 24,320,449 1,060,656 5,760,000 25,381,105 31,141,105 1,737,380 1990 1993 5-50 yr.
48. 2,016,000 8,518,000 578,666 2,016,000 9,096,666 11,112,666 627,615 1988 1993 5-50 yr.
49. 2,240,000 11,960,000 506,187 2,240,000 12,466,187 14,706,187 860,721 1988 1993 5-50 yr.
50. 351,001 4,159,438 962,315 351,001 5,121,753 5,472,754 1,146,128 1986 1986 5-50 yr.
51. 329,786 6,649,280 917,295 329,786 7,566,575 7,896,361 1,772,755 1983 1986 5-50 yr.
52. 2,432,000 14,107,966 507,265 2,432,000 14,615,231 17,047,231 1,071,150 1991 1993 5-50 yr.
53. 720,000 7,959,871 1,730,854 720,000 9,690,725 10,410,725 1,405,920 1984 1991 5-50 yr.
54. 1,640,000 12,945,374 591,821 1,640,000 13,537,195 15,177,195 1,026,408 1991 1993 5-50 yr.
55. 864,000 5,252,025 2,024,298 864,000 7,276,323 8,140,323 725,943 1984 1992 5-50 yr.
56. 2,171,000 18,535,275 184,086 2,171,000 18,719,361 20,890,361 638,832 1994 1994 5-50 yr.
57. 580,000 8,216,250 689,671 580,000 8,905,921 9,485,921 1,350,636 1986 1989 5-50 yr.
58. 1,988,000 9,663,149 661,740 1,988,000 10,324,889 12,312,889 834,959 1991 1993 5-50 yr.
59. 960,000 4,937,213 372,390 960,000 5,309,603 6,269,603 423,119 1986 1993 5-50 yr.
60. 1,530,000 18,062,088 279,763 1,530,000 18,341,851 19,871,851 587,889 1987 1994 5-50 yr.
61. 1,140,000 8,397,085 253,295 1,140,000 8,650,380 9,790,380 447,388 1989 1994 5-50 yr.
62. 360,000 4,235,504 805,106 360,000 5,040,610 5,400,610 1,123,653 1983 1990 5-50 yr.
63. 194,375 1,135,112 425,339 194,375 1,560,451 1,754,826 540,157 1950 1982 5-50 yr.
64. 1,536,000 13,614,751 1,190,609 1,536,000 14,805,360 16,341,360 1,621,074 1986 1992 5-50 yr.
65. 1,111,500 7,671,643 315,416 1,111,500 7,987,059 9,098,559 268,566 1986 1994 5-50 yr.
66. 411,500 6,891,173 781,548 411,500 7,672,721 8,084,221 1,803,002 1985 1985 5-50 yr.
67. 500,000 4,571,011 898,442 500,000 5,469,453 5,969,453 603,704 1986 1992 5-50 yr.
68. 800,000 5,214,004 449,752 800,000 5,663,756 6,463,756 909,950 1986 1991 5-50 yr.
69. 1,988,000 9,833,825 916,254 1,988,000 10,750,079 12,738,079 924,092 1987 1993 5-50 yr.
70. 960,000 11,022,351 615,777 960,000 11,638,128 12,598,128 1,196,690 1991 1992 5-50 yr.
71. 3,024,000 15,027,450 1,121,198 3,024,000 16,148,648 19,172,648 1,351,676 1988 1993 5-50 yr.
72. 1,888,000 10,950,825 683,551 1,888,000 11,634,376 13,522,376 487,332 1989 1994 5-50 yr.
73. 448,000 6,490,069 757,486 448,000 7,247,555 7,695,555 1,359,306 1985 1988 5-50 yr.
74. 3,648,000 13,152,000 1,422,402 3,648,000 14,574,402 18,222,402 981,520 1991 1993 5-50 yr.
75. 960,000 5,597,500 490,888 960,000 6,088,388 7,048,388 492,111 1985 1933 5-50 yr.
76. 1,120,000 6,088,097 485,027 1,120,000 6,573,124 7,693,124 545,676 1985 1993 5-50 yr.
77. 1,224,000 9,971,854 427,590 1,224,000 10,399,444 11,623,444 336,802 1982 1994 5-50 yr.
78. 377,500 6,195,990 1,281,528 377,500 7,477,518 7,855,018 1,210,170 1984 1989 5-50 yr.
79. 73,163 - 8,293,835 523,036 73,163 8,293,835 8,366,998 2,250,030 1982 1983 5-50 yr.
80. 125,000 1,076,646 286,328 125,000 1,362,974 1,487,974 536,818 1975 1982 5-50 yr.
81. 138,399 626,133 867,336 138,399 1,493,469 1,631,868 425,005 var. var. 5-50 yr.
82. 119,143,849 828,478,027 61,434,302 523,036 119,143,849 889,912,329 1,009,056,178 65,985,984
83. 791,726 3,089,125 2,531,424 - 791,726 5,620,549 6,412,275 1,612,424 var. var. 5-50 yr.
84. 14,395,165 - 5,461,284 1,085,669 14,395,165 6,654,653 20,942,118 -
85. 3,815,405 - - - 3,815,405 - 3,815,405 29,526
----------- ----------- ---------- --------- ---------- ----------- ------------ ---------- ---- ---- ---- ---
86. $138,146,145 $831,567,152 $69,427,010 $1,608,705 $138,146,145 $902,079,831 $1,040,225,976 $67,627,934
- ----------
<FN>
1. Adams Farm 19. Conway Station 37. Madison at Chase Oaks 55. Princeton Square 74. Welleby Lake
2. Audubon Village 20. Cooper Terrace 38. Madison at Chase Oaks 56. Promenade 75. West Wind Landing
3. Augustine Club 21. Cypress Cove 39. Madison at Round Grove 57. Quaraterdeck 76. Willow Trail
4. Auvers Village 22. Deerbrook 40. Madison at Stone Creek 58. Royal Oaks 77. Windridge
5. Beach Club 23. Duraleigh Woods 41. Madison on the Parkway 59. Sailboat Bay 78. Windsor Place
6. Belmont Crossing 24. English Hills 42. Kimmerly Glen 60. Sam Mill Village 79. Woodcrest
7. Belmont Landing 25. Falls 43. Lake Point 61. Shadow Lake 80. Woodknoll
8. Berkshire Place 26. Greentree 44. Lakeridge 62. Sommerset Place 81. Miscell.
9. Bermuda Cove 27. Gwinnett Crossing 45. Landings 63. South Augusta 82. Tot. Residential
10. Bishop Park 28. Harvest Grove 46. Laurel Gardens 64. Spicewood Springs 83. Commercial
11. Broadway 29. Haywood Pointe 47. Lexington Glen 65. Steeple Chase 84. Development
12. Champions Club 30. Hickory Creek 48. Lexington Park 66. Summit Place Progress
13. Champions Park 31. Hollows 49. Lofton Place 67. Sweetwater Glen 85. Land
14. Chatham Wood 32. Hunt Club 50. Magnolia Villa 68. Timber Hollow 86. Total
15. Cherry Creek 33. Hunter's Chase 51. Marsh Cove 69. Timberwalk
16. Claire Pointe 34. Huntington 52. Mission Bay 70. Viridian Lake
17. Clary's Crossing 35. Indigo Lakes 53. Misty Woods 71. Waterford
18. Colony Place 36. Madison at Cedar Springs 54. Polos 72. Waterford Village
Notes:
(a) Reconciliations of total real estate carrying value and accumulated depreciation for the years ending December 31, 1995,
1994 and 1993 are as follows:
<CAPTION>
Real Estate Accumulated Depreciation
------------------------------------------ -----------------------------------
1995 1994 1993 1995 1994 1993
-------------- ------------ ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $ 814,435,663 $564,519,670 $220,185,267 $41,362,624 $23,479,723 $14,476,598
Additions- acquisitions and improvements 225,806,187 250,201,373 345,127,045 26,265,310 17,904,287 9,065,625
Deductions- cost of real estate sold 15,874 285,380 792,642 - 21,386 62,500
-------------- ----------- ------------ ----------- ----------- -----------
Balance at end of period $1,040,225,976 $814,435,663 $564,519,670 $67,627,934 $41,362,624 $23,479,723
(b) This property was substantially renovated by the Company following acquisition.
(c) Additional apartment units acquired in 1992.
</TABLE>
<PAGE>
Part IV
Item 14 - Exhibit 11 - Computation of Per Share Earnings
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
----------- ----------- -----------
PRIMARY
Net income............................ $53,537,199 $36,984,527 $26,407,900
Preferred dividend requirement........ 18,129,144 7,933,704 4,025,000
---------- ---------- ----------
Net income available for common....... $35,408,085 $29,050,823 22,382,900
----------- ----------- ----------
Average common shares outstanding..... 33,367,527 26,430,241 17,268,064
Primary earnings per share average.... $1.06 $1.10 $1.30
----------- ---------- ----------
FULLY DILUTED:
Net income............................ $53,537,199 $36,984,527 $26,407,900
Average convertible preferred shares.. 9,744,051 6,132,041 13,113,330
Average common shares outstanding..... 33,367,527 26,430,241 17,268,064
Conversion of debentures.............. - - -
----------- ---------- -----------
Average fully diluted common shares...
outstanding $43,111,578 $32,562,282 $20,381,394
Fully diluted earnings per share..... $1.06* $1.10* $1.30
----------- ----------- -----------
*Actual computation is antidilutive.
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K into the Company's
previously filed Registration Statement File Nos. 33-68172 and 33-56431.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Atlanta, Georgia
February 15, 1996
<PAGE>
Part IV
Item 14 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K
a) FINANCIAL STATEMENTS. The following schedule lists the financial
statements filed as part of this report:
Report of Independent Public Accountant
Balance Sheets
Statements of Income
Statements of Changes in Stockholders' Equity
Statements of Cash Flows
Reconciliation of Net Income to Cash Flows
Notes to Financial Statements
2. FINANCIAL STATEMENT SCHEDULES. The following schedule lists the
financial statement schedules required to be filed by Item 8 and
Item 14(d) of Form 10-K:
Real Estate and Accumulated Depreciation
Report of Independent Public Accountants on Schedules
3. Exhibits. The following schedule lists the exhibits required to be filed
by Item 601 of Regulation S-K and Item 14(c) of Form 10-K:
(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, 1996,
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 (incorporat-
ed 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 $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).
(10.2) $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).
(10.3) 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).
(10.4) 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).
(10.5) 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).
(10.6) 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).
(10.7) 1995 Stock Option and Incentive Plan (incorporated herein by
reference to Appendix "B" to the Company's 1995 Proxy State-
ment on Form DEF-14A filed March 27, 1995).
(11) Statement regarding computation of per share earnings.
(21) Subsidiaries of the Registrant (wholly owned):
<TABLE>
<CAPTION>
State of Names Under Which
Name Type of Entity Formation Subsidiary Does Business
- ---- -------------- --------- ------------------------
<S> <S> (S> <S>
Merry Land Apartment Merry Land Apartment
Conmunities, Inc. Corporation Maryland Communities and the
- --------------------------------------------------------------- respective names of the
Company's apartment
ML Apartments Limited Corporation Maryland Projects in Florida,
- --------------------------------------------------------------- Georgia, Maryland,
North Carolina, Ohio
ML Texas Apartments LP Limited Partnership Texas South Carolina,
- --------------------------------------------------------------- Tennessee, Texas
and Virginia
ML North Carolina
Apartments LP Limited Partnership Georgia
- ---------------------------------------------------------------
ML Tennessee
Apartments LP Limited Partnership Georgia
- ---------------------------------------------------------------
</TABLE>
(23) Consent of Arthur Andersen LLP
(27) Financial Data Schedules
(b) Reports on Form 8-K. The registrant filed reports on Form 8-K/A and
___________________
Form 8-K during the last quarter of 1995 and first one and a half
months of 1996 as follows with respect to the following matters:
Form Matter Date Filed Location Financial Statements
____ ______ __________ ________ ____________________
8-K $40MM 6.875% 11/8/95 n/a n/a
Notes due 2003
$40MM 6.875%
Notes due 2004
8-K/A Kimmerly Glen* 12/1/95 Charlotte, Statement of the
North Carolina Excess of Operating
Revenue Over
Specific Operating
Expenses
8-K Chase Oaks 2/14/96 Dallas, Texas n/a
Melrose Dallas, Texas
Stone Creek Austin, Texas
Crestview Austin, Texas
*First reported on the Company's current report on Form 8-K filed
September 14, 1995.
<PAGE>
Part III
Signatures
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned,
MERRY LAND & INVESTMENT COMPANY, INC.
(Registrant)
/s/ W. Tennent Houston
______________________________
W. Tennent Houston - President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/Peter S. Knox III 2/20/96 /s/W. Tennent Houston 2/20/96
Peter S. Knox, III - Chairman W. Tennent Houston - President,
of the Board and Director Chief Financial Officer, and
Director
/s/W. Hale Barrett 2/20/96 /s/Pierce Merry, Jr. 2/20/96
W. Hale Barrett - Secretary Pierce Merry, Jr. - Director
/s/Hugh C. Long II 2/20/96 /s/Ronald J. Benton 2/20/96
Hugh C. Long II - Director Ronald J. Benton - Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 43,834
<SECURITIES> 48,468
<RECEIVABLES> 1,164
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 92,301
<PP&E> 1,041,623
<DEPRECIATION> 68,347
<TOTAL-ASSETS> 1,072,840
<CURRENT-LIABILITIES> 16,981
<BONDS> 360,000
0
231,683
<COMMON> 33,876
<OTHER-SE> 430,300
<TOTAL-LIABILITY-AND-EQUITY> 1,072,840
<SALES> 145,214
<TOTAL-REVENUES> 158,411
<CGS> 85,000
<TOTAL-COSTS> 104,874
<OTHER-EXPENSES> 1,370
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,645
<INCOME-PRETAX> 53,537
<INCOME-TAX> 0
<INCOME-CONTINUING> 53,537
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,537
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
