SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10Q
___________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended
SEPTEMBER 30, 1997
Commission file number: 001-11081
MERRY LAND & INVESTMENT COMPANY, INC.
P.O. Box 1417
Augusta, Georgia 30903
706 722-6756
___________
State of Incorporation: Georgia
I.R.S. Employer Identification Number: 58-0961876
Indicate by check mark whether the registrant (1) 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 number of shares of common stock outstanding as of September 30, 1997
was 38,820,915.
<PAGE>
Form 10-Q - Merry Land & Investment Company, Inc.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 1997 and December 31, 1996
Statements of Income - Three months ended September 30, 1997 and
1996, and nine months ended September 30, 1997 and 1996.
Statements of Cash Flows - Nine months ended September 30, 1997
and 1996
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
Form 10-Q - Part I. Financial Information
Item 1- Financial Statements
Merry Land & Investment Company, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
PROPERTIES AT COST 1997 1996
---- ----
<S> <C> <C>
Apartments $1,447,660 $1,175,427
Apartments under development 51,226 56,110
Commercial rental property 5,572 6,874
Land held for investment or future development 4,090 4,090
Operating equipment 3,565 1,817
--------- ---------
1,512,113 1,244,318
Less accumulated depreciation and depletion (130,239) (102,277)
--------- ---------
1,381,874 1,142,041
CASH AND SECURITIES
Cash and cash equivalents 660 32,793
Marketable securities 2,335 23,799
--------- ---------
2,995 56,592
OTHER ASSETS
Notes receivable 686 726
Other receivable 24 2,449
Deferred loan costs 4,382 3,497
Other 3,475 2,941
--------- ---------
8,567 9,613
--------- ---------
TOTAL ASSETS $1,393,436 $1,208,246
--------- ---------
NOTES PAYABLE
Mortgage loans $ 51,632 $ 27,546
Senior notes 410,000 360,000
Note payable-credit line 88,550 -
--------- ---------
550,182 387,546
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accrued interest 7,285 4,016
Resident security deposits 1,763 1,669
Accrued property taxes 17,463 7,642
Accrued employee compensation 2,162 2,284
Other 16,317 6,317
--------- ---------
44,990 21,928
STOCKHOLDERS' EQUITY
Preferred stock, at $25 and $50 liquidation preference, 20,000
shares authorized:
227 and 359 shares, $1.75 Series A Cumulative Convertible 5,663 8,970
4,000 shares, $2.205 Series B Cumulative Convertible 100,000 100,000
4,599 and 4,600 shares, $2.15 Series C Cumulative Convertible 114,985 114,995
1,000 shares, $4.145 Series D Cumulative Redeemable Preferred 50,000 50,000
Common stock, at $1 stated value, 100,000 shares authorized
38,821 and 37,784 shares issued 38,821 37,784
Capital surplus 518,788 498,907
Cumulative undistributed net earnings (8,152) 2,064
Notes receivable from stockholders and ESOP (22,368) (17,502)
Unrealized gain on securities 527 3,554
--------- ---------
798,264 798,772
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY $1,393,436 $1,208,246
---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Form 10-Q - Part I. Financial Information
Item 1- Financial Statements
Merry Land & Investment Company, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPT. 30, NINE MONTHS ENDED SEPT. 30,
---------------------------- ---------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Rental income $53,742 $44,816 $150,616 $129,869
Mineral royalties 441 99 995 272
Mortgage interest 17 13 63 52
Other interest 154 673 1,595 1,678
Dividends 81 316 682 2,246
Other income 15 2,472 5,066 5,106
------- ------- -------- --------
54,450 48,389 159,017 139,223
Rental expense 15,110 12,828 40,339 36,067
Interest 6,461 5,643 17,433 17,074
Depreciation - real estate 10,560 8,598 29,523 24,863
Depreciation - other 111 65 279 195
Amortization - financing costs 219 142 504 427
Taxes and insurance 5,682 4,562 17,060 13,809
General and administrative expense 946 921 3,327 2,190
------- ------- -------- --------
39,089 32,759 108,465 94,625
Income before net realized gains 15,363 15,630 50,553 44,598
Net realized gains 680 524 1,535 2,239
------- ------- -------- --------
NET INCOME 16,043 16,154 52,088 46,836
Dividends to preferred shareholders 5,812 4,848 17,462 14,766
NET INCOME AVAILABLE ------- ------- -------- --------
FOR COMMON SHARES $10,231 $11,306 $34,626 $32,070
------- ------- -------- --------
Weighted average common shares
outstanding
- primary 38,618 37,352 38,320 35,303
- fully diluted 48,907 47,852 48,625 46,029
NET INCOME PER COMMON SHARE $.27 $.30 $0.90 $0.91
---- ---- ----- -----
Cash Dividends Declared Per Common Share $.39 $.37 $1.17 $1.11
---- ---- ----- -----
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Form 10-Q - Part I. Financial Information
Item 1- Financial Statements
Merry Land & Investment Company, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPT. 30,
---------------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Rents and royalties received $151,837 $130,141
Interest received 1,881 1,954
Dividends received 682 2,988
Rental expense (39,772) (36,846)
General and administrative expense (3,497) (1,894)
Interest expense (14,164) (15,065)
Property taxes and insurance expense (8,707) (5,955)
Other 810 (830)
-------- --------
Net cash provided by operating activities 89,070 74,493
INVESTING ACTIVITIES:
Principal received on notes receivable 36 78
Sale of securities 26,949 25,522
Purchase of securities - (5,408)
Sale of real property 20,974 109
Purchase of real property (231,725) (98,991)
Development of real property (45,660) (38,421)
Recurring capital expenditures (5,552) (3,992)
Improvements to existing properties (5,319) (6,078)
Other 6,027 (1,966)
-------- --------
Net cash (used) by operating activities (234,270) (129,147)
FINANCING ACTIVITIES:
Senior unsecured notes 50,000 -
Net borrowings (repayments) - bank debt 88,550 -
Net borrowings (repayments) - mortgage loans 24,086 22,332
Repurchase agreements - -
Cash dividends paid - common (44,842) (39,977)
Cash dividends paid - preferred (17,462) (14,766)
Common stock retired - (675)
Sale of common stock - reinvested dividends 8,285 6,434
Sale of common stock - stock purchase plan 3,455 3,468
Sale of common stock - employees 1,133 1,168
Sale of common stock - public offering - 56,094
Sale of preferred stock - public offering (138) (25)
------- --------
Net cash provided (used) by financing 113,067 34,053
activities
_______ _______
NET INCREASE (DECREASE) IN CASH (32,133) (20,601)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 32,793 43,834
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 660 $ 23,233
------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Form 10-Q - Part I. Financial Information
Item 1- Financial Statements
Merry Land & Investment Company, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliation of Net Income to Cash Flows from Operating
Activities
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPT. 30,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Net income $ 52,088 $ 46,836
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 30,306 25,485
(Increase) decrease in interest and accounts 289 993
receivable
(Increase) decrease in other assets (1,731) (1,751)
Increase (decrease) in accounts payable and 6,584 5,168
accrued interest
Gain on the sale of marketable securities 596 (2,181)
Gain on the sale of real property 938 (57)
-------- -------
Net cash provided by operating activities $ 89,070 $ 74,493
--------- ---------
</TABLE>
The accompanying notes are an integral part of these
statements.
<PAGE>
Merry Land & Investment Company, Inc.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
1. Nature of Business
Merry Land & Investment Company, Inc. is a real
estate investment trust (REIT), which owns and
operates upscale apartment communities in nine
Southern states including Alabama, Florida,
Georgia, Maryland, North Carolina, South Carolina,
Tennessee, Texas, and Virginia. As a qualified
REIT the Company pays no corporate income taxes on
earnings distributed to stockholders.
The consolidated financial statements for the
nine month periods ended September 30, 1997 and
September 30, 1996 reflect all adjustments
(consisting of normal recurring adjustments) which
are, in the opinion of management, necessary for a
fair presentation of the financial position and
operating results for the interim period.
In March, 1997, the Financial Accounting
Standards Board released Statement of Financial
Accounting Standard No. 128, Earnings Per Share.
SFAS No. 128 significantly changes reported
earnings per share for companies with complex
capital structures. The Company believes the effect
on the Company's earnings per share is not
material.
2. MARKETABLE SECURITIES
The cost and market value of securities by
major classification at September 30, 1997 were as
follows (dollars in thousands):
<TABLE>
<CAPTION>
Unrealized
COST MARKET GAIN
------ ------- --------
<S> <C> <C> <C>
Common stock $1,808 $ 2,335 $ 527
</TABLE>
3. BORROWINGS
Borrowings at September 30, 1997 were as
follows (dollars in thousands):
<TABLE>
<CAPTION>
<S> <C>
9.76% mortgage notes (a) $ 12,662
7.75% mortgage note (b) 9,600
7.625% mortgage note (c) 5,167
7.210% mortgage note (d) 9,449
7.125% mortgage note (e) 14,754
6.625% senior unsecured notes (f) 120,000
7.25% senior unsecured notes (g) 40,000
6.875% senior unsecured notes (h) 40,000
6.875% senior unsecured notes (i) 40,000
7.25% senior unsecured notes (j) 120,000
6.90% senior unsecured notes (k) 50,000
Advances under unsecured line of credit (l) 88,550
-------
$ 550,182
-------
</TABLE>
------
(a) $10.7 million and $2.0 million, 9.76% mortgage notes, principal
and interest payable monthly,
maturity 2001.
(b) $9.6 million, 7.75% mortgage note, interest payable monthly,
maturity 2002.
(c) $5.2 million, 7.625% mortgage note, principal and interest
payable monthly, maturity 2005.
(d) $9.6 million, 7.210% mortgage note, interest payable monthly,
maturity 2001.
(e) $0.8 million and $8.5 million and $6.3 million, 7.125% mortgage
notes, interest payable monthly, maturity 2006.
(f) $120.0 million, 6.625% notes, interest payable semi-annually,
principal installments of $40.0 million
each due 1999, 2000, and 2001.
(g) $40.0 million, 7.25% notes, interest payable semi-annually,
maturity 2002.
(h) $40.0 million, 6.875% notes, interest payable semi-annually,
maturity 2003.
(i) $40.0 million, 6.875% notes, interest payable semi-annually,
maturity 2004.
(j) $120.0 million, 7.25% notes, interest payable semi-annually,
maturity 2005.
(g) $50.0 million, 6.900% notes, interest payable semi-annually,
maturity August, 2007.
(h) $200.0 million line of credit bearing interest equal to LIBOR
plus 0.60%, maturity September 2000.
The Company estimates that the fair value of borrowings
approximates their carrying value at September 30, 1997.
Maturities of borrowings at September 30 were as follows
(dollars in thousands):
<TABLE>
<CAPTION>
<S> <C>
1997 $107
1998 533
1999 40,575
2000 129,171
2001 61,860
2002 54,700
2003 40,364
2004 40,391
2005 120,419
2006 12,062
2007 50,000
-------
$550,182
-------
</TABLE>
4. INCOME TAXES AND DIVIDEND POLICY
As discussed in Note 1, the Company has elected to be
taxed as a REIT. The Internal Revenue Code provides that a
REIT, which in any taxable year meets certain requirements
and distributes to its stockholders at least 95% of its
ordinary taxable income, will not be subject to federal
income taxation on taxable income which is distributed. The
Company intends to distribute the required amounts of income
in 1997 to qualify as a REIT and to avoid paying income
taxes. On September 30, 1997, the Company paid dividends per
share as follows:
<TABLE>
<CAPTION>
<S> <C>
Series A Preferred $0.43750
Series B Preferred $0.55125
Series C Preferred $0.53750
Series D Preferred $1.03625
Common $0.39000
</TABLE>
<PAGE>
Form 10-Q - Merry Land & Investment Company, Inc.
Part I - Financial Information
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands except apartment and per share
data)
OVERVIEW
Merry Land & Investment Company, Inc. is one of the
largest owners and operators of upscale garden apartments
in the South. At September 30, 1997, the Company had a
total equity market capitalization of over $1.1 billion
and owned a high quality portfolio of 103 apartment
communities containing 29,091 units. The communities are
geographically diversified through the Southern United
States, located in twenty-seven metropolitan areas, each
with a population in excess of 250,000, extending from the
Washington, D.C. area to Texas and Florida. Substantially
all of the Company's apartment communities command rental
rates in the upper range of their markets.
OPERATING STRATEGY. The Company's strategy is to own
and operate a significant number of communities in every
major market in the Southern United States, and to
establish a reputation recognized among apartment dwellers
throughout this region for high quality communities and
first class service. The accomplishment of this strategy
should allow the Company to increase funds from operations
and distributions to shareholders by producing greater
cash flows at its apartment communities through
significant marketing advantages and operating
efficiencies. The Company adds to its holdings by buying
existing apartment communities, by buying communities
under construction and in the initial lease-up stage
(primarily from merchant builders) and by developing
communities from the ground up. The following table
further describes the Company's apartment holdings by
major market as of September 30, 1997 (dollars in
thousands except rental rates):
<TABLE>
<CAPTION>
Average Sept. Average
OCCUPANCY(1) RENTAL RATE (2)
% of ------------ ---------------
MARKET UNITS COST TOTAL COST 1997 1996 1997 1996
- ------ ----- ---- ---------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Dallas/Ft. Worth 3,208 $ 209,076 14.5% 93.7% 90.7% $837 $829
Atlanta 4,089 196,925 13.6 91.2 96.3 699 648
Orlando 2,404 118,399 8.2 96.2 93.8 681 657
Charlotte 2,459 112,901 7.8 93.9 94.7 647 588
Jacksonville 2,550 106,665 7.4 94.5 96.0 625 613
Austin 1,249 80,276 5.5 96.1 88.9 845 860
Ft. Lauderdale 1,144 72,158 5.0 93.2 89.7 845 847
Tampa 1,449 64,897 4.5 97.7 94.6 667 652
Ft. Myers 1,268 64,408 4.4 96.4 92.6 667 661
Savannah 1,085 49,883 3.4 92.4 96.6 661 614
Raleigh 1,256 48,320 3.3 94.7 94.5 630 603
Charleston 880 33,998 2.4 96.5 90.8 550 532
All others 6,050 289,754 20.0 91.7 90.8 670 636
------ ---------- ----- ---- ---- ---- ----
29,091 $1,447,660 100.0% 93.8% 93.3% $696 $666
</TABLE>
__________
(1) Represents the average of physical occupancy at each month end
for the period held.
(2) Represents weighted average monthly rent charged for occupied
units and rents asked for unoccupied
units at September month end.
GROWTH. Merry Land has increased its holdings of
apartments primarily through the acquisition of apartment
communities and also through apartment development. The
following table summarizes the Company's growth in recent
years (dollars in thousands):
<TABLE>
<CAPTION>
1997(1) 1996 1995 1994
------ ---- ---- ----
<S> <C> <C> <C> <C>
Units acquired 3,771 2,475 3,444 4,872
Units developed 726 414 - -
Total units owned at end of 29,091 24,936 22,296 18,852
period
Total cost of apartments $1,447,660 $1,175,427 $1,009,056 $796,436
Total apartment rental income $ 150,223 $ 176,053 $ 144,283 $101,667
</TABLE>
__________
(1) Represents totals at September 30, 1997.
ACQUISITIONS. In the second and third quarters of 1997,
the Company acquired the following twelve apartment
communities containing 3,771 units at a cost of $230.0
million (dollars in thousands):
<TABLE>
<CAPTION>
DATE
COMMUNITY LOCATION UNITS BUILT COST
- --------- -------- ----- ----- ------
<S> <C> <C> <C> <C>
Polos East Orlando, Fla. 308 1991 $ 16,000
Ranchstone Houston, Tex. 220 1996 11,250
The Oaks Charlotte, N.C. 318 1996 20,250
The Point Charlotte, N.C. 340 1996 21,300
Coventry at City View Ft. Worth, Tex. 360 1996 22,140
Palms at South Shore Houston, Tex. 240 1990 12,210
Chatelaine Park Atlanta, Ga. 303 1996 23,413
Riverhill Dallas, Tex. 334 1996 22,000
Hidden Lakes Ft. Worth, Tex. 312 1996 20,000
Wimberly Ft. Worth, Tex. 372 1996 26,500
Trails at Briar Forest Houston, Tex. 476 1990 22,150
Richmond Townhomes Houston, Tex. 188 1995 12,700
----- --------
3,771 $229,913
</TABLE>
ACQUISITION OF COMMUNITIES UNDER DEVELOPMENT. The
Company has also agreed to acquire the following communities
to be built by unrelated third parties (dollars in
thousands):
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED
COMMUNITY LOCATION UNITS COST COMPLETION
- --------- -------- ----- --------- ----------
<S> <C> <C> <C> <C>
Creekside Homes at Legacy Dallas, Tex. 380 $28,500 1Q 1998
Villages of Prairie Creek I Dallas, Tex. 236 17,700 1Q 1998
Villages of Prairie Creek II Dallas, Tex. 200 15,000 1Q 1999
--- -------
816 $61,200
</TABLE>
The Company will acquire title to these communities
upon completion of construction for an amount equal to the
lesser of the budgeted cost or the seller's actual cost.
The Company will pay the seller additional amounts upon
the attainment of specified occupancy and net operating
cash flow levels based on agreed upon formulas.
DEVELOPMENT. At September 30, 1997, the Company had
five communities with 1,902 units under construction (of
which 660 units have been delivered) and two communities
with 726 units under development. The Company expects to
complete these communities at an expected total cost of
$201.8 million. In addition, the Company owns land for
1,232 additional units. The communities under construction
and development offer features typical of very high end
properties, including nine foot ceilings, high levels of
trim and finish, garages and extensive amenities.
The following table summarizes the Company's current
development communities and recently completed communities.
Estimated cost consists of land, direct construction costs
and indirect costs, including projected fees to third party
development managers and allocated overhead (dollars in
thousands, except cost per unit):
<TABLE>
<CAPTION>
Cost of
Total Units
Total Estimated Total Placed
Estimated Cost Cost Units in in Estimated
LOCATION COMMUNITY UNITS COST PER UNIT TO DATE SERVICE SERVICE COMPLETION
- -------- --------- ----- --------- --------- ------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Completed
Nashville Cherry Creek 280 $ 18,945 $67,661 $18,945 280 $18,945 4Q 1996
Greensboro Adams Farm II (1) 200 13,100 65,500 13,062 200 13,062 3Q 1997
___ _________ _______ _______ ___ _______
480 $ 32,045 $66,760 $32,007 480 $32,007
UNDER
CONSTRUCTION
Atlanta River Sound 586 $ 41,500 $72,526 $39,787 440 $31,566 4Q 1997
Savannah Long Point 308 22,500 74,350 20,762 220 16,357 1Q 1998
Richmond Wyndham 264 24,500 92,803 12,701 - - 3Q 1998
Greensboro Bridford Lake 320 24,500 73,125 4,047 - - 4Q 1998
Atlanta Sweetwater 424 34,000 80,189 6,939 - - 1999
Creek ----- --------- ------- ------- --- -------
1,902 $ 147,000 $77,445 $84,236 660 $47,923
UNDER
DEVELOPMENT
Richmond Spring Oak 506 $ 38,800 $75,099 $ 5,488 1998
Nashville Cherry Creek II(1) 220 16,000 72,727 3,248 1998
----- --------- ------- --------
726 $ 54,800 $74,380 $ 8,736
FUTURE
DEVELOPMENT
Savannah Long Point II (1) 352 $ 1,101
Nashville Bell Road I and II 680 3,468
Greensboro Bridford LakeII(1) 200 1,300
----- --------
1,232 $ 5,869
</TABLE>
__________
(1) Adjoins an existing community owned by the
Company.
RECENT EVENTS
ISSUANCE OF SENIOR UNSECURED NOTES. On July
28, 1997 the Company completed a public offering of
$50.0 million of senior unsecured notes. The notes
were sold at a price of 99.707% of par value, to
yield 6.941% to maturity. The notes bear an
interest rate of 6.90%, with interest only payable
semi-annually in February and August, have a term
of ten years and mature on August 1, 2007.
On October 30, 1997 the Company completed a
public offering of $50.0 million of senior
unsecured notes. The notes were sold at a price of
100% of par value, to yield 6.69% to maturity. The
notes bear an interest rate of 6.69%, with interest
only payable semi-annually in May and November,
have a term of nine years and mature on October 30,
2006.
The notes are rated BBB+ by Standard & Poor's
Corporation and Duff & Phelps Credit Rating Co. and
Baa2 by Moody's Investors Services, Inc. and rank
equally with the Company's other unsecured and
unsubordinated indebtedness. The senior unsecured
notes contain various covenants which prohibit the
incurrence of additional debt:
- if total debt becomes greater than 60% of
total assets; or
- if total secured debt becomes greater than
40% of total assets; or
- if net operating income divided by interest
on debt and regularly scheduled principal debt
amortization becomes less than 1.5.
The Company is also required to maintain
unencumbered assets of not less than 150% of
outstanding unsecured debt.
CREDIT LINE. On September 16, 1997, the
Company completed a $200.0 million syndicated
revolving credit facility with a group of banks led
by its primary commercial bank. Borrowings under
the line bear interest at 0.60% above the thirty
day London Interbank Offered Rates. The credit
facility also includes a $100.0 million competitive
bid option which allows the Company to solicit bids
from participating banks at rates below the
contractual rate. The facility is for a three year
term and two year amortization for a total term of
five years with an annual renewal option.
RESULTS OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1997 AND 1996.
RENTAL MARKETS. Rental markets were stronger
in the nine month period of 1997 than in the same
period in 1996 as strong demand for apartments
exceeded additions to supply. Average physical
occupancy for the third quarter of 1997 totaled
95.2% as compared to 94.1% for the third quarter of
1996. The Company's increase in occupancy can be
attributed to stronger markets, to aggressive
leasing efforts by its staff and also to offering
concessions to residents in order to induce them to
rent. While levels of new construction throughout
the South remain high, the Company believes that if
general economic activity, job growth and household
formation in the South remain strong, physical
occupancy should remain satisfactory.
RENTAL OPERATIONS - TOTAL PORTFOLIO. The
operating performance of the Company's apartment
portfolio is summarized in the following table
(dollars in thousands except average monthly rent):
<TABLE>
<CAPTION>
Change from NINE MONTHS
-----------
% CHANGE 1996 TO 1997 1997 1996
-------- ------------ ---- ----
<S> <C> <C> <C> <C>
Rental Income 16.0% $20,775 $150,223 $129,448
Operating expenses (1) 11.4 4,102 40,009 35,907
Taxes and insurance 25.2 3,365 16,716 13,352
Subtotal (1) 15.2 7,466 56,725 49,259
____ ______ _______ _______
16.6% $13,309 $ 93,498 $ 80,189
Average occupancy (2) 0.5% (3) 93.8% 93.3%
Average monthly rent (4) 4.5% $ 696 $ 666
Expense ratio (5) (0.3)%(3) 37.8% 38.1%
</TABLE>
__________
(1) Excludes depreciation and amortization.
(2) Represents the average physical occupancy at each
month end for the period held.
(3) Represents increase or decrease between periods.
(4) Represents weighted average monthly rent charged for
occupied units and rents asked for
unoccupied units at September 30.
(5) Represents total of operating expenses, taxes and
insurance divided by rental revenues.
Acquisitions and the delivery of units from
the Company's development program since the second
quarter of 1996 increased the weighted average
number of apartments owned to 26,050 in the nine
month period of 1997 from 23,168 in the nine month
period of 1996. Rental revenues and expenses rose
accordingly. Company wide occupancy totaled 95.1%
at September 30, 1997 and 94.4% at September 30,
1996.
The 4.5% increase in portfolio average rental
rates in the nine month period of 1997 from the
nine month period of 1996 resulted from both higher
rents at the Company's continuing properties and
also the higher rents charged at the communities
the Company acquired and put in service in 1996 and
1997, whose monthly rents averaged $771 at
September 30, 1997, versus the total portfolio
average of $696.
RENTAL OPERATIONS - SAME STORE. The
performance of the 21,156 units which the Company
held for the nine month period of both 1997 and
1996 ("same store" results), is summarized in the
following table (dollars in thousands, except
average monthly rent; see footnotes above):
<TABLE>
<CAPTION>
Change from NINE MONTHS
-----------
% CHANGE 1996 TO 1997 1997 1996
-------- ------------ ---- ----
<S> <C> <C> <C> <C>
Rental income 3.1% $3,616 $121,708 $118,092
Personnel 12.8 1,500 13,266 11,766
Utilities (25.4) (1,757) 5,163 6,920
Operating 9.2 555 6,582 6,027
Maintenance and grounds (7.3) (597) 7,542 8,139
Taxes and insurance 8.9 1,077 13,136 12,059
Subtotal (1) 1.7 779 45,689 44,910
____ ______ _______ _________
3.9% $2,837 $ 76,019 $ 73,182
Average occupancy (2) 0.9% (3) 94.6% 93.7%
Average monthly rent (4) 2.3% $668 $ 653
Expense ratio (5) (0.5)% (3) 37.5% 38.0%
</TABLE>
Rental income rose by $3.6 million or 3.1% for
those properties held for all of both periods, as a
result of 0.9% higher occupancy and 2.3% higher
average rental rates. At September 30, 1997 same
store occupancy was 96.1%, up from 94.8% at
September 30, 1996. Rental concessions for
September 30, 1997 equaled approximately 1.6% of
market rents.
Operating expenses increased $0.6 million or
9.2% in 1997 from the same period in 1996.
Personnel costs rose $1.5 million, resulting
primarily from higher bonuses accrued on site and
higher employee headcount and salaries. Utilities
expense decreased by $1.8 million or 25.4% as the
Company has passed a portion of its water expense
to the residents. Accruals for property taxes and
insurance increased by $1.1 million to reflect
higher assessed values.
RENTAL OPERATIONS - DEVELOPMENT COMMUNITIES.
$45.7 million was expended in the nine month period
of 1997 for apartments under development, bringing
the total investment in communities still under
development to $98.8 million. In the first nine
months of 1997, 726 units were placed in service at
a cost of $51.7 million. The Company expects to put
a total of approximately 1,000 units in service in
1997. Some dilution of earnings may occur to the
extent that leasing lags behind the delivery of
units.
306 units of Madison at River Sound, 200 units
of Madison at Adams Farm, and 220 units of Hammocks
at Long Point were delivered in the first nine
months of 1997. The operating results for the nine
month period of 1997 and 1996 for all development
units in service is summarized in the following
table (dollars in thousands; see footnotes above):
<TABLE>
<CAPTION>
NINE MONTHS
-----------
1997 1996
---- ----
<S> <C> <C>
Units 1,567 649
Rental income $6,515 $2,839
Operating expense (1) 1,895 835
Taxes and insurance 398 173
Subtotal (1) 2,293 1,008
------ ------
$4,222 $1,831
</TABLE>
At September 30, 1997, 83.3% of the units
delivered at Cherry Creek, Madison at River Sound,
Madison at Adams Farm, and Hammocks at Long Point
were leased at an average rental rate of $768 per
unit.
RENTAL OPERATIONS - OTHER COMMUNITIES. "Other
communities" are those not included in same store
communities or development communities. These
include communities bought or sold in part or in
whole in 1996 or 1997. At September 30, 1997, these
communities included 6,368 units. The performance
of the other communities for the nine month period
of 1997 and 1996 are summarized in the following
table (dollars in thousands; see footnotes above):
<TABLE>
<CAPTION>
NINE MONTHS
1997 1996
____ ____
<S> <C> <C>
Units 6,368 4,848
Rental income $21,999 $8,517
Operating expense (1) 5,561 2,221
Taxes and insurance 3,181 1,119
Subtotal (1) 8,742 3,341
------- ------
$13,257 $5,176
</TABLE>
INTEREST, DIVIDEND AND OTHER INCOME. Dividend
income decreased as the Company essentially
completed the liquidation of its holdings of equity
security investments. Interest, dividend and other
income are summarized in the following table
(dollars in thousands):
<TABLE>
<CAPTION>
NINE MONTHS
1997 1996
---- ----
<S> <C> <C>
Interest income $1,658 $1,730
Dividend income 682 2,246
Other income 5,066 5,106
Total $7,406 $9,082
</TABLE>
INTEREST EXPENSE. Interest expense net of
capitalized interest rose to $17.4 million in the
nine month period of 1997, up from $17.1 million in
the nine month period of 1996. Average debt
outstanding rose to $418.7 million in the nine
month period of 1997 from $369.3 million in the
nine month period of 1996, primarily as a result of
the issuance of the 6.90% senior unsecured notes in
July of 1997, the assumption of $24.2 million of
mortgage notes related to the acquisition of
Richmond Townhomes and Trails at Briar Forest in
September of 1997, and borrowing $88.6 million
under the Company's line of credit to fund the
acquisition of apartment communities in the second
and third quarters of 1997. The weighted average
interest rate charged on all the Company's debt
increased to 7.1% in the nine month period of 1997
from 7.0% for the nine month period in 1996 as a
result of an average interest rate of 8.0% on the
mortgage debt assumed. During the nine month period
of 1997, $4.1 million of interest related to the
Company's development projects was capitalized
versus $2.0 million in the nine month period of
1996, due to the higher level of development
underway.
GENERAL AND ADMINISTRATIVE EXPENSES. General
and administrative expenses for the nine month
period of 1997 were $3.3 million, or 2.2% of rental
revenues as compared to 1.6% for all of 1996.
General and administrative expenses increased $1.1
million in the first nine months in 1997 versus the
first nine months in 1996 due primarily to higher
corporate headcount and their associated costs. In
1997, the Company has added positions in the areas
of property management, acquisitions, development,
accounting, and administration in order to provide
better service to its residents and to compete more
effectively in a rapidly evolving industry. The
Company expects that its overhead expense measured
as a percentage of revenues will remain among the
lowest of apartment REITs.
NET INCOME. Net income totaled $52.1 million
in the nine month period of 1997 and $46.8 million
for the nine month period of 1996. Net income
available for common shareholders totaled $34.6
million in the nine month period of 1997 and $32.1
million for the nine month period of 1996. The
increases in net income and net income available
for common shareholders for 1997 compared to 1996
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 the nine month period of 1997
decreased to $.90 from $.91 in the nine month
period of 1996 due primarily to a reduction in net
realized gains and more common shares outstanding.
DIVIDENDS TO PREFERRED SHAREHOLDERS. Dividends
to preferred shareholders totaled $17.5 million in
the nine month period of 1997 and $14.8 million in
the nine month period of 1996. Preferred dividends
are summarized in the following table (dollars in
thousands):
<TABLE>
<CAPTION>
NINE MONTHS
1997 1996
---- ----
<S> <C> <C>
Series A Preferred share dividends $ 321 $ 734
Series B Preferred share dividends 6,615 6,615
Series C Preferred share dividends 7,417 7,417
Series D Preferred share dividends 3,109 -
--------- ---------
Total preferred dividends $ 17,462 $ 14,766
</TABLE>
The increase in preferred dividends arose from
the issuance of $50.0 million of Series D preferred
shares in December, 1996. Holders of the Company's
Series A Preferred Stock have converted 4.4 million
of the 4.6 million Series A shares originally
issued in June 1993 into 5.9 million shares of the
Company's common stock as the common dividend was
raised above the equivalent preferred dividend.
FUNDS FROM OPERATIONS. Funds from operations
rose 10.8% to $77.0 million in the nine month
period of 1997 as compared to $69.5 million in the
nine month period of 1996. Funds from operations
available to common shares rose 14.4% to $62.6
million in the nine month period of 1997 compared
to $54.7 million in the nine month period of 1996.
These increases were principally due to increased
rental operating income resulting from the growth
of the Company's apartment holdings. On a fully
diluted per share basis, funds from operations
increased 4.6% to $1.58 in 1997 from $1.51 in 1996.
Other income from securities totaled $5.0 million,
or $.10 per share for the first three quarters of
1997 (all recorded in the first two quarters of the
year) versus $5.1 million, or $.11 per share for
the first three quarters of 1996. "Core FFO",
those earnings produced exclusively by non cash
management activities, rose 5.7% to $1.48 per share
from $1.40 per share for the first three quarters
of 1997.
The following is a reconciliation of net
income to funds from operations (data in thousands,
except per share data):
<TABLE>
<CAPTION>
NINE MONTHS
1997 1996
---- ----
<S> <C> <C>
Net income $52,088 $46,836
Less preferred dividends paid 17,462 14,766
------ -------
Net income available for common shares 34,626 32,070
Add depreciation of real estate owned 29,523 24,863
Less net realized gains 1,535 2,238
------ -------
Funds from operations available to common shares 62,615 54,695
Add convertible preferred dividends 14,353 14,766
------ -------
Funds from operations-fully diluted $76,968 $69,461
------ -------
Weighted average common shares outstanding -
Primary 38,320 35,303
Fully diluted 48,625 46,029
Funds from operations per share-
Primary $ 1.63 $ 1.55
Fully diluted $ 1.58 $ 1.51
Other income from securities (fully diluted) $ .10 $ .11
Core funds from operations (fully diluted) $ 1.48 $ 1.40
</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 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 $0.8
million and $0.6 million in the nine month periods
of 1997 and 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
FINANCIAL STRUCTURE. The Company's senior
notes and its preferred stock are rated investment
grade by Standard & Poor's Corporation (BBB+/BBB),
Moody's Investors Services, Inc. (Baa2/Baa3) and
Duff & Phelps Credit Rating Co. (BBB+/BBB). At
September 30, 1997, total debt equaled 34% of total
capitalization at cost, and 27% of total
capitalization with equity valued at market. At
that date, the Company's financial structure was as
follows (dollars in thousands):
<TABLE>
<CAPTION>
Equity at
% of Market % of
COST TOTAL VALUE TOTAL
<S> <C> <C> <C> <C>
Advances under line of credit $ 88,550 7% $ 88,550 6%
Mortgage loans 51,632 4 51,632 4
6.625% senior unsecured notes, 1999 40,000 3 40,000 2
6.625% senior unsecured notes, 2000 40,000 3 40,000 2
6.625% senior unsecured notes, 2001 40,000 3 40,000 2
7.25% senior unsecured notes, 2002 40,000 3 40,000 2
6.875% senior unsecured notes, 2003 40,000 3 40,000 2
6.875% senior unsecured notes, 2004 40,000 3 40,000 2
7.25% senior unsecured notes, 2005 120,000 8 120,000 7
6.90% senior unsecured notes, 2007 50,000 4 50,000 4
---------- ---- --------- ---
Total debt 550,182 41% 550,182 33%
Series D preferred stock 50,000 4% 50,000 4%
Common and preferred stock (1) 748,264 55% 1,083,187 63%
---------- ---- --------- ---
Total equity 798,264 59% 1,133,187 67%
Total capitalization $1,348,446 100% $1,683,369 100%
---------- ---- --------- ----
</TABLE>
__________
(1) Assumes conversion of all outstanding convertible
preferred stock into common stock.
At September 30, 1997, the Company had $88.6
million outstanding under its line of credit.
Borrowings under the line bear interest at 0.60%
above the thirty day London Interbank Offered
Rates. The Company's loan agreements and the
covenants under its senior unsecured notes would
allow it to borrow an additional $260.6 million on
an unsecured basis at September 30, 1997.
It generally is not the practice of the
Company to finance its acquisitions using mortgage
debt, though at times the Company finds it
advantageous to assume such debt in order to
successfully negotiate and close property
acquisitions. At September 30, 1997, the Company
had five mortgage loans outstanding, which were
assumed in 1996 and 1997 in connection with the
purchase of five communities.
LIQUIDITY. Merry Land expects to meet its short-term liquidity
requirements with cash provided by operating activities and by borrowing
under its line of credit. The Company's primary short-term liquidity needs
are operating expenses, apartment acquisitions, apartment development and
capital improvements. The Company has essentially completed the liquidation
of its holdings of marketable securities which were acquired as a temporary
investment pending the acquisition or development of additional apartment
communities.
The Company expects to meet its long-term
liquidity requirements, including scheduled debt
maturities and permanent financing for property
acquisitions and development, from a variety of
sources, including operating cash flow, additional
borrowings and the issuance and sale of debt and
equity securities in the public and private
markets.
The following table summarizes the Company's
capital requirements resulting from its acquisition
and development commitments as of September 30,
1997. Not included in this table are additional
acquisitions and developments, debt repayments or
the additional sales of debt or equity securities
(dollars in thousands):
<TABLE>
<CAPTION>
<S> <C>
ESTIMATED CAPITAL REQUIREMENTS:
Development communities expected costs $239,714
Less development costs paid thru 9/30/97 (130,748)
---------
Development costs through 1999
108,866
Acquisition of communities under development in 1998 61,200
Total future development commitments ---------
170,066
ESTIMATED CAPITAL SOURCES:
Cash on hand at 9/30/97 660
Funds available under line of credit at 9/30/97 111,450
Total capital sources ---------
112,110
---------
Excess of capital requirements over sources $57,956
---------
</TABLE>
On October 30, 1997 the Company completed the public
offering of its 6.69% $50.0 million senior unsecured notes.
Net proceeds of $49.6 million from this offering were used to
pay down the balance outstanding under the Company's line of
credit.
CASH FLOWS. The following table summarizes
cash flows for the nine month periods of 1997 and
1996 (dollars in thousands):
<TABLE>
<CAPTION>
SOURCES AND USES OF CASH:
NINE MONTHS
1997 1996
---- ----
<S> <C> <C>
Operating activities $ 89,070 $ 74,493
Sale of Merry Land common stock 12,736 66,464
Net borrowings 162,636 22,332
Sale of real property 20,974 -
Other 5,521 187
Total sources of cash $290,937 $163,476
Acquisitions of and improvements to (242,587) (109,061)
properties
Development of properties (45,660) (38,421)
Dividends paid (62,304) (54,743)
Other 6,017 (172)
--------- ---------
Total uses (344,534) (202,397)
--------- ---------
Increase (decrease) in cash, cash equivalents
and marketable securities ($ 53,597) ($ 38,921)
</TABLE>
Cash, cash equivalents and marketable
securities decreased by $53.6 million in 1997 as
the Company invested funds raised in the equity
offerings of 1996 in apartments. The Company's
operating cash flow increased to $89.1 million in
the nine month period of 1997 from $74.5 million in
the nine month period of 1996. The primary use of
cash has been apartment acquisitions, development
and improvements and dividends. Dividends paid in
the nine month period of 1997 increased from the
same period in 1996 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
dividends per share to $1.17 in the first three
quarters of 1997 from $1.11 per share for the first
three quarters of 1996.
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 projects.
The following table summarizes the capital
expenditures for the nine month periods of 1997 and
1996 (dollars in thousands, except per unit data):
<TABLE>
<CAPTION>
NINE MONTHS
1997 1996
---- ----
<S> <C> <C>
Apartment communities:
Acquisitions $231,725 $ 98,991
Development projects:
Development costs 41,579 36,459
Capitalized interest 4,081 1,962
Replacements for stabilized communities (1) 5,552 3,992
Improvements (2) 3,399 5,356
Commercial properties 172 342
Corporate level expenditures 1,747 380
-------- --------
$288,255 $147,482
-------- --------
Per Unit:
Replacements for stabilized communities (1) $262 $217
Improvements (2) $117 $221
</TABLE>
__________
(1) Stabilized communities are those properties which
have been owned for at least one full calendar
year. In the nine month period of 1997, 21,156
units were stabilized as compared to 18,410 units
in the nine month period of 1996.
(2) Improvements include expenditures for all
properties owned during the period, including
replacements at newly acquired communities.
The Company expects that the level of
expenditures for replacements and improvements will
increase for the remainder of 1997 due primarily to
the installation of water submeters at a number of
communities and other expenditures scheduled for
completion to enhance or maintain the Company's
apartment communities position in their markets.
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.
FORWARD LOOKING STATEMENTS. This filing includes
statements that are "forward looking statements" regarding
expectations with respect to market conditions, development
projects, occupancy rates, capital requirements and sources.
These assumptions and statements are subject to various
factors, unknown risks and uncertainties, including general
economic conditions, local market factors, delays and cost
overruns in construction, completion and rent up of
development communities, and performance of consultants or
other third parties and environmental concerns, any of which
may cause actual results to differ from the Company's current
expectations.
<PAGE>
Merry Land & Investment Company, Inc.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of
Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
a. EXHIBITS:
(3.i) Amended and Restated Articles of
Incorporation (incorporated herein by
reference to Exhibit 4(a) to the
Company's Shelf Registration Statement
on Form S-3 filed December 15, 1995,
file number 33-65067), as
amended by Articles of Amendment to
Articles of Incorporation re:
Series D Preferred Stock
(incorporated herein by reference to
Exhibit 4 to the Company's current
report on Form 8-K filed December 11, 1996).
(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).
(12) Material Contracts.
(10.1) Credit Agreement between the
Company and Lenders dated September
16, 1997, (incorporated herein by
reference to Item 7, Exhibit 10 to
the Company's report on Form 8-K
filed September 22, 1997).
(27) Financial Data Schedules
b. Reports on Form 8-K:
FINANCIAL STATEMENTS
FORM DATE FILED ITEMS REPORTED FILED
8-K 7-29-97 Completion of Offering No
of $50 million principal
amount of the Company's
6.90% Notes due 2007
8-K 8-6-97 Acquisitions of Ranchstone Financial Statements
Apartments and Polos East were filed with respect
Apartments to Ranchstone Apts.
and Polos East Apts.
8-K 8-6-97 Acquisitions of The Palms No
at South Shore Apartments
and Coventry at Cityview
Apartments
8-K 9-15-97 Financial Statements filed Financial Statements
with respect to previously were filed with respect
reported acquisitions to The Palms at South
Shore Apartments and
Coventry at Cityview
Apartments
8-K 9-22-97 Execution of Credit No
Agreement for $200
million Unsecured
Revolving Line of
Credit
8-K 10-8-97 Acquisitions of Chatelaine Financial Statements
Park Apartments, and the were filed with respect
Partnership interests of to the acquired
McCaslin Riverhill, Ltd., properties, and pro
The Wimberly Apartment forma, consolidated
Homes, Ltd., and McCaslin financials were filed
Hidden Lakes, Ltd. with respect to Polos
East Apts., Ranchstone
Apts., The Oaks Apts.,
The Pointe Apts.,
Coventry at Cityview
Apts., Chatelaine Park
Apts., Wimberly
Apartment Homes,
Riverhill Apts., and
Hidden Lakes Apts.
8-K 10-8-97 Acquisitions of Richmond No
Towne Homes and Trails
of Briar Forest Apartments
8-K 10-31-97 Completion of Offering No
of $50 million principal
amount of the Company's
6.69% Notes due 2006
<PAGE>
Form 10-Q - Merry Land & Investment Company, Inc.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
MERRY LAND & INVESTMENT COMPANY, INC.
/s/ W. TENNENT HOUSTON
----------------------
W. Tennent Houston
President
Principal Financial Officer
November 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 660
<SECURITIES> 2,335
<RECEIVABLES> 24
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,499
<PP&E> 1,460,887
<DEPRECIATION> 130,239
<TOTAL-ASSETS> 1,393,437
<CURRENT-LIABILITIES> 44,990
<BONDS> 410,000
0
270,648
<COMMON> 38,821
<OTHER-SE> 488,795
<TOTAL-LIABILITY-AND-EQUITY> 1,393,437
<SALES> 150,616
<TOTAL-REVENUES> 160,553
<CGS> 40,339
<TOTAL-COSTS> 108,465
<OTHER-EXPENSES> 50,693
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,433
<INCOME-PRETAX> 52,088
<INCOME-TAX> 0
<INCOME-CONTINUING> 52,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,088
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
