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_______________
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB/A
AMENDMENT TO FORM 10-KSB
Filed Pursuant to
THE SECURITIES EXCHANGE ACT OF 1934
LNH REIT, INC.
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(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-KSB for
the year ended December 31, 1995 as set forth in the pages attached hereto:
Item 9. Directors, Executive Officers, Promoters and Control Persons;
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Compliance with Section 16(a) of the Exchange Act.
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Item 10. Executive Compensation.
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Item 11. Security Ownership of Certain Beneficial Owners and Management.
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Item 12. Certain Relationships and Related Transactions.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: April 12, 1996
LNH REIT, INC.
By /s/ N. Keith McKey
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N. Keith McKey
Senior Vice President,
Chief Financial Officer
and Secretary
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ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
BOARD OF DIRECTORS
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The following table describes the present directors of LNH REIT, Inc.
("LNH" or the "Company").
<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
----------------------- --- ----------------------------------
<S> <C> <C>
H. C. Bailey, Jr. 56 President of H. C. Bailey Company (real estate development
Director since 1992 and investment); President of Bailey Mortgage Company
(mortgage banking) and Chairman of the Board and Chief
Executive Officer and President of Security Savings & Loan
Association (2) until 1992.
Robert Ted Enloe, III 57 President of Liberte Investors; President of the Company
Director since 1981 until 1992; Director and President of Lomas Financial
Corporation from 1975 to 1992.
George R. Farish 43 President of Houston Savings Association since 1985.
Director since 1992
Leland R. Speed 63 Chief executive officer of the Company since 1992,
Director since 1991 EastGroup Properties and The Parkway Company; Chief
and Chairman since 1995 executive officer of Eastover Corporation, Congress Street
Properties, Inc. and Rockwood National Corporation until
1994, and EB, Inc. until 1995.
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<FN>
(1) Unless otherwise stated, each person has held the positions indicated
for at least the past five years.
(2) Security Savings & Loan Association was placed in receivership by the
Resolution Trust Corporation in 1992.
</TABLE>
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OTHER DIRECTORSHIPS AND TRUSTEESHIPS
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Members of the Board of Directors serve on the Boards of
Directors or the Boards of Trustees of the following publicly-held companies:
<TABLE>
<CAPTION>
NAME COMPANY
- --------------------- -----------------------------------
<S> <C>
H.C. Bailey, Jr. EastGroup Properties
The Parkway Company
Robert Ted Enloe, III Compaq Computer Corporation
Leggett & Platt, Inc.
Liberte Investors
Sixx Holdings, Inc.
Epikon Corporation
George R. Farish The Parkway Company
Leland R. Speed EastGroup Properties
Farm Fish, Inc.
First Mississippi Corporation
KLLM Transport Services, Inc.
The Parkway Company
</TABLE>
EXECUTIVE OFFICERS
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The following is a list of the Company's executive officers.
<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
----------------------- --- ----------------------------------
<S> <C> <C>
Leland R. Speed 63 See Table under "Board of Directors."
Director since 1991
and Chairman of the
Board since 1995
David H. Hoster II 50 President and Trustee of EastGroup Properties since 1993
President since 1995 and Executive Vice President of EastGroup Properties
until 1993; President of the Company since 1995 and
Executive Vice President of the Company from 1992 until
1995; Executive Vice President of Congress Street
Properties, Inc., Eastover Corporation, The Parkway
Company and Rockwood National Corporation from 1988 to
1994, and EB, Inc. from 1993 to 1994.
</TABLE>
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<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
--------------------- --- ----------------------------------
<S> <C> <C>
Steven G. Rogers 41 President of The Parkway Company since 1993 and Senior
Senior Vice President Vice President of The Parkway Company from 1988 to 1993;
since 1992 Senior Vice President of the Company since 1992; Senior
Vice President of Congress Street Properties, Inc.,
Eastover Corporation, EastGroup Properties and Rockwood
National Corporation until 1994, and EB, Inc. until 1995.
N. Keith McKey 45 Executive Vice President of EastGroup Properties since
Senior Vice President 1993 and Chief Financial Officer since 1992; Senior Vice
and Chief Financial President of the Company since 1992; Senior Vice
Officer since 1992 President of Congress Street Properties, Inc., Eastover
Corporation, EB, Inc., The Parkway Company and Rockwood
National Corporation until 1994.
_____________________
<FN>
(1) There are no family relationships between any of the directors
or executive officers of the Company.
</TABLE>
SECTION 16 COMPLIANCE
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Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires that directors, officers and more than 10 percent
shareholders of the Company file reports with the Securities and Exchange
Commission within the first 10 days of the month following any purchase or sale
of Shares. The Company is not aware that any director or officer failed to
make such filings in a timely manner during 1995.
ITEM 10. EXECUTIVE COMPENSATION.
INCENTIVE COMPENSATION PLAN. The officers of the Company
receive no salary for the services they render to the Company. See "Item 12.
Certain Relationships and Related Transactions--Management Agreement." The
Board of Directors has adopted, however, an Incentive Compensation Plan
effective October 1, 1993 (the "Plan") pursuant to which Incentive
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Compensation Units with respect to 80,000 shares ("ICUs") have been granted to
certain executive officers of the Company. An ICU is the right to receive the
following payments: (i) per share regular dividends paid to shareholders of the
Company; and (ii) the amount by which cumulative per Share special dividends (a
dividend that is not a regular dividend, as determined by the "Committee"
described below) exceeds the fair market value of a share on the date the ICU
is granted ($9.00 with respect to all outstanding ICUs).
The Plan also provides for payments to holders of ICUs in the
event of a major corporate transaction. In the event (i) a person makes a
tender offer or other offer for all of the Company's outstanding shares; (ii)
the Board of Directors recommends that the Company's Shareholders accept such
offer; and (iii) as a result of such offer that person becomes the beneficial
owner (as defined under Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) of 80% or more of the Company's outstanding shares, the Company
shall pay the grantee of an ICU the amount by which (A) the per share amount
paid to shareholders pursuant to the offer plus the per share special dividends
paid to the Company's shareholders after the date grant is greater than (B) the
fair market value of a share on the date of grant of the ICU. If the Company
enters into a merger with another person pursuant to which the Company is not
the surviving corporation, the Company shall pay the grantee of an ICU the
amount by which (i) the fair market value of the per share consideration paid
to shareholders pursuant to the merger plus cumulative per share special
dividends paid to the Company's shareholders after the date of the grant of the
ICU exceed (ii) the fair market value of a share on the date of grant of the
ICU. The fair market value of the consideration paid in the merger, if such
consideration is not cash, shall be determined by the Committee.
The Plan is administered by a committee (the "Committee") of
not less than three directors. None of such directors shall be or shall have
been for one year eligible for selection as a grantee under the Plan. ICUs
will terminate (i) when the grantee ceases to be an officer of the Company or
(ii) in the event EastGroup Properties disposes of all of its shares in a
transaction in which the other shareholders of the Company do not have an
opportunity to sell their shares.
During the year ended December 31, 1995, the Company made
payments of $8,820, $7,560, $7,560 and $7,560 to Messrs. Speed, Hoster, McKey
and Rogers, respectively, pursuant to ICUs.
DIRECTORS' FEES. Under the Company's standard compensation
arrangements with directors, directors are paid a
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quarterly stipend of $1,250, plus $500 and reimbursement of actual expenses for
attendance at each meeting of the Board or of a committee established by the
Board. Only one fee is paid in the event that more than one meeting is held on
a single day.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. To the best
of the Company's knowledge, no person or group (as those terms are used in
Section 13(d)(3) of the Securities Exchange Act of 1934) owned beneficially, as
of April 1, 1996, more than 5% of the outstanding shares except for the persons
named in the following table.
<TABLE>
<CAPTION>
Amount and Nature Percent
of Beneficial of
Name of Beneficial Owner Ownership Class
------------------------ -------------------- -----
<S> <C> <C>
EastGroup Properties 515,200 (1) 23.42%
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201
Dimensional Fund Advisors Inc. 139,100 (2) 6.32%
1299 Ocean Avenue, Suite 650
Santa Monica, California 90401
Spiritas, Inc. 110,800 (1) 5.04%
5219 Second Avenue
Dallas, Texas 75210
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<FN>
(1) Based upon an amended Schedule 13D filed with the Securities
and Exchange Commission.
(2) As disclosed in a filing with the Securities and Exchange
Commission dated February 11, 1992, on Schedule 13G by
Dimensional Fund Advisors Inc. ("Dimensional"), as registered
investment advisor, Dimensional is deemed to have beneficial
ownership of 139,100 shares, all of which shares are held in
portfolios of DFA Investment Dimensions Group, Inc., a
registered open end investment company, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for
qualified employee benefit
</TABLE>
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plans, for all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all
such shares.
SECURITY OWNERSHIP OF MANAGEMENT
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The following table sets forth the shares beneficially owned
to the best of the Company's knowledge, as of April 1, 1996, by each director,
executive officer and by the directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY OF SHARES
NAME OWNED OUTSTANDING
---- ---------------- -----------
<S> <C> <C>
H.C. Bailey, Jr. 0 0%
Robert Ted Enloe, III 0 0
George F. Farish 0 0
Leland R. Speed 0 0
David H. Hoster II 0 0
Steven G. Rogers 0 0
N. Keith McKey 0 0
All officers and directors as a group 0 0
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
EXPENSE-SHARING ARRANGEMENTS. Until December 31, 1994,
EastGroup had an expense-sharing agreement with Congress Street Properties,
Inc. ("Congress Street"), The Parkway Company ("Parkway"), and Eastover
Corporation ("Eastover") pursuant to which the participants shared
administrative offices at the same location in Jackson, Mississippi and common
officers and other personnel, subject to the authority of the board of each
member company to elect or appoint and remove its officers in accordance with
its certificate of incorporation, declaration of trust or other charter
documents and applicable law. EB, Inc. ("EB") had a separate administrative
agreement with Congress Street which allowed EB to participate in the
expense-sharing arrangement on the same basis as the companies which were
parties to the expense-sharing agreement. The Company had a separate
administration agreement with Congress Street (and later EastGroup) which
terminated effective March 31, 1995. See "--
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Administration Agreement." Under this arrangement, the participants shared the
cost of the common officers and other employees and of shared facilities and
activities. These common costs were initially paid by Congress Street, which
served as the administrator of the arrangement, and the other participants paid
Congress Street an annual fee (on a monthly basis) of one-half of one percent
of their assets which were publicly-traded securities, and Congress Street was
paid a fixed annual fee in equal monthly installments by the Company. After
these fees and any profits of Eastover Realty Corporation, a real estate
company that was a subsidiary of Congress Street, were subtracted from total
common costs, the remaining common costs were allocated on a monthly basis
among EastGroup, Parkway, Congress Street, Eastover and EB (collectively, the
"Expense-Sharing Participants") in proportion to their assets other than
publicly-traded securities, based on their balance sheets as contained in their
most recent SEC filings. Certain costs which the common officers believed to
be particularly attributable to each member company were not shared. These
non-allocable costs included but were not limited to directors' and trustees'
fees, legal, audit and stock transfer expenses, stationery and items of similar
nature. Since the allocation formula was not based upon actual costs incurred
by each member company, the allocation may have, from time to time, resulted in
a greater or lesser charge to each member company than would have resulted if
actual costs to each member company were allocated.
In connection with the business combinations involving the
Expense-Sharing Participants (i.e., Congress Street merged with a wholly-owned
subsidiary of Parkway on November 29, 1994, Eastover combined with EastGroup on
December 22, 1994 and EB combined with Parkway on April 27, 1995), the above
described expense-sharing arrangements terminated on December 31, 1994, except
that EastGroup had the responsibility for managing the Company under the prior
administration agreement between the Company and Congress Street. See "--
Administration Agreement." Since that date, Parkway and EastGroup each have
their own respective officers and employees, who do not serve as officers or
employees of the other company, except for Leland R. Speed, who continues to
serve as the Chief Executive Officer of both companies, and a small number of
clerical and support staff employees. The officers of EastGroup also continue
to serve as officers of the Company; in addition, the President of
Parkway--Steven G. Rogers--continues to serve as an officer of the Company.
David H. Hoster II and N. Keith McKey, who formerly served as officers of all
the Expense-Sharing Participants, now serve as officers of EastGroup and the
Company and not Parkway. EastGroup, the Company and Parkway continue to share
the same leased office space at One Jackson Place in Jackson, Mississippi and
share the services of Mr. Speed and certain clerical and
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support staff employees and expenses related thereto are shared among Parkway
and EastGroup (except for certain costs which can be attributed to either
company based on its actual use of the services involved). The Company's costs
are paid as provided in the Management Agreement (described below).
MANAGEMENT AGREEMENT. The Company has no salaried employees;
its officers are elected by the Board of Directors solely to facilitate the
execution of commitments and other obligations on behalf of the Company.
Except for certain benefits received pursuant to the Incentive Compensation
Plan effective October 1, 1993, none of the officers of the Company receives
any remuneration from the Company in his or her capacity as an officer of the
Company. EGP Managers provides all executive and administrative personnel,
office space and general services required by the Company.
Management services for the Company are rendered by EGP
Managers under a Management Agreement. Until April 3, 1995, the manager,
pursuant to the Management Agreement, was LNH REIT Managers, a Mississippi
general partnership in which Walker Managers, L.P. ("Walker") and EGP Managers
were equal partners. In connection with EastGroup's purchase of 383,775 Shares
for $7.50 in cash per Share from affiliates of Walker, EGP Managers purchased
Walker's one-half interest in LNH REIT Managers, and EGP Managers replaced LNH
REIT Managers as manager under the Management Agreement. EGP Managers is
entitled to receive a basic annual fee (the "Basic Fee"), payable in monthly
installments, equal to the sum of 1.25% of the first $100,000,000 or portion
thereof of the Company's Invested Assets (as defined in the Management
Agreement), 1.125% of the second $100,000,000 or portion thereof, 1.00% of the
third $100,000,000 or portion thereof, 0.875% of the fourth $100,000,000 or
portion thereof and 0.75% of the portion (if any) of Invested Assets exceeding
$400,000,000.
EGP Managers may also receive incentive compensation equal to
the excess, if any, of (x) the Average Annual Incentive Fee (as defined below)
for the period from May 26, 1981 (the date on which the Company received the
net proceeds of the public offering of Shares), to the end of any fiscal year,
multiplied by the number of 12-month fiscal years and fractions thereof in such
period, over (y) the aggregate amount of incentive fee, if any, earned by the
manager in prior years. The "Average Annual Incentive Fee" at the end of any
fiscal year will be equal to the sum of:
(i) 10% of the amount by which the Average Annual
Net Profit (as defined in the Management Agreement) from May 26,
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1981, to such time exceeds 12% of the Average Net Worth (as defined in the
Management Agreement) for such period; and
(ii) 5% of the amount by which the Average Annual
Net Profit from May 26, 1981, to such time exceeds 17% of the Average Net Worth
for such period; and
(iii) 5% of the amount by which the Average Annual Net
Profit from May 26, 1981, to such time exceeds 22% of the Average Net Worth for
such period.
During the year ended December 31, 1995, the Company paid
Management Fees of $294,000. EGP Managers did not receive incentive
compensation in the fiscal year ended December 31, 1995, and is not expected to
receive incentive compensation in the current fiscal year. Effective July 1,
1994, EGP Managers agreed to amend the Management Agreement to provide that the
Management Fee paid by the Company will not exceed $29,167 per month. The
Management Agreement will be terminated on the Effective Date.
ADMINISTRATION AGREEMENT. Effective April 22, 1992, LNH REIT
Managers entered into an administration agreement (the "Administration
Agreement"), with Congress Street. Under the Administration Agreement,
Congress Street (and later EastGroup) administered the day-to-day business of
the Company in return for a $125,000 annual fee, payable by the Company's
manager. In connection with the termination of the expense-sharing
arrangements described above, EastGroup assumed Congress Street's duties under
the Administration Agreement. The Administration Agreement was terminated
effective March 31, 1995.
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