<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 1998.
[_] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ___________ to ___________
Commission File No. 0-12166
MERIDIAN POINT REALTY TRUST '83
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
CALIFORNIA 94-6542723
- ---------------------------- -----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
8500 STATION STREET, SUITE 100, MENTOR, OHIO 44060
-------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(440) 974-3770
-------------------------------
(Issuer's Telephone Number, Including Area Code)
655 MONTGOMERY STREET, SUITE 800, SAN FRANCISCO, CALIFORNIA 94111
- --------------------------------------------------------------------------------
(Former Address of Principal Executive Offices)
Check whether issuer: (1) filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months) or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
------ ------
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
SHARES OF BENEFICIAL INTEREST: 3,031,618 (AS OF OCTOBER 30, 1998)
Transition Small Business Disclosure Format (check one):
Yes No X
------ ------
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MERIDIAN POINT REALTY TRUST '83
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
TABLE OF CONTENTS
ITEM PAGE
PART I--FINANCIAL INFORMATION.................................................3
Item 1. Financial Statements........................................3
Item 2. Management's Discussion and Analysis or Plan
of Operation...............................................11
PART II--OTHER INFORMATION...................................................14
Item 1. Legal Proceedings..........................................14
Item 4. Submission of Matters to a Vote of Security Holders........14
Item 6. Exhibits and Reports on Form 8-K...........................16
2
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PART I: FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS.
The accompanying unaudited financial statements should be read in
conjunction with the Annual Report on Form 10-K for fiscal year ended December
31, 1997 of Meridian Point Realty Trust '83 (the "Company"). These statements
have been prepared in accordance with the instructions for the Securities and
Exchange Commission Form 10-QSB and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of the Company's management, all material adjustments of
a normal recurring nature considered necessary for a fair presentation of
results of operations for the interim periods have been included. The results of
operations for the nine months ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1998.
3
<PAGE> 4
<TABLE>
<CAPTION>
MERIDIAN POINT REALTY TRUST `83
BALANCE SHEET
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
1998 1997
(Unaudited)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and Cash Equivalents $ 238,204 $ 2,886,339
Investment in Mortgage-Related Assets, at market value 1,491,025 --
Accounts Receivable, Net of Reserves of $25,000 as of
September 30, 1998 and December 31, 1997 -- --
Restricted Cash 350,000 --
Other Assets, Net 142,436 21,052
- -----------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 2,221,665 $ 2,907,391
=====================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts Payable 103,488 102,057
- -----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 103,488 102,057
- -----------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Note 10)
SHAREHOLDERS' EQUITY:
Shares of Beneficial Interest - $1.00 stated value: Authorized -
Unlimited; 3,031,618 shares issued and outstanding
as of September 30, 1998 and December 31, 1997 3,031,618 3,031,618
Paid-in Capital 22,755,694 22,755,694
Distributions in Excess of Income (23,669,135) (22,981,978)
- -----------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2,118,177 2,805,334
=====================================================================================================
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,221,665 $ 2,907,391
=====================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
<TABLE>
<CAPTION>
MERIDIAN POINT REALTY TRUST `83
STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
REVENUES:
<S> <C> <C> <C> <C>
Rentals from Real Estate Investments $ -- $ 196,774 $ -- $ 907,832
Interest and Other 32,675 91,573 71,008 232,179
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES 32,675 288,347 71,008 1,140,011
- ----------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Interest and Amortization of Loan Costs -- 57,259 -- 262,771
Property Taxes -- 17,541 -- 79,234
Property Operating Costs, Including
Amounts Paid to Related Parties of $0,
$30,000, $0 and $90,000, respectively -- 88,751 -- 264,461
General and Administrative, Including
Amounts Paid to Related Parties of
$142,613, $15,250, $202,613 and
$43,050, respectively 541,399 100,750 745,593 245,298
Depreciation and Amortization -- 2,307 -- 16,153
Unrealized Loss on Investment in Mortgage-
Related Assets 12,573 -- 12,573 --
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 553,972 266,608 758,156 867,917
- ----------------------------------------------------------------------------------------------------------------------------
Income (Loss) before Gain on Sale of
Property and Extraordinary Item (521,297) 21,739 (687,158) 272,094
Gain on Sale of Property -- 4,538,135 -- 4,538,135
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (521,297) 4,559,874 (687,158) 4,810,229
Extraordinary Item -
Prepayment Penalty on Paydown of Debt -- (189,070) -- (189,070)
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (521,297) $ 4,370,804 $ (687,158) $ 4,621,159
=============================================================================================================================
NET INCOME (LOSS) PER COMMON
SHARE BASIC AND DILUTED:
Income (Loss) Before Extraordinary Item $ (0.17) $ 1.50 $ (0.23) $ 1.59
Extraordinary Item - Prepayment Penalty -- (0.06) -- (0.06)
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER COMMON
SHARE $ (0.17) $ 1.44 $ (0.23) $ 1.53
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
MERIDIAN POINT REALTY TRUST `83
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income (Loss) $ (687,158) $ 4,621,159
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided (Used) by Operating Activities:
Unrealized Loss on Mortgage-Related Assets 12,573 --
Gain on Sale of Properties -- (4,538,135)
Loss on Early Retirement of Debt -- 189,070
Amortization - Other -- 20,995
Decrease (Increase) in Restricted Cash (350,000) 1,580,139
Decrease in Accounts Receivable -- 2,929
Decrease (Increase) in Other Assets (121,383) 16,354
Increase in Accounts Payable 1,431 17,232
Decrease in Other Liabilities -- (194,354)
- -------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (1,144,537) 1,717,389
- -------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Disposition of Properties -- 11,650,000
Closing Costs on Disposition of Assets -- (1,071,141)
Improvements to Existing Real Estate -- (1,103)
Investment in Mortgage-Related Assets (2,008,476) --
Return of Principal from Mortgage-Related Assets 504,878 --
- -------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (1,503,598) 10,577,756
- -------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments on Mortgage Notes -- (4,627,123)
Cash Distributions Paid -- (9,094,854)
- -------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES -- (13,721,977)
- -------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND EQUIVALENTS (2,648,135) (1,426,832)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 2,886,339 4,437,422
- -------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 238,204 $ 3,010,590
=========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS
MERIDIAN POINT REALTY TRUST `83
SEPTEMBER 30, 1998
(UNAUDITED)
1. GENERAL.
Meridian Point Realty Trust `83 (the "Company") is a business trust
organized under the laws of the State of California for the purpose of
acquiring, operating, holding for investment and ultimately selling
income-producing commercial and industrial real estate. The Company was formed
as a self-liquidating/finite-life real estate investment trust ("REIT"). Under
this self-liquidating policy, the Company may not invest net proceeds from sales
or refinancings in additional properties. The Company was formed on June 24,
1982 and commenced operations on April 12, 1983. On February 23, 1996, the
Company sold all of its real estate properties except for the Charleston
Business Park ("Charleston") (See Note 6). On August 21, 1997, the Company sold
the Charleston property. Following the sale, the Company's assets have consisted
almost entirely of cash and cash equivalents An annual meeting of shareholders
was held on September 22, 1998, for the purpose of electing trustees and
approving and adopting a plan of liquidation. The proposed plan of liquidation
was defeated by shareholders and a new Board of Trustees was elected. The vote
was declared official on September 28, 1998. The new Trustees are: Steven A.
Calabrese, Mark D. Grossi, Marc C. Krantz, Richard M. Osborne and Thomas J.
Smith.
2. USE OF ESTIMATES.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. CASH EQUIVALENTS.
The Company considers all investments with an original maturity of
three months or less to be cash equivalents.
7
<PAGE> 8
4. FAIR VALUE OF FINANCIAL INSTRUMENTS.
On June 29, 1998, the Company purchased four Real Estate Mortgage
Investment Conduits ("REMICs"). The Company classified these investments as
available-for-sale under Statement of Financial Accounting Standard No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Accordingly, a
charge of $12,573 for the unrealized loss on these investments has been included
in the accompanying Statements of Operations for the three and nine months ended
September 30, 1998. Presented in the following table is a schedule of the REMICs
purchased by the Company and their fair market values as of September 30, 1998.
<TABLE>
<CAPTION>
REMIC Series Stated Interest Rate Maturity Fair Market Value
------------ -------------------- --------- -----------------
<S> <C> <C> <C>
FHLMC 1458 GA 6.750% 05/15/04 $ 352,551
FNMA 96-2 B 7.500% 10/22/09 366,972
FHLMC 1432 E 6.750% 01/15/06 367,376
FHLMC 1472 E 6.250% 02/15/05 404,126
-----------
$ 1,491,025
===========
</TABLE>
5. RENTALS FROM REAL ESTATE INVESTMENTS.
Certain of the Company's leases required lessees to pay all or a
portion of real estate taxes, insurance and operating costs ("Expense
Recaptures"). Expense Recaptures of $57,566 and $233,540 for the three and nine
month periods ended September 30, 1997, respectively, have been included in
Rentals from Real Estate Investments.
6. SALE OF PROPERTY.
On August 21, 1997, the Company sold the Charleston property, the last
property remaining in its portfolio. The total sales price for the property was
$13,000,000 less a $1,350,000 credit for estimated remediation work (see Note
10) and related costs, resulting in a net sales price of $11,650,000. The sales
price was paid entirely in cash. Out of escrow, the Company used $4,557,500 of
the sales proceeds to pay off the then outstanding principal on the mortgage
note payable. The Company also paid $891,504 in closing costs and $189,070 in
mortgage prepayment penalties. In connection with the sale, the Company
recognized a Gain on Sale of Property of $4,538,135. If this transaction had
occurred on January 1, 1997, the Company's pro forma results of operations for
the nine month period ended September 30, 1997 would have been (in thousands
except per share amounts):
<TABLE>
<CAPTION>
September 30, 1997
------------------
<S> <C>
Revenues $ 232
Expenses 335
-------
Net Income (Loss) $ (103)
=======
Net Income (Loss) per Share $ (0.03)
=======
</TABLE>
8
<PAGE> 9
7. EARNINGS PER SHARE.
Basic earnings per share of beneficial interest is determined by
dividing net income (loss) by the weighted average number of shares of
beneficial interest outstanding during the period. Weighted average number of
shares outstanding was 3,031,618 for the three and nine months ended September
30, 1998 and 1997. During the nine months ended September 30, 1998 and 1997, the
Company had no dilutive securities outstanding.
Reported Earnings Per Share for the three and nine months ended
September 30, 1997 have been restated due to a clerical error.
During the nine months ended September 30, 1998, the Company had no
cash distributions. During the nine months ended September 30, 1997, the Company
distributed $9,094,854, or $3.00 per share of beneficial interest to
shareholders of record as of the close of business on September 2, 1997.
8. INCOME TAXES.
The Company has previously elected to be taxed as a REIT pursuant to
Section 856(c)(1) of the Internal Revenue Code of 1986, as amended (the "Code"),
and intends to be taxed as a REIT under the Code for the fiscal year ended
December 31, 1998. The REIT provisions of the Code generally allow a REIT to
deduct dividends paid to shareholders in computing the Company's taxable income.
No provisions for federal or state income taxes have been made in the
accompanying Consolidated Statements of Operations.
To qualify for REIT status, the Company must meet a number of highly
technical organizational and operations requirements on a continuing basis.
Those requirements seek to ensure, among other things, that the gross income and
investments of a REIT are largely real estate related, with certain other
permitted assets, that a REIT distributes substantially all its ordinary taxable
income to shareholders on a current basis and that the REIT's ownership is not
overly concentrated. Due to the complex nature of these rules, the limited
available guidance concerning interpretation of the rules, the importance of
ongoing factual determinations and the possibility of adverse changes in or
interpretations of the law, administrative interpretations of the law and
developments at the Company, no assurance can be given regarding the Company's
qualification as a REIT for any particular year. As a result of the Company's
sale of its last real estate property in August 1997, the Company's status as a
REIT for 1997 and 1998 is dependent, in part, upon tax rules regarding
investments by REITs in certain types of non-real estate assets. The current
Board of Trustees is reviewing the Company's status as a REIT for the fiscal
year ended December 31, 1997 and 1998.
If the Company failed to qualify as a REIT for either the fiscal year
ended December 31, 1997 or 1998, it would be taxed as a regular corporation, and
distributions to shareholders would not be deductible in computing the Company's
taxable income. The resulting corporate tax liabilities could materially reduce
the funds available for distribution to the Company's shareholders or for
reinvestment. If the Company failed to qualify as a REIT, distributions to
shareholders would no longer be required. Moreover, the Company might not be
able to elect to be treated as a REIT for the four taxable years after the year
during which the Company ceased to qualify as a REIT. In addition, if the
Company later requalified as a REIT, it might be required to pay a full
corporate-level tax on any unrealized gain associated with its assets as of the
date of requalification and to make distributions equal to any C corporation
earnings accumulated during the period of non-REIT status.
9
<PAGE> 10
9. RELATED PARTIES.
Effective February 24, 1996, the Company entered into an agreement with
E&L Associates, Inc. ("E&L") under which E&L provided asset management and
certain other administrative services to the Company. E&L received a monthly fee
of $10,000 plus reimbursement for other expenses incurred on behalf of the
Company. During the three and nine month periods ended September 30, 1998, E&L
received management fees of $40,000 and $100,000, repectively, all of which is
included in General and Administrative Costs on the accompanying Statements of
Operations. E&L is a wholly-owned subsidiary of a company in which Lorraine O.
Legg (the Company's former Chief Executive Officer and a former Trustee) has an
ownership interest. The agreement between the Company and E & L was terminated
by the current Board of Trustees on September 22, 1998.
In connection with the sale of the Charleston property, the Board of
Trustees adopted an incentive payment plan for E&L for arranging, structuring,
negotiating and closing the transaction. Under this plan, E&L received a fee of
$233,000 in September, 1997.
Before leaving office, the previous Board created the Meridian
Indemnity Trust (the "Trust") to pay for the expense of defending themselves
against potential litigation. The Trust was funded with $350,000 of Company
funds which have been reflected as "Restricted Cash" in the accompanying Balance
Sheet as of September 30, 1998.
In connection with the proxy solicitation by Meridian '83 Shareholders'
Committee for Growth, Turkey Vulture Fund XIII, Ltd. (the"Fund"), a shareholder
of the Company, incurred expenses of $102,613 which is included in General and
Administrative Costs in the accompanying Statement of Operations. The Board of
Trustees authorized the expense reimbursement because of the benefit to the
Company of the proxy solicitation. The reimbursement is conditioned upon the
authorization by the Company's shareholders of the conversion of the Company to
a perpetual-life REIT through an amendment to the Declaration of Trust. Richard
M. Osborne, the Company's Chairman of the Board and Chief Executive Officer, is
the sole Manager of the Fund.
10. COMMITMENTS AND CONTINGENCIES.
The ownership of real estate entails environmental risks and potential
liability to owners, including former owners. Environmental investigation at the
Golden Cove property sold to Meridian Industrial Trust ("MIT") in 1996 indicated
that soil at the property contained volatile organic compounds in concentrations
that exceeded the clean-up goals typically cited by the California Regional
Water Quality Control Board (the "RWQCB"). As part of the sale transaction, the
Company was obligated fully to fund the remediation costs, for which it had
previously accrued $140,000 in 1994. Approximately $95,000 had been expended by
the Company for remediation costs through December 1997, and it does not believe
that any additional costs will be incurred, but there can be no assurance to
that effect. The Company may be entitled to seek contribution and indemnity for
the remediation costs against other potentially responsible parties who may have
caused the contamination at the property.
10
<PAGE> 11
In the late 1980s, the San Francisco Bay Region of the RWQCB requested
that the Company investigate and characterize soil and groundwater contamination
of the Charleston property. The Company engaged an environmental engineering
firm that discovered the presence of trichloroethylene and other solvent
chemicals in the groundwater. The RWQCB deferred issuing a Site Cleanup
Requirements ("SCRs") order to give the Company time to complete the pending
sale of the Charleston property. As part of the sale, the purchaser agreed to
indemnify the Company broadly against the pending SCRs and other types of
environmental claims. Its indemnity is backed by an environmental insurance
policy placed with Reliance Insurance Company of Illinois. It is possible that
the RWQCB could still name the Company when it ultimately issues its SCRs order
for the property based on the Company's former ownership. If that occurs, the
Company would tender the SCRs order to the purchaser for compliance. Similarly,
the Company would tender any other environmental claim brought against it to the
purchaser pursuant to the indemnity.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company was formed and currently operates as a self-liquidating,
finite-life REIT. As a self-liquidating, finite-life REIT, the Company may not
invest net proceeds from sales or refinancings in additional properties.
Therefore, the company is unable to invest in additional properties. The current
Board of Trustees intends to seek shareholder approval, as quickly as
practicable, of an amendment to the Company's Declaration of Trust to eliminate
this self-liquidating policy. The elimination of the self-liquidating policy
would convert the Company to a perpetual-life REIT. This change to a
perpetual-life REIT would enable the Company to continue to operate and grow by
reinvesting proceeds from the sale of the Company's properties into
newly-acquired properties.
Since the Charleston property was sold in August 1997, the Company's
remaining assets consist almost entirely of cash and cash equivalents.
The following discussion should be read in conjunction with the
Company's Balance Sheets and Statements of Operations and Cash Flows and the
notes thereto. Unless otherwise defined in this report, or unless the context
otherwise requires, the capitalized words or phrases referred to in this section
either: (a) describe accounting terms that are used as line items in such
financial statements, or (b) have the meanings ascribed to them in such
financial statements and the notes thereto.
Year 2000 Compliance
- --------------------
The Company is continuing its efforts to assess issues caused by the
inability of its information systems to properly process transactions using
dates beginning in the Year 2000. The Company is attempting to identify affected
software and develop a plan for correcting that software in the most effective
manner. Remediation of any potential issues regarding Year 2000 compliance will
likely include the upgrading or replacement of older software with new programs
and systems, which will handle the Year 2000 and beyond. The Company anticipates
that most of the necessary upgrades and replacements will be in place before
mid-1999.
11
<PAGE> 12
Because the Company's current operations, and consequently its computer
needs, are limited, the Company does not expect that Year 2000 compliance costs
will have any material adverse effect on the Company's liquidity or ongoing
results of operations. However, there can be no assurance that the Company will
be successful in implementing its Year 2000 remediation according to the
anticipated schedule or that compliance costs will not have a material adverse
effect on the Company's future liquidity or ongoing results of operations.
Liquidity and Capital Resources
- -------------------------------
The Company's liquidity and capital resources have been dramatically
changed as a result of the February 23, 1996 and August 21, 1997 asset sales and
the June 1998 investment of approximately $2 million in short-term mortgage
investments. The Company's source of near-term liquidity is its unrestricted
cash which, at September 30, 1998, totaled $238,204 as compared to $2,886,339
for the same period in 1997, a decrease of 91.8%. These funds are expected to be
adequate to satisfy the Company's overhead and operating expenses in the short
term.
An annual meeting of shareholders was held on September 22, 1998, at
which time a proposed plan of liquidation was defeated by shareholders and a new
Board of Trustees was elected. The vote was declared official on September 28,
1998. Before leaving office, the previous Board purchased additional Directors'
and Officers' indemnity insurance at a cost of $135,000, which is being expensed
in the third quarter. The former Trustees also created the Meridian Indemnity
Trust (the "Indemnity Trust") to pay for the expense of defending themselves
against potential litigation. The Indemnity Trust was funded with $350,000 of
Company funds which is reflected as "Restricted Cash" on the Company's
accompanying Balance Sheet. Current management is attempting to negotiate the
release of these funds from the Indemnity Trust.
During the nine months ended September 30, 1998, the Company had no
cash distributions. In the quarter ended September 30, 1997, the Company paid a
cash dividend of $3.00 per share of beneficial interest.
Material Changes in Results of Operations
- -----------------------------------------
Revenues
- --------
Rentals from Real Estate Investments totaled $0 and $907,832 for the
nine months ended September 30, 1998 and 1997, respectively, and $0 and $196,774
for the three months ended September 30, 1998 and 1997, respectively. The
decrease is the result of the sale of the Charleston property, the Company's
last remaining property, in August 1997.
Interest and Other Revenues were $71,008 and $232,179 in the nine
months ended September 30, 1998 and 1997, respectively, a decrease of 69.4%, and
$32,675 and $91,573 for the three months ended September 30, 1998 and 1997,
respectively, a decrease of 64.3%. The change was due primarily to the sale of
the Charleston property in August 1997 and changes in the Company's average cash
balances available for investment.
12
<PAGE> 13
Expenses
- --------
Interest expense, Property Taxes, Property Operating Costs, and
Depreciation and Amortization declined from period to period because of the
August 1997 property sale. No such expenses were incurred in 1998. The new
officers of the Company have agreed to serve without salaries until a plan for
converting the Company to a perpetual-life REIT is approved by the shareholders.
General and Administrative expenses were $745,593 and $245,298 in the
nine months ended September 30, 1998 and 1997, respectively, an increase of
203.9%, and were $541,399 and $100,750 in the three months ended September 30,
1998 and 1997, respectively, an increase of 437.4%. The increased expenditures
were related to the former Board of Trustees' evaluation of the Company's future
options, the charges related to the reimbursement of proxy solicitation costs
incurred by the Fund and the purchase by the former trustees of additional
Directors' and Officers' indemnity insurance.
An Unrealized Loss on Investment in Mortgage-Related Assets of $12,573
was incurred in the three and nine month periods ended September 30, 1998.
Net Income (Loss)
- -----------------
As a result of the factors noted above, net loss was $521,297 for the
three months ended September 30, 1998 compared to net income of $4,370,804 for
the same period in 1997. Net loss was $687,158 for the nine months ended
September 30, 1998 compared to net income of $4,621,159 for the same period in
1997. The September 30, 1997 figures reflect the gain on the sale of the
Charleston property.
Forward Looking Statements
- --------------------------
Statements that are not historical facts, including statements about the
Company's confidence in its prospects and strategies and its expectations about
growth, are forward-looking statements that involve risks and uncertainties.
These risks and uncertainties include, but are not limited to (1) the Company's
continued tax status as a REIT, (2) the Company's ability to execute its
business plan involving a conversion from a self-liquidating, finite-life REIT
to a perpetual-life REIT, (3) the Company's continued listing on the Nasdaq
SmallCap Market, (4) changes in general economic conditions, (5) changes in
local real estate conditions, (6) the inability to generate sufficient revenues
to meet operating expenses, and (7) the failure to manage growth effectively.
Any investor or potential investor in the Company must consider these risks and
others that are detailed in other filings by the Company with the Securities and
Exchange Commission. These risks and others could cause actual results to differ
materially from those in the forward-looking statements.
13
<PAGE> 14
- --------------------------------------------------------------------------------
PART II: OTHER INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is
a party or to which any of the assets of the Company is subject.
On June 12, 1998, the Fund filed a lawsuit, captioned Turkey Vulture
Fund XIII, Ltd. v. Herbert E. Stansbury, Jr., Peter O. Hansen, Lorraine O. Legg,
Robert E. Morgan, James M. Pollak and Doe 1 through Doe 10 (Sup. Ct. Ca. No.
995738), against the now former trustees of the Company seeking monetary damages
of approximately $600,000 alleging that the now former trustees breached their
fiduciary duties to the Company by failing to preserve the Company's legal
status as a REIT under the Code. The Fund's sole Manager is Richard M. Osborne,
now a Trustee of the Company. The Fund and the former trustees have had ongoing
discussions since the September 22, 1998 annual meeting regarding a possible
resolution of the lawsuit.
Prior to the current Trustees assuming office, the Company was notified
by The Nasdaq Stock Market that the Company's shares of beneficial interest,
without par value (the "Shares"), will be delisted from the Nasdaq SmallCap
Market, effective December 14, 1998. The Nasdaq Stock Market has taken this
action because the Company does not currently meet the Nasdaq SmallCap Market's
requirement that listed companies maintain a closing bid price greater than or
equal to $1.00. The Shares must report a closing bid price of $1.00 or greater
for ten consecutive trading days before December 14, 1998 to comply with the
minimum bid price requirement. The Company is currently evaluating its options
with respect to the potential delisting.
There is no assurance that the Company will be successful in
maintaining its Nasdaq SmallCap Market listing. If the Company's Shares are
delisted, there would likely be a negative impact on the trading market,
liquidity and price of the Shares.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 22, 1998, the Company held its Annual Meeting of
Shareholders (the "Annual Meeting"). As of August 4, 1998, the record date for
this meeting, there were 3,031,618 shares issued and outstanding and entitled to
vote at the Annual Meeting. There were 2,026,083 shares represented at the
Annual Meeting in person or by proxy.
14
<PAGE> 15
Proposal 1
- ----------
With respect to the election of trustees of the Company to serve until
the next annual meeting of shareholders of the Company and until their
successors have been elected and qualified, the results were:
A. The nominees for trustees designated by the then management of
the Company:
NAME FOR
Peter O. Hansen 460,814
Lorraine O. Legg 460,814
Robert E. Morgan 460,310
James M. Pollak 460,814
Herbert E. Stansbury, Jr. 460,310
B. The nominees for trustees designated by the Meridian '83
Shareholders' Committee for Growth:
NAME FOR
Steven A. Calabrese 1,508,080
Mark D. Grossi 1,508,080
Marc C. Krantz 1,508,080
Richard M. Osborne 1,508,080
Thomas J. Smith 1,508,080
The following persons received a majority of the votes cast: Steven A.
Calabrese, Mark D. Grossi, Marc C. Krantz, Richard M. Osborne and Thomas J.
Smith and will serve as trustees of the Company.
Proposal 2
- ----------
With respect to the second proposal regarding the approval and adoption
of a Plan of Complete Liquidation and Dissolution, the results were:
FOR 678,339 AGAINST 39,342 ABSTAINED 18,426
The Plan of Complete Liquidation and Dissolution was not approved and adopted by
the shareholders because an affirmative vote of a majority of the outstanding
shares was neccessary for adoption of the Plan.
15
<PAGE> 16
Proposal 3
- ----------
With respect to the third proposal regarding the ratification of the
selection of Arthur Andersen LLP as independent auditors of the Company for the
year ending December 31, 1998, the results were:
FOR 678,339 AGAINST 16,390 ABSTAINED 41,275
The selection of Arthur Andersen LLP was ratified by the shareholders because an
affirmative vote of a majority of the votes cast was necessary for ratification.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits: None.
(b) Reports on Form 8-K
The following report on Form 8-K was filed during the quarter September
30, 1998:
Current report on Form 8-K under Item 5 - Other Events, dated September
29, 1998 announcing the election of new trustees and officers and the move of
the Company's headquarters to Mentor, Ohio.
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.
REGISTRANT
MERIDIAN POINT REALTY TRUST `83
Date: November 16, 1998 By: /s/ RICHARD M. OSBORNE
-------------------------------------
Richard M. Osborne
Chairman and Chief
Executive Officer
(Principal Executive Officer)
Date: November 16, 1998 By: /s/ RONALD L. RAMER
----------------------------------
Ronald L. Ramer,
Chief Financial Officer
(Principal Financial and Accounting Officer)
16
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<NAME> Meridian Point Realty Trust '83
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 588,204
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<COMMON> 3,031,618
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