<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-12166
MERIDIAN POINT REALTY TRUST `83
(Exact name of Small Business Issuer as specified in its charter)
CALIFORNIA 94-6542723
(State or other jurisdiction of (I.R.S. Employer I.D. Number)
incorporation or organization)
8500 STATION STREET, SUITE 100, MENTOR, OHIO 44060
(Address and zip code of principal executive offices)
Issuers's telephone number, including area code: (440) 974-3770
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 reports), 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 OUTSTANDING AS OF NOVEMBER 9, 1999: 3,031,618
---------
Transition Small Business Disclosure Format (check one): Yes [ ] No [X]
--- ---
1
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Meridian Point Realty Trust '83
Quarterly Report on Form 10-QSB
For the Quarter Ended September 30, 1999
Table of Contents
PART I Page
----
Item 1. Financial Statements........................................3
Item 2. Management's Discussion and Analysis or Plan of Operation .11
PART II
Item 1. Legal Proceedings..........................................15
Item 6. Exhibits and Reports on Form 8-K...........................15
2
<PAGE> 3
- --------------------------------------------------------------------------------
PART I
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements should be read in conjunction
with the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998 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, 1999 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1999.
3
<PAGE> 4
MERIDIAN POINT REALTY TRUST `83
BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
------
1999
(UNAUDITED) 1998
----------- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 294,495 $ 600,173
Investment in mortgage-related assets, at market value 1,469,411 1,205,722
Restricted cash 6,400 357,728
Other assets 261,476 14,453
------------ ------------
Total assets $ 2,031,782 $ 2,178,076
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Accounts payable $ 175,179 $ 185,567
Accrued liabilities 7,600 -
------------ ------------
Total liabilities 182,779 185,567
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY:
Shares of beneficial interest - $1.00 stated value: authorized -
unlimited; 3,031,618 shares issued and outstanding
as of September 30, 1999 and December 31, 1998 3,031,618 3,031,618
Paid-in capital 22,755,694 22,755,694
Distributions in excess of income (23,938,309) (23,794,803)
------------ ------------
Total shareholders' equity 1,849,003 1,992,509
------------ ------------
Total liabilities and shareholders' equity $ 2,031,782 $ 2,178,076
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
MERIDIAN POINT REALTY TRUST `83
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
GROSS REVENUES:
Interest and Other $ 25,005 $ 32,675 $ 69,657 $ 71,008
OPERATING EXPENSES:
Legal costs 82,149 144,354 136,751 185,267
General and administrative, including
amounts paid to related parties of $0,
$142,613, $0 and $202,613 respectively 20,397 409,558 76,412 572,899
--------- --------- --------- ---------
Total expenses 102,546 553,912 213,163 758,166
--------- --------- --------- ---------
Net loss $ (77,541) $(521,237) $(143,506) $(687,158)
========= ========= ========= =========
NET LOSS PER COMMON
SHARE - BASIC AND DILUTED:
Net loss per common share $ (0.03) $ (0.17) $ (0.05) $ (0.23)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
MERIDIAN POINT REALTY TRUST `83
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (143,506) $ (687,158)
Adjustments to reconcile net loss to
net cash used in operating activities:
Unrealized loss on mortgage-related assets 333 12,573
Changes in operating assets and liabilities:
Decrease (increase) in restricted cash 351,328 (350,000)
Increase in other assets (247,023) (121,383)
(Decrease) increase in accounts payable (10,388) 1,431
Increase in other liabilities 7,600 -
----------- -----------
Net cash used in operating activities (41,656) (1,144,537)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in mortgage-related assets (1,554,573) (2,008,476)
Return of principal from mortgage-related assets 1,290,551 504,878
----------- -----------
Net cash used in investing activities (264,022) (1,503,598)
----------- -----------
NET DECREASE IN CASH AND EQUIVALENTS (305,678) (2,648,135)
CASH AND CASH EQUIVALENTS,
beginning of period 600,173 2,886,339
----------- -----------
CASH AND CASH EQUIVALENTS,
end of period $ 294,495 $ 238,204
=========== ===========
</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, 1999
(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.
On August 22, 1997, the Company sold the Charleston property. Following the
sale, the Company's assets have consisted almost entirely of cash and cash
equivalents and investments in mortgage-related assets. 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.
2. USE OF ESTIMATES, RISKS AND UNCERTAINTIES
-----------------------------------------
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.
From time to time, the Company is subject to legal claims arising in the
ordinary course of business in connection with the Company's ownership of real
estate and leasing of such real estate to tenants. The Company maintains
liability insurance, subject to customary deductibles and, accordingly,
management does not believe the ultimate resolution of such matters will have a
material effect in the Company's financial position or results of operations.
3. CASH EQUIVALENTS
----------------
The Company considers all investments with an original maturity of three months
or less to be cash equivalents.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
On June 29, 1998, March 17, 1999, June 21, 1999, July 28, 1999 and September 23,
1999, the Company purchased Real Estate Mortgage Investment Conduits ("REMICs").
The Company classified these investments as trading securities under Statement
of Financial Accounting Standard No. 115, Accounting for Certain Investments in
Debt and Equity Securities.
7
<PAGE> 8
Accordingly, income of $943 and a charge of $333 for the unrealized gain or loss
on these investments has been included in the accompanying Statements of
Operations for the three and nine months ended September 30, 1999, respectively.
Presented in the following table is a schedule of the REMICs purchased by the
Company and their fair market values as of September 30, 1999.
<TABLE>
<CAPTION>
REMIC Series Stated Interest Rate Maturity Fair Market Value
------------ -------------------- -------- -----------------
<S> <C> <C> <C>
FHLMC 1432 E 6.750% 01/15/06 $ 27,652
FHLMC 1472 E 6.250% 02/15/05 129,518
FHLMC 1732 E 6.500% 12/15/17 432,291
FNMA 1993-250-A 6.150% 09/25/16 443,911
FHLMC 1829 A 6.100% 10/15/17 187,051
FHLMC 1758 D 5.500% 07/15/06 248,988
----------
$1,469,411
==========
</TABLE>
5. EARNINGS PER SHARE
------------------
Basic earnings per share of beneficial interest is determined by dividing net
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, 1999 and 1998. During the nine
months ended September 30, 1999 and 1998, the Company had no dilutive securities
outstanding.
During the nine months ended September 30, 1999 and 1998, the Company made no
cash distributions.
6. INCOME TAXES
------------
The Company has previously elected to be taxed as a REIT pursuant to Section
856(c)(1) of the Code and intends to be taxed as a REIT under the Code for the
fiscal year ended December 31, 1999. 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 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
8
<PAGE> 9
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.
If the Company failed to qualify as a REIT, it would be taxed as a regular
corporation, and distributions to shareholders would not be deductible in
computing the Company's taxable income. Also, 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. 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 earnings
accumulated during the period of non-REIT status.
As previously reported, 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
was dependent, in part, upon tax rules regarding investments by REITs in certain
types of non-real estate assets. On June 8, 1999, the Company entered into a
Closing Agreement with the Internal Revenue Service in which the IRS agreed to
accept the Company's tax status as a REIT regarding these investments for 1997
and 1998.
7. 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, 1999 and 1998, E&L
received management fees of $0, $40,000, $0 and $100,000, respectively, 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, President 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.
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. On September 3,
1999, the Company, the current Board, Turkey Vulture Fund XIII, Ltd. (the"Fund")
and the previous Board entered into a Settlement Agreement whereby the Trust
released to the Company $280,898, disbursed the legal fees of the prior Board in
the amount of $77,964, and withheld $6,400 of funds for the future fees of the
Trust, which will remain in place until September 2002. These funds have been
reflected as "Restricted Cash" in the accompanying Balance Sheet as of September
30, 1999.
In connection with the proxy solicitation by Meridian '83 Shareholders'
Committee for Growth, the Fund, a shareholder of the Company, incurred expenses
of $102,613 which is included in Accounts Payable in the accompanying Balance
Sheets as of September 30, 1999 and December 31, 1998. The Board of Trustees
authorized the expense reimbursement because of the benefit to
9
<PAGE> 10
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.
At September 30, 1999, the Company has $294,495 of cash and cash equivalents at
a financial institution which is partially owned by a group controlled by
Richard M. Osborne, the Chairman and Chief Executive Officer of the Company.
8. 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.
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.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Introduction and Discussion of Known Trends, Events and Uncertainties
- ---------------------------------------------------------------------
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.
Recent Events
- -------------
On May 12, 1999, the Company entered into a Formation Agreement by and between
the Company, Liberty Self-Stor, Inc., a Maryland corporation and a wholly-owned
subsidiary of the Company ("Liberty"), Liberty Self-Stor, Ltd., an Ohio limited
liability company controlled by Richard M. Osborne (the "Ohio LLC"), Richard M.
Osborne, Thomas J. Smith, Diane M. Osborne, and Retirement Management Company,
an Ohio corporation of which Mr. Osborne is the sole shareholder. The Formation
Agreement provides for the merger of the Company with and into Liberty. The
Formation Agreement also provides for the formation of an operating partnership
by Liberty and the members of the Ohio LLC (namely, Mr. Osborne, Mr. Smith, Mrs.
Osborne and Retirement Management Company). The newly-formed operating
partnership will be LSS I Limited Partnership, a Delaware limited partnership
("LSS I"). Each member of the Ohio LLC will exchange his, her or its membership
interests in the Ohio LLC for Class A limited partnership interests in LSS I.
Liberty will contribute cash and securities to LSS I in exchange for the
general partnership interest and Class B limited partnership interests in
LSS I. As a result of the contribution, LSS I will own cash, securities, all
of the interests in the Ohio LLC, which at the time of the closing will own
15 self-storage facilities, and other assets. The value of the contribution
of the membership interests of the Ohio LLC will be the net asset value of
the properties and other assets contributed.
11
<PAGE> 12
Liberty filed a registration statement on Form S-4, and amendments thereto with
the Securities and Exchange Commission. The Securities and Exchange Commission
declared Liberty's registration statement on Form S-4 effective on October 29,
1999. The transactions are subject to the approval of the Company's shareholders
at the Special Meeting of Shareholders in lieu of the Annual Meeting of
Shareholders to be held on Tuesday, December 28, 1999, and other customary terms
and conditions. The Company expects the transactions to close late in the fourth
quarter of 1999 or early in the first quarter of 2000.
Year 2000 Compliance
- --------------------
The Company has assessed the ability of its information systems to properly
process transactions using dates beginning in the Year 2000. The Company has
identified affected software and developed a plan for correcting that software
in the most effective manner. Remediation of any potential issues regarding Year
2000 compliance included the upgrading or replacement of older software with new
programs and systems, which will handle the Year 2000 and beyond. The Company
believes that the necessary upgrades and replacements have been put in place.
Because the Company's assets are in financial institutions and brokerage houses
and that the 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. Such costs are expected to be less than $5,000. The Company expects
that it will be successful in implementing its Year 2000 remediation according
to the anticipated schedule and that other 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 22, 1997 asset sales and the June
1998, March 1999, June 1999, July 1999 and September 1999 investments of
approximately $3.5 million in short-term mortgage investments. The Company's
source of near-term liquidity is its unrestricted cash, which at September 30,
1999 totaled $294,495 as compared to $600,173 at December 31, 1998, a decrease
of 50.9%. These funds are expected to be adequate to satisfy the Company's
overhead and operating expenses in the short term. As discussed above in "Recent
Events," the Company will seek shareholder approval of the reincorporation into
a Maryland corporation, eliminating its self-liquidating policy, and the
formation of LSS I to acquire the Ohio LLC and hold Liberty's real estate at the
December 28, 1999 Special Meeting of the Company's Shareholders. Absent the
consummation of these transactions, the Company will be forced to liquidate.
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. The
former Trustees created the Meridian Indemnity Trust (the "Trust") to pay for
the expenses of defending themselves against potential litigation. The Trust was
funded with $350,000 of Company funds. On September 3, 1999, the Company, the
current Board, the Fund and the previous Board entered into a Settlement
Agreement whereby the Trust released to the Company $280,898, disbursed the
legal fees of the
12
<PAGE> 13
prior Board in the amount of $77,964, and withheld $6,400 of funds for the
future fees of the Trust which will remain in place until September 2002. These
funds have been reflected as "Restricted Cash" in the accompanying Balance Sheet
as of September 30, 1999.
During the nine months ended September 30, 1999 and 1998, the Company made no
cash distributions.
Material Changes in Results of Operations
- -----------------------------------------
Revenues
- --------
Interest and Other Revenues were $69,657 and $71,008 in the nine months ended
September 30, 1999 and 1998, respectively, a decrease of $1,351, or 1.9%, and
$25,005 and $32,675 for the three months ended September 30, 1999 and 1998,
respectively, a decrease of $7,670, or 23.5%. The change was due primarily to
the Company's average cash balances available for investment.
Expenses
- --------
Legal Costs were $136,751 and $185,267 in the nine months ended September 30,
1999 and 1998, respectively, a decrease of $48,516, or 26.2%, and $82,149 and
$144,354 for the three months ended September 30, 1999 and 1998, respectively, a
decrease of $62,205, or 43.1%. The decreased expenditures were due to several
factors, including shareholder meeting preparation and previously reported
lawsuits in 1998.
General and Administrative expenses were $76,412 and $572,899 in the nine months
ended September 30, 1999 and 1998, respectively, a decrease of $496,487, or
86.7%, and $20,397 and $409,558 in the three months ended September 30, 1999 and
1998, respectively, a decrease of $389,161, or 95.0%. The decreased expenditures
were due to several factors, including the elimination of management fees paid
to E&L, the lack of fees paid to trustees in the nine months ended September 30,
1999, expenses related to the former Board of Trustees' evaluation of the
Company's future options, D & O insurance premiums for additional coverage
obtained for the former Board, and expenses in connection with the proxy
solicitation by Meridian '83 Shareholders' Committee for Growth.
Net Loss
- --------
As a result of the factors noted above, net loss was $143,506 and $687,158 for
the nine months ended September 30, 1999 and 1998, respectively, a decrease of
$543,652, or 79.1%, and $77,541 and $521,237 for the three months ended
September 30, 1999 and 1998, respectively, a decrease of $443,696, or 85.1%. The
reduction in net loss was due primarily to the decrease in expenses.
Forward Looking Statements
- --------------------------
Statements that are not historical facts, including statements about the
Company's confidence in
13
<PAGE> 14
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) changes in general economic conditions, (4) changes in
local real estate conditions, (5) the inability to generate sufficient revenues
to meet operating expenses, and (6) 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.
Election for REIT Status
- ------------------------
The Company has previously elected to be taxed as a REIT pursuant to Section
856(c)(1) of the Code and intends to be taxed as a REIT under the Code for the
fiscal year ending December 31, 1999. 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 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. If the Company failed to
qualify as a REIT, it would be taxed as a regular corporation, and distributions
to shareholders would not be deductible in computing the Company's taxable
income. Also, 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. 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 earnings accumulated during the period of
non-REIT status.
As previously reported, 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
was dependent, in part, upon tax rules regarding investments by REITs in certain
types of non-real estate assets. On June 8, 1999, the Company entered into a
Closing Agreement with the Internal Revenue Service in which the IRS agreed to
accept the Company's tax status as a REIT regarding the investments for 1997 and
1998.
14
<PAGE> 15
- --------------------------------------------------------------------------------
PART II
- --------------------------------------------------------------------------------
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 are subject.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits: None.
(b) Reports on Form 8-K: None.
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.
MERIDIAN POINT REALTY TRUST `83
Date: November 12, 1999 By: /s/ RICHARD M. OSBORNE
----------------------------------------
Richard M. Osborne
Chairman and Chief
Executive Officer
(Principal Executive Officer)
Date: November 12, 1999 By: /s/ RONALD L. RAMER
----------------------------------------
Ronald L. Ramer,
Chief Financial Officer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
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0
0
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</TABLE>
