SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8594
-------
PRESIDENTIAL REALTY CORPORATION
-------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-1954619
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 South Broadway, White Plains, New York 10605
------------------------------------------ ------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, indicating area code 914-948-1300
------------
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 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
------ ------
The number of shares outstanding of each of the issuer's classes of common
stock as of the close of business on August 7, 1996 was 478,940 shares of
Class A common and 3,062,061 shares of Class B common.
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
Index to 10-Q
For the Six Months Ended
June 30, 1996
Part I - Financial Information (Unaudited)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
<CAPTION>
Assets June 30, December 31,
<S> 1996 1995
------------ ------------
Mortgage portfolio (Note 2): <C> <C>
Sold properties, accrual $32,138,313 $34,605,410
Related parties, accrual 1,038,370 1,090,746
Sold properties, impaired 14,734,240 16,080,144
Related parties, impaired 1,578,645 1,639,396
------------ ------------
Total mortgage portfolio 49,489,568 53,415,696
------------ ------------
Less discounts:
Sold properties, accrual 3,161,967 3,554,902
Related parties, accrual 152,531 162,766
Sold properties, impaired 7,805,377 7,829,694
------------ ------------
Total discounts 11,119,875 11,547,362
------------ ------------
Less deferred gains:
Sold properties, accrual 14,057,615 14,830,873
Sold properties, impaired 5,524,099 6,516,474
Related parties, impaired 1,578,645 1,639,396
------------ ------------
Total deferred gains 21,160,359 22,986,743
------------ ------------
Net mortgage portfolio (of which $578,218 in 1996
and $1,878,646 in 1995 are due within one year) 17,209,334 18,881,591
------------ ------------
Real estate (Note 3) 24,754,083 23,871,618
Less: accumulated depreciation 5,348,397 5,073,887
------------ ------------
Net real estate 19,405,686 18,797,731
------------ ------------
Foreclosed properties (Note 4) 620,996 601,434
Minority partners' interest (Note 5) 3,693,988 3,971,048
Prepaid expenses and deposits in escrow 1,210,520 1,327,000
Other receivables (net of valuation allowance of
$117,932 in 1996 and $143,739 in 1995) 615,636 1,029,052
Other receivables (related party) 11,397 10,664
Securities available for sale (Note 6) 2,254,723 2,390,346
Cash and cash equivalents 3,675,384 1,306,505
Other assets 1,087,781 1,197,743
------------ ------------
Total Assets $49,785,445 $49,513,114
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
<CAPTION>
Liabilities and Stockholders' Equity
June 30, December 31,
1996 1995
<S> ------------ -------------
Liabilities: <C> <C>
Mortgage debt:
Properties owned (Note 7) $26,768,119 $26,977,997
Wrap mortgage debt on sold properties 5,838,793 6,060,537
------------- -------------
Total (of which $1,004,194 in 1996 and $1,002,048
in 1995 are due within one year) 32,606,912 33,038,534
Executive pension plan liability (Note 10) 1,779,801 1,841,859
Accrued liabilities 1,896,338 1,776,117
Accrued postretirement cost (Note 11) 607,046 617,316
Deferred income 546,364 560,164
Accounts payable 242,341 346,522
Other liabilities 519,271 531,363
------------- -------------
Total Liabilities 38,198,073 38,711,875
------------- -------------
Stockholders' Equity:
Common stock; par value $.10 a share (Note 1-C)
Class A, authorized 700,000 shares, issued and
outstanding 478,940 shares 47,894 47,894
Class B June 30, 1996 December 31, 1995 307,628 306,406
------- ----------------- -----------------
Authorized: 10,000,000 10,000,000
Issued: 3,076,282 3,064,056
Treasury: 14,221 14,221
Additional paid-in capital 1,815,711 1,744,933
Retained earnings 9,695,535 8,905,779
Net unrealized loss on securities available for sale (Note 6) (86,828) (11,205)
Class B, treasury stock (at cost) (192,568) (192,568)
------------- -------------
Total Stockholders' Equity 11,587,372 10,801,239
------------- -------------
Total Liabilities and Stockholders' Equity $49,785,445 $49,513,114
============= =============
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
1996 1995
Income: ------------ ------------
<S> <C> <C>
Rental $4,348,245 $3,891,451
Interest on mortgages - sold properties 1,162,452 1,011,719
Interest on wrap mortgages 700,083 710,060
Interest on mortgages - related parties 137,312 124,706
Investment income 142,185 163,349
Other 29,075 37,106
------------ ------------
Total 6,519,352 5,938,391
------------ ------------
Costs and Expenses:
General and administrative 1,144,975 987,583
Interest on wrap mortgage debt 126,454 136,431
Other interest 70,852 57,876
Depreciation on non-rental property 12,061 11,428
Rental property:
Operating expenses 1,792,343 1,696,903
Interest on mortgages 1,101,237 1,140,338
Real estate taxes 400,732 376,286
Depreciation on real estate 319,941 299,199
Amortization of mortgage and organization costs 64,135 69,713
Minority interest share of partnership income 475,651 322,635
Loss from operations of foreclosed properties (Note 4) 17,473 31,544
Net gain from sales of foreclosed properties (Note 4) (64,605)
------------ ------------
Total 5,525,854 5,065,331
------------ ------------
Income before net gain from sales of properties and securities 993,498 873,060
Net gain from sales of properties and securities 856,093 30,197
------------ ------------
Net Income $1,849,591 $903,257
============ ============
Earnings per Common Share (Note 1-C):
Income before net gain from sales of properties and securities $0.28 $0.25
Net gain from sales of properties and securities 0.24 0.01
------------ ------------
Net Income per Common Share $0.52 $0.26
============ ============
Cash Distributions per Common Share $0.30 $0.30
============ ============
Weighted Average Number of Shares Outstanding 3,530,047 3,512,787
============ ============
<F>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>
THREE MONTHS ENDED JUNE 30,
---------------------------
1996 1995
Income: ------------ ------------
<S> <C> <C>
Rental $2,118,388 $1,939,241
Interest on mortgages - sold properties 625,661 517,357
Interest on wrap mortgages 349,406 354,418
Interest on mortgages - related parties 69,202 64,532
Investment income 72,823 77,273
Other 13,992 22,610
------------ ------------
Total 3,249,472 2,975,431
------------ ------------
Costs and Expenses:
General and administrative 507,099 471,007
Interest on wrap mortgage debt 62,592 67,603
Other interest 35,426 28,938
Depreciation on non-rental property 6,052 5,751
Rental property:
Operating expenses 903,136 816,334
Interest on mortgages 549,380 571,242
Real estate taxes 201,610 187,472
Depreciation on real estate 160,922 151,121
Amortization of mortgage and organization costs 28,092 34,432
Minority interest share of partnership income 203,881 165,282
Loss from operations of foreclosed properties (Note 4) 7,744 19,036
Net gain from sales of foreclosed properties (Note 4) (44,839)
------------ ------------
Total 2,665,934 2,473,379
------------ ------------
Income before net gain from sales of properties and securities 583,538 502,052
Net gain from sales of properties and securities 830,967 3,543
------------ ------------
Net Income $1,414,505 $505,595
============ ============
Earnings per Common Share (Note 1-C):
Income before net gain from sales of properties and securities $0.16 $0.14
Net gain from sales of properties and securities 0.24 0.01
------------ ------------
Net Income per Common Share $0.40 $0.15
============ ============
Cash Distributions per Common Share $0.15 $0.15
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------------
1996 1995
Cash Flows from Operating Activities: ------------ ------------
<S> <C> <C>
Cash received from rental properties $4,418,059 $4,054,490
Interest received 1,761,083 1,653,131
Interest paid on rental property mortgages (1,110,848) (1,136,492)
Interest paid on wrap mortgage debt (126,454) (136,431)
Cash disbursed for rental and foreclosed property operations (2,084,106) (1,985,959)
Cash disbursed for general and administrative costs (1,209,612) (1,457,462)
Miscellaneous disbursements (30,514) (34,478)
------------ ------------
Net cash provided by operating activities 1,617,608 956,799
------------ ------------
Cash Flows from Investing Activities:
Payments received on notes receivable 2,634,243 453,062
Payments disbursed for investments in notes receivable (11,096) (8,176)
Net payments received on sales of foreclosed properties 151,306
Payments disbursed for additions and improvements (308,765) (277,651)
Proceeds from sales of securities 100,496 113,000
Purchases of securities (40,000) (187,055)
Net cash receipts from operations of foreclosed properties 3,705 6,863
------------ ------------
Net cash provided by investing activities 2,378,583 251,349
------------ ------------
Cash Flows from Financing Activities:
Principal payments on mortgage debt:
Properties owned (271,697) (250,846)
Wrap mortgage debt on sold properties (221,744) (213,941)
Mortgage debt payment from proceeds of mortgage refinancing (238,181)
Mortgage proceeds 300,000
Mortgage costs (9,264)
Cash distributions on common stock (1,059,835) (1,053,622)
Proceeds from dividend reinvestment and share purchase plan 72,000 58,550
Distributions to minority partners (198,591) (229,257)
------------ ------------
Net cash used in financing activities (1,627,312) (1,689,116)
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents 2,368,879 (480,968)
Cash and Cash Equivalents, Beginning of Period 1,306,505 2,402,211
------------ ------------
Cash and Cash Equivalents, End of Period $3,675,384 $1,921,243
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Reconciliation of Net Income to Net Cash
Provided by Operating Activities
Net Income $1,849,591 $903,257
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 396,137 380,340
Gain from sales of properties and securities (856,093) (30,197)
Net gain from sales of foreclosed properties (64,605)
Amortization of discounts on notes and fees (424,506) (326,885)
Decrease in accounts receivable 74,493 97,533
Decrease in accounts payable and accrued liabilities (56,288) (535,683)
Decrease in deferred income (13,800) (27,163)
Decrease in prepaid expenses, deposits in escrow
and deferred charges 157,298 246,299
Decrease in security deposit liabilities (5,663) (7,483)
Miscellaneous 20,788 (1,249)
Minority share of partnership income 475,651 322,635
------------ ------------
Total adjustments (231,983) 53,542
------------ ------------
Net cash provided by operating activities $1,617,608 $956,799
============ ============
Supplemental noncash disclosures:
Notes received from sales of foreclosed properties $80,200
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General - Presidential Realty Corporation ("Presidential" or the "Company"),
a Real Estate Investment Trust ("REIT"), is engaged principally in the holding
of notes and mortgages secured by real estate and in the ownership of income
producing real estate.
B. Principles of Consolidation - The consolidated financial statements include
the accounts of Presidential Realty Corporation and its wholly owned
subsidiaries. Additionally, the accompanying consolidated financial statements
include 100% of the account balances of UTB Associates and PDL, Inc. and
Associates Limited Co-Partnership ("Metmor Plaza Associates"), partnerships in
which Presidential is the General Partner and owns a 66-2/3% interest and a 25%
interest, respectively (see Note 5).
All significant intercompany balances and transactions have been eliminated.
C. Earnings Per Common Share - Per share data is based on the weighted average
number of shares of Class A and Class B common stock outstanding and common
stock equivalents during each period. For the six months ended June 30,
1996 and 1995, no dilution in per share earnings would have resulted from the
exercise of stock options issued under the Company's stock option plans.
D. Cash and Cash Equivalents - Cash and cash equivalents includes cash on hand,
cash in banks and money market funds.
E. Basis of Presentation - The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of management,
all adjustments (consisting of only normal recurring accruals) considered
necessary for a fair presentation of the results for the respective periods
have been reflected. These financial statements and accompanying notes should
be read in conjunction with the Company's Form 10-K for the year ended December
31, 1995.
F. Management Estimates - In preparing the consolidated financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the consolidated
balance sheets and income and expense for the period. Actual results could
differ from those estimates.
2. MORTGAGE PORTFOLIO
The Company's mortgage portfolio includes notes receivable - sold properties
and notes receivable - related parties and includes both accrual and impaired
loans. The Company complies with the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment
of a Loan" and, accordingly, has classified loans that are within the scope of
this statement as impaired loans.
Notes receivable - sold properties consist of:
(1) Long-term purchase money notes from sales of properties previously owned by
the Company. These purchase money notes have varying interest rates with
balloon payments due at maturity.
(2) Notes receivable from sales of cooperative apartment units. Substantially
all of these notes were either received from Ivy Properties, Ltd. or its
affiliates (collectively "Ivy") in connection with a settlement agreement
between the Company and Ivy executed in November, 1991 (the "Settlement
Agreement") or from sales of foreclosed cooperative apartments received from
Ivy pursuant to the Settlement Agreement (see Note 4). These notes generally
have market interest rates and the majority of these notes amortize monthly
with balloon payments due at maturity.
Notes receivable - related parties are all due from Ivy and consist of:
(1) Purchase money notes resulting from sales of property or partnership
interests to Ivy.
(2) Notes receivable relating to loans made by the Company to Ivy in connection
with Ivy's cooperative conversion business.
In June of 1996, the Company received principal prepayments on two of its long-
term purchase money notes, the Hoboken, New Jersey property note in the amount
of $1,188,787 and the Town House, Memphis, Tennessee property note in the
amount of $1,000,000. As a result, the Company recognized income on the Town
House note from the amortization of discount of $76,473 and gain on sale of
$773,258.
At June 30, 1996, all of the notes in the Company's mortgage portfolio are
current with the exception of those notes which are classified as impaired
loans in accordance with SFAS No. 114.
Two sold property loans, the Kent Terrace and the Fairfield Towers loans, and
one related party loan, the Ivy Overlook loan, were classified as impaired
loans at December 31, 1995. In February, 1996, the Kent Terrace loan was
reclassified to real estate as a result of the Company's foreclosure of its
loan and at June 30, 1996, the Fairfield Towers loan and the Ivy Overlook loan
remain classified as impaired loans. These two loans are in the aggregate
amount of $16,312,885 and have a net carrying value of $1,404,764 after
deducting discounts of $7,805,377 and deferred gains of $7,102,744. In
accordance with SFAS No. 114, the Company has determined that no allowances for
credit losses are required for these loans because the net carrying value of
these loans is less than the fair value of the underlying collateral.
The Company recognizes income on these impaired loans only to the extent that
such income is actually received. The average recorded investment in these
loans during the six months ended June 30, 1996 and June 30, 1995 was
$16,734,170 and $18,182,047, respectively.
The Kent Terrace note, having an outstanding principal balance of $1,300,000
and a net carrying value of $329,212 after deducting a deferred gain of
$970,788, was classified as an impaired loan at December 31, 1995. This note
had been in default since October of 1994, and in February, 1996, the Company
foreclosed on its mortgage and became the owner of the 112 unit apartment
property in Martinsburg, West Virginia. As a result, in 1996, the $329,212 net
carrying value of the note and the related deferred interest of $338,190 have
been reclassified to real estate (see Note 3).
With the exception of the Kent Terrace loan discussed above, there have been no
significant changes in the status of the impaired loans since December 31, 1995.
Condominium sales at the Fairfield Towers property have continued and
an additional 19 units were sold during the six months ended June 30, 1996.
The following table reflects the activity in impaired loans.
<TABLE>
IMPAIRED LOANS
----------------
<CAPTION>
Impaired Additions Impaired
Loan (Payments or Loan
Balance Adjustments) Balance
Loan Description 12/31/95 1996 6/30/96
----------------------------------- ------------- ------------- ------------
<S> <C> <C> <C>
Notes receivable-sold properties:
Properties previously owned-
Fairfield Towers $14,780,144 ($45,904) $14,734,240
Kent Terrace (1) 1,300,000 (1,300,000)
Notes receivable-related parties:
Sold properties-
Overlook 1,639,396 (60,751) 1,578,645
------------- ------------- ------------
Total $17,719,540 ($1,406,655) $16,312,885
============= ============= ============
Discount Deferred Net
on Gain on Carrying
Loans Loans Value
Loan Description 6/30/96 6/30/96 6/30/96
----------------------------------- ------------- ------------- ------------
Notes receivable-sold properties:
Properties previously owned-
Fairfield Towers ($7,805,377) ($5,524,099) $1,404,764
Kent Terrace (1)
Notes receivable-related parties:
Sold properties-
Overlook (1,578,645)
------------- ------------- ------------
Total ($7,805,377) ($7,102,744) $1,404,764
============= ============= ============
Six months ended June 30,
-----------------------------
1996 1995
------------- ------------
Reported Interest Income and
Amortization of Discount (Cash Basis)
-----------------------------------
Fairfield Towers - interest income $91,072 $25,291
Fairfield Towers - amortization of discount 24,317 17,918
Kent Terrace - interest income (1) 48,723
Overlook - interest income 48,964 57,285
Overlook - additional interest income 22,359
------------- ------------
Total $186,712 $149,217
============= ============
Recognized Gain from Sale of Property
-------------------------------------
Fairfield Towers $21,587 $15,906
Kent Terrace (1)
Overlook 60,751
------------- ------------
Total $82,338 $15,906
============= ============
Nonreported Interest Income and Amortization of Discount
---------------------------------------------------------
The following additional amounts would have been reported
if these loans had been fully performing:
Fairfield Towers - interest income $406,641 $471,583
Fairfield Towers - additional interest income 91,645 53,422
Fairfield Towers - amortization of discount 460,495 393,743
Kent Terrace - interest income (1) 86,639
Overlook - interest income 41,671
Overlook - additional interest income
------------- ------------
Total $958,781 $1,047,058
============= ============
<FN>
(1) In February, 1996, the Company completed the foreclosure of its
$1,300,000 Kent Terrace mortgage and became the owner of the
property. As a result, the net carrying value of the loan of
$329,212, after a deferred gain of $970,788, was reclassified to
real estate.
</TABLE>
3. REAL ESTATE
Real estate is comprised of the following:
June 30, December 31,
1996 1995
------------- ------------
Land $ 3,664,548 $ 3,615,176
Buildings and leaseholds 20,976,394 20,157,963
Furniture and equipment 113,141 98,479
----------- -----------
Total real estate $24,754,083 $23,871,618
=========== ===========
As discussed in Note 2, Presidential foreclosed on its Kent Terrace mortgage
and became the owner of the property in February, 1996. The Company presently
intends to hold this property as a rental property and, accordingly,
reclassified the $329,212 net carrying value of the loan plus deferred
interest of $338,190 to real estate on its consolidated balance sheet.
4. FORECLOSED PROPERTIES
At June 30, 1996, Presidential owns 58 cooperative apartment units which it
had received in satisfaction of certain loans due Presidential. These
cooperative apartment units are located at five locations: 330 W. 72nd St.,
New York, N.Y. (3 units); Hastings Gardens, Hastings, N.Y. (5 units); 6300
Riverdale Avenue, Bronx, N.Y. (8 units); Towne House, New Rochelle, N.Y. (39
units) and Sherwood House, Long Beach, N.Y. (3 units).
Cooperative apartment units at four of the above properties were received from
Ivy in 1991 and 1992 in connection with the Settlement Agreement. The
cooperative apartment units at Long Beach were received from Ivy in 1994 in
payment of the outstanding loan on that property and other amounts due to
Presidential pursuant to the Settlement Agreement.
These cooperative apartment units are reported as foreclosed properties on
Presidential's consolidated balance sheets and are carried at the lower of cost
or estimated fair value (net of estimated costs to sell). Net loss from
operations of foreclosed properties is reported as a separate line item on the
statement of operations, while net cash receipts from operations of foreclosed
properties reduces the Company's carrying value of the foreclosed property.
The following table presents the Company's foreclosed properties, loss from
operations of foreclosed properties, gain (loss) from sales of foreclosed
properties and number of units sold:
<TABLE>
Foreclosed properties:
---------------------------
<CAPTION>
Property Name and Location
-------------------------------------------------
Hastings 6300 Riverdale
330 W. 72nd St. Gardens Ave.
New York, Hastings, Bronx,
New York New York New York
--------------- -------------- --------------
<S> <C> <C> <C>
Balance January 1, 1996 $53,276 $47,040 $76,196
Capitalized costs
Net cash receipts from operations (1) (2,182)
--------------- -------------- --------------
Balance June 30, 1996 $51,094 $47,040 $76,196
=============== ============== ==============
Loss from operations of foreclosed properties (1):
--------------------------------------------------
Six months ended June 30, 1996 $5,614 $8,431
=============== ============== ==============
Six months ended June 30, 1995 $17,078 $6,828
=============== ============== ==============
Gain (loss) from sales of foreclosed properties (1):
----------------------------------------------------
Six months ended June 30, 1996
=============== ============== ==============
Six months ended June 30, 1995 $31,184
=============== ============== ==============
Number of units sold:
---------------------------
Six months ended June 30, 1996
=============== ============== ==============
Six months ended June 30, 1995 12
=============== ============== ==============
Property Name and Location
-------------------------------------------------
Towne House Sherwood House Total
New Rochelle, Long Beach, Foreclosed
New York New York Properties
--------------- -------------- --------------
Balance January 1, 1996 $365,676 $59,246 $601,434
Capitalized costs 23,267 23,267
Net cash receipts from operations (1) (1,523) (3,705)
--------------- -------------- --------------
Balance June 30, 1996 $387,420 $59,246 $620,996
=============== ============== ==============
Loss from operations of foreclosed properties (1):
-------------------------------------------------- Total Loss
--------------
Six months ended June 30, 1996 $3,428 $17,473
=============== ============== ==============
Six months ended June 30, 1995 $7,638 $31,544
=============== ============== ==============
Gain (loss) from sales of foreclosed properties (1):
---------------------------------------------------- Total
Gain (Loss)
--------------
Six months ended June 30, 1996
=============== ============== ==============
Six months ended June 30, 1995 $34,575 ($1,154) $64,605
=============== ============== ==============
Number of units sold:
--------------------------- Total
Units Sold
--------------
Six months ended June 30, 1996
=============== ============== ==============
Six months ended June 30, 1995 3 2 17
=============== ============== ==============
<FN>
(1) Includes an allocation for home office overhead.
</TABLE>
5. MINORITY PARTNERS' INTEREST
Presidential is the General Partner of UTB Associates and Metmor Plaza
Associates, partnerships in which Presidential has a 66-2/3% interest and a 25%
interest, respectively. As the General Partner of these partnerships,
Presidential exercises effective control over the business of these
partnerships, and, accordingly, has included 100% of the account balances of
these partnerships in the accompanying financial statements (see Note 1-B).
The minority partners' interest reflects the minority partners' equity in the
partnerships.
Included in the Company's mortgage debt is a mortgage note payable by the
Metmor Plaza Associates partnership which is substantially in excess of the
historical cost of the property. This was due to a refinancing of the original
mortgage note on the building and subsequent distribution of these proceeds to
the partners. This event resulted in a negative partnership interest for each
partner and a negative minority partners' interest on the Company's books. The
estimated fair value of the building is significantly greater than the mortgage
debt and the minority partners' interest is expected to be recovered when the
building is sold and the partnership is liquidated.
Minority partners' interest is comprised of the following:
June 30, December 31,
1996 1995
------------- ------------
Metmor Plaza Associates $3,938,144 $4,218,947
UTB Associates (244,156) (247,899)
---------- ----------
Total minority partners' interest $3,693,988 $3,971,048
========== ==========
6. SECURITIES AVAILABLE FOR SALE
The Company's investments are in marketable equity securities consisting of
stocks of listed corporations. The Company does not acquire securities for
purposes of engaging in trading activities and, as a result, the Company's
investments are classified as securities available for sale in accordance with
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". Disposition of such securities may be appropriate for either
liquidity management or in response to changing economic conditions.
The cost and fair value of securities available for sale are as follows:
June 30, December 31,
1996 1995
----------- ------------
Cost $2,341,551 $2,401,551
Gross unrealized gains 23,916 37,845
Gross unrealized losses (110,744) (49,050)
---------- ----------
Fair value $2,254,723 $2,390,346
========== ==========
Net unrealized loss on securities available for sale, which is a separate
component of stockholders' equity on the Company's consolidated balance sheets,
increased by $75,623 from $11,205 at December 31, 1995 to $86,828 at June 30,
1996.
During the six months ended June 30, 1996, the Company sold securities
available for sale for gross proceeds of $101,500 and a gross (and net) gain of
$496. During the six months ended June 30, 1995, the Company sold securities
available for sale for gross proceeds of $113,000 and a gross (and net) loss of
$1,002. Gains and losses on sales of securities are determined using the
specific identification method.
7. MORTGAGE DEBT
In June of 1996, the Company completed the refinancing of the mortgage on its
Mapletree Industrial Center property in Palmer, Massachusetts. The prior
mortgage of $238,181 was paid from the proceeds of the new $300,000 mortgage.
The interest rate for the first year is 8.25% and will be adjusted annually to
equal the Lender's prime rate on the adjustment date. The mortgage matures in
June, 2011 and requires monthly payments of principal and interest in the
initial amount of $2,910. This mortgage debt is secured by a lien on the
Mapletree property and a guarantee of repayment by Presidential.
8. INCOME TAXES
Presidential elected to qualify as a Real Estate Investment Trust effective
January 1, 1982 under Sections 856-860 of the Internal Revenue Code. Under
those sections, a REIT which distributes at least 95% of its real estate
investment trust taxable income to its shareholders each year by the end of
the following year and which meets certain other conditions will not be taxed
on that portion of its taxable income which is distributed to its shareholders.
For the year ended December 31, 1995, the Company had taxable income (before
distributions to stockholders) of approximately $1,454,000 ($.41 per share),
which included approximately $347,000 ($.10 per share) of capital gains. This
amount will be reduced by approximately $8,000 of the 1995 distributions that
were not utilized in reducing the Company's 1994 taxable income and by any
eligible 1996 distributions that the Company may elect (under Section 858 of
the Internal Revenue Code) to utilize as a reduction of its 1995 taxable
income.
As previously stated, in order to retain REIT status, Presidential is required
to distribute 95% of its REIT taxable income (exclusive of capital gains). As
of June 30, 1996, Presidential has distributed the required 95% of its 1995
REIT taxable income. In addition, although no assurances can be given, it is
the Company's present intention to distribute all of its 1995 taxable income
and, therefore, no provision for income taxes was made at December 31, 1995.
Furthermore, the Company had taxable income (before distributions to
stockholders) for the six months ended June 30, 1996 of approximately
$1,798,000 ($.51 per share), which included approximately $1,306,000 ($.37 per
share) of capital gains. This amount will be reduced by 1996 distributions
that were not utilized in reducing the Company's 1995 taxable income and by any
eligible 1997 distributions that the Company may elect to utilize as a
reduction of its 1996 taxable income.
Presidential has, for tax purposes, reported the gain from the sale of certain
of its properties using the installment method.
9. COMMITMENTS AND CONTINGENCIES
The Company has incurred environmental costs for environmental site
investigations and the related response action outcome for potentially
hazardous drums found at two sites on its Mapletree Industrial Center
property in Palmer, Massachusetts. During the year ended December 31, 1995,
the Company expensed $45,536 for the initial investigation and partial cleanup
of one drum disposal site and accrued an additional $38,000 of environmental
expenses for the completion of the response action outcome on this site and a
site investigation at a second site. At June 30, 1996, there have been no
significant changes to the 1995 estimated costs. Actual costs incurred may
vary from these estimates due to the inherent uncertainties involved.
10. PENSION PLANS
Defined Benefit Plan
Effective January 1, 1994, the Company adopted a noncontributory defined
benefit pension plan, which covers substantially all of its employees. The
plan provides monthly retirement benefits commencing at age 65. The monthly
benefit is equal to the sum of (1) 6.5% of average monthly compensation
multiplied by the total number of plan years of service (up to a maximum of 10
years), plus (2) .62% of such average monthly compensation in excess of one-
twelfth of covered compensation multiplied by the total number of plan years of
service (up to a maximum of 10 years). The Company makes annual contributions
that meet the minimum funding requirements and the maximum contribution
limitations under the Internal Revenue Code.
Periodic pension costs are reflected in general and administrative expenses in
the Company's consolidated statement of operations.
Net periodic pension cost for the six months ended June 30, 1996, included the
following components:
Service cost-benefits earned during the period $139,746
Interest cost on projected benefit obligation 18,690
Return on plan assets (21,967)
Net amortization and deferrals 12,311
--------
Net periodic pension cost $148,780
========
The assumptions used in determining net periodic pension cost were 7% for the
discount rate, 7% for the expected long-term rate of return on assets, and 5%
for the average increase in compensation.
Executive Pension Plan
Presidential has employment contracts with several active and retired key
officers and employees. Such contracts are being accounted for as constituting
pension agreements. The contracts generally provide for annual benefits in
specified amounts commencing upon retirement for each participant for life,
with an annual adjustment for an increase in the consumer price index.
Presidential complies with the provisions of SFAS No. 87, "Employers'
Accounting for Pensions". The principal assumption used in the accounting was
a discount rate of 7%. Periodic pension costs are reflected in general and
administrative expenses in the Company's consolidated statement of operations.
Net periodic pension cost for the six months ended June 30, 1996, included
the following components:
Service cost-benefits earned during the period $ 6,929
Interest cost on projected benefit obligation 94,540
Net amortization 32,978
--------
Net periodic pension cost $134,447
========
Presidential has elected not to fund expenses accrued under these contracts.
11. POSTRETIREMENT BENEFITS
Presidential has employment contracts with several active and retired key
officers and employees which provide for postretirement benefits other than
pensions (such as health care benefits). The Company complies with the
provisions of SFAS No. 106,"Employers' Accounting for Postretirement Benefits
Other Than Pensions". SFAS No. 106 requires the Company to accrue the
estimated cost of retiree benefit payments during the years the employee
provides services.
The components of postretirement benefit cost for the six months ended June 30,
1996, were as follows:
Service cost - benefits earned $ 2,931
Interest cost on accumulated postretirement
benefit obligation 18,260
Net amortization (4,229)
-------
Postretirement benefit cost $16,962
=======
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 1996 AND 1995
Results of Operations
Financial Information for the six months ended June 30, 1996 and 1995:
- ----------------------------------------------------------------------
Income increased by $580,961 from $5,938,391 in 1995 to $6,519,352 in 1996
primarily as a result of increases in rental income and interest on
mortgages-sold properties, partially offset by a decrease in investment
income.
Rental income increased by $456,794 from $3,891,451 in 1995 to $4,348,245 in
1996 primarily as a result of additional income of $122,491 received for lease
cancellation penalties at the Metmor Plaza property and rental income of
$163,901 at the Kent Terrace property, which the Company became the owner of in
February, 1996, as a result of the foreclosure of its mortgage on that
property. In addition, rental income increased by $205,943 at the Cambridge
Green, Continental Gardens and Metmor Plaza properties.
Interest on mortgages-sold properties increased by $150,733 from $1,011,719 in
1995 to $1,162,452 in 1996 primarily due to an increase in the interest
payments of $65,781 received on the Fairfield Towers note and $76,473 of
increased interest income as a result of the amortization of discount on the
Town House note, which was prepaid in June, 1996.
Investment income decreased by $21,164 from $163,349 in 1995 to $142,185 in
1996 primarily as a result of decreased interest income on cash and cash
equivalent accounts.
Costs and expenses increased by $460,523 from $5,065,331 in 1995 to $5,525,854
in 1996 primarily due to increases in general and administrative expenses, an
increase in minority interest share of partnership income and increases in
other rental property expenses.
General and administrative expenses increased by $157,392 from $987,583 in
1995 to $1,144,975 in 1996 primarily due to increases in professional fees of
$77,253, of which approximately $42,000 was incurred in connection with a
proposed acquisition of property which was not completed, and salary expense of
$73,673, of which $64,141 pertained to bonuses.
Rental property operating expenses increased by $95,440 from $1,696,903 in 1995
to $1,792,343 in 1996. The addition of the Kent Terrace property resulted in
an increase of $170,693 and the write-off of the carrying value on 4 acres of
vacant land in Hartford, Connecticut resulted in an increase of $22,036. These
increases were offset by decreases of $43,166 in repairs and maintenance and
$55,789 in insurance expense at the Palmer Mapletree property.
Rental property mortgage interest decreased by $39,101 from $1,140,338 in 1995
to $1,101,237 in 1996. This decrease is primarily due to a decrease of $35,979
for the Metmor Plaza property as a result of principal payments and lower
interest rates. The Metmor Plaza mortgage has a variable rate of interest
based on the LIBOR rate and the "Section 936" rate (which is established by
the lender), but cannot exceed 8% per annum.
Real estate tax expense increased by $24,446 from $376,286 in 1995 to $400,732
in 1996 as a result of increased real estate taxes of $11,751 at the
Continental Gardens property and real estate taxes of $12,717 as a result of
the addition of the Kent Terrace property.
Minority interest share of partnership income increased by $153,016 from
$322,635 in 1995 to $475,651 in 1996, as a result of an increase in
partnership income on the Metmor Plaza property.
There were no sales of foreclosed properties in 1996 compared to a net gain
from sales of foreclosed properties of $64,605 in 1995.
Net gain from sales of properties and securities are sporadic (as they depend
on the timing of sales or the receipt of installments or prepayments on
purchase money notes). In 1996, the net gain from sales of properties and
securities was $856,093 compared with $30,197 in 1995. In the 1996 period, the
Company recognized $773,258 of deferred gain from the sale of the Town House
property as a result of the $1,000,000 principal prepayment received on that
note. In addition, the Company recognized deferred gains of $60,751 and
$21,587 from the sales of the Overlook and Fairfield Towers properties,
respectively, as a result of principal payments received on those notes.
Financial Information for the three months ended June 30, 1996 and 1995:
- ------------------------------------------------------------------------
Income increased by $274,041 from $2,975,431 in 1995 to $3,249,472 in 1996
primarily as a result of increases in rental income and interest on
mortgages-sold properties.
Rental income increased by $179,147 from $1,939,241 in 1995 to $2,118,388 in
1996 primarily as a result of increased rental income of $102,798 at the
Cambridge Green, Continental Gardens and Metmor Plaza properties and rental
income of $83,472 at the Kent Terrace property.
Interest on mortgages-sold properties increased by $108,304 from $517,357 in
1995 to $625,661 in 1996 primarily due to the receipt of additional interest
payments of $41,291 on the Fairfield Towers note and $76,473 of increased
interest income as a result of the amortization of discount on the Town House
note.
Costs and expenses increased by $192,555 from $2,473,379 in 1995 to $2,665,934
in 1996 primarily due to increases in general and administrative expenses, an
increase in minority interest share of partnership income and increases in
other rental property expenses.
General and administrative expenses increased by $36,092 from $471,007 in 1995
to $507,099 in 1996 primarily due to increases in salary expense of $36,400, of
which $35,735 pertained to bonuses, and increases of $19,664 in professional
fees, which were partially offset by a $16,226 decrease in insurance expense.
Rental property operating expenses increased by $86,802 from $816,334 in 1995
to $903,136 in 1996. This increase was primarily the result of the addition
of the Kent Terrace property which resulted in an increase of $103,899.
Repairs and maintenance expenses at the Metmor Plaza property increased by
$13,820 and the write-off of the carrying value of 4 acres of vacant land in
Hartford, Connecticut resulted in an increase of $22,036. These increases were
offset by decreases of $33,651 in bad debts and $20,853 in insurance expense at
the Palmer Mapletree property.
Rental property mortgage interest decreased by $21,862 from $571,242 in 1995
to $549,380 in 1996. This decrease is primarily due to a decrease of $20,530
for the Metmor Plaza property as a result of principal payments and lower
interest rates.
Real estate tax expense increased by $14,138 from $187,472 in 1995 to $201,610
in 1996 as a result of increased real estate taxes of $5,876 at the
Continental Gardens property and real estate taxes of $7,630 as a result of
the addition of the Kent Terrace property.
Minority interest share of partnership income increased by $38,599 from
$165,282 in 1995 to $203,881 in 1996, as a result of an increase in
partnership income on the Metmor Plaza property.
There were no sales of foreclosed properties in 1996 compared to a net gain
from sales of foreclosed properties of $44,839 in 1995.
Net gain from sales of properties and securities are sporadic (as they depend
on the timing of sales or the receipt of installments or prepayments on
purchase money notes). In 1996, the net gain from sales of properties and
securities was $830,967 compared with $3,543 in 1995. During 1996, the Company
received a prepayment of $1,000,000 on the Town House note, resulting in the
recognition of deferred gain from sales of $773,258. In addition, the Company
recognized deferred gains of $55,436 and $2,273 from the sales of the Overlook
and Fairfield Towers properties, respectively, as a result of principal
payments received on those notes.
Balance Sheet
Net mortgage portfolio decreased by $1,672,257 from $18,881,591 at December 31,
1995 to $17,209,334 at June 30, 1996. This decrease was primarily the result
of the $2,188,787 prepayments received on the purchase money notes secured by
the Town House, Memphis, Tennessee property ($1,000,000) and the Hoboken, New
Jersey property ($1,188,787). These decreases were partially offset by the
recognition of $773,258 of deferred gain on the Town House note. In addition,
the $329,212 net carrying value of the Kent Terrace loan was reclassified from
net mortgage portfolio to real estate. In February, 1996, the Company
foreclosed its mortgage and became the owner of the Kent Terrace property.
Real estate increased by $882,465 from $23,871,618 at December 31, 1995 to
$24,754,083 at June 30, 1996. This increase was primarily the result of the
667,402 addition of the Kent Terrace property in February, 1996. Upon receipt
of the property, the Company reclassified the $329,212 net carrying value of
the loan from net mortgage portfolio and also reclassified the $338,190 related
deferred interest receivable from other receivables to real estate. The
Company also recorded $152,147 in acquisition and improvement costs for the
Kent Terrace property and $84,952 for additions and improvements to other
properties. In June, 1996, the Company wrote off to expense the $22,036
carrying value on 4 acres of vacant land located in Hartford, Connecticut.
Other receivables decreased by $413,416 from $1,029,052 at December 31, 1995 to
$615,636 at June 30, 1996 primarily as a result of the reclassification of the
$338,190 deferred interest receivable on Kent Terrace to real estate and the
receipt of $75,000 of accrued interest on notes receivable - sold properties.
Securities available for sale decreased by $135,623 from $2,390,346 at
December 31, 1995 to $2,254,723 at June 30, 1996. This decrease was the
result of the sale of $100,000 of securities and a $75,623 decrease in the fair
value of securities, offset by a $40,000 purchase of securities.
Other assets decreased by $109,962 from $1,197,743 at December 31, 1995 to
$1,087,781 at June 30, 1996. This decrease was primarily the result of the
amortization of $64,135 of mortgage costs and the write-off of $40,818 of
deferred charges.
Net unrealized loss on securities available for sale increased by $75,623 from
$11,205 at December 31, 1995 to $86,828 at June 30, 1996. This increase in
unrealized loss is a result of the decrease in the fair value of the
securities available for sale for the period.
Liquidity and Capital Resources
Management believes that the Company has sufficient liquidity and capital
resources to carry on its existing business and, barring any unforeseen
circumstances, to pay the dividends required to maintain REIT status in the
foreseeable future. The Company is actively seeking to expand its portfolio
of real estate equities and plans to utilize for this purpose a portion of its
available funds and additional funds that the Company may receive from balloon
payments due on the Company's notes receivable as they mature, as well as
funds that may be available from external sources. However, the Company's
plans to expand its portfolio of real estate equities may be adversely
affected by limitations on its ability to obtain funds for investment on
satisfactory terms from external sources.
Presidential does not maintain any line of credit or short term financing
arrangement. At the present time, Presidential obtains funds for working
capital and investment from its available cash and cash equivalents, from
operating activities and from repayments of its mortgage portfolio.
At June 30, 1996, Presidential had $3,675,384 in available cash and cash
equivalents and $2,254,723 in securities available for sale. The June 30,
1996 total of $5,930,107 represents an increase of $2,233,256 from the
$3,696,851 total at December 31, 1995. This increase is primarily the result
of the receipt of $2,188,787 in prepayments on the Town House and Hoboken
purchase money notes and the receipt of $61,819 of net proceeds from the
refinancing of the mortgage on the Palmer Mapletree property.
Operating Activities
Presidential's principal source of cash from operating activities is from
interest on its mortgage portfolio, which was $1,634,629 in 1996, net of
interest payments on wrap mortgage debt. In 1996, net cash received from
rental property operations was $1,024,514, which is net of distributions to
minority partners but before additions and improvements and mortgage
amortization.
Investing Activities
Presidential holds a portfolio of mortgage notes receivable which consist
primarily of notes arising from sales of real properties previously owned by
the Company. Some of these notes wrap around underlying mortgage debt (the
"Underlying Debt") which is paid by Presidential only out of funds received on
its mortgage portfolio relating to the Underlying Debt. During 1996, the
Company received principal payments of $2,412,499 on its mortgage portfolio
(net of any principal payments attributable to the Underlying Debt), of which
$2,336,346 represented prepayments, which are sporadic and cannot be relied
upon as a regular source of liquidity.
During 1996, the Company invested $308,765 in additions and improvements to
its properties.
Financing Activities
The Company's indebtedness at June 30, 1996, consisted of $32,606,912 of
mortgages (including $5,838,793 of underlying indebtedness on properties not
owned by the Company but on which the Company holds wraparound mortgages).
The mortgage debt, which is secured by individual properties, is nonrecourse
to the Company with the exception of the Palmer Mapletree mortgage which was
refinanced in June of 1996, and which is secured by the property and a
guarantee of repayment by Presidential. Generally mortgage debt repayment is
serviced with cash flow from the operations of the individual properties.
During 1996, the Company made $271,697 of principal payments on mortgage debt
on properties which it owns. In addition, the Company refinanced the mortgage
on its Palmer Mapletree property in Palmer, Massachusetts in June of 1996 and
the prior mortgage of $238,181 was paid from the proceeds of the new $300,000
mortgage. The mortgage matures in June, 2011, requires monthly payments of
principal and interest in the initial amount of $2,910 and has an interest rate
of 8.25% for the first year, after which, the interest rate will be adjusted
annually to equal the Lender's prime rate. The mortgages on the Company's
properties are self-liquidating at fixed rates of interest with the exception
of the mortgages on Metmor Plaza, Building Industries Center and Continental
Gardens.
During 1996, Presidential declared and paid cash distributions of $1,059,835 to
its shareholders and received proceeds from dividend reinvestments of $72,000.
Fairfield Towers
The Company's financial performance and liquidity in 1996 and subsequent years
will be affected by the results of the condominium conversion of Fairfield
Towers Apartments in Brooklyn, New York by the owner of that property. The
Company holds a second mortgage having an outstanding principal balance of
$14,734,240 on the 1,042 condominium apartment units still owned by the sponsor
at this property, which mortgage is subordinate to a first mortgage having an
outstanding principal balance of $15,240,711. The first mortgage is due on
December 19, 1996. During 1996, the Company, along with the owner of the
property, will seek to negotiate an extension and modification, or refinancing,
of the first mortgage on terms that will facilitate the continued sales of
condominium units at the property and protect Presidential's interest in this
loan. Until the first mortgage is repaid (when approximately 50% of the units
have been sold) Presidential will receive basic interest on its note payable
only out of net cash flow from operations of the property and release payments
upon the sale of each condominium unit averaging $3,000 per unit. All unpaid
basic interest and additional interest (which is based on percentages of gross
sales proceeds) will be deferred until after repayment of the first mortgage.
While the Company's return on the loan during the initial years of the
conversion has been and will continue to be limited, if the conversion is
successful and the first mortgage is repaid, the Company expects to ultimately
recover the outstanding principal balance of the note and substantial amounts
of basic and additional interest. In June of 1994, the owners of the Fairfield
Towers property closed the first sales of the condominium units pursuant to the
conversion of the property to condominium status. At June 30, 1996, a total of
110 units were sold.
Environmental Matters
The Company is involved in various stages of environmental projects for the
investigation and removal of potentially hazardous drums found at two sites
on its Mapletree Industrial Center property in Palmer, Massachusetts. Accrued
liabilities for environmental matters have been recorded in operating expenses
when it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated. These estimates are exclusive of
claims against third parties and have not been discounted. Actual costs
incurred may vary from these estimates due to the inherent uncertainties
involved. The Company believes that any additional liability in excess of
amounts provided which may result from the resolution of this matter will not
have a material adverse effect on the financial condition, liquidity or the
cash flow of the Company. For the year ended December 31, 1995, amounts charged
to operations for environmental expenses were $83,536. There have been no
significant additional charges for the six months ended June 30, 1996.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27. Financial Data Schedule.
(b) No reports on form 8-K have been filed during the quarter ended
June 30, 1996.
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.
PRESIDENTIAL REALTY CORPORATION
(Registrant)
DATE: August 9, 1996 By: /s/ Jeffrey F. Joseph
---------------------
Jeffrey F. Joseph
President
DATE: August 9, 1996 By: /s/ Elizabeth Delgado
---------------------
Elizabeth Delgado
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,675,384
<SECURITIES> 2,254,723
<RECEIVABLES> 17,954,299
<ALLOWANCES> 117,932
<INVENTORY> 0
<CURRENT-ASSETS> 8,345,878
<PP&E> 24,754,083
<DEPRECIATION> 5,348,397
<TOTAL-ASSETS> 49,785,445
<CURRENT-LIABILITIES> 3,689,237
<BONDS> 31,602,718
0
0
<COMMON> 355,522
<OTHER-SE> 11,231,850
<TOTAL-LIABILITY-AND-EQUITY> 49,785,445
<SALES> 0
<TOTAL-REVENUES> 6,519,352
<CGS> 0
<TOTAL-COSTS> 3,070,275
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,298,543
<INCOME-PRETAX> 1,849,591
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,849,591
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,849,591
<EPS-PRIMARY> 0.52
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