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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
December 13, 1994
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Date of Report (Date of Earliest Event Reported)
TRANSCONTINENTAL REALTY INVESTORS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Nevada 0-13291 94-6565852
- - - - --------------------------------------------------------------------------------
(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
- - - - --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Form 8-K/A amends a Form 8-K Current Report dated December 13, 1994 and
filed December 21, 1994 by Transcontinental Realty Investors, Inc. (the
"Company") and provides required financial statements that were not available
at the date of the original filing.
(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December
31, 1993 and the nine months ended September 30, 1994.
A summary of the pro forma transactions follows:
On December 13, 1994, NCPO Texas, Ltd., a Texas limited partnership (the
"Partnership"), purchased the North Central Plaza One Office Building ("NCPO"),
a 197,848 square foot office building in Dallas, Texas for $12.4 million,
exclusive of acquisition commissions and closing costs. The seller of the
property was Prudential Insurance Company of America, a New Jersey corporation.
The Partnership paid $4.2 million in cash obtaining new mortgage financing for
the remaining $8.2 million. The mortgage bears interest at 8.625% per annum,
requires monthly payments of principal and interest of $68,994 and matures
January 31, 2017.
The Company is the sole limited partner of the Partnership with a 97.5% limited
partner interest. The general partner of the partnership, with a 2.5% general
partner interest, is Ensearch Holding Company, a corporation controlled by an
adult son of A. Bob Jordan, a Director of the Company. The Company has the
option to acquire such general partner interest at any time for one dollar.
The Company intends to exercise such option. The Company consolidates the
partnership for financial statement purposes.
The $12.4 million NCPO purchase price is approximately 5.6% of the Company's
assets at December 31, 1993. However, this purchase combined with other
property purchases the Company has made in 1994, exceed 10% of the Company's
assets at December 31, 1993.
In addition to the NCPO acquisition discussed above, the Company has purchased
three industrial properties, two office buildings and one apartment complex in
1994. The three industrial properties and one of the office buildings are
located in Virginia, the other office building is located in Dallas, Texas and
the apartment complex is located in Orlando, Florida. The properties were
purchased for a total of $27.3 million and represent approximately 12.4% of the
Company's consolidated assets at December 31, 1993. The Company paid a total
of $11.7 million in cash and financed the remainder of the purchase prices.
The mortgages secured by the properties bear interest at rates ranging from
6.0% to 10.0% per annum and mature from 1999 to 2024. Two of these
acquisitions occurred prior to September 30, 1994 and are accordingly reflected
in the September 30, 1994 "actual balance sheet" of the Company, as presented.
The Company has previously provided an audited statement of operations for the
Summerfield Apartments in Orlando, Florida which the Company
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
acquired in November 1994. Such acquisition approximated 3.0% of the Company's
consolidated assets at December 31, 1993. The remaining acquisitions, for
which the Company has not provided audited statements of operations, do not in
the aggregate constitute a significant subsidiary.
In 1994, the Company sold one apartment complex, one office building, its
general partnership interest in two partnerships and its limited partner
interest in a third partnership. In connection with the sales, the Company
received cash totaling $1.6 million and provided an additional $100,000 in
purchase money financing. These sales all occurred prior to September 30, 1994
and are accordingly reflected in the Company's "actual balance sheet" as of
September 30, 1994, as presented.
The proforma statements of operations present the Company's operations as if
the transactions described above had occurred at the beginning of each of the
periods presented.
(b) Financial statements of property acquired:
<TABLE>
<CAPTION>
Exhibit
Number Description
- - - - ------- ---------------------------------------------------------------------------------------------------
<S> <C>
99.0 North Central Plaza One Audited Statement of Operating Income for the year ended December 31, 1993.
</TABLE>
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TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Other
North Central Property
Actual Plaza One(1) Acquisitions(2) Proforma
------ ------------- --------------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Assets
------
Notes and interest receivable
Performing.................. $ 16,641 $ - $ - $ 16,641
Nonperforming, nonaccruing.. 593 - - 593
--------------- -------------- -------------- --------------
17,234 - -
17,234
Real estate held for sale, net
of depreciation............. 8,137 - - 8,137
Less - allowance for
estimated losses............ (960) - - (960)
--------------- -------------- -------------- --------------
24,411 - - 24,411
Real estate held for invest-
ment, net of accumulated
depreciation................ 183,217 12,930 15,182 211,329
Investment in partnerships.... 11,094 - - 11,094
Cash and cash equivalents..... 4,816 (4,507) (2,809) (2,500)
Other assets.................. 6,194 84 (136) 6,142
--------------- -------------- -------------- --------------
$ 229,732 $ 8,507 $ 12,237 $ 250,476
=============== ============== ============== ==============
Liabilities and Stockholders' Equity
- - - - ------------------------------------
Liabilities
Notes and interest payable.... $ 124,082 $ 8,150 $ 12,202 $ 144,434
Other liabilities............. 10,813 151 35 10,999
--------------- -------------- -------------- --------------
134,895 8,301 12,237 155,433
Commitments and contingencies
Stockholders' equity
Common stock $.01 par value,
authorized, 10,000,000
shares; issued and out-
standing, 2,674,850 shares.. 27 - - 27
Paid-in capital............... 219,049 - - 219,049
Accumulated distributions in
excess of accumulated
earnings.................... (124,239) 206 - (124,033)
--------------- -------------- -------------- --------------
94,837 206 - 95,043
--------------- -------------- -------------- --------------
229,732 $ 8,507 $ 12,237 $ 250,476
=============== ============== ============== ==============
</TABLE>
__________________________
(1) Assumes the December 13, 1994 acquisition of the property by the Company
occurred on September 30, 1994.
(2) Assumes that the October and November 1994 property acquisitions of the
Company occurred on September 30, 1994.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
North Other Property and
Central Property Partnership
Actual Plaza One(1) Acquisitions(1) Sales (2) Pro forma
------ ------------ --------------- ------------- ----------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C>
Income
Rentals................................ $ 26,376 $ 1,664 $ 3,654 $ (1,062) $ 30,632
Interest............................... 1,160 - - - 1,160
Equity in (losses) of investees........ (77) - - (6) (83)
---------------- ---------- ---------- --------- ---------
27,459 1,664 3,654 (1,068) 31,709
Expenses
Property operations.................... 20,317 1,081 2,038 (506) 22,930
Interest............................... 7,711 523 1,395 (356) 9,273
Depreciation........................... 4,472 697 479 (175) 5,473
Advisory fee to affiliate.............. 1,280 - - - 1,280
General and administrative............. 1,280 - - - 1,280
---------------- ---------- ---------- --------- ---------
35,060 2,301 3,912 (1,037) 40,236
(loss) before gain on sale of
partnership interests, gain on sale of
real estate and extraordinary gain..... (7,601) (637) (258) (31) (8,527)
Gain on sale of partnership interests.... 2,514 - - - 2,514
Gain on sale of real estate.............. 2,153 - - - 2,153
Extraordinary gain....................... 1,189 - - - 1,189
---------------- ---------- ---------- --------- ---------
Net (loss)............................... $ (1,745) $ (637) $ (258) $ (31) $ (2,671)
================ ========== ========== ========= =========
Earnings per share
(Loss) before gain on sale of partner-
ship interests, gain on sale of real
estate and extraordinary gain........ $ (2.84) $ (3.19)
Gain on sale of partnership interests.. .94 .94
Gain on sale of real estate............ .80 .80
Extraordinary gain..................... .44 .44
---------------- ---------
Net (loss)............................. $ (.66) $ (1.01)
================ =========
Weighted average Common shares used in
computing earnings per share........... 2,674,850 2,674,850
================ =========
</TABLE>
____________________________
(1) Assumes acquisition by the Company on January 1, 1994.
(2) Assumes sale by the Company on January 1, 1994.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Property
North Central Other and
Plaza One Property Partnership
Actual Acquisition(1) Acquisitions(1) Sales (2) Pro forma
------ --------------- --------------- ------------ ---------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C>
Income
Rentals ............................... $ 30,373 $ 2,046 $ 3,889 $ (1,911) $ 34,397
Interest .............................. 1,869 - - - 1,869
Equity in income (losses) of investees. (262) - - 490 228
----------- ---------- ------------ -------- -----------
31,980 2,046 3,889 (1,421) 36,494
Expenses
Property operations ................... 23,659 1,340 2,513 (1,315) 26,197
Interest .............................. 8,662 698 1,826 (596) 10,590
Depreciation .......................... 5,435 259 708 (229) 6,173
Advisory fee to affiliate ............. 1,548 - - - 1,548
General and administrative ............ 1,991 - - - 1,991
Provision for losses .................. 873 - - - 873
----------- ---------- ------------ -------- -----------
42,168 2,297 5,047 (2,140) 47,372
Income (loss) before gain on sale of
real estate and extraordinary gain .... (10,188) (251) (1,158) 719 (10,878)
Gain on sale of real estate ............ 24 - - - 24
Extraordinary gain ..................... 1,594 - - - 1,594
----------- ---------- ------------ -------- -----------
Net income (loss) ...................... $ (8,570) $ (251) $ (1,158) $ 719 $ (9,260)
=========== ========== ============ ======== ===========
Earnings per share
Income before gain on sale of real
estate and extraordinary gain......... $ (3.79) $ (4.05)
Gain on sale of real estate............ .01 .01
Extraordinary gain..................... .59 .59
----------- -----------
Net income............................. $ (3.19) $ (3.45)
=========== ===========
Weighted average shares of Common
shares used in computing earnings
per share.............................. 2,688,888 2,688,888
=========== ===========
- - - - ----------------------------
</TABLE>
(1) Assumes acquisition by the Company on January 1, 1993.
(2) Assumes sale by the Company on January 1, 1993.
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SIGNATURE
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 hereto duly authorized.
TRANSCONTINENTAL REALTY INVESTORS, INC.
Date: February 3, 1995 By: /s/ Thomas A. Holland
Thomas A. Holland
Senior Vice President and
Chief Accounting Officer
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TRANSCONTINENTAL REALTY INVESTORS, INC.
EXHIBITS TO
CURRENT REPORT ON FORM 8-K
Dated December 13, 1994
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- - - - ------- ----------------------------------------- ------
<S> <C> <C>
99.0 North Central Plaza One Audited Statement 9
of Operating Income for the year ended
December 31, 1993.
</TABLE>
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EXHIBIT 99.0
NORTH CENTRAL PLAZA ONE
STATEMENT OF OPERATING INCOME
YEAR ENDED DECEMBER 31, 1993
9
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FARMER, FUQUA, HUNT & ROBERT, LLC
Certified Public Accountants
American Institute of 10670 North Central Expressway
Certified Public Accountants Suite 400
Texas Society of Dallas, Texas 75231
Certified Public Accountant 214/265-9905
Fax: 214/265-9945
Independent Auditors' Report
To the Board of Directors
Transcontinental Realty Investors, Inc.
We have audited the accompanying statement of operating income of North Central
Plaza One (a real estate project) for the year ended December 31, 1993. This
statement of operating income is the responsibility of the Project's
management. Our responsibility is to express an opinion on this statement of
operating income based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of operations is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of operating
income. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of Transcontinental Realty Investors, Inc.) and, as
described in Note 1, is not intended to be a complete presentation of the
results of operations.
In our opinion, the statement of operating income referred to above presents
fairly, in all material respects, the operating income of North Central
Plaza One for the year ended December 31, 1993, in conformity with
generally accepted accounting principles.
FARMER, FUQUA, HUNT & ROBERT, LLC
Dallas, Texas
January 20, 1995
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NORTH CENTRAL PLAZA ONE
STATEMENT OF OPERATING INCOME
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<S> <C>
REVENUES:
Rental revenues $1,896,165
Other revenue 149,912
----------
Total Revenue 2,046,077
OPERATING EXPENSES:
Cleaning 146,106
Utilities 344,173
Repairs and maintenance 177,667
Contract services 112,257
Management fees 59,238
Administrative expenses 267,745
Fixed expenses 233,209
----------
Total Operating Expenses 1,340,395
----------
NET OPERATING INCOME $ 705,682
==========
</TABLE>
The accompanying notes are an integral part of this statement.
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NORTH CENTRAL PLAZA ONE
NOTES TO STATEMENT OF OPERATING INCOME
DECEMBER 31, 1993
NOTE 1: ORGANIZATION
North Central Plaza One (the property) is a 10 story, class A office
building located in Dallas, Texas. The building has 197,848
square feet of rentable area. The property is managed by Fults
Management Company. During 1993, the property was owned by Prudential
Insurance Company of America.
The accompanying financial statement does not include provision for
depreciation and amortization, interest expense or income taxes.
Accordingly, thifs statement is not intended to be a complete
presentation of the results of operations.
NOTE 2: OTHER INCOME
Other income consists of the following:
<TABLE>
<S> <C>
Parking/Garage $ 1,450
Storage 3,986
Escalation Charges 34,835
Electrical Billbacks 55,351
Lease Buyout 45,639
Lawsuit Settlement 5,000
Miscellaneous 3,651
--------------
Total Other Income $ 149,912
==============
</TABLE>
NOTE 3: MANAGEMENT FEES
Per the management agreement, Fults Management Company receives the
greater of $3,000 or 3% of monthly rent collections.
NOTE 4: SUBSEQUENT EVENTS
On December 13, 1994, the property was sold to NCPO Texas, Ltd., a
Texas Limited Partnership. Transcontinental Realty Investors, Inc.
("the Company") is the sole limited partner of the partnership with a
97.5% limited partner interest. The general partner of the partnership,
with a 2.5% general partner interest, is Ensearch Holding Company, a
corporation controlled by an adult son of A. Bob Jordon, a Director of
the Company. The Company has the option to acquire such general partner
interest at any time for one dollar.
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NOTES TO STATEMENT OF OPERATING INCOME
DECEMBER 31, 1993 (CONTINUED)
North Central Expressway was under construction at LBJ Freeway during 1994.
Management feels this negatively impacted the rental of office space during
1994.
Satellite Music, a subsidiary of ABC Radio Networks, the property's largest
tenant, is no longer in the building. Management has refused to release
Satellite Music from their lease which does not expire until March 31, 2000. To
date, Satellite Music has continued to pay the rent under their lease
agreement.
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