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Previous: VOYAGEUR TAX FREE FUNDS INC, 497, 1999-02-18 |
Next: PETROLEUM HEAT & POWER CO INC, 8-K, 1999-02-18 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
December 2, 1998
------------------------------------------------
Date of Report (Date of Earliest Event Reported)
TRANSCONTINENTAL REALTY INVESTORS, INC.
------------------------------------------------------
(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
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 2, 1998, Transcontinental Realty Investors, Inc. (the "Company")
purchased in a single transaction the Neighborhood Inns of Chicago, three hotels
in Chicago, IL, the Belmont Hotel with 45 rooms, the Brompton Hotel with 52
rooms, and the Surf Hotel with 55 rooms, for a total of $11.6 million,
approximately 3.6 percent of the Company's assets at December 31, 1997. The
seller of the hotels was Wilmont Hotel Limited Partnership, an unrelated party.
The properties were constructed in 1927. The Company paid a total of $2.3
million in cash and obtained mortgage financing secured by all three properties
totaling $9.3 million. The mortgage bears interest at a variable rate, currently
9.376% per annum, requires monthly payments of principal and interest of
$94,108 and matures in December 2001.
On December 23, 1998, the Company purchased the 80 unit Southgreen Apartments in
Bakersfield, California for $3.6 million, approximately 1.1% of the Company's
assets at December 31, 1997. The seller of the property was Monarch Southgreen
Partners, Ltd., an unrelated party. The property was constructed in 1985 and was
97% occupied on the date of purchase. The Company paid $1.1 million in cash, and
obtained mortgage financing of $2.5 million. The mortgage bears interest at a
variable rate, currently 8.25% per annum, requires monthly payments of principal
and interest of $19,953 and matures in December 2005.
In assessing the income producing properties described above, the following were
among the factors considered by management, geographic location of the
properties, performance of the properties, new or renovated properties in the
vicinity of each property and the maintenance and appearance of the properties.
In addition to the purchases described above, the Company has also purchased, in
1998, eight additional apartment complexes, one each in El Paso, Midland, and
Addison, Texas in January 1998, two in Midland, Texas in April 1998, one each in
Odessa and Midland, Texas in May 1998 and one in McKinney, Texas in October
1998. The Company has also purchased six office buildings, two in Dallas, Texas,
one in February 1998 and the other in March 1998, three in San Diego,
California, two in May 1998 and one in July 1998 and one in Palm Beach, Florida
in June 1998. In addition to these income producing properties, the Company has
also purchased four parcels of undeveloped land, two in Dallas, Texas, one in
January 1998 and the other in February 1998, one in Farmers Branch, Texas in May
1998 and one in Austin, Texas in July 1998. The above income producing
properties and undeveloped land were purchased for a total of $71.2 million. The
Company paid $23.4 million in cash and financed the remainder of the purchase
prices. The mortgages secured by the properties bear interest at fixed and
variable rates, ranging from 7.2% to 9.91% per annum and mature from October
1999 to March 2018.
In 1998, the Company sold three retail centers, one in March 1998, one in
September 1998 and one in October 1998 and an office building in September 1998.
In connection with these sales, the Company received net cash totaling $22.1
million.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December 31,
1997 and the nine months ended September 30, 1998. The pro forma statements of
operations present the Company's operations as if the transactions described
above had occurred at January 1, of each of the periods presented. A pro forma
balance sheet as of September 30, 1998 is also presented. The pro forma balance
sheet presents the Neighborhood Inns of Chicago and Southgreen Apartments
purchases, described above, as if they had occurred at January 1, 1998.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
3
<PAGE> 4
TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Cliffs of Neighborhood
Eldorado Inns of Southgreen
Actual(1) Apartments(2) Chicago(3) Apartments(3) Sales(3) Pro Forma
--------- --------- --------- --------- --------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Notes and interest receivable
Performing .......................... $ 1,610 $ -- $ -- $ -- $ -- $ 1,610
Nonperforming ....................... 806 -- -- -- -- 806
--------- --------- --------- --------- --------- ---------
2,416 -- -- -- -- 2,416
Less - allowance for
estimated losses .................... (891) -- -- -- -- (891)
Foreclosed real estate held
for sale ............................ 3,867 -- -- -- -- 3,867
Real estate held for sale,
net of accumulated
depreciation ........................ 6,524 -- -- -- -- 6,524
Real estate held for
investment, net of
accumulated depreciation ............ 309,039 13,236 12,494 3,776 (873) 337,672
Investment in partnerships ............. 3,877 -- -- -- -- 3,877
Cash and cash equivalents .............. 19,657 (1,830) (2,776) (937) 762 14,876
Other assets ........................... 15,614 251 (374) (310) (3) 15,178
--------- --------- --------- --------- --------- ---------
$ 360,103 $ 11,657 $ 9,344 $ 2,529 $ (114) $ 383,519
========= ========= ========= ========= ========= =========
</TABLE>
- ------------------------
(1) Includes the Mountain Plaza Apartments, Hunters Glen Apartments and Bent
Tree Garden Apartments which were acquired in January 1998, the Parkway
North Office Building acquired in February 1998, the Plaza on Bachman Creek
acquired in March 1998, the 4400 Apartments and Ashton Way Apartments
acquired in April 1998, the Woodview Apartments, Emerald Terrace
Apartments, Daley Plaza and Viewridge Building acquired in May 1998, the
Atrium Office Building acquired in June 1998 and the Valley Rim Office
Building acquired in July 1998 and excludes the Shaws Plaza Shopping Center
which was sold in March 1998 and the Chesapeake Ridge Office Building and
Northtown Mall Shopping Center which were sold in September 1998.
(2) Property acquired subsequent to September 30, 1998. See the Company's
Current Report on Form 8-K, dated October 20, 1998.
(3) Assumes purchase or sale by the Company on January 1, 1998.
4
<PAGE> 5
TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET - Continued
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Cliffs of Neighborhood
Eldorado Inns of Southgreen
Actual(1) Apartments(2) Chicago(3) Apartments(3) Sales(3) Pro Forma
--------- --------- --------- --------- --------- ---------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
Liabilities
Notes and interest payable ............. $ 258,782 $ 10,683 $ 9,250 $ 2,500 $ (307) $ 280,908
Other liabilities ...................... 8,738 391 94 29 (26) 9,226
--------- --------- --------- --------- --------- ---------
267,520 11,074 9,344 2,529 (333) 290,134
Commitments and contingencies
Shareholders' equity
Common Stock, $.01 par value;
10,000,000 shares; issued and
outstanding, 3,872,505 shares ....... 39 -- -- -- -- 39
Preferred Stock, $.01 par
value, authorized 6,000
shares, Series A issued and
outstanding, 5,829 shares
(liquidation preference
$583,000) ........................... -- -- -- -- -- --
Paid-in capital ........................ 217,431 583 -- -- -- 218,014
Accumulated distributions in
excess of accumulated earnings ...... (124,887) -- -- -- 219 (124,668)
--------- --------- --------- --------- --------- ---------
92,583 583 -- -- 219 93,385
--------- --------- --------- --------- --------- ---------
$ 360,103 $ 11,657 $ 9,344 $ 2,529 $ (114) $ 383,519
========= ========= ========= ========= ========= =========
</TABLE>
- ---------------------------
(1) Includes the Mountain Plaza Apartments, Hunters Glen Apartments and Bent
Tree Garden Apartments which were acquired in January 1998, the Parkway
North Office Building acquired in February 1998, the Plaza on Bachman Creek
acquired in March 1998, the 4400 Apartments and Ashton Way Apartments
acquired in April 1998, the Woodview Apartments, Emerald Terrace
Apartments, Daley Plaza and Viewridge Building acquired in May 1998, the
Atrium Office Building acquired in June 1998 and the Valley Rim Office
Building acquired in July 1998 and excludes the Shaws Plaza Shopping Center
which was sold in March 1998 and the Chesapeake Ridge Office Building and
Northtown Mall Shopping Center which were sold in September 1998.
(2) Property acquired subsequent to September 30, 1998. See the Company's
Current Report on Form 8-K, dated October 20, 1998.
(3) Assumes purchase or sale by the Company on January 1, 1998.
5
<PAGE> 6
TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Neigh-
Other borhood
Apartment Commercial Property Inns of Southgreen
Actual Complexes Properties Purchases Chicago Apartments
----------- ----------- ----------- ----------- ----------- -----------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C> <C>
Income
Rents ..................... $ 51,414 $ 1,496 $ 1,059 $ 622 $ 4,027 $ 371
Income .................... 593 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
52,007 1,496 1,059 622 4,027 371
Expenses
Property operations ....... 27,355 923 402 419 3,001 181
Interest .................. 16,865 -- -- -- -- --
Depreciation .............. 7,882 -- -- -- -- --
Advisory and net
income fee to
affiliate .............. 2,578 -- -- -- -- --
General and
administrative ......... 1,649 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
56,329 923 402 419 3,001 181
Net income (loss) from
operations ................ (4,322) 573 657 203 1,026 190
Equity in income of
investees ................. 342 -- -- -- -- --
Gain on sale of real
estate .................... 12,015 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) ............ $ 8,035 $ 573 $ 657 $ 203 $ 1,026 $ 190
=========== =========== =========== =========== =========== ===========
Earnings per share
Net income (loss) ......... $ 2.07
===========
Weighted average shares
of Common Stock used
in computing earnings
per share ................. 3,876,505
===========
<CAPTION>
Pro Forma Pro Forma
Sales Adjustments Combined
----------- ----------- -----------
(dollars in thousands, except per share)
<S> <C> <C> <C>
Income
Rents ..................... $ (2,064) $ -- $ 56,925
Income .................... -- -- 593
----------- ----------- -----------
(2,064) -- 57,518
Expenses
Property operations ....... (741) -- 31,540
Interest .................. (624) 3,582 19,823
Depreciation .............. (438) 1,270 8,714
Advisory and net
income fee to
affiliate .............. -- -- 2,578
General and
administrative ......... -- -- 1,649
----------- ----------- -----------
(1,803) 4,852 64,304
Net income (loss) from
operations ................ (261) (4,852) (6,786)
Equity in income of
investees ................. -- -- 342
Gain on sale of real
estate .................... -- -- 12,015
----------- ----------- -----------
Net income (loss) ............ $ (261) $ (4,852) $ 5,571
=========== =========== ===========
Earnings per share
Net income (loss) ......... $ 1.44
===========
Weighted average shares
of Common Stock used
in computing earnings
per share ................. 3,876,505
===========
</TABLE>
The accompanying footnotes are an integral part of this Pro Forma Combined
Statement of Operations.
6
<PAGE> 7
TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
1. The Pro Forma Combined Statement of Operations assumes the property was
purchased or sold by the Company on January 1, 1998. Pro forma
operating results for purchased properties are from January 1 through
the respective date of purchase only. Results subsequent to the dates
of purchase are included in the "Actual" column.
2. The caption "Apartment Complexes" includes Mountain Plaza, 4400, Ashton
Way and Cliffs of Eldorado Apartments. For further information on
Mountain Plaza, 4400 and Ashton Way Apartments, see the Company's
Current Report on Form 8-K, dated May 29, 1998 as amended on Form
8-K/A, dated September 23, 1998. For the Cliffs of Eldorado Apartments,
see the Company's Current Report on Form 8-K, dated October 20, 1998.
<TABLE>
<S> <C>
Revenues:
Mountain Plaza Apartments $ 46
4400 Apartments 97
Ashton Way Apartments 137
Cliffs of Eldorado Apartments 1,216
----------
$ 1,496
==========
Property Operations Expenses:
Mountain Plaza Apartments $ 25
4400 Apartments 93
Ashton Way Apartments 123
Cliffs of Eldorado Apartments 682
----------
$ 923
==========
</TABLE>
3. The caption "Commercial Properties" includes Parkway North Office
Building, Plaza on Bachman Creek, Atrium Office Building and Valley Rim
Office Building. For further information on Parkway North Office
Building and Plaza on Bachman Creek see the Company's Current Report on
Form 8-K, dated May 29, 1998, as amended on Form 8-K/A, dated September
23, 1998. For the Atrium and Valley Rim Office Buildings see the
Company's Current Report on Form 8-K, dated June 26, 1998, as amended
on Form 8-K/A, dated October 16, 1998.
<TABLE>
<S> <C>
Revenues:
Parkway North Office Building $ 163
Plaza on Bachman Creek 195
Atrium Office Building 365
Valley Rim Office Building 336
----------
$ 1,059
==========
Property Operations Expenses:
Parkway North Office Building $ 57
Plaza on Bachman Creek 53
Atrium Office Building 168
Valley Rim Office Building 124
----------
$ 402
==========
</TABLE>
7
<PAGE> 8
TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
NINE MONTHS ENDED SEPTEMBER 30, 1998
4. Other property purchases includes Bent Tree Garden, Hunters Glen,
Woodview and Emerald Terrace Apartments, as well as Daley Plaza and
View Ridge Office Buildings. The sellers of these properties were not
able to provide either audited statements of operations or access to
the respective property's financial records to enable the Company to
have an audit performed. These properties in total represent
approximately 6.8% of the Company's assets at December 31, 1997.
<TABLE>
<S> <C>
Revenues:
Bent Tree Garden Apartments $ 111
Hunters Glen Apartments 27
Woodview Apartments 266
Emerald Terrace Apartments 182
Daley Plaza Office Building 29
Viewridge Office Building 7
----------
Total $ 622
==========
Property Operations Expenses:
Bent Tree Garden Apartments $ 68
Hunters Glen Apartments 17
Woodview Apartments 182
Emerald Terrace Apartments 128
Daley Plaza Office Building 22
Viewridge Office Building 2
----------
Total $ 419
==========
</TABLE>
5. Statement of operations for the one month ended October 31, 1997,
November 30, 1997, April 30, 1998, for the six months ended June 30,
1998 and June 15, 1998 and one for the one month ended July 31, 1998
were obtained for Mountain Plaza Apartments, Parkway North Office
Building, Valley Rim Office Building, Cliffs of Eldorado Apartments,
Southgreen Apartments and Neighborhood Inns of Chicago, respectively.
Such statements were used as the basis for estimating their respective
operating results for the nine months ended September 30, 1998. The
previous years' actual amounts were used to estimate the interim period
January 1 to the respective dates of purchase for the remaining
properties.
6. The pro forma interest adjustment is based on the mortgages obtained,
assumed or seller financing obtained, if any, for each property at its
respective date of purchase. The pro forma
8
<PAGE> 9
TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
NINE MONTHS ENDED SEPTEMBER 30, 1998
depreciation adjustment is based on the purchase price of each property
depreciated under the Company's established depreciation policies.
<TABLE>
<S> <C>
Interest:
Atrium Office Building $ 246
Valley Rim Office Building 266
Ashton Way Apartments 73
Bent Tree Gardens Apartments 348
Cliffs of Eldorado Apartments 653
Emerald Terrace Apartments 61
4400 Apartments 73
Hunters Glen Apartments 115
Mountain Plaza Apartments 183
Southgreen Apartments 155
Woodview Apartments 142
Daley Plaza Office Building 249
Neighborhood Inns of Chicago 628
Plaza on Bachman Creek 163
Parkway North Office Building 132
Viewridge Office Building 95
----------
Total $ 3,582
==========
Depreciation:
Atrium Office Building $ 87
Valley Rim Office Building 81
Ashton Way Apartments 29
Bent Tree Gardens Apartments 129
Cliffs of Eldorado Apartments 250
Emerald Terrace Apartments 23
Hunters Glen Apartments 39
4400 Apartments 26
Mountain Plaza Apartments 63
Southgreen Apartments 57
Woodview Apartments 54
Daley Plaza Office Building 74
Neighborhood Inns of Chicago 184
Plaza on Bachman Creek 55
Parkway North Office Building 89
Viewridge Office Building 30
----------
Total $ 1,270
==========
</TABLE>
7. Interim operating results for Shaws Plaza Shopping Center which was
sold in March 1998 and the Chesapeake Ridge Office Building and
Northtown Mall Shopping Center which were both sold in September 1998
are their actual operating results from January 1 to the date of sale.
9
<PAGE> 10
TRANSCONTINENTAL REALTY INVESTORS, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Neigh-
Other borhood
Apartment Commercial Property Inns of
Actual Complexes Properties Purchases Chicago
----------- ----------- ----------- ----------- -----------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C>
Income
Rents ............................... $ 54,462 $ 2,605 $ 3,001 $ 3,300 $ 3,585
Income .............................. 1,499 -- -- -- --
----------- ----------- ----------- ----------- -----------
55,961 2,605 3,001 3,300 3,585
Expenses
Property operations ................. 32,424 1,857 1,182 2,128 1,680
Interest ............................ 16,765 -- -- -- --
Depreciation ........................ 9,578 -- -- -- --
Advisory fee to
affiliate ........................ 1,807 -- -- -- --
Net income fee to
affiliate ........................ 1,022 -- -- -- --
General and
administrative ................... 2,645 -- -- -- --
Provision for losses ................ 1,337 -- -- -- --
----------- ----------- ----------- ----------- -----------
65,578 1,857 1,182 2,128 1,680
Income (loss) from
operations .......................... (9,617) 748 1,819 1,172 1,905
Equity in income of
investees ........................... 812 -- -- -- --
Gain on sale of real
estate .............................. 21,404 -- -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss) ...................... $ 12,599 $ 748 $ 1,819 $ 1,172 $ 1,905
=========== =========== =========== =========== ===========
Earnings per share
Net income (loss) ................... $ 3.22
===========
Weighted average shares
of Common Stock used
in computing earnings
per share ........................... 3,907,221
===========
<CAPTION>
Southgreen Pro Forma Pro Forma
Apartments Sales Adjustments Combined
----------- ----------- ----------- -----------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C>
Income
Rents ............................... $ 495 $ (2,304) $ -- $ 65,144
Income .............................. -- -- -- 1,499
----------- ----------- ----------- -----------
495 (2,304) -- 66,643
Expenses
Property operations ................. 223 (739) -- 38,755
Interest ............................ -- (689) 4,749 20,825
Depreciation ........................ -- (430) 1,683 10,831
Advisory fee to
affiliate ........................ -- -- -- 1,807
Net income fee to
affiliate ........................ -- -- -- 1,022
General and
administrative ................... -- -- -- 2,645
Provision for losses ................ -- (1,337) -- --
----------- ----------- ----------- -----------
223 (3,195) 6,432 75,885
Income (loss) from
operations .......................... 272 891 (6,432) (9,242)
Equity in income of
investees ........................... -- -- -- 812
Gain on sale of real
estate .............................. -- -- -- 21,404
----------- ----------- ----------- -----------
Net income (loss) ...................... $ 272 $ 891 $ (6,432) $ 12,974
=========== =========== =========== ===========
Earnings per share
Net income (loss) ................... $ 3.32
===========
Weighted average shares
of Common Stock used
in computing earnings
per share ........................... 3,907,221
===========
</TABLE>
The accompanying footnotes are an integral part of this Pro Forma Combined
Statement of Operations.
10
<PAGE> 11
TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
1. The Pro Forma Combined Statement of Operations assumes the property was
purchased or sold by the Company on January 1, 1997.
2. The caption "Apartment Complexes" includes Mountain Plaza, 4400, Ashton
Way, and Cliffs of Eldorado Apartments. For further information on
Mountain Plaza, 4400 and Ashton Way Apartments, refer to the Company's
Current Report on Form 8-K, dated May 29, 1998 as amended on Form
8-K/A, dated September 23, 1998. For the Cliffs of Eldorado, see the
Company's Current Report on Form 8-K, dated October 20, 1998.
<TABLE>
<S> <C>
Revenues:
Mountain Plaza Apartments $ 1,085
4400 Apartments 389
Ashton Way Apartments 548
Cliffs of Eldorado 583
----------
$ 2,605
==========
Property Operations Expenses:
Mountain Plaza Apartments $ 592
4400 Apartments 372
Ashton Way Apartments 480
Cliffs of Eldorado 413
----------
$ 1,857
==========
</TABLE>
3. The caption "Commercial Properties" includes Parkway North Office
Building, Plaza on Bachman Creek, Atrium Office Building and Valley Rim
Office Building. For further information on the Parkway North Office
Building and Plaza on Bachman Creek see the Company's Current Report on
Form 8-K, dated May 29, 1998, as amended on Form 8-K/A, dated September
23, 1998. For the Atrium and Valley Rim Office Buildings see the
Company's Current Report on Form 8-K, dated June 26, 1998, as amended
on Form 8-K/A, dated October 16, 1998.
<TABLE>
<S> <C>
Revenues:
Parkway North Office Building $ 938
Plaza on Bachman Creek 506
Atrium Office Building 885
Valley Rim Office Building 672
----------
$ 3,001
==========
Property Operations Expenses:
Parkway North Office Building $ 393
Plaza on Bachman Creek 252
Atrium Office Building 290
Valley Rim Office Building 247
----------
$ 1,182
==========
</TABLE>
4. Other property purchases includes Bent Tree Garden, Hunters Glen,
Woodview and Emerald Terrace Apartments, as well as Daley Plaza and
View Ridge Office Buildings. The sellers of these properties
11
<PAGE> 12
TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
YEAR ENDED DECEMBER 31, 1997
were not able to provide either audited statements of operations or
access to the respective property's financial records to enable the
Company to have an audit performed. These properties in total represent
approximately 6.8% of the Company's assets at December 31, 1997.
5. The amounts for Mountain Plaza Apartments, Parkway North Office
Building, Plaza on Bachman Creek, 4400 Apartments, Ashton Way
Apartments, Atrium Office Building and Valley Rim Office Building are
from their respective audited statements of operations.
<TABLE>
<S> <C>
Revenues:
Bent Tree Garden Apartments $ 1,338
Hunters Glen Apartments 643
Woodview Apartments 797
Emerald Terrace Apartments 436
Viewridge Office Building 69
Daley Plaza Office Building 17
----------
Total $ 3,300
==========
Property Operations:
Bent Tree Garden Apartments $ 809
Hunters Glen Apartments 406
Woodview Apartments 546
Emerald Terrace Apartments 307
Viewridge Office Building 54
Daley Plaza Office Building 6
----------
Total $ 2,128
==========
</TABLE>
6. The amounts for Bent Tree Gardens Apartments, Hunters Glen Apartments,
Woodview Apartments, Emerald Terrace Apartments, Viewridge Office
Building and Daley Plaza are based on available financial information
or estimates made in conjunction with the respective purchase.
7. The pro forma interest adjustment is based on the mortgages obtained or
assumed and seller financing obtained, if any, for each property at its
respective date of purchase. The pro forma
12
<PAGE> 13
TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
YEAR ENDED DECEMBER 31, 1997
depreciation adjustment is based on the purchase price of each property
depreciated under the Company's established depreciation policies.
<TABLE>
<S> <C>
Interest:
Atrium Office Building $ 325
Valley Rim Office Building 352
Ashton Way Apartments 96
Bent Tree Gardens Apartments 461
Cliffs of Eldorado Apartments 865
Emerald Terrace Apartments 81
4400 Apartments 96
Hunters Glen Apartments 152
Mountain Plaza Apartments 242
Southgreen Apartments 206
Woodview Apartments 188
Daley Plaza Office Building 330
Neighborhood Inns of Chicago 838
Plaza on Bachman Creek 216
Parkway North Office Building 175
Viewridge Office Building 126
----------
Total $ 4,749
==========
Depreciation:
Atrium Office Building $ 115
Valley Rim Office Building 108
Ashton Way Apartments 38
Bent Tree Gardens Apartments 170
Cliffs of Eldorado Apartments 330
Emerald Terrace Apartments 31
Hunters Glen Apartments 52
4400 Apartments 36
Mountain Plaza Apartments 83
Southgreen Apartments 76
Woodview Apartments 72
Daley Plaza Office Building 97
Neighborhood Inns of Chicago 246
Plaza on Bachman Creek 73
Parkway North Office Building 117
Viewridge Office Building 39
----------
Total $ 1,683
==========
</TABLE>
8. Operating results for Shaws Plaza Shopping Center which was sold in
March 1998 and the Chesapeake Ridge Office Building and Northtown Mall
Shopping Center which were both sold in September 1998 are their actual
operating results for the year ended December 31, 1997.
13
<PAGE> 14
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Financial statements of property acquired:
Exhibit
Number Description
- ------ -----------
99.0 Audited Statement of Revenue and Direct Operating Expenses of
Mountain View Apartments for the year ended December 31, 1997
(incorporated by reference to Exhibit 99.0 of the Registrant's
Current Report on Form 8-K/A, dated May 29, 1998).
99.1 Audited Statement of Revenue and Direct Operating Expenses of
Parkway North for the year ended December 31, 1997
(incorporated by reference to Exhibit 99.1 of the Registrant's
Current Report on Form 8-K/A, dated May 29, 1998).
99.2 Audited Statement of Revenue and Direct Operating Expenses of
Plaza on Bachman Creek for the year ended December 31, 1997
(incorporated by reference to Exhibit 99.2 of the Registrant's
Current Report on Form 8-K/A, dated May 29, 1998).
99.3 Audited Statement of Revenue and Direct Operating Expenses of
4400 Apartments for the year ended December 31, 1997
(incorporated by reference to Exhibit 99.3 of the Registrant's
Current Report on Form 8-K/A, dated May 29, 1998).
99.4 Audited Statement of Revenue of Ashton Way Apartments for the
year ended December 31, 1997 (incorporated by reference to
Exhibit 99.4 of the Registrant's Current Report on Form 8-K/A,
dated May 29, 1998).
99.5 Mountain Plaza Statement of Operations for the ten months ended
October 31, 1997, (incorporated by reference to Exhibit 99.5 of
the Registrant's Current Report on Form 8-K/A, dated May 29,
1998).
99.6 Parkway North Statement of Operations for the eleven months
ended November 30, 1997, (incorporated by reference to Exhibit
99.6 of the Registrant's Current Report on Form 8-K/A, dated
May 29, 1998).
99.7 Audited Statement of Revenue and Direct Operating Expenses of
Atrium Office Building for the year ended December 31, 1997
(incorporated by reference to Exhibit 99.7 of the Registrant's
Current Report on Form 8-K/A, dated June 26, 1998).
99.8 Audited Statement of Revenue and Direct Operating Expenses of
Valley Rim Building for the year ended December 31, 1997
(incorporated by reference to Exhibit 99.8 of the Registrant's
Current Report on Form 8-K/A, dated June 26, 1998).
14
<PAGE> 15
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
Exhibit
Number Description
99.9 Valley Rim Building Statement of Operations for the four months
ended April 30, 1998 (incorporated by reference to Exhibit 99.9
of the Registrant's Current Report on Form 8-K/A, dated June
26, 1998).
99.10 Audited Statement of Revenue and Direct Operating Expenses of
Cliffs of Eldorado Apartments for the year ended December 31,
1997 (incorporated by reference to Exhibit 99.10 of the
Registrant's Current Report on form 8-K/A, dated October 20,
1998).
99.11 Cliffs of Eldorado Apartments Statement of Operations for the
six months ended June 30, 1998 (incorporated by reference to
Exhibit 99.11 of the Registrant's Current Report on form 8-K/A,
dated October 20, 1998).
99.12 Audited Statement of Revenue and Direct Operating Expenses of
the Neighborhood Inns of Chicago for the year ended December
31, 1997, filed herewith.
99.13 Neighborhood Inns of Chicago Statement of Operations for the one
month ended July 31, 1998, filed herewith.
99.14 Audited Statement of Revenue and Direct Operating Expenses of
the Southgreen Apartments for the year ended December 31, 1997,
filed herewith.
99.15 Southgreen Apartments Statement of Operations for the six months
ended June 15, 1998, filed herewith.
15
<PAGE> 16
SIGNATURE PAGE
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 18, 1999 By: /s/ Thomas A. Holland
----------------------- -----------------------------------
Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------------------------------------------------------
<S> <C>
99.12 Audited Statement of Revenue and Direct Operating
Expenses of Neighborhood Inns of Chicago for the year ended
December 31, 1997.
99.13 Neighborhood Inns of Chicago Statement of
Operations for the one month ended July 31, 1998.
99.14 Audited Statement of Revenue and Direct Operating
Expenses of Southgreen Apartments for the year
Ended December 31, 1997.
99.15 Southgreen Apartments Statement of Operations
for the six months ended June 15, 1998.
</TABLE>
<PAGE> 1
EXHIBIT 99.12
NEIGHBORHOOD INNS OF CHICAGO
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1997
<PAGE> 2
Independent Auditors' Report
To the Board of Trustees
Transcontinental Realty Investors, Inc.
We have audited the accompanying statement of revenues and direct operating
expenses of Neighborhood Inns of Chicago for the Year ended December 31, 1997.
This statement of revenues and direct operating expenses is the responsibility
of the Property's management. Our responsibility is to express an opinion on
this statement of revenues and direct operating expenses 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 revenues and direct operating expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
direct operating expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of revenues and direct operating expenses
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 revenues and direct operating expenses referred
to above presents fairly, in all material respects, the revenues and direct
operating expenses of Neighborhood Inns of Chicago for the Year ended December
31, 1997, in conformity with generally accepted accounting principles.
FARMER, FUQUA, HUNT & MUNSELLE, P.C.
Dallas, Texas
December 11, 1998
<PAGE> 3
NEIGHBORHOOD INNS OF CHICAGO
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
Year ended December 31, 1997
<TABLE>
<S> <C>
REVENUES
Room rental revenues $3,480,711
Other revenues 104,042
----------
Total revenues 3,584,753
DIRECT OPERATING EXPENSES
Salaries and benefits 1,049,907
Repairs and maintenance 282,503
Utilities 177,919
Property taxes 147,709
Insurance 22,173
----------
Total direct operating expenses 1,680,211
----------
REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $1,904,542
==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 4
NEIGHBORHOOD INNS OF CHICAGO
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
December 31, 1997
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Neighborhood Inns of Chicago is a group of three hotels located in
Chicago, Illinois. During 1997, the hotels were owned by The Wilmont
Hotel Limited Partnership. The three hotels, Park Brompton Inn, City
Suites Hotel and Surf Hotel, have 52 rooms, 45 rooms and 55 rooms,
respectively.
The accompanying financial statement does not include a provision for
depreciation and amortization, bad debt expense, interest expense, or
income taxes. Accordingly, this statement is not intended to be a
complete presentation of the results of operations.
NOTE 2: ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 3: OTHER REVENUES
Other revenues consists of the following:
<TABLE>
<S> <C>
Phone Revenues $ 82,446
Other Revenues 21,596
----------
$ 104,042
==========
</TABLE>
NOTE 4: SUBSEQUENT EVENT
The property was sold to Transcontinental Realty Investors, Inc., a
Nevada corporation, on December 2, 1998.
<PAGE> 1
EXHIBIT 99.13
Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/18/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 1
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
INFLOWS
501:
Amex 25,055.12
Cash Room Rev 22,176.11
Diner's Club 2,790.92
Discover 3,502.15
Visa & MC 94,232.62
----------
TOTAL 501 147,756.92
----------
TOTAL INFLOWS 147,756.92
OUTFLOWS
503:
Refunds:
Room Refunds 335.88
----------
TOTAL REFUNDS 335.88
----------
TOTAL 503 335.88
550:
Hotel Tax 18,586.64
----------
TOTAL 550 18,586.64
605:
Commission:
Travel Agent Co 2,306.81
Utell 41.07
----------
TOTAL COMMISSION 2,347.88
----------
TOTAL 605 2,347.88
709:
Hotel Supplies:
Amenities 987.86
Cleaning Sup 1,777.40
Laundry Supp 644.44
----------
TOTAL HOTEL SUPPLIES 3,409.70
----------
TOTAL 709 3,409.70
717:
Maintenance:
Repairs 240.00
Supplies 315.79
----------
TOTAL MAINTENANCE 555.79
----------
TOTAL 717 555.79
718:
Outside Service 12.00
----------
TOTAL 718 12.00
729:
Scavenger 191.00
----------
TOTAL 729 191.00
804:
Marketing Exp.:
</TABLE>
22
<PAGE> 2
Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/18/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 2
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Media 1,890.91
Mktng Office Expense 105.00
Mrktng Mngmnt 834.00
Prdctn & Crtv 577.77
-----------
TOTAL MARKETING EXP 3,407.68
----------
TOTAL 804 3,407.68
811:
Credit Cards:
Credit Card Dis 2,825.03
----------
TOTAL CREDIT CARDS 2,825.03
----------
TOTAL 811 2,825.03
819:
Dues 147.81
----------
TOTAL 819 147.81
825:
Rent on Equip 230.44
----------
TOTAL 825 230.44
826:
Food Service:
Brkfst Service 3,700.00
Room Service 1,089.43
----------
TOTAL FOOD SERVICE 4,789.43
----------
TOTAL 826 4,789.43
829:
Health Insurance 1,484.92
----------
TOTAL 829 1,484.92
830:
Workmans Comp 1,547.00
----------
TOTAL 830 1,547.00
837:
Licenses 135.00
----------
TOTAL 837 135.00
846:
Office Expense:
Supplies 328.34
----------
TOTAL OFFICE EXPENSE 328.34
----------
TOTAL 846 328.34
847:
Parking Expense 1,370.00
----------
TOTAL 847 1,370.00
848:
Payroll Pro Exp 131.50
----------
TOTAL 848 131.50
852:
Postage & Delivery 1,153.92
----------
</TABLE>
23
<PAGE> 3
Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/18/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 3
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL 852 1,153.92
861:
Payroll:
Garnishment 716.10
Net Payroll 30,706.86
----------
TOTAL PAYROLL 31,422.96
----------
TOTAL 861 31,422.96
871:
Property Taxes 4,961.11
----------
TOTAL 871 4,961.11
873:
Payroll Taxes 12,004.17
----------
TOTAL 873 12,004.17
875:
Taxes:
Maintenance Fee 42.61
Telecommunication 106.81
----------
TOTAL TAXES 149.42
----------
TOTAL 875 149.42
876:
Telephone:
1-800 Serv. 963.42
ATK Numbers 94.59
Long Distance 523.68
----------
TOTAL TELEPHONE 1,581.69
----------
TOTAL 876 1,581.69
877:
Cable Television 489.11
----------
TOTAL 877 489.11
878:
Cable Music 38.97
----------
TOTAL 878 38.97
882:
Utilities:
Electric 5,247.11
Gas-Broker 431.66
Gas-Peoples 638.26
Water 959.19
----------
TOTAL UTILITIES 7,276.22
----------
TOTAL 882 7,276.22
Meeting Expense 104.77
Newspapers 588.07
----------
TOTAL OUTFLOWS 101,606.45
----------
OVERALL TOTAL 46,150.47
==========
</TABLE>
24
<PAGE> 4
PBI Checkbook NEIGHBORHOOD INNS OF CHICAGO 8/20/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 1
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
INFLOWS
501:
Amex 23,735.29
Cash Room Rev 16,914.10
Diners Club 2,037.71
Discover 7,552.53
Visa&MC 88,542.28
----------
TOTAL 501 138,781.91
----------
TOTAL INFLOWS 138,781.91
OUTFLOWS
110:
Cash In (5,872.38)
Cash Out 5,872.38
----------
TOTAL 110 0.00
703:
Cable Television 1,163.34
----------
TOTAL 703 1,163.34
708:
Food Service:
Breakfast Serv 4,760.03
----------
TOTAL FOOD SERVICE 4,760.03
----------
TOTAL 708 4,760.03
709:
Hotel Supplies:
Amenities 370.84
Cleaning Supp. 566.88
Laundry Supp. 942.94
----------
TOTAL HOTEL SUPPLIES 1,880.66
----------
TOTAL 709 1,880.66
713:
Linens 2,211.98
----------
TOTAL 713 2,211.98
716:
Elevator
Elevator Maintenance 125.00
----------
TOTAL ELEVATOR 125.00
----------
TOTAL 716 125.00
717:
Maint & Repair:
Equipment 952.20
Repairs 152.66
Supplies 765.08
----------
TOTAL MAINT & REPAIR 1,869.94
----------
TOTAL 717 1,869.94
727:
Payroll:
</TABLE>
25
<PAGE> 5
PBI Checkbook NEIGHBORHOOD INNS OF CHICAGO 8/20/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 2
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Administrative 7,432.11
Front Desk 7,357.83
Garnishment 1,593.48
Housekeeping 7,599.25
Maintenance 2,994.43
----------
TOTAL PAYROLL 26,977.10
----------
TOTAL 727 26,977.10
728:
Contract Labor 2,144.25
----------
TOTAL 728 2,144.25
729:
Scavenger 170.00
----------
TOTAL 729 170.00
804:
Marketing Exp.:
Crtve&Prdctn 349.41
Direct Mrktng 228.33
Media Expense 1,890.91
Mktng Mgmnt 1,668.00
----------
TOTAL MARKETING EXP 4,136.65
----------
TOTAL 804 4,136.65
806:
Commissions:
Travel Agent Co 780.59
Utell Int'l 317.84
----------
TOTAL COMMISSIONS 1,098.43
----------
TOTAL 806 1,098.43
811:
Credit Card Fee:
Discount Fees 2,924.70
----------
TOTAL CREDIT CARD FEE 2,924.70
----------
TOTAL 811 2,924.70
819:
Dues 52.00
Newspapers 535.06
----------
TOTAL 819 587.06
828:
Insurance:
Health Insurance 1,410.24
Workmans Comp 1,285.00
----------
TOTAL INSURANCE 2,695.24
----------
TOTAL 828 2,695.24
842:
Office Expense:
Equipment 27,684.57
Office PR Exp. 210.00
Supplies 582.78
----------
TOTAL OFFICE EXPENSE 28,477.35
</TABLE>
26
<PAGE> 6
PBI Checkbook NEIGHBORHOOD INNS OF CHICAGO 8/20/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 3
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
----------
TOTAL 842 28,477.35
847:
Parking:
Parking Sticker 7,000.00
----------
TOTAL Parking 7,000.00
----------
TOTAL 847 7,000.00
848:
Payroll Pro Exp 110.30
----------
TOTAL 848 110.30
852:
Postage & Delivery 1,176.35
----------
TOTAL 852 1,176.35
855:
Prof Fees Other 25.00
----------
TOTAL 855 25.00
860:
Rent:
Equipment 82.96
----------
TOTAL RENT 82.96
----------
TOTAL 860 82.96
870:
Taxes:
City Tax 3,927.00
Maintenance Fee 52.00
Payroll 9,719.24
Property Escrow 3,304.01
State Tax 15,247.00
Telecommunication 130.00
----------
TOTAL TAXES 32,379.25
----------
TOTAL 870 32,379.25
876:
Telephone:
1-800 AT&T 994.28
Local Service 389.75
Long Distance 356.01
----------
TOTAL TELEPHONE 1,740.04
----------
TOTAL 876 1,740.04
881:
Utilities:
Electric 1,933.19
Gas - Broker 512.04
Gas - Peoples 767.82
Water 653.23
----------
TOTAL UTILITIES 3,866.28
----------
TOTAL 881 3,866.28
----------
TOTAL OUTFLOWS 127,601.91
</TABLE>
27
<PAGE> 7
Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/19/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 1
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
INFLOWS
501:
Amex Dep. 40,241.02
Cash Room Rov 16,887.52
Diners Card Dep 2,783.14
Discover Dep. 8,036.86
Mastercard & Visa 93,263.89
----------
TOTAL 501 161,212.43
----------
TOTAL INFLOWS 161,212.43
OUTFLOWS
317-03:
Payroll Taxes 9,687.75
----------
TOTAL 317-03 9,687.75
503:
Refunds:
Parking Refund 3.25
Room Refund 155.72
----------
TOTAL REFUNDS 158.97
----------
TOTAL 503 158.97
508:
Vend & Ldry Rfnds 7.40
----------
TOTAL 508 7.40
550:
City Tax 4,212.00
State Tax 16,351.00
----------
TOTAL 550 20,563.00
601:
Laundry Expense 260.00
Vending 101.17
----------
TOTAL 601 361.17
610:
Food Service:
Breakfast Svc 6,206.89
Room Service 408.54
----------
TOTAL FOOD SERVICE 6,615.43
----------
TOTAL 610 6,615.43
707:
Cable Music 38.97
Cable Television 609.71
----------
TOTAL 707 648.68
709:
Decorating 193.07
----------
TOTAL 709 193.07
740:
Hotel Supplies:
</TABLE>
28
<PAGE> 8
Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/19/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 2
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Amenities 3,163.79
Cleaning Suppls 555.49
Laundry Suppls 1,183.75
----------
TOTAL HOTEL SUPPLIES 4,903.03
----------
TOTAL 740 4,903.03
748:
Linens 1,664.18
----------
TOTAL 748 1,664.18
754:
Elevator:
Elevator Maint 125.00
----------
TOTAL ELEVATOR 125.00
----------
TOTAL 754 125.00
757:
Maint & Repair:
Maint, Outside 636.00
Repairs 682.84
Supplies 1,070.95
----------
TOTAL MAINT & REPAIR 2,389.79
----------
TOTAL 757 2,389.79
775:
Scavenger 160.00
----------
Total 775 160.00
780:
Uniforms 148.41
----------
TOTAL 780 148.41
804:
Marketing Exp.:
Marketing Mngmt 1,668.00
Media Expense 2,357.56
Prod & Crtv Exp 577.77
Promo & Events 19.25
----------
TOTAL MARKETING EXP 4,622.58
----------
TOTAL 804 4,622.58
806:
Commission:
Travel Agents 1,826.91
Utell 391.53
----------
TOTAL COMMISSION 2,218.44
----------
TOTAL 806 2,218.44
811:
Credit Card:
Discount Fees 3,270.74
----------
TOTAL CREDIT CARD 3,270.74
----------
TOTAL 811 3,270.74
</TABLE>
29
<PAGE> 9
Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/19/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 3
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
819:
Dues (600.00)
----------
TOTAL 819 (600.00)
822:
Dining & Entertainment 45.00
----------
TOTAL 822 45.00
825:
Rental Equip 62.22
----------
TOTAL 825 62.22
829:
Health Insurance 2,849.97
----------
TOTAL 829 2,849.97
837:
Licenses-Permits 25.00
----------
TOTAL 837 25.00
841:
Parking:
Parking Rental 97.00
Parking Sticker 4,074.00
----------
TOTAL PARKING 4,171.00
----------
TOTAL 841 4,171.00
846:
Office Expense:
Computer Exp. (740.00)
Misc. Expenses 210.00
Office Supplies 426.95
Service Agrmts 1,249.50
----------
TOTAL OFFICE EXPENSE 1,146.45
----------
TOTAL 846 1,146.45
847:
Payroll Pro Exp 139.90
----------
TOTAL 847 139.90
852:
Postage & Delivery 141.91
----------
TOTAL 852 141.91
855:
Prof Fees Other 49.54
----------
TOTAL 855 49.54
871:
Payroll:
Administrative 6,801.89
Front Desk 7,725.13
Housekeeping 8,773.05
Maintenance 1,956.50
----------
TOTAL Payroll 25,256.57
----------
TOTAL 871 25,256.57
</TABLE>
30
<PAGE> 10
Republic Bank NEIGHBORHOOD INNS OF CHICAGO 8/19/98
Cash Flow Report
7/l/98 Through 7/31/98
Page 4
<TABLE>
<CAPTION>
7/1/98-
Category Description 7/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
878:
Taxes:
Maintenance Fee 51.00
Prprty Tax Escr 4,035.61
Telecommunication 129.00
----------
TOTAL TAXES 4,215.61
----------
TOTAL 878 4,215.61
881:
Telephone:
1-800 Service 1,350.97
Long Distance 363.62
----------
TOTAL TELEPHONE 1,714.59
----------
TOTAL 881 1,714.59
891:
Electric 4,240.15
----------
TOTAL 891 4,240.15
893:
Gas Utilities:
Gas - Broker 523.50
Gas - Peoples 789.42
----------
TOTAL GAS UTILITIES 1,312.92
----------
TOTAL 893 1,312.92
895:
Water 730.13
----------
TOTAL 895 730.13
Furn. & Appl. 321.55
Newspapers 730.36
----------
TOTAL OUTFLOWS 104,290.51
----------
OVERALL TOTAL 56,921.92
==========
</TABLE>
31
<PAGE> 1
EXHIBIT 99.14
SOUTHGREEN APARTMENTS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1997
<PAGE> 2
Independent Auditors' Report
To the Board of Trustees
Transcontinental Realty Investors, Inc.
We have audited the accompanying statement of revenues and direct operating
expenses of Southgreen Apartments for the year ended December 31, 1997. This
statement of revenues and direct operating expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
statement of revenues and direct operating expenses 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 revenues and direct operating expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
direct operating expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of revenues and direct operating expenses
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 revenues and direct operating expenses referred
to above presents fairly, in all material respects, the revenues and direct
operating expenses of Southgreen Apartments for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
FARMER, FUQUA, HUNT & MUNSELLE, P.C.
Dallas, Texas
February 2, 1999
<PAGE> 3
SOUTHGREEN APARTMENTS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
Year Ended December 31, 1997
<TABLE>
<S> <C>
REVENUES
Net rental revenues $ 477,291
Other revenues 17,484
----------
Total revenues 494,775
DIRECT OPERATING EXPENSES
Repairs and maintenance 90,454
Salaries and benefits 59,207
Property taxes 42,028
Utilities 20,917
Insurance 10,274
----------
Total direct operating expenses 222,880
----------
REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 271,895
==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 4
SOUTHGREEN APARTMENTS
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
December 31, 1997
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Southgreen Apartments is a 80-unit apartment complex located in
Bakersfield, California. During 1997, the property was owned by Monarch
Southgreen Partners, Ltd.
The accompanying financial statement does not include a provision for
depreciation and amortization, bad debt expense, interest expense, or
income taxes. Accordingly, this statement is not intended to be a
complete presentation of the results of operations.
NOTE 2: ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 3: OTHER REVENUES
Other revenues consist of the following:
<TABLE>
<S> <C>
Forfeited deposits $ 7,330
Laundry and vending income 4,118
Miscellaneous income 3,461
Late fees and NSF charges 2,575
-----------
$ 17,484
============
</TABLE>
NOTE 4: SUBSEQUENT EVENT
The property was sold to Transcontinental Realty Investors, Inc., a
Nevada corporation, on December 23, 1998.
<PAGE> 1
EXHIBIT 99.15
PDINCSTSUM INCOME STATEMENT SUMMARY PAGE 1
M2 SOUTHGREEN APARTMENTS SYSTEM DATE: 07/06/98
MSP SELECT DATE: 07/06/98
Cur. Period 06/98 As of 12:05:53
Set. Period 06/98 JUNE 15, 1998
<TABLE>
<CAPTION>
CURRENT CURRENT YTD YTD
ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE
RENT PER SCHEDULE 43,720 105.4% 43,245 475 259,845 105.7% 257,470 2,375
LOSS/GAIN TO LEASE (2,234) (5.4)% (1,545) (689) (14,034) (5.7)% (10,270) (3,764)
-------- -------- -------- -------- -------- -------- -------- --------
GROSS POSSIBLE RENT 41,486 100.0% 41,700 (214) 245,811 100.0% 247,200 (1,389)
-------- -------- -------- -------- -------- -------- -------- --------
VACANCY LOSS 2,789 6.7% 800 (1,989) 6,805 2.8% 4,800 (2,005)
OTHER RENTAL LOSSES 278 0.7% 0 (278) (175) (0.1)% 0 175
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL RENTAL LOSSES 3,067 7.4% 800 (2,267) 6,630 2.7% 4,800 (1,830)
-------- -------- -------- -------- -------- -------- -------- --------
NET RENTAL REVENUE 38,419 92.6% 40,900 (2,481) 239,181 97.3% 242,400 (3,219)
TOTAL OTHER REVENUE 1,110 2.7% 1,900 (790) 8,142 3.3% 11,400 (3,258)
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL REVENUE 39,529 95.3% 42,800 (3,271) 247,323 100.6% 253,800 (6,477)
-------- -------- -------- -------- -------- -------- -------- --------
OPERATING EXPENSES
SALARY EXPENSE 4,670 11.3% 5,402 732 32,527 13.2% 32,412 (115)
MANAGEMENT FEES 1,944 4.7% 1,704 (240) 12,041 4.9% 10,104 (1,937)
PROPERTY ADMINISTRATION 552 1.3% 490 (62) 3,925 1.6% 2,940 (985)
LEASING EXPENSE 1,290 3.1% 400 (890) 2,616 1.1% 2,400 (216)
UTILITIES EXPENSE 1,463 3.5% 1,645 182 9,514 3.9% 9,870 356
SERVICE EXPENSES 2,329 5.6% 2,331 2 15,701 6.4% 14,286 (1,415)
CLEANING & DECORATING 2,299 5.5% 600 (1,699) 3,750 1.5% 3,600 (150)
REPAIRS & MAINTENANCE 1,104 2.7% 835 (269) 4,941 2.0% 5,310 369
PROPERTY TAXES 5,422 13.1% 3,634 (1,788) 30,480 12.4% 21,804 (8,676)
HAZARD INSURANCE 851 2.1% 838 (13) 5,066 2.1% 5,028 (38)
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL OPERATING EXPENSES 21,924 52.8% 17,879 (4,045) 120,562 49.0% 107,754 (12,808)
-------- -------- -------- -------- -------- -------- -------- --------
NET OPERATING INCOME 17,605 42.4% 24,921 (7,316) 126,761 51.6% 146,046 (19,285)
PROPERTY REPLACEMENT
RECURRING REPLACEMENT 1,537 3.7% 1,000 (537) 4,737 1.9% 6,000 1,263
NON-RECURRING REPLACEMENT 9,800 23.6% 0 (9,800) 43,046 17.5% 0 (43,046)
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL PROPERTY REPLACEMENT 11,337 27.3% 1,000 (10,337) 47,783 19.4% 6,000 (41,783)
-------- -------- -------- -------- -------- -------- -------- --------
AVAILABLE FOR DEBT SERVICE 6,268 15.1% 23,921 (17,653) 78,978 32.1% 140,046 (61,068)
TOTAL DEBT SERVICE 16,289 39.3% 16,000 (289) 97,567 39.7% 96,000 (1,567)
-------- -------- -------- -------- -------- -------- -------- --------
CASH FLOW (DEFICIT) (10,021) (24.2)% 7,921 (17,942) (18,589) (7.6)% 44,046 (62,635)
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
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