SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996 Commission file number 0-13693
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
(Exact name of registrant as specified in charter)
Massachusetts 13-6850434
------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3111 Paces Mill Road, Suite A-200, Atlanta, GA 30339
- ---------------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 984-9500
-----------------
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
--- --
Shares of Beneficial Interest outstanding at November 13, 1996: 1,080,531
<PAGE>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
INDEX OF FINANCIAL INFORMATION
PART I FINANCIAL INFORMATION PAGE
- ------ --------------------- ----
Item 1 Financial Statements
Consolidated Balance Sheets at September 30, 1996 (unaudited)
and December 31, 1995 3
Consolidated Statements of Operations (unaudited) for the
three and nine months ended September 30, 1996 and 1995 4
Consolidated Statements of Shareholders' Equity for the
year ended December 31, 1995 and the nine months
ended September 30, 1996 (unaudited) 5
Consolidated Statements of Cash Flows (unaudited)
for the nine months ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II OTHER INFORMATION/SIGNATURE
- ------- ---------------------------
Item 6 Exhibits and Reports on Form 8-K 13
Signature Page 14
<PAGE>
<TABLE>
<CAPTION>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
---------------- ----------------
(unaudited)
<S> <C> <C>
ASSETS
Real estate investments:
Mortgage loans receivable, net of valuation allowance
of $895,000 at December 31, 1995 (note 2) $ 0 $ 700,000
Real estate assets:
Real estate assets less accumulated depreciation of
$512,615 and $374,523 at September 30, 1996 and
December 31, 1995 respectively (note 3) 10,894,765 2,357,533
---------------- ----------------
10,894,765 3,057,533
Cash and cash equivalents 193,514 18,470,031
Cash escrows 268,235 0
Receivables and prepaid assets 223,079 346,057
Deferred costs less accumulated amortization of
$37,258 and $23,754 at September 30, 1996 and
December 31, 1995 respectively (note 4) 221,298 4,736
---------------- ----------------
Total Assets $ 11,800,891 $ 21,878,357
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage payable (note 6) $ 7,383,961 $ 0
Line of credit (note 6) 1,568,104 0
Accounts payable and accrued liabilities 417,242 301,358
Due to affiliate 0 292,887
---------------- ----------------
9,369,307 594,245
---------------- ----------------
Shareholder's equity:
Shares of beneficial interest, without par value,
unlimited shares authorized, 1,080,540 shares
issued and outstanding (note 8 ) 36,972,784 36,973,249
Cumulative earnings 38,078,279 38,689,392
Cumulative distributions (72,619,479) (54,378,529)
---------------- ----------------
2,431,584 21,284,112
---------------- ----------------
Total Liabilities and Shareholders' Equity $ 11,800,891 $ 21,878,357
================ ================
(See accompanying notes)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the three months For the nine months
ended September 30, ended September 30,
------------------------------ ------------------------------
1996 1995 1996 1995
------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Interest income $ 399 $ 105,843 $ 92,302 $ 757,491
Income from partnership (note 5) 0 430,040 0 1,284,882
Rental income 612,911 157,519 942,533 454,409
Loan commitment fees 0 5,611 0 16,835
Miscellaneous income (note 2) 0 0 141,229 0
------------- --------------- -------------- --------------
613,310 699,013 1,176,064 2,513,617
------------- --------------- -------------- --------------
EXPENSES
Investment advisor's fees 0 115,729 333,461 256,582
Trustees' fees and expenses 20 16,498 44,797 51,373
Professional fees 68,380 60,777 447,070 208,936
Other operating expenses 78,505 59,198 242,680 190,315
Property operating expenses 230,857 89,058 332,403 243,078
Interest expense (note 6) 200,945 0 208,370 0
Depreciation and amortization 110,696 101,563 151,596 271,590
------------ --------------- -------------- --------------
689,403 442,823 1,760,377 1,221,874
------------- --------------- -------------- --------------
Income (loss) before sale of real estate investment (76,093) 256,190 (584,313) 1,291,743
------------- --------------- -------------- --------------
GAIN AND LOSS ON REAL ESTATE
Gain (loss) on sale of real estate investment(notes 2&3) 0 (150,300) (26,800) 2,525
Allowance to reduce mortgage receivable to
fair market value (note 2) 0 0 0 (1,647,000)
------------- --------------- -------------- --------------
0 (150,300) (26,800) (1,644,475)
------------- --------------- -------------- --------------
Net income (loss) $ (76,093) $ 105,890 $ (611,113) $ (352,732)
============= =============== ============== ==============
EARNINGS PER SHARE
Income (loss) before sale of real estate investment $ (0.07) $ 0.24 $ (0.54) $ 1.19
Gain (loss) on sale of real estate investment 0.00 (0.14) (0.03) (1.52)
------------- --------------- -------------- --------------
Net income (loss) $ (0.07) $ 0.10 $ (0.57) $ (0.33)
============= =============== ============== ==============
WEIGHTED AVERAGE NUMBER OF SHARES (Note 8) 1,080,540 1,080,625 1,080,540 1,080,625
============= =============== ============== ==============
(See accompanying notes)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the year ended December 31, 1995 and the nine months ended September 30, 1996
(unaudited)
Shares of Total
beneficial Cummulative Cummulative shareholders'
interest earnings distributions equity
------------ -------------- ----------------------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 $ 50,200,591 $ 38,110,846 $(54,378,529) $ 33,932,908
Net Income 0 578,546 0 578,546
Distributions to shareholders
(1.53 per share return of capital
on a federal income tax basis) (13,227,342) 0 0 (13,227,342)
------------ -------------- ------------- -------------
BALANCE AT DECEMBER 31, 1995 36,973,249 38,689,392 (54,378,529) 21,284,112
Net Loss 0 (611,113) 0 (611,113)
Retirement of Shares (465) 0 0 (465)
Distributions to shareholders 0 0 (18,240,950) (18,240,950)
------------ -------------- ------------- -------------
BALANCE AT SEPTEMBER 30, 1996 $ 36,972,784 $ 38,078,279 $(72,619,479) $ 2,431,584
============ ============== ============= =============
(See accompanying notes)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the nine months
ended September 30,
---------------------------------------
1996 1995
--------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (611,113) $ (352,732)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 151,596 271,590
(Gain) loss on sale of real estate (note 3) 26,800 1,644,475
Decrease (increase) in escrows (268,236) 0
Decrease (increase) in deferred lease commissions (5,639) 0
Decrease (increase) in interest receivable and prepaid assets 122,978 109,646
(Decrease) increase in accounts payable, accrued liabilities
and due to affiliate (177,003) 353
--------------- ----------------
Total adjustments (149,504) 2,026,064
--------------- ----------------
Net cash provided by (used in) operating activities (760,617) 1,673,332
--------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of The Thicket Apartments (note 3) (8,660,900) 0
Peachtree capital expenditures (9,077) (297)
The Thicket capital expenditures (5,347) 0
Principal payment on Hall Street note (note 2) 0 2,000,000
Net proceeds from sale of Hawthorne (notes 2 & 3) 673,200 3,264,696
Net proceeds from sale of Arbutus & Pacesetter (note 2) 0 6,384,700
--------------- ----------------
Net cash provided by (used in) investing activities (8,002,124) 11,649,099
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from mortgage payable (note 6) 7,392,000 0
Net proceeds from line of credit (note 6) 1,568,104 0
Deferred financing costs (note 4) (224,426) 0
Principal repayment on mortgage payable (note 6) (8,039) 0
Purchase of retired shares (465) 0
Distributions to shareholders (18,240,950) (6,310,850)
--------------- ----------------
Net cash provided by (used in) financing activities (9,513,776) (6,310,850)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (18,276,517) 7,011,581
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 18,470,031 2,555,662
--------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 193,513 $ 9,567,243
=============== ================
(See accompanying notes)
<FN>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
The Trust sold Hawthorne Research and Development Facility on March 30, 1995 for $5,095,000. The Trust took back a note for
$1,595,000 which was discounted to $1,493,200 due to its below-market interest rate. As of September 30, 1995, the amortized
discount increased the note balance to $1,518,650 (see note 2).
</FN>
</TABLE>
<PAGE>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
(unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
The financial statements of the Trust are consolidated and include all the
accounts of the Trust, its wholly-owned operating partnership, Vinings
Investment Properties, L.P., a Delaware limited partnership (the "Operating
Partnership"), and subsidiaries. Through its ownership of Vinings Holdings,
Inc., a Delaware corporation and wholly-owned subsidiary which is a limited
partner of the Operating Partnership, and its limited and general partnership
interests in the Operating Partnership, the Trust was a 100% economic owner of
the Operating Partnership at September 30, 1996 (this structure is commonly
referred to as an umbrella partnership real estate investment trust or
"UPREIT"). The term "Trust" as used herein means the Trust and its subsidiaries
on a consolidated basis (including the Operating Partnership and its
subsidiaries), or, where the context so requires, Vinings Investment Properties
Trust only. Certain prior period amounts have been reclassified to conform with
the current financial statement presentation.
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments necessary for a fair presentation
have been included. Operating results for the nine month period (consisting only
of normal recurring adjustments) ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Vinings Investment Properties Trust and
Subsidiaries (formerly known as Mellon Participating Mortgage Trust Commercial
Properties Series 85/10 and Subsidiaries) Annual Report on Form 10-K for the
year ended December 31, 1995.
NOTE 2 - MORTGAGE LOANS RECEIVABLE
Hall Street Investment
- ----------------------
On February 22, 1995, the borrower prepaid the outstanding note receivable
balance of $2 million with accrued interest. On February 26, 1996, the Trust
received $141,229 from the termination of the Receivership for the Hall Street
Property. The Trust had completed the foreclosure sale of the Hall Street
Industrial Complex on October 4, 1994.
Hawthorne Research and Development Facility
- -------------------------------------------
On March 30, 1995, the Trust closed the sale of this investment (see note 3) to
Greens Realty Partnership, L.P., a California limited partnership, for
$5,095,000 of which $3,500,000 was paid at closing. The balance of $1,595,000
(the "Hawthorne Note"), was payable pursuant to a non-recourse purchase money
note with an interest rate of 5% per annum and was secured by a purchase money
deed of trust.
On January 3, 1996, the Trust sold the Hawthorne Note for $700,000. At December
31, 1995, the Trust had established a valuation allowance of $895,000.
Commissions and fees related to the Hawthorne Note were paid in January 1996,
resulting in an additional loss on sale of $26,800.
Arbutus and Pacesetter Investment
- ---------------------------------
The Trust's investment in the Arbutus Shopping Center and Pacesetter Shopping
Center had been at respective book values of $4,350,000 and $3,812,000. On
August 12, 1995, the Trust closed the sale of the two mortgages at $3,615,000
for Arbutus and $2,900,000 for Pacesetter. These sales resulted in a total loss
of $1,797,300, comprised of a $1,647,000 write-down to reflect the realizable
value plus selling and legal expenses of $150,300.
NOTE 3 - REAL ESTATE ASSETS
The Thicket Apartments
- ----------------------
On June 28, 1996, Thicket Apartments, L.P. ("Thicket LP"), a Delaware limited
partnership and an indirect wholly-owned subsidiary of the Trust, acquired The
Thicket Apartments, a 254-unit apartment complex located in Atlanta, Georgia.
Thicket LP purchased The Thicket Apartments for a cash purchase price of
$8,650,000, financed by a mortgage loan on the acquired property of $7,392,000.
The Trust also obtained a secured line of credit, a portion of which was used to
finance the transaction. Occupancy was 99% at September 30, 1996.
Peachtree Business Center
- -------------------------
PBC Acquisition Inc., a wholly owned subsidiary of the Trust, owns Peachtree
Business Center ("Peachtree"), a single-story business park with approximately
75,000 square feet of gross leasable space, located in metropolitan Atlanta,
Georgia. Occupancy was 100% at September 30, 1996.
Hawthorne Research and Development Facility
- -------------------------------------------
This investment was a $14.25 million first mortgage loan secured by a research
and development facility located in Hawthorne, California. The borrower was an
independent entity that leased the entire facility to the Northrop Corporation
through January 31, 1994. The scheduled maturity for the loan was May 31, 1995.
In January 1992, the borrower defaulted on the loan. On February 26, 1992, the
Trust obtained a court-appointed receiver that ultimately resulted in the Trust
receiving title to the land and buildings ("Hawthorne") through a foreclosure
sale on June 19, 1992. In January 1994, the Northrop Corporation vacated the
building.
The value of this investment was unfavorably impacted by declining rental rates
for research and development facilities in the Hawthorne area. From 1992 through
1994, the Trust reduced its carrying value to reflect this decline. At December
31, 1994, the Trust reduced this investment to its estimated net realizable
value of $4,605,072.
This investment was sold on March 30, 1995 (see note 2) for $5,095,000. The
recapture of depreciation taken on Hawthorne and additional expenses paid after
the closing resulted in a realized gain of $152,825.
<PAGE>
NOTE 4 - DEFERRED COSTS
Deferred costs include financing costs totaling $224,426 related to the
acquisition of The Thicket Apartments which are being amortized over the life of
the mortgage loan, and leasing commissions totaling $34,129 paid to an
unaffiliated management company that manages Peachtree Business Center which are
being amortized over the lives of the individual leases. Accumulated
amortization as of September 30, 1996 totals $9,750 and $27,508 respectively.
NOTE 5 - INVESTMENT IN PARTNERSHIP
The Trust invested $14.7 million as a limited partner in a partnership with a
total capitalization of $41.5 million that owns 33 stores leased to Pier 1 under
net leases with initial terms of fifteen years. On December 31, 1995, the Trust
and MP GP, Inc. along with certain other partners of the Partnership sold their
limited partner and general partner interests, respectively, to Pier 1. Total
sales proceeds to the Trust and MP GP, Inc. were $15,788,680 which, after legal
and advisor fees of $189,648, resulted in a gain of $1,700,323.
NOTE 6 - NOTES PAYABLE
In connection with the acquisition of The Thicket Apartments, the Trust obtained
a note in the amount of $7,392,000 secured by a first mortgage on the property.
The note bears interest at an annual rate of 9.04% and has a maturity date of
July 1, 2003. Monthly payments are due on the first day of each calendar month
in the amount of $59,690. In addition, the Security Deed calls for an escrow to
be held by the lender for the payment of annual real estate taxes and insurance
premiums.
In addition, the Trust obtained a $2,000,000 line of credit secured by
Peachtree. Payments of interest only at the prime rate are due monthly. A total
of $1,568,104 was drawn from the line as of September 30, 1996, all in
connection with the acquisition of The Thicket Apartments.
NOTE 7 - DISTRIBUTIONS
On February 2, 1996, the Trust paid a cash dividend of $16,856,750 or $1.95 per
share. On February 27, 1996, the Trust paid another cash dividend of $1,383,200
or $0.16 per share.
NOTE 8 - REVERSE SHARE SPLIT
On July 1, 1996, the Trust effected a 1-for-8 reverse share split of its
outstanding shares of beneficial interest, without par value. Shareholders
tendered their shares and received one share for every eight shares owned. The
Trust purchased any fractional shares at a cost of $5.50 per share. As of
September 30, 1996, a total of 85 shares worth of fractional shares had been
purchased and retired leaving an outstanding share balance of 1,080,540. The
weighted average number of shares for prior periods has been restated to reflect
the reverse share split.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
- -------
The Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The Trust's actual results could differ materially from those set forth
in the forward-looking statements. Certain factors that might cause such a
difference include the following: the inability of the Trust to identify
properties within its affiliates' existing multifamily property portfolios that
will have a strategic fit with the Trust; real estate investment considerations,
such as the cyclical nature of the real estate market generally and locally in
Georgia and the surrounding southeastern states, the national economic climate,
the local economic climate in Georgia and the surrounding southeastern states,
and the local real estate conditions and competition in Georgia and the
surrounding southeastern states; the possibility that the Trust will be unable
to procure financing to meet the needs of its current growth and expansion
strategy; and the ability of a property to generate revenues sufficient to meet
debt service payments and other operating expenses; and risks associated with
borrowing, such as the possibility that the Trust will not have sufficient funds
to make principal payments on outstanding debt and the possibility that
outstanding debt may be refinanced at higher interest rates or on terms
otherwise less favorable to the Trust.
The Trust is a finite-life real estate investment trust that was organized on
December 7, 1984. The Trust currently qualifies as, and intends to continue to
qualify as, a real estate investment trust under the Internal Revenue Code of
1986. The initial term of the Trust is twenty years, subject to earlier
termination by action of the Trustees and to extension by vote of a majority of
the shareholders.
On December 21, 1995, the Trust entered into a Tender Offer Agreement with an
unaffiliated third party (the "Purchaser"). Pursuant to the Tender Offer
Agreement, on January 31, 1996, the Purchaser commenced a cash tender offer (the
"Tender Offer") for a minimum of a majority and a maximum of 85% of the
outstanding shares. The Tender Offer expired in accordance with its terms on
February 28, 1996. The Purchaser accepted approximately 73.3% of the outstanding
shares. Upon the consummation of the Tender Offer, management and the Board of
Trustees of the Trust were replaced with individuals designated by the
Purchaser.
The Trust's original primary objective was to create a portfolio of commercial
real estate investments that produced stable current returns coupled with the
potential for realizing long-term appreciation. With the consummation of the
Tender Offer, new management contemplates converting the Trust into an
indefinite life real estate investment trust and has caused the Trust to expand
into the multifamily property markets. The Trust currently anticipates that
these properties will include certain properties within its affiliates' existing
multifamily property portfolios that meet certain criteria, as well as
properties acquired from unaffiliated third parties. In this regard, an UPREIT
structure was established with the creation of Vinings Investment Properties,
L.P., (the "Operating Partnership") on June 11, 1996. In addition, on June 28,
1996, Thicket Apartments, L.P. ("Thicket LP"), a Delaware limited partnership
and an indirect wholly-owned subsidiary of the Trust, acquired The Thicket
Apartments, a 254-unit apartment complex located in Atlanta, Georgia. Thicket LP
purchased The Thicket Apartments for a cash purchase price of $8,650,000,
financed by a mortgage loan on the acquired property of $7,392,000. The Trust
also obtained a secured line of credit, a portion of which was used to finance
the transaction. Management's plans for the Trust are more fully discussed in
the Annual Report on Form 10-K as filed with the Securities and Exchange
Commission.
As of September 30, 1996, approximately 92% of the Trust's total assets were
represented by two real estate assets. These investments were Peachtree Business
Center, a 75,000 square foot office building and The Thicket Apartments, a 254
unit apartment complex.
<PAGE>
Results of Operations
- ---------------------
Interest income of $399 was earned for the three months ended September 30, 1996
compared to $105,843 for the same period in 1995. For the nine month period
ended September 30, 1996 and 1995, interest income earned was $92,302 and
$757,491 respectively. The decrease in interest income from 1995 to 1996 is due
primarily to the absence of interest on mortgage loans receivable resulting from
the sale of the Arbutus and Pacesetter loans, the Hawthorne Note, and the payoff
of the Hall Street Note. All 1996 interest was generated primarily by cash
proceeds from the sale of Pier 1 and the Hawthorne Note.
There is no partnership income in 1996 as the Pier 1 interest was sold on
December 31, 1995. Partnership income for the three months and the nine months
ended September 30, 1995 was $430,040 and $1,284,882, respectively.
Rental income for the three months ended September 30, 1996 was $455,392 higher
than the rental income for the same period for 1995. This increase is due to the
income generated from The Thicket Apartments. For the nine months ended
September 30, 1996, rental income was $488,124 higher than the previous year. Of
this increase, $20,676 was generated from Peachtree Business Center, with the
balance being generated from The Thicket Apartments.
There is no loan commitment fee revenue in 1996 because it was fully amortized
in 1995. There is also no miscellaneous income for the three months ended
September 30, 1996. However, miscellaneous income of $141,229 for the nine
months ended September 30, 1996 is due to proceeds from the termination of the
Receivership for the Hall Street Property in February 1996.
There are no investment advisor's fees for the three months ended September 30,
1996 as compared to $115,729 for the same period in 1995. However, investment
advisor's fee expense for the nine months ended September 30, 1996 has increased
by $76,879 when compared to the same period in 1995. Through the third quarter
of 1995, this expense was directly related to the nature and value of the assets
under management and the income they produced. Beginning with the fourth quarter
of 1995 through the consummation of the Tender Offer in February 1996, the prior
Advisor was paid various fixed fees for asset management, asset liquidation and
the successful completion of the Tender Offer. Since the consummation of the
Tender Offer, the Trust has not paid advisor's fees.
Trustee's fees and expenses for the three months ended September 30, 1996
decreased by $16,478 over the same period in 1995. This decrease is a result of
the change in Trustees after the consummation of the Tender Offer. The current
Trustees are not receiving an annual retainer fee. The Trustee's fees and
expenses for the nine months ended September 30, 1996 decreased $6,576 over the
same period in 1995.
Professional fees for the three months ended September 30, 1996 are $7,603
higher than those for the same period in 1995. For the nine months ended
September 30, 1996, professional fees have increased by $238,134 when compared
to the same period in 1995. In the first quarter of 1996, the Trust incurred
significant legal expenses relating to the Tender Offer.
Other operating expenses include directors' and officers' insurance, shareholder
expenses, annual reporting costs and miscellaneous general and administrative
expenses. These expenses for the three months ended September 30, 1996 are
$78,505 compared to $59,198 for the same period in 1995. For the nine months
ended September 30, 1996 these expenses are $242,680 as compared to $190,315 for
the same period in 1995. The increases of $19,307 and $52,365, respectively, are
due primarily to higher costs for directors' and officers' insurance, reporting
costs, and professional fees incurred in connection with the tender offer.
Property operating expenses for the three months and the nine months ended
September 30, 1996 have increased by $141,799 and $89,325 respectively, as
compared to the same periods in 1995. These increases are due primarily to
property operating expenses related to the operation of The Thicket Apartments.
Interest expense for the three months and the nine months ended September 30,
1996 is interest on the mortgage payable as well as the line of credit, both of
which were incurred in connection with the acquisition of The Thicket
Apartments.
<PAGE>
Depreciation and amortization for the three months ended September 30, 1996
increased by $9,133 as compared to the same period in 1995. However,
depreciation and amortization for the nine months ended September 30, 1996
decreased by $119,994 as compared to the same period in 1995. These expenses
relate directly to the assets held during the respective periods of time. During
1995 depreciation was generated from the Pier I partnership interest. This
interest was sold on December 31, 1995 and, therefore, no depreciation from Pier
I is reflected in 1996. The Thicket Apartments was purchased on June 28, 1996.
Therefore, the third quarter of 1996 reflects depreciation generated from this
investment. Peachtree Business Center generated depreciation for both 1995 and
1996. In addition, loan costs related to the acquisition of The Thicket
Apartments are being amortized in the third quarter of 1996.
Liquidity and Capital Resources
- -------------------------------
Operating activities of the Trust provided net cash of $1,673,332 for the nine
months ended September 30, 1995. However, for the nine months ended September
30, 1996, net cash of $760,617 was used in operating activities. This is due to
the fact that the Trust's previous management was in the process of liquidating
all assets during 1995. Therefore, with the exception of Peachtree Business
Center, all of the investments which generated cash flow in 1995 were not held
by the Trust in 1996.
New management plans to expand the Trust's investments through acquisitions of
multi-family real estate, the first of which was The Thicket Apartments, as
shown in the net cash used in investing activities for the nine months ended
September 30, 1996. For the nine months ended September 30, 1995 net cash of
$11,649,099 was provided by investing activities was generated from the sale of
the Hall Street, Hawthorne, Arbutus and Pacesetter investments.
Net cash provided by financing activities in 1996 was generated from the
mortgage note payable and the line of credit obtained in connection with the
acquisition of The Thicket Apartments. Distributions to shareholders increased
from $6,310,850 for the nine months ended September 30, 1995 to $18,240,950 for
the nine months ended September 30, 1996, all as a result of the liquidation of
the Trust's investments.
The cash held by the Trust plus the cash flow from Peachtree Business Center and
The Thicket Apartments are expected to provide sources of liquidity as
management continues to implement its growth and expansion strategy for the
Trust. The Trust obtained a $2,000,000 line of credit secured by Peachtree
Business Center. At September 30, 1996, a total of $1,568,104 has been drawn on
the line of credit, leaving a balance of $431,896 to fund future capital
improvements and/or working capital needs. Management is currently exploring
additional financing alternatives including public or private offerings of the
Trust's securities.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K dated June 28, 1996 was filed with the Securities and
Exchange Commission. The filing reported the acquisition of The
Thicket Apartments and was amended on Form 8-K/A on September 11,
1996. The Thicket Apartments is a 254-unit apartment complex located
in Atlanta, Georgia.
<PAGE>
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 thereunto duly authorized.
Vinings Investment Properties Trust
By: /s/ Stephanie A. Reed
-----------------------
Stephanie A. Reed
Vice President
Dated: November 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
consolidated balance sheet and statement of operations for Vinings Investment
Properties Trust for the period ended September 30, 1996 and is qualified in its
entirety by reference to such financial statements as contained in the quarterly
report on Form 10-Q for the quarter ended September 30, 1996.
</LEGEND>
<CIK> 759174
<NAME> Vinings Investment Properties Trust
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 461749
<SECURITIES> 0
<RECEIVABLES> 34407
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11407380
<DEPRECIATION> 512615
<TOTAL-ASSETS> 11800891
<CURRENT-LIABILITIES> 0
<BONDS> 8952065
0
0
<COMMON> 0
<OTHER-SE> 2431584
<TOTAL-LIABILITY-AND-EQUITY> 11800891
<SALES> 0
<TOTAL-REVENUES> 1176064
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1552007
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208370
<INCOME-PRETAX> (584313)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (611113)
<EPS-PRIMARY> (0.57)
<EPS-DILUTED> 0
