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 JUNE 30, 1999
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)
(770) 984-9500
-------------------
Registrant's telephone number, including area code:
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 August 2, 1999: 1,100,503
<PAGE>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
INDEX OF FINANCIAL INFORMATION
-----------------------------------
PAGE
PART I FINANCIAL INFORMATION ----
Item 1 Financial Statements
Consolidated Balance Sheets as of June 30, 1999 (unaudited)
and December 31, 1998............................................... 3
Consolidated Statements of Operations (unaudited) for the
three months ended June 30, 1999 and 1998........................... 4
Consolidated Statements of Cash Flows (unaudited)
for the three months ended June 30, 1999 and 1998................... 5
Notes to Consolidated Financial Statements.......................... 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations................................. 15
PART II OTHER INFORMATION/SIGNATURE
Item 4 Submission of Matters to a Vote of Security Holders................. 20
Item 6 Exhibits and Reports on Form 8-K.................................... 21
Signature........................................................... 22
<PAGE>
<TABLE>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
-------------------------------------
<CAPTION>
June 30, December 31,
-------------- ---------------
1999 1998
-------------- ---------------
ASSETS
<S> <C> <C>
Real estate assets:
Land................................................................... $ 8,247,900 $ 2,884,500
Buildings and improvements............................................. 55,572,437 15,399,690
Furniture, fixtures & equipment........................................ 3,739,744 1,025,222
Less: accumulated depreciation............................................ (2,245,207) (1,664,678)
-------------- ---------------
Net real estate assets................................................. 65,314,874 17,644,734
Investment in unconsolidated Joint Venture................................. 1,687,332 -
Cash and cash equivalents.................................................. 396,381 158,302
Restricted cash............................................................ 1,719,992 458,877
Receivables and other assets............................................... 173,713 694,998
Deferred financing costs, less accumulated amortization of $97,583 and
$77,258 at June 30, 1999 and December 31, 1998, respectively........... 147,981 139,064
Deferred leasing costs, less accumulated amortization of $46,203 and
$32,861 at June 30, 1999 and December 31, 1998, respectively........... 51,069 52,203
-------------- ---------------
Total assets............................................................... $ 69,491,342 $ 19,148,178
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable..................................................... $ 55,231,119 $ 13,640,065
Line of credit............................................................. 935,000 2,000,000
Accounts payable and accrued liabilities................................... 1,642,933 546,249
Distribution payable....................................................... 158,591 -
Acquisition advances from Joint Venture.................................... 363,837 -
-------------- ---------------
Total liabilities................................................. 58,331,480 16,186,314
-------------- ---------------
Minority interests of unitholders in Operating Partnership:
Preferred partnership interests........................................ 8,521,239 -
Common partnership interests........................................... 476,518 534,892
-------------- ---------------
Total minority interests.......................................... 8,997,757 534,892
Shareholders' equity:
Shares of beneficial interest, without par value....................... 19,502,907 19,502,911
Cumulative earnings.................................................... 37,037,727 37,302,590
Cumulative distributions............................................... (54,378,529) (54,378,529)
-------------- ---------------
Total shareholders' equity........................................ 2,162,105 2,426,972
-------------- ---------------
Total liabilities and shareholders' equity................................. $ 69,491,342 $ 19,148,178
============== ===============
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
-----------------------------------------------
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
------------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
REVENUES
<S> <C> <C> <C> <C>
Rental revenues .............................................. $2,170,334 $ 987,560 $3,168,723 $1,964,375
Other property revenues....................................... 105,492 35,034 145,866 74,350
Other income.................................................. 6,270 1,032 18,270 1,629
------------- ------------- ------------- -------------
2,282,096 1,023,626 3,332,859 2,040,354
------------- ------------- ------------- -------------
EXPENSES
Property operating and maintenance............................ 846,533 430,974 1,244,082 803,644
Depreciation and amortization................................. 427,314 160,475 593,871 319,223
Amortization of deferred financing costs...................... 12,599 7,727 20,325 15,452
Interest expense ............................................. 956,304 330,224 1,288,383 661,715
General and administrative ................................... 118,300 194,510 261,837 299,711
Unusual item ................................................. - (349,351) - (261,386)
------------- ------------- ------------- -------------
2,361,050 774,559 3,408,498 1,838,359
------------- ------------- ------------- -------------
Income (loss) before equity in loss of unconsolidated
Joint Venture and minority interests ..................... (78,954) 249,067 (75,639) 201,995
Equity in loss of unconsolidated Joint Venture ............... (17,768) - (17,768) -
------------- ------------- ------------- -------------
Income (loss) before minority interests ...................... (96,722) 249,067 (93,407) 201,995
Minority interests in Operating Partnership:
Preferred partnership interests .......................... 229,830 - 229,830 -
Common partnership interests ............................. (58,973) 45,660 (58,374) 37,031
------------- ------------- ------------- -------------
Net income (loss) ............................................ $ (267,579) $ 203,407 $ (264,863) $ 164,964
============= ============= ============= =============
NET INCOME (LOSS) PER SHARE - BASIC ............................... $ (0.24) $ 0.19 $ (0.24) $ 0.15
============= ============= ============= =============
NET INCOME (LOSS) PER SHARE - DILUTED ............................. $ (0.24) $ 0.19 $ (0.24) $ 0.15
============= ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC ....................... 1,100,503 1,080,508 1,100,504 1,080,509
============= ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED ..................... 1,343,049 1,323,054 1,343,050 1,323,055
============= ============= ============= =============
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
------------------------------------------------
<CAPTION>
For the six months ended June 30,
------------------------------------
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) ..................................................... $ (264,863) $ 164,964
----------- --------------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ................................. 593,871 319,223
Amortization of deferred financing costs ...................... 20,325 15,452
Equity in loss of unconsolidated Joint Venture ................ 17,768 -
Minority interests in Operating Partnership:
Preferred partnership interests ............................ 229,830 -
Common partnership interests ............................... (58,374) 37,031
Changes in assets and liabilities, net of the effect
of real estate assets acquired
Restricted cash ............................................ (235,645) (120,906)
Receivables and other assets ............................... (5,307) (13,133)
Capitalized leasing costs .................................. (12,213) (12,979)
Accounts payable and accrued liabilities ................... 297,565 67,873
----------- -----------
Total adjustments ............................................. 847,820 292,561
----------- -----------
Net cash provided by operating activities ............................. 582,957 457,525
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of real estate assets ........................................ (6,066,073) -
Capital expenditures .................................................. (191,848) (70,291)
Investment in unconsolidated Joint Venture ............................ (1,705,100) -
Acquisition advances from Joint Venture ............................... 363,837 -
----------- -----------
Net cash used in investing activities ................................. (7,599,184) (70,291)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred financing costs .............................................. (29,242) -
Principal repayments on line of credit ................................ (1,065,000) (255,000)
Principal repayments on mortgage notes payable ........................ (101,449) (70,791)
Purchase of retired shares ............................................ (3) (14)
Proceeds from issuance of preferred partnership interests ............. 8,450,000 -
----------- -----------
Net cash provided by (used in) financing activities ................... 7,254,306 (325,805)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS ............................. 238,079 61,429
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ...................... 158,302 282,851
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............................ $ 396,381 $ 344,280
=========== ===========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
VININGS INVESTMENT PROPERTIES TRUST
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
June 30, 1999
-----------------------------------------------------
NOTE 1 - BUSINESS AND ORGANIZATION
Vinings Investment Properties Trust ("Vinings" or the "Trust") was
organized on December 7, 1984 as a mortgage real estate investment
trust ("REIT") whose original plan was to liquidate within
approximately ten years. On February 28, 1996, Vinings Investment
Properties, Inc. completed a tender offer to acquire control of the
Trust and to rebuild Vinings assets by expanding into the multifamily
real estate markets through the acquisition of garden style apartment
communities which are leased to middle-income residents. Current
management believes that these investments will provide attractive
sources of income to Vinings which will not only increase net income
and provide cash available for future distributions, but will increase
the value of Vinings' real estate portfolio as well.
Currently Vinings conducts all of its operations through Vinings
Investment Properties, L.P. (the "Operating Partnership"), a Delaware
limited partnership. As of June 30, 1999, the Trust was the sole 1%
general partner and an 80.94% limited partner in the Operating
Partnership. (This structure is commonly referred to as an umbrella
partnership REIT or "UPREIT").
On April 29, 1999, the Operating Partnership offered, in a private
transaction pursuant to a Securities Purchase Agreement (the "Purchase
Agreement"), Series A Convertible Preferred Partnership interests (the
"Preferred Units"), the proceeds from which were used to acquire
thirteen multifamily communities (collectively, the "Portfolio
Properties") from seventeen limited partnerships and limited liability
companies. Eight of the Portfolio Properties were purchased through
subsidiary partnerships of the Operating Partnership. The remaining
Portfolio Properties were purchased through a joint venture structure.
See Notes 3 and 4. As of June 30, 1999, a total of 1,988,235 Preferred
Units had been issued for an aggregate purchase price of $8,450,000.
See Note 5.
Vinings currently owns, through wholly owned subsidiaries, ten
apartment communities totaling 1,520 units and a 75,000 square foot,
single story business park. In addition, Vinings holds a 20% interest
in and is the general partner of an unconsolidated joint venture, which
owns through subsidiary partnerships five additional apartment
communities totaling 968 units. (See Note 4.) At June 30, 1999, the
average occupancy of Vinings portfolio, including the communities held
by the unconsolidated joint venture, was 94%.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The condensed 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
<PAGE>
management, all adjustments necessary (consisting only of normal
recurring adjustments) for a fair presentation have been included.
Operating results for the six month period ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1999.
The accompanying condensed consolidated financial statements of Vinings
include the consolidated accounts of the Trust and its subsidiaries.
All significant intercompany balances and transactions have been
eliminated in consolidation. Vinings accounts for its investment in the
unconsolidated joint venture using the equity method of accounting. The
term "Vinings" or "Trust" hereinafter refers to Vinings Investment
Properties Trust and its subsidiaries, including the Operating
Partnership.
The minority interests of the common unitholders in the Operating
Partnership on the accompanying balance sheets is calculated based on
the common unitholders' minority interest ownership percentage (18.06%
as of June 30, 1999) multiplied by the Operating Partnership's net
assets. The minority interests of the preferred unitholders on the
accompanying balance sheet represents cash contributed in exchange for
those units and the accrued liquidation preference of $0.21 per
Preferred Unit ($71,239 at June 30, 1999). The minority interests of
the common unitholders in the income or loss of the Operating
Partnership on the accompanying statements of operations is calculated
based on the weighted average number of common shares of beneficial
interest in Vinings (the "Shares") and ordinary interests in the
Operating Partnership (the "Common Units") outstanding during the
period. The minority interests of the preferred unitholders on the
statements of operations represents the accrued preferred 11% return on
the Preferred Units ($158,591 at June 30, 1999) and the accrued
liquidation preference of $0.21 per Preferred Unit for the three and
six months ended June 30, 1999. See Note 5.
These financial statements should be read in conjunction with Vinings'
audited consolidated financial statements and footnotes thereto
included in Vinings' Annual Report on Form 10-K for the year ended
December 31, 1998.
Net Income (Loss) Per Share
---------------------------
The following is a reconciliation of net income (loss) available to the
common shareholders and the weighted average shares used in Vinings'
basic and diluted net income (loss) per share computations:
<TABLE>
<CAPTION>
For the three months For the six months
Ended June 30, Ended June 30,
------------------------- --------------------------
1999 1998 1999 1998
------------------------- --------------------------
<S> <C> <C> <C> <C>
Net income (loss) - basic ............................. $(267,579) $203,407 $(264,863) $164,964
Minority interests in Operating Partnership:
Preferred partnership interests ................... - - - -
Common partnership interests ...................... 58,973 45,660 58,374 37,031
--------------------------- ---------------------------
Total minority interest ............................... 58,973 45,660 58,374 37,031
--------------------------- ---------------------------
Net income (loss) - diluted ........................... $(326,552) $249,067 $(323,237) $201,995
=========================== ===========================
Weighted average shares - basic ....................... 1,100,503 1,080,508 1,100,504 1,080,509
Dilutive Securities:
Weighted average Common Units ..................... 242,546 242,546 242,546 242,546
Weighted average Preferred Units .................. - - - -
Share options ..................................... - - - -
=========================== ===========================
Weighted average shares - diluted ..................... 1,343,049 1,323,054 1,343,050 1,323,055
=========================== ===========================
</TABLE>
<PAGE>
Both common and preferred units in the Operating Partnership held by
the minority unitholders are redeemable for Shares of the Trust on a
one-for-one basis, or for cash, at the option of the Trust. For the
three months and the six months ended June 30, 1999 options to purchase
108,750 shares were excluded and for the three months and the six
months ended June 30, 1998 options to purchase 26,000 shares and
107,250 shares, respectively, were excluded as the impact of such
options was antidilutive. For the three months and the six months ended
June 30, 1999 the Preferred Units, as hereinafter defined, totaling
1,988,235 were also excluded as the impact of such units was
antidilutive.
Income Taxes
------------
Vinings has elected to be taxed as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"). As a result, Vinings will
generally not be subject to federal income taxation on that portion of
its income that qualifies as REIT taxable income to the extent that
Vinings distributes at least 95% of its taxable income to its
shareholders and satisfies certain other requirements. Accordingly, no
provision for federal income taxes has been included in the
accompanying condensed consolidated financial statements.
Reclassifications
-----------------
Certain 1998 financial statement amounts have been reclassified to
conform with the current year presentation.
NOTE 3 - ACQUISITION
On May 1, 1999, Vinings, through its subsidiaries, completed the
acquisition of the Portfolio Properties from seventeen limited
partnerships and limited liability companies. Eight of the Portfolio
Properties (the "Vinings Properties") were purchased through subsidiary
partnerships of the Operating Partnership. The remaining Portfolio
Properties (the "Joint Venture Properties") were purchased through a
joint venture structure. See Note 4.
The Vinings Properties, totaling 1,064 units, were purchased by eight
individual partnerships in each of which Vinings Holdings, Inc., a
wholly owned subsidiary of the Trust, owns a .1% general partnership
interest and the Operating Partnership owns a 99.9% limited partnership
interest. The aggregate purchase price for the Vinings Properties was
$47,665,396 (excluding closing costs), which included the assumption of
debt of approximately $41,693,000 and the balance being paid in cash,
which was funded by the issuance of the Preferred Units, as hereinafter
defined. A total of approximately $749,200 in escrows held by the
mortgagees was also purchased.
<PAGE>
NOTE 4 - INVESTMENT IN UNCONSOLIDATED JOINT VENTURE
On May 1, 1999, Vinings also purchased, through a joint venture
structure, five apartment communities, totaling 968 units (the "Joint
Venture Properties"). The Joint Venture Properties were purchased by
nine individual partnerships in each of which Vinings Holdings, Inc., a
wholly owned subsidiary of the Trust, owns a .1% general partnership
interest and Vinings/CMS Master Partnership, L.P. (collectively, the
"Joint Venture"), a Delaware limited partnership, owns a 99.9% limited
partnership interest. The Operating Partnership has a .1% general
partner interest and a 19.98% limited partner interest in the Joint
Venture, for which it paid $1,705,100. This investment was funded by
the issuance of the Preferred Units. The remaining limited partnership
interests in the Joint Venture are held by an unaffiliated third party.
The Joint Venture was formed on March 22, 1999, primarily to acquire
the limited partner interest in limited partnerships that acquire,
operate, manage, hold and sell certain real property, specifically the
Joint Venture Properties. The aggregate purchase price paid by the
property partnerships for the Joint Venture Properties was $46,634,603
(excluding closing costs), which included the assumption of
approximately $39,265,000 of debt and the balance being paid in cash. A
total of approximately $716,400 in escrows held by the mortgagees was
also purchased.
Vinings accounts for its investment in the Joint Venture using the
equity method of accounting. The following is a summary of the results
of operations of the Joint Venture and Vinings'share of the equity in
the loss from the Joint Venture for the two month period from May 1,
1999 to June 30, 1999:
For the two
months ended
June
30, 1999
------------
Revenues ................................................. $1,190,696
Expenses:
Property operating and maintenance .................. 454,936
Depreciation and amortization ....................... 247,522
Interest expense .................................... 577,077
------------
Total Expenses .................................. 1,279,535
------------
Net loss for Joint Venture ............................... (88,839)
Vinings equity percentage ........................... 20%
------------
Vinings equity in loss of unconsolidated Joint Venture ... $ (17,768)
============
Distributions received by Vinings from Joint Venture ..... -
============
Cash flows provided by operating activities .............. $ 230,718
============
Cash flows used in investing activities .................. (8,515,391)
============
Cash flows provided by financing activities .............. $8,469,027
============
<PAGE>
The following summarizes the balance sheet of the Joint Venture as of June
30, 1999:
Real estates assets, net of accumulated depreciation ..... $46,863,523
Cash and other assets .................................... 1,766,309
------------
Total assets ................................... $48,629,832
============
Mortgage notes payable ................................... $39,233,809
Other liabilities ........................................ 959,762
------------
Total liabilities ................................... 40,193,571
------------
Capital - Vinings ........................................ 1,687,332
Capital - Other .......................................... 6,748,929
------------
Total capital ....................................... 8,436,261
------------
Total liabilities and capital .................. $48,629,832
============
Mortgage notes payable held by the Joint Venture are non-recourse fixed
rate notes secured by the individual properties. All of the notes
except one are insured by the U.S. Department of Housing and Urban
Development ("HUD") and therefore distributions from the properties are
subject to Surplus Cash as defined by HUD. The maturity dates of the
notes payable range from June 2007 to November 2037 and interest rates
range from 8.00% to 8.75%.
NOTE 5 - SHAREHOLDERS' EQUITY AND PREFERRED PARTNERSHIP INTERESTS
On April 29, 1999, the Operating Partnership offered, in a private
transaction pursuant to a Securities Purchase Agreement (the "Purchase
Agreement"), Series A Convertible Preferred Partnership interests (the
"Preferred Units"). The holders of Preferred Units are entitled to
receive cumulative preferential cash distributions at the per annum
rate of $0.4675 per Preferred Unit. Upon the occurrence of certain
triggering events, the holders of Preferred Units are entitled to
receive, in addition to an amount equal to any accumulated and unpaid
distributions on such holder's Preferred Units, a liquidation
preference of $4.46 per Preferred Unit, or, if any such triggering
event occurs prior to one year from the date of issuance $4.25 per
Preferred Unit.
Under certain circumstances, the holders of Preferred Units may convert
any part or all of such Preferred Units into Common Units, Common
Shares, or shares of preferred interests of Vinings ("Preferred
Shares"). In lieu of converting Preferred Units into Common Shares, the
Operating Partnership, in its sole discretion, may satisfy its
conversion obligations through certain cash payments, as further set
forth in the partnership agreement of the Operating Partnership.
Generally, the holders of Preferred Units do not have the right to vote
on any matter on which any general or limited partner of the Operating
Partnership may vote. The holders of Preferred Units do, however, have
the right to vote as a separate class of Partnership Interests on
certain transactions including, without limitation, certain
authorizations and issuances of preferred units of Partnership
Interests designated as ranking senior to the Preferred Units, certain
amendments to the Partnership Agreement, and certain sales or other
dispositions of assets of the Operating Partnership, certain mergers or
consolidations of the Operating Partnership, and transactions which
result in the liquidation of the Partnership.
<PAGE>
As of June 30, 1999, a total of 1,988,235 Preferred Units had been
issued for an aggregate purchase price of $8,450,000. The Operating
Partnership used the proceeds of such sales of Preferred Units to pay
the cash consideration for the Operating Partnership's interests in the
property partnerships that acquired the Vinings Properties, and its
interest in the Joint Venture. (See Notes 3 and 4.)
At the annual meeting of shareholders held on June 29, 1999, Vinings'
shareholders approved proposals to amend the Trust's Declaration of
Trust to decrease the total number of common shares of beneficial
interest authorized from an unlimited amount to 25,000,000 and to
authorize a new class of 7,050,000 preferred shares of beneficial
interest which, upon the affirmative vote of two-thirds of the Board of
Trustees, may be issued in such amounts, in one or more series, and
with such designations, preferences, limitations and relative rights
for each series as the Board of Trustees shall determine.
NOTE 6 - NOTES PAYABLE
Mortgage Notes Payable
----------------------
Mortgage notes payable were secured by the following apartment
communities at June 30, 1999 and December 31,1998, as follows:
<TABLE>
<CAPTION>
Fixed Interest
Rate as of Principal Balance as of
Maturity 6/30/99 6/30/99 12/31/98
----------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
The Thicket 07/01/2003 9.04 % $ 7,232,325 $ 7,262,759
Windrush 07/01/2024 7.50 % 6,330,992 6,377,306
Cottonwood 10/01/2036 8.875% 4,692,001 -
Delta Bluff 08/01/2036 9.25 % 6,213,451 -
Foxgate I 06/01/2037 8.50 % 6,610,467 -
Hampton House 08/01/2037 8.50 % 5,178,712 -
Heritage Place 10/01/2036 8.75 % 3,147,494 -
Northwoods 06/01/2034 8.75 % 4,492,799 -
River Pointe 01/01/2037 8.625% 5,992,312 -
Trace Ridge 07/01/2036 8.50 % 5,340,566 -
------------- --------------
Total $55,231,119 $13,640,065
============= ==============
</TABLE>
All of the notes except The Thicket are insured by HUD and therefore
distributions from the properties are subject to Surplus Cash as
defined by HUD.
<PAGE>
Scheduled maturities of the mortgage notes payable as of June 30, 1999
are as follows:
1999 $ 156,196
2000 332,715
2001 361,792
2002 393,425
2003 7,314,761
Thereafter 46,672,230
------------
Total $55,231,119
============
Line of Credit
-------------
On June 28, 1998 Vinings renewed its line of credit in the amount of
$2,000,000 for six months, which expired on December 28, 1998. Vinings
did not renew the line of credit and on February 4, 1999 one of the
independent Trustees purchased the line of credit from the bank and
Vinings paid interest to the Trustee monthly at the annual rate of
8.50% from such date through April 27, 1999, at which time Vinings
obtained a new line of credit in the amount of $2,000,000 from a
financial institution. The independent Trustee who purchased the line
of credit was repaid in full on April 27, 1999. The interest rate on
the line of credit at June 30, 1999 was 8.75%, which is one percent
over prime as posted in The Wall Street Journal. The principal balance
of the line of credit as of June 30, 1999 was $935,000 and the maturity
date is April 27, 2000.
NOTE 7 - RELATED PARTY TRANSACTIONS
On January 1, 1999, Vinings entered into management agreements with VIP
Management, LLC ("VIP"), an affiliate of the officers, who are also
Trustees of Vinings, to provide property management services for a fee
equal to varying percentages ranging from three and one half to six
percent of gross revenues, plus a fee for data processing. Prior to
January 1, 1999, Vinings had entered into management agreements with
Vinings Properties, Inc., also an affiliate of the officers of Vinings,
to provide property management services on substantially the same terms
as the current agreements. In addition, as a commitment to the
rebuilding of Vinings, prior to 1998 The Vinings Group, Inc., the
parent corporation of Vinings Properties, Inc. (collectively with VIP,
"The Vinings Group"), provided numerous services at no cost to Vinings
relating to administration, acquisition, and capital and asset advisory
services. Certain direct costs paid on Vinings' behalf were reimbursed
to The Vinings Group and beginning January 1, 1998, The Vinings Group
has charged Vinings for certain overhead charges. However, while
Vinings has been in its initial growth stages, The Vinings Group has
been committed to providing as many services as possible to promote the
Trust's growth.
<PAGE>
The following table reflects payments made to The Vinings Group:
<TABLE>
<CAPTION>
Three months Six months
Ended June 30, Ended June 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
Vinings
<S> <C> <C> <C> <C>
Management fees..................... $ 97,111 $46,669 $153,295 $100,207
Data processing fees................ 15,352 6,840 22,192 13,680
Overhead reimbursements............. 53,250 26,250 106,500 52,500
========== ========== ========== ==========
Total.......................... $165,713 $79,759 $281,987 $166,387
========== ========== ========== ==========
Joint Venture
Management fees..................... $ 48,636 - $48,636 -
Data processing fees................ 9,680 - 9,680 -
========== ========== ========== ==========
Total......................... $ 58,316 - $58,316 -
========== ========== ========== ==========
</TABLE>
On February 4, 1999 one of the independent Trustees purchased the
Trust's line of credit, which expired on December 28, 1998 and Vinings
paid interest to the Trustee monthly at the annual rate of 8.50%
through April 27, 1999, at which time the Trustee was repaid in full.
For more information regarding the line of credit see Note 6.
In connection with the acquisition of the Portfolio Properties, MFI
Realty, Inc., an affiliate of the officers, received fees totaling
$400,276 of which $167,103 was paid by the Operating Partnership and
$233,173 was paid by the Joint Venture.
The officers of the Trust have not received compensation from Vinings
for their services through June 30, 1999 except for restricted stock
awarded on July 1, 1998.
NOTE 8 - DISTRIBUTIONS
There were no distributions declared or distributed for the periods
ended June 30, 1999 and 1998. On August 6, 1999 Vinings declared a
dividend of five cents per share payable September 1, 1999 to
shareholders of record on August 16, 1999. Vinings intends to continue
to pay distributions to shareholders in amounts at least sufficient to
enable the Trust to qualify as a REIT. See Note 6.
NOTE 9 - CONTINGENCIES
Vinings is, from time to time, subject to various claims that arise in
the ordinary course of business. These matters are generally covered by
insurance. While the resolution of these matters cannot be predicted
with certainty, management believes that the final outcome of such
matters will not have a material adverse effect on the financial
position or results of operations of Vinings.
<PAGE>
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION
Vinings paid interest of $1,241,232 and $650,130 for the six months
ended June 30, 1999 and 1998, respectively. In connection with the
acquisition of the Vinings Properties, Vinings assumed mortgage
indebtedness totaling $41,692,503.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Overview
- --------
Vinings Investment Properties Trust ("Vinings" or the "Trust") was organized on
December 7, 1984 as a mortgage real estate investment trust ("REIT") whose
original plan was to liquidate within approximately ten years. On February 28,
1996, Vinings Investment Properties, Inc. completed a tender offer to acquire
control of the Trust and to rebuild Vinings' assets by expanding into the
multifamily real estate markets through the acquisition of garden style
apartment communities which are leased to middle-income residents. Current
management believes that these investments will provide attractive sources of
income to Vinings which will not only increase net income and provide cash
available for future distributions, but will increase the value of Vinings' real
estate portfolio as well.
Currently Vinings conducts all of its operations through Vinings Investment
Properties, L.P. (the "Operating Partnership"). As of June 30, 1999, the Trust
was the sole 1% general partner and an 80.94% limited partner in the Operating
Partnership. (This structure is commonly referred to as an umbrella partnership
REIT or "UPREIT").
On April 29, 1999, the Operating Partnership offered, in a private transaction
pursuant to a Securities Purchase Agreement (the "Purchase Agreement"), Series A
Preferred Partnership interests (the "Preferred Units"). See Note 5 to Vinings'
June 30, 1999 Condensed Consolidated Financial Statements. As of June 30, 1999,
a total of 1,988,235 Preferred Units had been issued for an aggregate purchase
price of $8,450,000, the proceeds from which were used to acquire thirteen
multifamily communities (collectively, the "Portfolio Properties") from
seventeen limited partnerships and limited liability companies. Eight of the
Portfolio Properties (the "Vinings Properties") were purchased through
subsidiary partnerships of the Operating Partnership. The remaining Portfolio
Properties (the "Joint Venture Properties") were purchased through a joint
venture in which the Operating Partnership has a 20% limited partner interest
and is the general partner (the "Joint Venture"). See Notes 3 and 4 to Vinings'
June 30, 1999 Condensed Consolidated Financial Statements.
The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with the accompanying condensed
consolidated financial statements of Vinings and the notes thereto.
Results of Operations
- ---------------------
Rental and other property revenues increased $1,253,232 or 123%, from $1,022,594
for the three months ended June 30, 1998 to $2,275,826 for the same period in
1999, and $1,275,864 or 63%, from $2,038,725 for the six months ended June 30,
1998 to $3,314,589 for the same period in 1999. This increase is due primarily
to the revenues generated in connection with the Trust's ownership of the
Vinings Properties for the two months ended June 30, 1999, which were not in
Vinings' portfolio during 1998.
Other income increased $5,238 from $1,032 for the three months ended June 30,
1998 to $6,270 for the same period of 1999, and $16,641 from $1,629 for the six
months ended June 30, 1998 to $18,270 for the same period in 1999. The increase
was due to interest earned on earnest money deposits held in escrow in
connection with the acquisition of the Portfolio Properties.
<PAGE>
Property operating and maintenance expense increased by $415,559, or 96%, from
$430,974 for the three months ended June 30, 1998, to $846,533 for the same
period in 1999, and $440,438, or 55%, from $803,644 for the six months ended
June 30, 1998 to $1,244,082 for the same period in 1999. Of this increase,
$457,559 was due to expenses generated in connection with the Trusts' ownership
of the Vinings Properties for the two months ended June 30, 1999, which were not
in Vinings' portfolio during 1998. This increase was offset by a decrease in
operating expenses of $42,000 for the three months and $17,121 for the six
months ended June 30, 1999, due primarily to savings in Thicket's cable T.V. and
unit decorating expenses.
Depreciation and amortization increased by $266,839 or 166% from $160,475 for
the three months ended June 30, 1998 to $427,314 for the same period in 1999,
and $274,648 or 86%, from $319,223 for the six months ended June 30, 1998 to
$593,871 for the same period in 1999. This increase is due primarily to
depreciation generated in connection with the Trusts' ownership of the Vinings
Properties for the two months ended June 30, 1999, which were not in Vinings'
portfolio during 1998.
Amortization of deferred financing costs increased by $4,872 or 63% from $7,727
for the three months ended June 30, 1998 to $12,599 for the same period in 1999,
and $4,873 or 32% from $15,452 for the six months ended June 30, 1998 to $20,325
for the same period in 1999, due to costs incurred in connection with
refinancing of the line of credit.
Interest expense increased $626,080, or 190%, from $330,224 for the three months
ended June 30, 1998 to $956,304 for the same period in 1999, and $626,668, or
95%, from $661,715 for the six months ended June 30, 1998 to $1,288,383, for the
same period in 1999, due primarily to the mortgage interest generated in
connection with the Trusts' ownership of the Vinings Properties for the two
months ended June 30, 1999, which were not in the Vinings' portfolio during
1998. In addition, interest on Vinings' line of credit decreased slightly due to
the reduced balance on the line of credit.
General and administrative expense decreased $76,210 or 39%, from $194,510 for
the three months ended June 30, 1998 to $118,300 for the same period in 1999,
and $37,874, or 13% from $299,711 for the six months ended June 30, 1998 to
$261,837 for the same period in 1999. For the three months ended June 30, 1999,
this decrease consists of: (1) compensation expense relating to the Restricted
Stock awarded on July 1, 1998 totaling $80,000; (2) corporate communications
expense totaling $17,000; and (3) travel expense of $6,800; offset by an
increase in overhead reimbursements of $27,000. For the six months ended June
30, 1999, this decrease consists of: (1) compensation expense relating to the
Restricted Stock awarded on July 1, 1998 totaling $80,000; (2) corporate
communications expense totaling $11,000; (3) travel expense totaling $5,200; and
(4) investor relations expense totaling $5,500; offset by an increase in
overhead reimbursements totaling $54,000 and professional fees of $8,300.
The Unusual item, net of ($349,351) for the three months and ($261,386) for the
six months ended June 30, 1998, relates to cost incurred, net of settlement
proceeds, in connection with litigation involving an acquisition in which the
seller breached its contract with the Trust. There were no costs incurred in
this regard during the three months or six months ended June 30, 1999.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities increased $125,432 or 27%, from
$457,525 for the six months ended June 30, 1998 to $582,957 for the six months
ended June 30, 1999. This increase is due primarily to the Trust's ownership of
the Vinings Properties for the two months ended June 30, 1999, which were not in
the Trust's portfolio during 1998.
<PAGE>
Cash flows used in investing activities are made up of four items: 1) the cash
used to purchase the Vinings Properties during the second quarter of 1999
totaling $6,066,073; 2) the cash investment in the Joint Venture totaling
$1,705,100 during the second quarter of 1999; 3) cash advances from the Joint
Venture relating to the acquisition of the Joint Venture Properties totaling
$363,837; and 4) cash used for capital expenditures at the properties, which
increased $121,557, or 173% from $70,291 for the six months ended June 30, 1998
to $191,848 for the six months ended June 30, 1999 due primarily to the
ownership of the Vinings Properties for the two months ended June 30, 1999,
which were not in Trust's portfolio during 1998.
Cash flows provided by financing activities increased by $7,580,111 for the six
months ended June 30, 1999 as compared to the same period in 1998. Of this
increase, $8,450,000 was provided by the issuance of the Preferred Units, which
was offset by cash used for: 1) deferred financing costs totaling $29,242
relating the refinancing of the line of credit during the second quarter of
1999; 2) cash used to make principal repayments on the line of credit totaling
$1,065,000 during the second quarter of 1999 as compared to principal repayments
on the line of credit totaling $255,000 for the same period during 1998; and 3)
cash used to make principal repayments on mortgage notes payable totaling
$101,449 during the second quarter of 1999 as compared to principal repayments
on mortgage notes payable totaling $70,791 for the same period during 1998.
The cash held by Vinings at June 30, 1999, plus the cash flow from Vinings'
assets, including the investment in the Joint Venture, is expected to provide
sources of liquidity to allow Vinings to meet all current operating obligations.
Management plans to continue ongoing discussions with capital sources, both
public and private, as well as explore financing alternatives, so as to allow
the Trust to continue to expand and grow its income producing investments.
Year 2000
- ---------
The statements in the following section include "Year 2000 readiness
disclosure" within the meaning of the Year 2000 Information and Readiness
Disclosure Act of 1998.
The "Year 2000 issue" is the phrase used to describe the various problems caused
from the improper processing of dates and date sensitive information by
computers and other machinery and equipment. The Year 2000 issue is the result
of many computer programs recognizing a date ending with "00" as the year 1900
rather than the year 2000, causing potential system failures or miscalculations
which could result in disruptions of normal business operations.
Vinings is continuing its assessment of the potential impact Year 2000 will have
on its operations. A compliance program has been implemented, which will 1)
determine Vinings' state of readiness for the Year 2000, including the Trust's
information technology ("IT") systems, its non-IT systems and the state of
readiness of Vinings' material suppliers and third party vendors; 2) assess
where potential risks may occur, recognizing that date sensitive systems may
fail at different points in time depending on their function, and prioritize
those risks; 3) determine what steps need to be taken in order to bring
remaining software, hardware and systems, including embedded systems, into Year
2000 compliance; 4) implement, test and re-evaluate all solutions in time to
minimize any significant detrimental effects on operations; and 5) determine a
contingency plan in the event that the Trust or any of its material suppliers or
third party vendors will not be Year 2000 compliant (the "Compliance Program").
Vinings believes that its testing of all systems should be complete by the end
of the third quarter, 1999.
<PAGE>
Vinings believes that most of its computer systems and related software are
already Year 2000 compliant. These systems include the on-site resident
management software and associated hardware as well as corporate financial and
accounting software and related hardware. The costs incurred to date for new
on-site hardware and software total approximately $6,200. The financial and
accounting systems are shared with The Vinings Group. The costs incurred to
upgrade these systems total approximately $70,000 and are in the form of monthly
lease payments of $1,178, which expire in November 2002. Currently these lease
payments are not a cost of the Trust. Any additional costs to upgrade or modify
these systems are not expected to be material.
None of the Portfolio Properties when acquired had on-site automated systems.
Vinings has recently obtained the necessary hardware and software to automate
these newly acquired communities and is in the process of converting them to
these newly acquired systems. The estimated cost to automate the Portfolio
Properties with systems that will be Year 2000 compliant is approximately
$67,000, which is being financed over a period of time. In addition, Vinings is
in the process of communicating with the vendors and third party suppliers that
are used by the Portfolio Properties in order to determine their Year 2000
compliance. This process is expected to by complete during the third quarter of
1999.
Vinings is continuing its process of determining whether many of its other
operational systems are Year 2000 compliant and therefore cannot determine at
this time the potential impact on the Trust's financial condition and results of
operations. These systems include administrative systems as well as mechanical
systems. However, Vinings has been in contact with the suppliers and
manufacturers of these systems and believes that all material systems within its
control will be Year 2000 compliant well in advance of January 1, 2000.
Vinings' most reasonably likely worst case scenario relates to Year 2000
non-compliance by third party vendors and service providers. Vinings relies on a
number of suppliers for utility services, financial services, materials, etc.
Interruption of suppliers' operations due to Year 2000 issues could have a
material adverse effect on the Trust's future financial condition and results of
operations. Vinings has taken steps to evaluate the status of suppliers' efforts
in order to determine whether any of these suppliers will have an adverse
material effect. Once evaluation is complete, Vinings will determine any
required alternatives and contingency plan requirements.
The information provided above regarding Vinings' Year 2000 compliance includes
forward-looking statements based on management's best estimates of future
events. Such forward-looking statements involve risks and uncertainties
including the availability of resources, the ability to identify and correct
potential Year 2000 sensitive problems that could have a serious impact on
operations and the ability of third party suppliers to bring their systems into
Year 2000 compliance. There can be no assurance that any of the factors or
statements regarding the Trust's Year 2000 preparedness will not change and that
any change will not affect the accuracy of the Trust's forward-looking
statements.
<PAGE>
Other Matters
- -------------
This 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. Vinings' 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 Vinings to identify
properties within existing multifamily property portfolios of entities
affiliated with management which will have a strategic fit with Vinings, the
inability of Vinings to identify unaffiliated properties for acquisition, the
inability of Vinings to continue to acquire properties in the future, the less
than satisfactory performance of any property which might be acquired by
Vinings, the inability to access the capital markets in order to fund Vinings'
present growth and expansion strategy, the cyclical nature of the real estate
market generally and locally in Georgia, Mississippi and the surrounding
southeastern states, the national economic climate, the local economic climate
in Georgia, Mississippi and the surrounding southeastern states, the local real
estate conditions and competition in Georgia, Mississippi and the surrounding
southeastern states, and the ability of Vinings to identify and correct all
potential Year 2000 sensitive problems. There can be no assurance that, as a
result of the foregoing factors, Vinings' growth and expansion strategy will be
successful or that the business and operations of Vinings will not be adversely
affected thereby.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Vinings is exposed to market risk from changes in interest rates, which may
adversely affect its financial position, results of operations and cash flows.
In seeking to minimize the risks from interest rate fluctuations, Vinings
manages exposures through its regular operating and financing activities.
Vinings does not use financial instruments for trading or other speculative
purposes. Vinings is exposed to interest rate risk primarily through its
borrowing activities, which are described in Note 6 to Vinings' June 30, 1999
Condensed Consolidated Financial Statements. All of Vinings' borrowings are
under fixed rate instruments, except the line of credit, which is at prime plus
1%. As of June 30, 1999 Vinings exposure to market risk has changed due to the
acquisition of the Vinings Properties and the assumption of the related mortgage
indebtedness. However, Vinings has determined that there is no material market
risk exposure to its consolidated financial position, results of operations or
cash flows due to changes in interest rates because of the fixed rate nature of
its long-term debt.
The following table presents principal reductions and related weighted average
interest rates by year of expected maturity for Vinings' debt obligations and of
June 30, 1999 and should be read in conjunction with Vinings' December 31, 1998
SEC form 10-K:
<TABLE>
<CAPTION>
Fair Value
There- June 30,
(In Thousands) 1999 2000 2001 2002 2003 after Total 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Reductions
In Mortgage Notes $ 156 $ 333 $ 362 $ 393 $7,315 $46,672 $55,231 $55,231
Average Interest Rates 8.63% 8.63% 8.63% 8.63% 8.63% 8.58% 8.63% 8.63%
Line Of Credit $ 935 - - - - - $ 935 $ 935
Interest Rate 8.75% - - - - - 8.75% 8.75%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PART II
OTHER INFORMATION
-----------------
ITEM 4. Submission of Matters to a Vote of Security Holders
The Trust held its annual meeting of shareholders for the fiscal year ended
December 31, 1998 on June 29, 1999 (the "Annual Meeting"). At the Annual
Meeting, the shareholders voted to elect Peter D. Anzo, Stephanie A. Reed,
Martin H. Petersen, Gilbert H. Watts, Jr., Phill D. Greenblatt, Henry Hirsch and
James D. Ross to serve as Trustees of the Trust until the 2000 annual meeting of
shareholders. The following table sets forth the results of the shareholder
votes with respect to the election of the Trustees.
Trustees For Against
----------- ----------- ---------
Peter D. Anzo 1,056,033 622
Stephanie A. Reed 1,056,033 622
Martin H. Petersen 1,050,070 6,585
Gilbert H. Watts, Jr. 1,050,008 6,647
Phill D. Greenblatt 1,056,002 653
Henry Hirsch 1,056,002 653
James D. Ross 1,054,870 1,785
PROPOSAL 2. To approve a proposal to amend the Trust's Declaration of Trust to
decrease the total number of authorized shares of beneficial interest from
unlimited to 25,000,000 and to classify all such shares as common shares of
beneficial interest or, if Proposal 3 is also approved by the shareholders, to
decrease the total number of authorized shares of beneficial interest from
unlimited to 32,050,000 and to classify 25,000,000 of such shares as common
shares of beneficial interest, as described in the Proxy Statement.
Broker
For Against Abstain Non-Vote
--------- --------- --------- ----------
794,209 1,069 1,818 259,558
PROPOSAL 3. To approve a proposal to amend the Trust's Declaration of Trust to
authorize a new class of 7,050,000 preferred shares of beneficial interest
which, upon the affirmative vote of two-thirds of the Board of Trustees, may be
issued in such amounts, in one or more series, and with such designations,
preferences, limitations and relative rights for each series as the Board of
Trustees shall determine, as described in the Proxy Statement. The following
table sets forth the results of the shareholder votes with respect to the
approval of Proposal 3.
Broker
For Against Abstain Non-Vote
--------- --------- --------- ----------
761,347 33,807 1,942 259,558
PROPOSAL 4. To approve a proposal to amend the Trust's Declaration of Trust to
(a) provide the Trust with a perpetual existence, (b) remove all references and
provisions relating to the Trust's being externally-advised and the Trust's
prior operations as a mortgage real estate investment trust, (c) eliminate those
provisions that prohibit the Trust from investing in certain investments in
which a Trustee or officer of the Trust has an interest and (d) eliminate those
provisions that require the Trust to mail to shareholders certain financial
information that is required to be disclosed to all shareholders, as described
in the Proxy Statement. The following table sets forth the results of the
shareholder votes with respect to the approval of Proposal 4.
Broker
For Against Abstain Non-Vote
--------- --------- --------- ----------
766,840 28,524 1,733 259,558
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
Current Report on Form 8-K, dated April 29, 1999, was filed with the Securities
and Exchange Commission on May 10, 1999, and Amendment No. 1 was filed with the
Securities and Exchange Commission on July 15, 1999, with respect to the
Vinings' issuance of Preferred Partnership Units and the acquisition of the
Portfolio Properties.
<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 and Treasurer
Dated: August 16, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
consolidated balance sheet and statements of operations for Vinings Investment
Properties Trust for the three and six months ended June 30, 1999 and is
qualified in its entirety by reference to such financial statements as contained
in the Form 10-Q report for the three and six months ended June 30, 1999.
</LEGEND>
<CIK> 0000759174
<NAME> Vinings Investment Properties Trust
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 2116373
<SECURITIES> 0
<RECEIVABLES> 101569
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 67560081
<DEPRECIATION> (2245207)
<TOTAL-ASSETS> 69491342
<CURRENT-LIABILITIES> 0
<BONDS> 56166119
0
0
<COMMON> 0
<OTHER-SE> 2162105
<TOTAL-LIABILITY-AND-EQUITY> 69491342
<SALES> 0
<TOTAL-REVENUES> 3332859
<CGS> 0
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<OTHER-EXPENSES> 2120115
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<INTEREST-EXPENSE> 1288383
<INCOME-PRETAX> (264863)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
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<CHANGES> 0
<NET-INCOME> (264863)
<EPS-BASIC> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
