<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM ______________ TO _______________
COMMISSION FILE NUMBER 1-6613
VALUE PROPERTY TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 23-1862664
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
120 ALBANY STREET, 8TH FLOOR 08901
NEW BRUNSWICK, NEW JERSEY (Zip code)
(Address of principal
executive offices)
Registrant's telephone number, including area code 908-296-3080
__________
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Shares, par value $1.00 per share New York Stock Exchange
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
---- ----
Indicate by check mark if the disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. /X/
The aggregate market value of the Common Shares held by non-affiliates
of the registrant at December 18, 1995, computed by reference to the closing
sale price of such shares as reported in the Consolidated Transaction
Reporting System, was $22,098,835. The number of Common Shares outstanding
at December 18, 1995 was 11,226,310. Indicate by check mark whether the
registrant has filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to
the distribution of the securities under a plan confirmed by a court.
Yes X No
---- ----
__________
DOCUMENTS INCORPORATED BY REFERENCE
The definitive proxy statement for fiscal year ended September 30, 1995 is
incorporated by reference into Part III of this 10-K.
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<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL
Value Property Trust (the "Trust") is a Maryland real estate investment
trust (a "REIT") engaged in the business of managing its portfolio of
mortgage loans and real estate investments. The Trust was organized in 1970
as PNB Mortgage and Realty Investors. In 1984, the Trust changed its name to
Mortgage and Realty Trust. In October 1995, the Trust changed its name to
Value Property Trust. The Trust is organized under an Amended and Restated
Declaration of Trust dated September 29, 1995 and as amended through October
26, 1995 (the "Amended and Restated Declaration of Trust"), and conducts its
business in such a fashion as to qualify as a REIT under Sections 856-860 of
the Internal Revenue Code of 1986, as amended (the "Code").
As of September 30, 1995, the Trust had: (1) cash and cash equivalents
of $16.8 million; and (2) invested assets consisting of 31 mortgage loans and
38 investments in real estate owned. Based upon the amounts of the Trust's
investments as of September 30, 1995, approximately 51% of the Trust's
portfolio was in investments in California, 18% in Pennsylvania and 12% in
New England states. Nationally, 38% of the amounts of its investments are in
industrial or research and development properties, 19% in office buildings,
32% in shopping centers, 10% in apartments and 1% in other types of real
estate investments.
PREVIOUS CHAPTER 11 CASE AND 1991 PLAN OF REORGANIZATION
On April 12, 1990, the Trust filed a voluntary petition for
reorganization under Chapter 11 in the United States Bankruptcy Court for the
Central District of California (the "Bankruptcy Court"), commencing a
bankruptcy case, Bankruptcy Case No. LA 90-08976-SB (the "Prior Bankruptcy
Case"). On November 21, 1990, a Joint Plan of Reorganization (the "1991
Plan") proposed by the Trust, the creditors' committee and the equity
committee was filed with the Bankruptcy Court pursuant to section 1121 of the
Bankruptcy Code. The 1991 Plan was confirmed by the Bankruptcy Court by an
order entered February 27, 1991. The Prior Bankruptcy Case was closed on
November 4, 1994, pursuant to a final order of the Bankruptcy Court.
The 1991 Plan provided that the holders of outstanding indebtedness were
to receive payments in installments over a period ending on June 30, 1995,
with the right of the Trust to defer payment of certain amounts for up to
twenty-four months or until December 31, 1995, when all deferred payments
would be due. Interest was payable initially at Bank of America N.T. & S.A.'s
reference rate plus one percent, increasing by 0.25% every six months, with
interest on deferred amounts accruing at the adjusted rate plus two percent.
The 1991 Plan also included certain financial, affirmative and negative
covenants. The forecast upon which the 1991 Plan was based assumed that the
real estate markets would begin to improve in fiscal 1992. However, the
markets continued to deteriorate materially. Despite these conditions, the
Trust was able to make all required interest payments and to exceed the
required amortization payments through December 31, 1991. These results were
achieved through liquidating Trust assets at substantial discounts from their
acquisition cost. However, due to the continued deterioration of the real
estate markets, the Trust could not meet the amortization payment at June 30,
1992, which required the Trust to reduce the debt to $291,250,000, taking
into account deferrals permitted under the 1991 Plan. This deterioration
also precluded the Trust from maintaining compliance with the financial
covenants of the 1991 Plan. Thus, the Trust determined that it was necessary
to defer a portion of the principal payments on the outstanding debt and
limit certain future cash interest payments to allow sufficient time for
liquidity to return to the United States real estate market. Such deferral
was accomplished by an out-of-court modification to the 1991 Plan (the "1992
Restructuring").
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<PAGE>
THE 1992 RESTRUCTURING
Pursuant to the Trust's negotiations with the creditors' committee, on
June 15, 1992, the Trust commenced a solicitation of acceptances to certain
modifications (the "1992 Modifications") to the outstanding debt obligations
of the Trust and to a prepackaged plan of reorganization (the "Proposed 1992
Plan") to effect the 1992 Modifications. The 1992 Modifications to the
outstanding debt obligations provided, among other things, for (i) an
increased amount of required principal payments that could be deferred (while
retaining the final payment date for deferred payments at December 31, 1995),
(ii) an extension of the permitted repayment period of such deferred amounts
from 24 months to 30 months from the date a deferral is utilized, (iii) the
establishment of a limit on the maximum rate of interest to be paid in cash
on a current basis at 9% through June 30, 1994, with any excess being accrued
and paid at December 31, 1995, (iv) changes in certain required financial
covenants to reflect the then-existing financial condition of the Trust and
the then-existing real estate market, (v) with the approval of the holders of
66-2/3% of the outstanding debt obligations, the release of collateral for
certain financings by the Trust, and (vi) the payment of additional
consideration to the holders of the outstanding debt obligations equal to one
percent of the principal amount of the outstanding debt obligations, payable
in four semi-annual installments commencing on the date the 1992
Restructuring became effective. The Trust received 100% acceptance of the
1992 Modifications and, on July 15, 1992, the Trust successfully restructured
its outstanding debt by issuance of new notes in accordance with the proposed
1992 Modifications (the "Old Notes") and entered into an indenture (the "Old
Note Indenture") with Wilmington Trust Company, as trustee (the "Old Note
Trustee"), entered into a second amendment to the Trust's then outstanding
Collateral and Security Agreement dated as of February 21, 1991 (as amended,
the "Old Collateral Agreement") and amended the 1991 Plan (as amended
pursuant to the 1992 Restructuring, the "Prior Plan").
RECENT CHAPTER 11 CASE AND 1995 PREPACKAGED PLAN OF REORGANIZATION
The financial projections upon which the 1992 Restructuring was based
assumed that the real estate markets would stop or slow their decline by 1993
with some improvement in 1994. Instead, after the effective date of the 1992
Restructuring, these markets failed to improve materially. The Trust's
business operations, including its ongoing efforts to refinance and sell
property, did not generate cash flow sufficient to service the Old Notes
during the fiscal years ended September 30, 1993 and 1994. Because its
operating income had declined due to the continued deterioration of the real
estate markets, the Trust was not able to meet its scheduled June 30, 1993
principal payment on the Old Notes of $20,000,000, and subsequently the Trust
also failed to make additional principal payments, constituting events of
default under the Old Note Indenture. The Trust also failed to make interest
payments on the Old Notes. In addition, the Trust failed to meet certain
ratios set forth in the financial covenants of the Old Note Indenture which
constituted additional events of default under the Old Note Indenture.
Throughout the second and third quarters of fiscal 1994, the Trust's
management and advisors continued discussions with certain principal holders
of the Old Notes and their representatives to explore various alternatives
for restructuring the Old Notes. In March 1994, the principal holders
requested that the Trust agree to pay certain fees and expenses of legal
counsel to the principal holders. The Trust agreed, and in March 1994, the
principal holders retained counsel to advise them in the Trust's financial
restructuring. Thereafter, in June 1994, the principal holders requested and
the Trust agreed to pay certain fees and expenses of a new financial advisor
to the principal holders. The negotiations among the Trust, the various
creditor constituencies and other interested parties in the Trust's financial
restructuring continued into the fourth quarter of fiscal 1994.
On November 17, 1994, the Trust announced that it had reached a
non-binding agreement in principle with the Old Note holders to restructure
the indebtedness represented by the Old Notes (the "1995 Restructuring").
Under the 1995 Restructuring, the Trust and the Board of Trustees
recommended to the Old Note holders that the Trust utilize a "prepackaged
plan" of reorganization (the "Prepackaged Plan") governed by Chapter 11 title
11 of the United States Bankruptcy Code, as amended (the "Bankruptcy Code").
The use of the Prepackaged Plan allowed the Trust, the Board of Trustees and
holders of the Old Notes to agree in advance on the method and course
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<PAGE>
of restructuring prior to the filing of the bankruptcy petition in Chapter
11. To this end, the Trust and certain holders who had acquired a significant
portion of the Old Notes entered into an agreement of understanding (the
"Agreement of Understanding") pursuant to which the Trust agreed to
distribute to the holders of the Old Notes $25 million in cash prior to the
Prepackaged Plan's petition date. Under this agreement, the principal
holders (who held in excess of 80% of the Old Notes), among other things,
agreed to vote in favor of the Prepackaged Plan when solicited. On April 11,
1995, the Trust paid $25.0 million pursuant to the Agreement of
Understanding, with such payment to be credited against the cash payment of
at least $50.0 million to be made to the holders of the Old Notes pursuant to
the Prepackaged Plan.
On July 12, 1995, the Trust mailed to each holder of Old Notes,
outstanding common shares, other secured claims and unsecured claims
(collectively, the "Holders") as of the close of business on July 7, 1995
(the "Record Date"), a copy of the Disclosure Statement and Proxy Statement
for the Solicitation of Votes for the Prepackaged Plan of Reorganization (the
"Disclosure Statement").
Pursuant to the Disclosure Statement, the solicitation of ballots in
favor of the Prepackaged Plan expired at midnight (New York time) on August
17, 1995. On August 18, 1995, the Trust filed a voluntary petition for
reorganization under Chapter 11 in the Bankruptcy Court commencing a
bankruptcy case, Bankruptcy Case No. LA 95-31101-SB. The Prepackaged Plan
was confirmed by the Bankruptcy Court by an order entered September 22, 1995.
The Trust entered into an amended and restated indenture (the "New
Indenture") with Wilmington Trust Company as trustee, an amended and restated
collateral and security agreement (the "New Security Agreement"), a pledge
agreement (the "Pledge Agreement"), and a registration rights agreement (the
"Registration Rights Agreement"). The Prepackaged Plan became effective
September 29, 1995 (the "Effective Date") and provided for, among other
things, (i) a 1 for 33.33 reverse stock split of the outstanding common
shares affecting the shareholders of record as of September 29, 1995, and
(ii) the issuance to holders of the Trust's debt securities: (a)
$110,000,000 principal amount of newly issued 11-1/8% Senior Secured Notes
due 2002 (the "Senior Notes"), (b) $71,000,000 in cash and (c) approximately
10,889,430 new common shares, par value $1.00 per share, representing, in the
aggregate, approximately 97% of the common shares outstanding after the
Effective Date (all common shares outstanding after the Effective Date
hereinafter referred to as the "Common Shares").
BUSINESS PLAN
Since emerging from bankruptcy on September 29, 1995, the Trust has not
yet formulated a long-term strategic plan. The Trust's current plan is to
evaluate each of its assets and identify, over the next one to two years, a
core portfolio of properties to retain and operate or to offer for sale, with
a view to maximizing the Trust's overall return to investors.
The Trust's core portfolio may focus on one or more property types or on
specific geographical regions, in each case where the Trust believes
opportunities for appreciation exist. It may seek to make improvements to
such properties in order to maximize their value, or may hold properties when
it believes them to be undervalued.
Management may from time to time determine to sell one or more
properties consistent with the Trust's goal of focusing its holdings on a
core portfolio. In addition, the Trust may receive unsolicited bids for one
or more properties and will consider such bids in light of management's
assessment of such factors as the price offered for the properties, their
possibility for future appreciation and/or the current return to the Trust
from operating such properties, and the fit of such properties with the
Trust's remaining portfolio of core properties.
The Trust may also, from time to time, identify new properties for
acquisition or make investments as opportunities arise, in each case
consistent with the Trust's definition of its core portfolio.
In addition to reviewing each of its properties, the Trust is currently
assessing its mortgage loan portfolio, with a view to identifying and
formulating a plan of action with respect to non-performing loans and loans
that are unlikely to be collected in a timely manner. Performing loans may
be retained by the Trust for their current yield
- 3 -
<PAGE>
and the Trust may, from time to time, solicit bulk sale bids for some or all
of its non-performing and/or performing loans.
As of September 30, 1995 the Trust had cash and marketable securities
valued at approximately $16.8 million. The Trust intends to use such funds,
together with funds from operations and net proceeds from the sale of assets,
to make appropriate capital and tenant improvements to its properties and to
make acquisitions of new properties from time to time as described above.
Pending such use, the Trust will use its funds to reduce leverage by
repaying, redeeming or repurchasing its indebtedness or to make other
investments (including investments in the Trust's Common Shares), subject to
the terms of its debt instruments as in effect from time to time.
COMPETITION, REGULATION, AND OTHER FACTORS
The success of the Trust depends upon, among other factors, general
economic conditions and trends, including real estate trends, interest rates,
government regulations and legislation, income tax laws and zoning laws.
The Trust's real estate investments are located in markets in which they
face significant competition. Many of the Trust's investments, particularly
the office buildings, are located in markets which have an over-supply of
available space, resulting in intense competition for tenants and low rents.
GOVERNMENT REGULATIONS
The Trust's properties are subject to various federal, state and local
regulatory requirements such as local building codes and other similar
regulations. The Trust believes that the properties are currently in
substantial compliance with all applicable regulatory requirements, although
expenditures at properties owned by the Trust may be required to comply with
changes in these laws. No material expenditures are contemplated at this
time in order to comply with any such laws or regulations.
The Trust believes that it is in compliance in all material respects
with all federal, state and local laws regarding hazardous or toxic
substances, and the Trust has not been notified by any governmental authority
of any noncompliance or other claim in connection with any of its present or
former properties. To date, compliance with federal, state and local
environmental protection regulations has not had a material effect upon the
Trust.
OTHER INFORMATION
As of September 30, 1995, the Trust employed 25 people. The Trust is
currently in the process of assessing and redeploying its employees. As
such, the number of employees of the Trust will be fluctuating for the first
quarter of fiscal 1996. The Trust's current business constitutes a single
business segment. The Trust is not dependent upon a single tenant or a
limited number of tenants.
The Trust's principal offices are currently located at 120 Albany
Street, 8th Floor, New Brunswick, New Jersey 08901 and 22120 Clarendon
Street, Suite 230, Woodland Hills, California 91367; the Trust's telephone
numbers are (908) 296-3080 and (818) 594-8586, respectively.
INVESTMENTS
Although the Trust has continued to fund previously existing investment
commitments and to fund limited tenant improvements and similar investments
necessary to retain or obtain tenants, the Trust has not made any new
investments in loans or properties since its Prior Bankruptcy Case filing,
but it has continued to manage its investment portfolio.
Loans are secured by first or junior mortgages as well as mortgages
secured by leaseholds. Loans made by the Trust are secured by mortgages on
income-producing properties, including office buildings, shopping centers,
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<PAGE>
industrial projects, apartments and condominium projects. When the Trust
made investments, it abided by various restrictions consisting principally of
loan-to-value ratios, investment ranges and percentage of total assets
invested in loans to a single borrower.
The Trust's investments are primarily located in major metropolitan
areas throughout the United States. As of September 30, 1995, the Trust held
investments in mortgage loans, investments in real estate and other interests
in real properties located in 18 states.
The following pages contain summaries of the Trust's investments at
September 30, 1995.
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<PAGE>
VALUE PROPERTY TRUST
REAL ESTATE INVESTMENTS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ASSET DATE OCCUPANCY
# PROJ TYPE ASSET NAME CITY ST ACQUIRED OWNERSHIP TOTAL SQ. FT. @ 9/30/95
- ----- ---------- -------------------------- --------------- --- -------- --------- -------------- ---------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
498 Apartments Junipers Yarmouth ME Feb-92 100% 188,087 SF 97.0%
643 Apartments Villa del Cresta Florissant MO Feb-92 100% 333,038 SF 95.0%
646 Apartments McLaughlin Hammond IN Apr-94 100% 166,056 SF 96.0%
-------------------------
TOTAL APARTMENTS 687,181 SF 95.8%
-------------------------
421 Industrial Parkway Richmond CA Jan-89 100% 87,654 SF 67.0%
452 Office/Ind. Keewaydin Salem NH Aug-92 100% 125,230 SF 72.0%
467 Industrial North County Yorba Linda CA Mar-91 100% 105,930 SF 88.0%
563 Industrial Slauson Whittier CA May-87 100% 111,923 SF 91.0%
575 Office/Whse Turnpike Canton MA Jan-91 100% 50,972 SF 43.0%
577 Whse/Office South St. Hopkinton MA Jan-91 100% 119,000 SF 0.0%
606 Industrial Maryland Road Willow Grove PA Jun-93 100% 108,514 SF 0.0%
629 Industrial Nash El Segundo CA Jan-94 100% 45,924 SF 84.0%
637 Office/Ind 900 Bldg Minneapolis MN Sep-93 100% 216,000 SF 95.0%
638 Warehouse 6950 Bldg Eden Prairie MN Sep-93 100% 90,000 SF 100.0%
647 Industrial Moreno Valley Moreno Valley CA Nov-92 100% 251,090 SF 100.0%
659 Industrial Avenue Hall Valencia CA Jul-91 100% 86,980 SF 90.0%
679 Office/Whse Mellen St. Framingham MA Apr-92 100% 57,797 SF 68.0%
682 Whse/Distr Fife-TPIP II * Fife (Tacoma) WA Dec-92 15% 332,508 SF 100.0%
684 Whse/Distr Keystone I Partnership * Bristol Twp. PA Jun-93 70% 100,725 SF 100.0%
641 Ind/Office Bay City Holdings * Santa Monica CA Jan-95 85% 114,375 SF 93.0%
-------------------------
TOTAL INDUSTRIAL 2,004,622 SF 80.2%
-------------------------
439 Office Summer Street Boston MA Jan-90 100% 69,527 SF 70.0%
447 Office Riverside Centre Portland OR Aug-89 100% 99,233 SF 95.0%
448 Office Stadium Towers Anaheim CA Aug-88 100% 64,574 SF 71.0%
462 Office Chestnut Street Philadelphia PA Jan-91 100% 50,326 SF 73.0%
542 Office Southampton Southampton PA Feb-92 100% 42,040 SF 94.0%
558 Office Pinebrook I King of Prussia PA May-87 100% 57,756 SF 77.0%
409 Office Pinebrook II King of Prussia PA May-87 100% 58,521 SF 97.0%
687 Office Six Sentry Parkway Blue Bell PA Jun-94 100% 91,587 SF 75.0%
420 Office Hoes Lane Piscataway NJ Aug-91 100% 37,238 SF 81.0%
544 Office Two Executive Campus Cherry Hill NJ Oct-92 100% 102,310 SF 55.0%
664 Office Clarewood Woodland Hills CA May-92 100% 39,902 SF 89.0%
574 Office Burtonsville Commerce Burtonsville MD Mar-95 100% 91,428 SF 98.0%
-------------------------
TOTAL OFFICE 804,442 SF 80.4%
-------------------------
591 Retail Creekside Partnership * Vacaville CA Oct-94 80% 116,215 SF 74.0%
630 Retail Newark Partnership * Newark CA Oct-94 90% 65,760 SF 85.0%
672 Retail Paseo Padre Fremont CA Oct-90 100% 194,625 SF 89.0%
673 Retail Arcade Square Sacramento CA Sep-93 100% 76,452 SF 81.0%
590 Retail Berdon Plaza Fairhaven MA Apr-91 100% 116,151 SF 18.0%
639 Retail Bradford Plaza West Chester PA Aug-95 100% 129,609 SF 71.0%
-------------------------
TOTAL RETAIL 698,812 SF 70.1%
-------------------------
TOTAL PORTFOLIO 4,195,057 SF 81.1%
-------------------------
-------------------------
</TABLE>
* The Trust has a partnership interest in this property
<PAGE>
VALUE PROPERTY TRUST
GEOGRAPHIC DISTRIBUTION OF INVESTMENTS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
State Apartments Hotel Industrial Office Residential
- ------ ---------- ----- ---------- ------ -----------
<S> <C> <C> <C> <C> <C>
Arizona . . . . . . . $2,963,521
California. . . . . . $170,064 33,983,030 $8,980,257 $52,453
Colorado. . . . . . .
Delaware. . . . . . . 155,928
Georgia . . . . . . . 45,449
Indiana . . . . . . . 3,658,732
Maine . . . . . . . . 7,649,887
Maryland. . . . . . . 5,220,406 549,086
Massachusetts . . . . 5,325,881 1,657,311
Minnesota . . . . . . 2,040,161
Missouri. . . . . . . 8,208,281
Nevada. . . . . . . . $1,985,852
New Hampshire . . . . 3,599,438
New Jersey. . . . . . 2,074,301
Oregon. . . . . . . . 5,850,051
Pennsylvania. . . . . 11,168,874 16,127,183
Virginia. . . . . . . 105,577
Washington. . . . . . 3,998,323
----------- ---------- ----------- ----------- --------
Totals $19,686,964 $1,985,852 $63,079,228 $39,909,509 $908,493
----------- ---------- ----------- ----------- --------
----------- ---------- ----------- ----------- --------
Percentage 9.50% 0.96% 30.44% 19.26% 0.44%
----------- ---------- ----------- ----------- --------
----------- ---------- ----------- ----------- --------
Retail Research & Secured
Buildings Development Notes Totals %
---------- ------------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
Arizona . . . . . . . $2,963,521 1.43%
California. . . . . . $49,869,065 $11,313,263 $370,276 104,738,408 50.59%
Colorado. . . . . . . 133,599 133,599 0.06%
Delaware. . . . . . . 155,928 0.08%
Georgia . . . . . . . 45,449 0.02%
Indiana . . . . . . . 3,658,732 1.77%
Maine . . . . . . . . 7,649,887 3.69%
Maryland. . . . . . . 5,769,492 2.78%
Massachusetts . . . . 6,752,852 13,736,044 6.63%
Minnesota . . . . . . 2,393,919 4,434,080 2.14%
Missouri. . . . . . . 8,208,281 3.96%
Nevada. . . . . . . . 1,985,852 0.96%
New Hampshire . . . . 3,599,438 1.74%
New Jersey. . . . . . 2,074,301 1.00%
Oregon. . . . . . . . 5,850,051 2.82%
Pennsylvania. . . . . 8,925,536 1,528,820 262,936 38,013,349 18.35%
Virginia. . . . . . . 105,577 0.05%
Washington. . . . . . 3,998,323 1.93%
----------- ----------- --------- ------------ -------
Totals $65,681,052 $15,236,002 $633,212 $207,120,312
----------- ----------- --------- ------------
----------- ----------- --------- ------------
Percentage 31.70% 7.39% 0.31% 100.00%
----------- ----------- --------- -------
----------- ----------- --------- -------
</TABLE>
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<PAGE>
FRESH START REPORTING
In connection with its emergence from Chapter 11 proceedings, the Trust
implemented Fresh Start Reporting as provided in Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
("Fresh Start Reporting"). As a result, as of September 30, 1995 all assets
were recorded at reorganization value and all liabilities were recorded to
reflect their fair value. For additional information on this reporting
method, see Note 1 - "Basis of Financial Information and Plan of
Reorganization" in the Notes to the Financial Statements.
ITEM 2. PROPERTIES.
INVESTED ASSETS
The Trust has 69 assets under management consisting of 31 loans and 38
real estate investments. At September 30, 1995, as a result of the approval
of the Trust's Prepackaged Plan of Reorganization, the carrying amount of all
assets have been restated in accordance with Fresh Start Reporting. The
Trust has classified these assets as follows:
INVESTED ASSETS
---------------
Reorganization
Value %
-------------- ----
($000)
ASSETS HELD FOR SALE:
---------------------
Mortgage loans $ 21,966 10.6%
Real estate investments 42,059 20.3%
Investments in partnerships 5,220 2.5%
--------- -----
Subtotal 69,245 33.4%
--------- -----
ASSETS HELD FOR INVESTMENT:
---------------------------
Mortgage loans 35,013 16.9%
Real estate investments 81,581 39.4%
Investments in partnerships 20,648 10.0%
Notes receivable 633 .3%
--------- -----
Subtotal 137,875 66.6%
--------- -----
TOTAL INVESTED ASSETS $207,120 100.0%
======== ======
ITEM 3. LEGAL PROCEEDINGS.
A discussion of events surrounding the Trust's Prior Bankruptcy Case and
an explanation of the material terms of the Trust's reorganization under the
1991 Plan are set forth in the section entitled "Previous Chapter 11 Case and
1991 Plan of Reorganization" under Item 1 above. The Prior Bankruptcy Case
was closed on November 4, 1994 pursuant to a final order of the Bankruptcy
Court.
A discussion of events surrounding the Trust's 1995 prepackaged bankruptcy
filing and an explanation of the material terms of the Trust's reorganization
under the Prepackaged Plan are set forth in the section entitled
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<PAGE>
"Recent Chapter 11 Case and 1995 Prepackaged Plan of Reorganization" under
Item 1 above. Notwithstanding the confirmation of the Trust's Prepackaged
Plan, as of September 29, 1995, the bankruptcy court continued to have
jurisdiction among other things, to resolve disputes that may arise under the
Prepackaged Plan.
A third party has alleged the existence of a purchase contract with
respect to one of the Trust's properties which the Trust disputes. This
dispute may lead to litigation, but the Trust believes that any such
litigation would not have a material effect on earnings or business prospects
of the Trust.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On July 12, 1995 the Disclosure Statement was mailed to the shareholders
of the Trust pursuant to a consent solicitation for votes for the Prepackaged
Plan. The Disclosure Statement described the 1995 Restructuring pursuant to
the Prepackaged Plan.
The consent solicitation expired at 12:00 midnight, New York City time,
on August 17, 1995. The following is a summary of the results of the ballots
received from the classes that were solicited: (i) Class 2 - Claims of
holders of Old Notes - 24 out of 24 claims voted in favor of the Prepackaged
Plan; (ii) Class 4 - Unsecured Claims - the entire $368,561.67 amount of
claims was voted in favor of the Prepackaged Plan; and (iii) Class 5 -
Interest of holders of outstanding common shares - 5,384,146 out of
10,260,215 of the outstanding common shares were voted, 5,221,355 in favor
and 162,791 against the Prepackaged Plan.
On or about October 5, 1995, in response to a mailing of consent
requests on or about October 4, 1995 to the holders of approximately 97% of
the Trust's outstanding Common Shares, the Trust had received the written
consent of 85.29% of the Trust's outstanding Common Shares approving an
amendment to the Trust's Amended and Restated Declaration of Trust changing
the Trust's name to "Value Property Trust." Subsequently, on or about
October 6, 1995, the Trust mailed a 14-C Information Statement describing
this vote to all of the holders of the Trust's outstanding Common Shares.
- 9 -
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES AND RELATED SHAREHOLDER MATTERS.
(a) MARKET PRICE AND DIVIDENDS
The Trust's Common Shares are listed for trading on the New York Stock
Exchange under the symbol "VLP", and until October 27, 1995 they were traded
under the symbol "MRT". No dividends have been declared by the Trust in the
past two years. The following table shows the high and low sales prices for
each fiscal quarter during the past two years:
High Low
---- ---
1995
First Quarter . . . . . $ 1/4 $ 1/8
Second Quarter . . . . . 3/8 3/16
Third Quarter . . . . . 11/32 7/32
Fourth Quarter . . . . . 11/32 9/32
1994
First Quarter . . . . . $ 5/8 $ 3/8
Second Quarter . . . . . 5/8 3/8
Third Quarter . . . . . 1/2 3/8
Fourth Quarter . . . . . 1/2 1/4
On October 2, 1995, pursuant to the conditions of the Prepackaged Plan, the
Trust directed the New York Stock Exchange to effectuate a 1 for 33.33
reverse stock split of the Trust's outstanding common shares which resulted
in a reduction of the Trust's outstanding common shares from approximately
11,226,215 to approximately 336,820. Simultaneously, and also pursuant to
the conditions of the Prepackaged Plan in exchange for the release of certain
debt by the Trust's noteholders, the Trust directed the New York Stock
Exchange to issue approximately 10,890,180 new Common Shares. The combined
result of these actions by the Trust on the New York Stock Exchange is that,
as of October 2, 1995, substantially the same amount of Common Shares are
authorized and outstanding as before the reverse stock split and issuance of
new Common Shares and on October 2, 1995 the Trust's Common Shares were
trading at $10 1/2.
The Trust incurred net operating losses ("NOLs") of $35 million, $38
million, $31 million and $12 million for tax purposes in fiscal 1994, 1993,
1992 and 1991, respectively. The Trust estimates a net operating loss before
cancellation of indebtedness ("COD") income for tax purposes of approximately
$41 million for fiscal 1995. Beginning with fiscal 1996, NOLs available to
offset taxable income in future years will be approximately $82 million after
the recognition for tax purposes of the COD income of approximately $75
million. These NOLs will be subject to the Code Section 382 annual
limitations on the use of the NOLs. The Trust estimates this annual
limitation to be approximately $6 million with any portion of the Section 382
limitation not used in any taxable year carried forward up to fifteen years.
After the recognition of the COD income, the remaining NOLs available
will be $9 million, $38 million and $35 million from fiscal 1992, 1993 and
1994, respectively.
(b) HOLDERS OF COMMON SHARES
There were approximately 4,700 record holders of the Trust's Common
Shares at December 20, 1995.
(c) The Trust did not declare or pay any dividends during either the
fiscal year ended September 30, 1995 or the fiscal year ended September 30,
1994. In addition, the New Indenture governing the New Notes
- 10 -
<PAGE>
prohibits the Trust from declaring or making any dividends to shareholders
other than dividends required for the Trust to maintain its REIT status
unless the Consolidated Net Worth (as defined in the New Indenture) of the
Trust at the time of such payment and after giving effect thereto is at least
$50 million; provided, however, that the Trust shall in no event declare or
make any such payment or other distribution if a Default or Event of Default
(as defined in the New Indenture) has occurred and is continuing under the
New Indenture.
- 11 -
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Post
Confirmation Pre-Confirmation
------------ -----------------------------------------------------------------------------
Years Ended September 30
-----------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Operating Data $ 39,464,000 $ 36,277,000 $ 38,342,000 $ 42,009,000 $ 56,253,000
Total Income 52,120,000 47,668,000 43,967,000 42,077,000 51,736,000
Interest and other operating
expenses 7,306,000 5,839,000 5,500,000 4,470,000 3,062,000
Depreciation and amortization 3,000,000 2,000,000 37,000,000 32,000,000 33,000,000
Gain on sale of real estate 244,000
Loss from operations before
reorganization items and
extraordinary items (22,962,000) (19,230,000) (48,125,000) (36,538,000) (31,301,000)
Reorganization Items
Professional fees and other
expenses, net (5,778,000) (2,360,000) (5,844,000) (934,000) (4,352,000)
Write down of invested assets to
reorganization value (66,597,000)
Net loss before extraordinary item (95,337,000)
Extraordinary Item - Gain on
extinguishment of debt 75,304,000 - - - -
Net loss $ (20,033,000) $ (21,590,000) $ (53,969,000) $ (37,472,000) $ (35,653,000)
Net loss per share*
September 30, September 30, September 30, September 30, September 30,
BALANCE SHEET DATA 1995 1994 1993 1992 1991
------------- ------------- ------------- ------------- -------------
Invested assets $ 207,120,000 $ 309,973,000 $ 347,526,000 $ 424,394,000 $ 505,600,000
Total assets 232,329,000 364,740,000 353,874,000 427,268,000 514,754,000
Allowance for losses - 13,430,000 11,808,000 19,353,000 14,707,000
Senior Notes (due 1995) - 290,000,000 290,000,000 312,000,000 374,000,000
Senior Notes (due 2002) 109,975,000
Mortgage payable 17,535,000 17,593,000 17,572,000 15,615,000 -
Shareholders' equity 100,074,000 20,033,000 41,623,000 95,592,000 133,064,000
</TABLE>
-12-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
MANAGEMENT DISCUSSION
Value Property Trust is a Maryland REIT engaged in the business of
managing its portfolio of mortgage loans and real estate investments. On
October 26, 1995, the Trust's name was changed from Mortgage and Realty Trust
to Value Property Trust. On September 29, 1995, the Trust's Prepackaged Plan
of Reorganization was declared effective by the United States Bankruptcy
Court for the Central District of California.
Under the Prepackaged Plan, holders of the Trust's $290,000,000
principal amount of Old Notes received: (i) $110,000,000 principal amount of
newly issued Senior Notes; (ii) $71,000,000 in cash; and (iii) approximately
10,889,430 new Common Shares representing in the aggregate approximately 97%
of the Common Shares outstanding after the Effective Date. In connection
with the Prepackaged Plan, the Trust effected a 1 for 33.33 reverse stock
split of its outstanding common shares.
In connection with its emergence from Chapter 11 proceedings, the Trust
implemented Fresh Start Reporting as of September 30, 1995. Fresh Start
Reporting was required because: (1) the reorganization value of the Trust's
assets immediately before the date of confirmation was less than the total of
all post-petition liabilities; (2) there was more than a 50% change in the
ownership of the Trust; and (3) there was a permanent and substantive loss of
control by existing shareholders. As a result, all assets and liabilities
were restated to reflect their appropriate carrying value. The September 30,
1995 balance sheet amounts have been segregated by a black line in order to
signify that the balance sheet is that of a new reporting entity and has been
prepared on a basis not comparable to the pre-confirmation balance sheets.
(See "Note 1, Notes to Financial Statements" for additional information
concerning Fresh Start Reporting).
The following section includes a discussion and analysis of the results
of operations on a pre-confirmation basis, for the years ended September 30,
1995, 1994 and 1993. The Trust has, for the past several years, reported
significant net losses. As a result of the restructuring, past results
should not be indicative of future operating performance. Future results of
operations of the Trust will not be comparable to the historical operating
performance.
RESULTS OF OPERATIONS
The Trust reported a net loss for fiscal 1995 of $20.0 million. The
loss includes: (1) reorganization items for professional fees, interest
income and an adjustment that reduced invested assets by $66.6 million as a
result of adopting Fresh Start Reporting; and (2) an extraordinary item of
$75.3 million reflecting the gain on extinguishment of debt. The Trust's
loss from operations before the reorganization items and the extraordinary
item was $23.0 million. The 1995 loss includes a provision for losses of $3.0
million and interest expense accrued of $35.9 million. The Trust reported a
net loss for fiscal 1994 of $21.6 million compared to a net loss of $54.0
million for fiscal 1993. The 1994 loss includes a provision for losses of
$2.0 million compared to a provision for losses of $37.0 million in 1993.
Reorganization expense was $2.4 million in 1994 compared to $5.8 million in
1993.
Interest and fee income on mortgage loans was $9.4 million for fiscal
1995 compared to $14.7 million in fiscal 1994. The decrease results
primarily from a reduction in earning mortgage loans which averaged $97.8
million for fiscal 1995 compared to $131.4 million for fiscal 1994. During
fiscal 1995, mortgage loans of approximately $10.9 million were transferred
to real estate and $22.7 million have been repaid. Interest and fee income
decreased from $19.0 million in 1993 to $14.7 million in fiscal 1994. The
decrease resulted primarily from repayment of mortgage loans which totalled
$25.5 million and the transfer of $13.1 million of loans to real estate owned.
- 13 -
<PAGE>
Rental income was $24.6 million for fiscal 1995 compared to $18.5
million for fiscal 1994 and $17.4 million for fiscal 1993. In addition to
rental income, the Trust received reimbursement of certain operating expenses
totalling $2.3 million, $1.7 million and $1.6 million for fiscal 1995, 1994
and 1993, respectively. Operating expenses and depreciation and amortization
on rental properties increased to $19.0 million in fiscal 1995 compared to
$15.7 million for both fiscal 1994 and 1993. The increases in income and
expenses on rental properties results from continued acquisition of real
estate properties and improvement in occupancy levels.
Interest on short-term investments was $3.5 million in 1995 compared to
$1.2 million and $.2 million for fiscal years 1994 and 1993, respectively.
The increase in fiscal 1995 was due to the continuing accumulation of
available cash. Available cash averaged $57.6 million for fiscal 1995
compared to $32 million and $8.6 million in fiscal years 1994 and 1993,
respectively. The increase results from the fact that the Trust made no
payment (interest or principal) on the Old Notes since September 30, 1993.
On April 11, 1995 the Trust made a $25.0 million payment and on September 29,
1995 an additional $46 million payment was made to Old Note holders. At
September 30, 1995 cash and cash equivalents were $16.8 million, including
restricted cash for borrowers deposits and the Trust's termination pay plan.
Interest expense accrued for fiscal 1995 totalled $35.9 million compared
to $33.0 million and $28.5 million for fiscal years 1994 and 1993,
respectively. The Trust's average borrowing rate for fiscal 1995 was 13.3%
compared to 10.7% and 9.2% for fiscal years 1994 and 1993, respectively. The
unamortized cost of restructuring of Old Notes totalling $3.4 million was
charged off during fiscal 1993 as a result of the monetary default.
As a result of implementing Fresh Start Reporting, the Trust wrote down
its real estate investments by $66.6 million to reorganization value. In
addition, net reorganization expenses incurred by the Trust were $5.8 million
in fiscal 1995, compared to $2.4 million and $5.8 million in fiscal years
1994 and 1993, respectively.
The Trust recorded a $75.3 million extraordinary item-gain on
extinguishment of debt against interest and principal due of $331.4 million
on the Old Notes.
Other operating expenses declined to $4.5 million for fiscal 1995 from
$4.8 million and $5.3 million for fiscal years 1994 and 1993, respectively.
The decrease was primarily due to a decrease in professional fees and
expenses.
A $3.0 million provision for losses was established in the current
fiscal year compared to a provision of $2.0 million in 1994 and $37.0 million
in 1993. The Trustees review the investment portfolio quarterly using current
estimates and assumptions to determine the adequacy of the allowance for
losses. The estimates and assumptions used in the valuation process are
subject to changes which may be material.
LIQUIDITY AND CAPITAL RESOURCES
Prior to its 1995 Restructuring, the Trust faced significant liquidity
problems. The Trust did not generate sufficient cash flow from normal
operations and was not able to liquidate mortgage loans and real estate
investments in order to meet scheduled amortization on its Old Notes. As a
result of the 1995 Restructuring, the Trust should no longer have the
liquidity problems that it faced in the past years. Funds from operations
should be sufficient to meet minimum debt service requirements. In the near
term, capital expenditure needs will be met through liquidation of existing
assets and the cash available at September 30, 1995. The Trust may, in the
future, seek to raise additional capital through issuance of equity
securities and/or the incurring of additional indebtedness for the purpose of
meeting additional capital expenditures or retiring the New Notes.
The New Indenture restricts the payment of dividends, other than such
declaration and making of dividend payments that the Trust deems necessary to
preserve its status as a REIT, unless the Consolidated Net Worth (as defined
in the New Indenture) of the Trust at the time of such payment and after
giving effect thereto is at least $50 million; provided, however, that the
Trust shall in no event declare or make any such dividend payment or other
- 14 -
<PAGE>
distribution if a Default or Event of Default (as defined in the New
Indenture) has occurred and is continuing. Under the Code, the Trust must
distribute 95% of its "REIT taxable income" to its shareholders to continue
to qualify as a REIT.
Taxable income required to be distributed will be less than financial
reporting under generally accepted accounting principles due to differences
related to depreciation, use of NOLs (subject to the Code Section 382
limitations) and timing differences related to bad debt deductions.
The New Indenture contains various affirmative, negative and financial
covenants including limitations on investments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data are as set forth in the
"Index to Financial Statements" on page 28.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
- 15 -
<PAGE>
PART III
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the executive officers of the Trust:
NAME AGE POSITIONS AND OFFICES WITH THE TRUST
---- --- ------------------------------------
George R. Zoffinger 47 President, Chief Executive Officer and Trustee
Hugh T. Regan, Jr. 35 Treasurer and Secretary
The officers of the Trust serve a one-year term of office and are elected
to their positions each year by the Trustees at the annual organization meeting
of Trustees which normally immediately follows the annual meeting of
shareholders. Mr. Zoffinger was appointed the President and Chief Executive
Officer of the Trust pursuant to the terms of the Prepackaged Plan. The Board
of Trustees ratified such appointment and elected Hugh T. Regan, Jr. to the
positions of Treasurer and Secretary on October 2, 1995. Mr. Regan has served
as a Vice President of the Trust since 1989. For information about Mr.
Zoffinger's professional background, see "Trustees of the Registrant" below.
TRUSTEES OF THE REGISTRANT
The following biographical information is furnished as to each of the
current Trustees of the Trust.
NAME, AGE AND POSITIONS
YEAR FIRST WITH THE
BECAME TRUSTEE TRUST PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS(1)
- -------------- ---------- -----------------------------------------------
Jeffrey Altman Chairman, Chairman of the Board of Trustees of the Trust
29 years Trustee since October 1995. Vice President of Mutual
September 1995 Series Fund Inc. since 1995. Analyst with Heine
Securities Corporation since 1990. Director of
Resurgence Properties Inc.
George R. President, Mr. Zoffinger served as Chairman of the Board of
Zoffinger Chief Corestates New Jersey National Bank from April
47 years Executive 1994 to the present. From December 1991 to
September 1995 Officer, April 1994, he served as President and Chief
Trustee Executive Officer of Constellation Bancorp and
Constellation Bank. From March 30, 1990 to
December 1991, Mr. Zoffinger served as the
Commissioner for the New Jersey State Department
of Commerce and Economic Development, as well as
Chairman of the Board of the New Jersey Economic
Development Authority. Mr. Zoffinger has served
on the Board of Directors of Multicare, Inc.
since April 1995.
Carl A. Mayer, Trustee Founded The Mayer Group in 1990, an advisor
Jr. group offering consulting and marketing
57 years expertise and services to real estate investment
September 1995 companies who are seeking investment capital
from the pension fund community. Mr. Mayer
continues to serve as a principal of The Mayer
Group.
Martin Bernstein Trustee A private investor who has been managing family
58 years funds since 1988. Prior to this period, Mr.
September 1995 Bernstein served as a founding General Partner
of Halcyon Investments and Alan B. Slifka & Co.
(investments). Mr. Bernstein also currently
serves on the Board of Directors of Astro
Communications and MBO Properties, Inc.
- 16 -
<PAGE>
John B. Levy Trustee Currently the President of John B. Levy &
48 years Company, Inc., a real estate consulting firm
September 1995 based in Richmond, Virginia, and has served in
that capacity since June 1995. Mr. Levy was an
Executive Vice President of Republic Realty
Mortgage Corporation from 1993 to June 1995.
Prior to 1993, Mr. Levy acted as Senior Vice
President of Nationsbanc Mortgage Corporation,
and was charged with lender relations,
production of new income property loans and
management of the production offices.
Richard B. Trustee Currently the President of Realty Capital
Jennings International Inc., a real estate investment
51 years banking firm, and has served in that capacity
September 1995 since 1991. Between 1990 and 1991, Mr. Jennings
acted as Senior Vice President of Landauer
Associates, Inc., a real estate appraisal and
advisory firm based in New York, New York. Mr.
Jennings has also been President of Jennings
Securities Corporation since 1995. Mr. Jennings
currently serves on the Board of Directors of
MBO Properties, Inc.
Richard S. Frary Trustee The founding partner and majority shareholder of
48 years Tallwood Associates, Inc., a private merchant
September 1995 banking firm specializing in corporate
restructurings and real estate, and has served
in that capacity since 1990. Mr. Frary
currently serves on the Board of Directors of
Washington Homes, Inc.
- ----------------
(1) Included are only directorships in companies with a class of equity
securities registered pursuant to Section 12 or subject to the requirements
of Section 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and in financial institutions and insurance companies.
ITEM 11. TRUSTEE AND EXECUTIVE COMPENSATION.
COMPENSATION OF FORMER NON-OFFICER TRUSTEES
During the fiscal year ended September 30, 1995, the Trustees received as
compensation for their services as Trustees an annual retainer of $10,000 plus
$800 for each regular monthly Trustee meeting attended in person or conducted by
telephone conference; $600 for each committee meeting attended in person; and
$400 for any Trustee or committee meeting, other than the regular, monthly
Trustee meeting, convened by telephone conference; except that no additional
compensation was paid for attendance at any committee meeting held on the same
day as any Trustee meeting. An additional $100 fee was payable per meeting to
the chairman of any committee.
On September 20, 1989, the Trustees adopted the Pension Plan for Trustees,
effective October 1, 1989. Trustees become eligible for plan benefits upon
completion of five years of service as Trustee, including years served prior to
the plan's effective date. Under the plan, each eligible Trustee will be
entitled to a normal retirement benefit equal to the annual retainer for
Trustees at the rate in effect on the Trustee's normal retirement date or, if
earlier, the Trustee's last day of Board membership. On April 5, 1995, the
Board of Trustees amended the pension plan for Trustees to provide that should
any Trustee's service terminate for any reason within one year after the
Effective Date of the Prepackaged Plan, such terminated Trustee shall receive a
one-time single-sum cash payment equal in amount to the net present value of the
maximum aggregate projected benefit obligation of the Trust to that Trustee. No
other death benefits became payable on behalf of any Trustee under the plan.
All former Trustees received lump sum distributions in connection with the
termination of their service under the Prepackaged Plan.
- 17 -
<PAGE>
COMPENSATION OF CURRENT NON-OFFICER TRUSTEES
Current Trustees receive $750 for each meeting and, in lieu of an annual
retainer, the Trustees will be granted options to purchase Common Shares under
the proposed 1995 Common Share Option Plan, as described in "1995 Common Share
Option Plan". The Pension Plan for the Trustees, as currently in effect, would
provide no retirement benefits for the current Trustees because they receive no
annual retainer.
The following table provides information about the compensation for the
Chief Executive Officers and the four other most highly compensated officers of
the Trust for the fiscal years ended September 30, 1995, 1994, 1993
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Awards Payouts
-------------------- -------
Annual Compensation(1)
-------------------------------------------------------
Other Annual Restricted Options/ LTIP All Other
Name and Fiscal Salary Bonus Compensation Shares SARs Payouts Compensations
Principal Position Year ($)(2) ($) ($) ($) (#) ($) ($)(3)
- ------------------ ------ ------ ------ ------------ ----------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George R. Zoffinger 1995(4) -- -- -- -- -- -- --
President and Chief 1994 -- -- -- -- -- -- --
Executive Officer 1993 -- -- -- -- -- -- --
C.W. Strong, Jr. 1995 $175,000 -- -- -- -- -- $3,000
Former Chief 1994 175,000 -- -- -- -- -- 3,000
Executive Officer 1993 175,000 -- -- -- -- -- 3,000
Victor H. 1995 $100,000 -- -- -- -- -- $3,000
Schlesinger 1994 100,000 -- -- -- -- -- 3,000
Former Chairman 1993 100,000 -- -- -- -- -- 3,000
--
James A. Dalton, 1995 $200,301 $25,000 -- -- -- -- $3,000
Former Vice 1994 188,348 25,000(5) -- -- -- -- 3,000
President 1993 181,104 20,000 -- -- -- 3,000
Daniel F. 1995 $129,488 $20,000 -- -- -- -- $3,000
Hennessey, 1994 129,488 20,000(5) -- -- -- -- 3,000
Former Chief 1993 124,508 20,000 -- -- -- -- 3,000
Financial Officer
Donald W. Burnes, 1995 $127,968 $25,000 -- -- -- -- $3,000
Jr. 1994 120,595 30,000(5) -- -- -- -- 3,000
Former Vice 1993 114,448 30,000 -- -- -- -- 3,000
President
</TABLE>
(1) In the fiscal year ended September 30, 1995, the Trust provided certain
personal benefits to its executive officers. The amount of such benefits
to each of the Named Executive Officers did not exceed the lesser of
$50,000 or 10% of salary and bonus for such fiscal year.
(2) Includes salary deferrals and employee contributions to the Trust's Savings
Incentive Plan. See "Savings Incentive Plan" below.
(3) Includes the Trust's matching contributions under the Trust's Savings
Incentive Plan. See "Savings Incentive Plan" below.
(4) Between April 24, 1995 and September 29, 1995, the Trust paid a monthly
consulting fee of $17,667 to GRZ, Inc. for the consulting services of
George R. Zoffinger. Mr. Zoffinger became the President and Chief
Executive Officer of the Trust on September 29, 1995, but he received no
salary in fiscal year 1995.
(5) Does not include bonuses for calendar year 1994, which was paid in November
1994. The bonuses were $25,000 for Mr. Dalton, $20,000 for Mr. Hennessey,
and $25,000 for Mr. Burnes.
- 18 -
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1995; AGGREGATED OPTION EXERCISES IN FISCAL
YEAR 1995 AND FISCAL YEAR-END 1995 OPTION VALUES
All options outstanding at the time of the Effective Date of the
Prepackaged Plan were cancelled pursuant to the terms of the Prepackaged Plan,
and no options were granted or exercised in fiscal year 1995.
EMPLOYEES' RETIREMENT PLAN
On September 20, 1989, the Trustees adopted an Employees' Retirement Plan
effective September 30, 1989. On December 16, 1992, the Trustees amended and
restated the Employees' Retirement Plan effective January 1, 1992 (as amended on
July 20, 1994, and effective January 1, 1994 and as may be further amended, the
"Retirement Plan"). All employees are eligible to participate in the Retirement
Plan provided that they are at least 21 years of age and have been employed for
twelve consecutive months, during which period the employee has completed at
least 1000 hours of service. Under the Retirement Plan, each eligible employee
after completing five years of vesting service becomes 100% vested and entitled
to a retirement pension. Benefits can be paid as a lump sum or as an annual
retirement income for life equal to the greater of (a) the sum of (i) 1.3% of
the highest five-year average annual base salary, multiplied by the number of
years of credited service up to and including 35 thereof and (ii) 0.4% of the
highest five-year average annual base salary in excess of Social Security
covered compensation (as adjusted every five years), multiplied by the number of
years of credited service up to and including 35 thereof or (b) the sum of (i)
1.3% of the highest five-year average annual base salary, multiplied by the
number of credited service up to and including 15 thereof; (ii) 1.5% of the
highest five-year average annual base salary, multiplied by the number of years
of credited service from 16 to 25 years inclusive; (iii) 0.5% of the highest
five-year average annual base salary, multiplied by the number of years of
credited service from 26 to 35 years inclusive; and (iv) 0.4% of the highest
five-year average annual base salary in excess of Social Security covered
compensation (as adjusted every five years), multiplied by the number of years
of credited service up to and including 25 thereof.
In November 1995, the Trustees amended the Retirement Plan effective
January 1, 1996 to switch from the Pension Benefit Guaranty Corporation interest
rate used for valuing lump sum distributions to the new General Agreement on
Tariffs and Trade interest rate and mortality table for valuing lump sum
distributions. As a result of this amendment, the current market value of
Retirement Plan assets approximates the current aggregate lump sum amounts due
to participants.
Unreduced retirement benefits may begin to be paid at normal retirement
(age 65 and five years of participation in the Retirement Plan), late
retirement, or five years prior to Social Security retirement age with 20 years
of service.
The table below shows the estimated annual benefits payable upon retirement
under the Trust's Retirement Plan. Retirement benefits shown are based upon
retirement at age 65 and the payment of a straight life annuity to the employee.
The annual benefit under the Retirement Plan will not exceed the lesser of
$112,221 or 100% of the participant's average compensation for three consecutive
Fiscal Years (as defined in the Retirement Plan) in which such eligible employee
is an active participant in the Retirement Plan.
- 19 -
<PAGE>
PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFIT
AVERAGE OF 5
HIGHEST ANNUAL
COMPENSATION
LEVELS YEARS OF SERVICE
15 20 25 30 35
-------- -------- -------- ------- ------- --------
$125,000 $29,427 $40,486 $51,545 $58,854 $68,663
150,000 35,802 49,236 62,670 71,604 83,538
175,000 42,177 57,986 73,795 84,354 98,413
200,000 48,552 66,736 84,920 97,104 112,221
225,000 54,927 75,486 96,045 109,854 112,221
For the fiscal year ended September 30, 1995, the base salary for purposes
of the Retirement Plan for Named Executive Officers is set forth in the salary
column of the Summary Compensation Table. The Named Executive Officers were
credited with years of service under the Retirement Plan as follows: Mr.
Dalton, 13 years; Mr. Hennessey, 24 years; Mr. Burnes, 6 years; and Mr.
Zoffinger 0 years. Mr. Strong and Mr. Schlesinger did not participate in the
Retirement Plan.
The benefits listed in the Pension Plan Table are not subject to reduction
for Social Security or other offset amounts.
SAVINGS INCENTIVE PLAN
On September 20, 1989, the Trustees adopted a Savings Incentive Plan
effective September 30, 1989, to provide retirement benefits for eligible
employees of the Trust. On December 16, 1992, the Trustees amended and restated
the Savings Incentive Plan effective January 1, 1992 and the current Board of
Trustees further amended the Plan on October 2, 1995 (as amended, the "Savings
Plan"). As of October 2, 1995, all other employees of the Trust are eligible to
participate in the Savings Plan immediately upon employment. Under the Savings
Plan, each eligible employee may authorize payroll deductions of not less than
1% nor more than 15% of the employee's earnings before bonus income, not to
exceed the dollar limit permissible under the Code ($9,240 in 1995). The Trust
will match each employee's contribution for the payroll period, subject to a
limitation of 6% of the employee's compensation for the payroll period, with the
maximum amount of contribution by the Trust in any year being $3,000.
Benefits will be paid to terminating participants as soon as possible
following the participant's date of termination. Participants have a 100%
nonforfeitable right to their contributions to the Savings Plan and the Trust's
matching contributions vest at the rate of 20% for each year of service, but
will, in any event, be 100% vested at the later of age 65 or after five years of
participation in the Savings Plan, or in the event of disability or death.
Subject to certain limitations, hardship distributions of a participant's fully
vested account balance are permitted on account of a demonstrable, immediate and
heavy financial need.
EMPLOYEE RETENTION PLAN
The Trustees adopted an Employee Retention Plan as amended, dated
October 17, 1990, as amended January 16, 1991 and March 20, 1991 (the "Retention
Plan"), designed to provide a financial incentive for key employees to
successfully restructure the Trust and maximize the net worth of the Trust. The
Retention Plan was approved by the Bankruptcy Court by order dated February 26,
1991.
The Retention Plan is administered by the Compensation and Nominating
Committee which determines the allocation of amounts among the participants.
Victor H. Schlesinger, former Chairman, and C.W. Strong, Jr., former Chief
Executive Officer, did not participate in the Retention Plan.
Two portions of the Retention Plan as originally adopted remain in place.
The first portion of the Retention Plan provides for a termination pay plan (the
"Termination Pay Plan") that will remain in effect during the period ending on
the later of (i) the
- 20-
<PAGE>
date that the obligations (including, without limitation,
interest accrued from and after January 31, 1991) payable by the Trust to or for
the benefit of any creditor holding a "Class 3 Claim" under the 1992 amendment
to the Trust's 1991 Plan are no longer outstanding (the "Original Effective
Period"), (ii) the maturity date of the Trust's New Notes, or (iii) the date on
which the New Notes are repaid in full (periods set forth in (i)-(iii),
collectively, are referred to as the "Effective Period"). Any eligible employee
who is terminated without Cause (as defined in the Retention Plan) during the
Effective Period will be entitled to termination pay of not less than 12 weeks
and not more than 18 months salary depending on the employee's years of
employment and position with the Trust. The number of months salary for Messrs.
Dalton, Hennessey and Burnes are 18, 18 and 12, respectively. Medical and
dental coverage will be continued during any termination pay period.
On September 30, 1995, the Trust expensed the $1.3 million representing the
cost of the Termination Pay Plan. After fiscal year end, the majority of
existing employees were terminated and the Trust commenced payments to such
employees.
The second portion of the Retention Plan is an incentive program which may
provide total incentive payments during the Original Effective Period of not
more than $1,250,000. On September 16, 1992, the Compensation and Nominating
Committee approved a continuation of the incentive program for calendar year
1993 based on a formula for reducing the Trust's outstanding indebtedness.
Under this incentive program, because the Trust's outstanding indebtedness was
no greater than $290,000,000 at December 31, 1992, $125,000 was deposited in the
pool. Similarly, $125,000 was deposited in the pool at December 31, 1993 and
December 31, 1994. The amounts paid from the pool to the Named Executive
Officers for the fiscal years ended September 30, 1995, 1994 and 1993 are
included in the Summary Compensation Table.
1995 COMMON SHARE OPTION PLAN
The Board of Trustees has adopted the 1995 Common Share Option Plan (the
"1995 Plan") for Trustees, officers, employees and other key persons of the
Trust and its subsidiaries, subject to the approval of the 1995 Plan by the
shareholders. The Board of Trustees believes that Common Share options and
other Common Share-based incentive awards can play an important role in the
success of the Trust by encouraging and enabling the officers and other
employees of the Trust and its subsidiaries upon whose judgment, initiative and
efforts the Trust largely depends for the successful conduct of its business to
acquire a proprietary interest in the Trust. The Board of Trustees anticipates
that providing such persons with a direct stake in the Trust will assure a
closer identification of the interests of participants in the 1995 Plan with
those of the Trust, thereby stimulating their efforts on the Trust's behalf and
strengthening their desire to remain with the Trust. The Board of Trustees
believes that the proposed 1995 Plan will help the Trust to achieve its goals by
keeping the Trust's incentive compensation program dynamic and competitive with
those of other companies.
NUMBER OF COMMON SHARES SUBJECT TO THE 1995 PLAN. The 1995 Plan
provides for the grant of options to purchase up to 870,000 Common Shares,
subject to adjustment for share splits, share dividends and similar events. To
the extent that awards under the 1995 Plan do not vest or otherwise revert to
the Trust, the Common Shares represented by such awards may be the subject of
subsequent awards.
NATURE OF OPTIONS. The 1995 Plan provides for the grant of incentive
stock options ("Incentive Options") which qualify under Section 422 of the Code
and nonqualified stock options ("Non-Qualified Options"). Holders of options
also receive dividend equivalent rights.
1995 PLAN ADMINISTRATION. The 1995 Plan is administered by the
Compensation Committee. It is the intention of the Trust that all members of
the Compensation Committee be "disinterested persons" as that term is defined
under the rules promulgated by the SEC.
ELIGIBILITY. The Compensation Committee has full power to select,
from among the employees eligible for awards, the individuals to whom awards
will be granted, to make any combination of awards to participants, and to
determine the specific terms and conditions of each award, subject to the
provisions of the 1995 Plan. Incentive Options may be granted only to officers
and other full-time employees of the Trust or its subsidiaries. Non-qualified
Options may be granted to officers, employees and other key persons of the Trust
or its subsidiaries. Trustees of the Trust who are not employed by the Trust or
its subsidiaries ("Independent Trustees") will also be eligible for certain
awards under the 1995 Plan, as described below.
- 21 -
<PAGE>
COMMON SHARE OPTIONS GRANTED TO INDEPENDENT TRUSTEES. The 1995 Plan
provides that each person who was a non-employee member of the Board of Trustees
on October 5, 1995 shall automatically be granted on such date a Non-qualified
Option to purchase 35,000 Common Shares and each person who first becomes a non-
employee member of the Board of Trustees after October 5, 1995 shall
automatically be granted, upon the date such person first becomes a Trustee, a
Non-qualified Option to purchase 10,000 shares. All of these options granted
have an exercise price set at the fair market value on the date of grant.
OTHER OPTION TERMS. The option exercise price of each option will be
determined by the Compensation Committee but may not be less than 100% of the
fair market value of the Common Shares. The term of each option will be fixed
by the Compensation Committee and may not exceed ten years from date of grant.
The Compensation Committee will determine at what time or times each option may
be exercised and, subject to the provisions of the 1995 Plan, the period of
time, if any, after retirement or termination of employment for any reason
during which options may be exercised. Options may be made exercisable in
installments and the exercisability of options may be accelerated by the
Compensation Committee. The Plan provides that in the event of a "Change of
Control" (as defined in the 1995 Plan) of the Trust, all options shall
automatically become fully exercisable. Upon exercise of options, the option
exercise price must be paid in full either in cash, check or other instrument
acceptable to the Compensation Committee or, if the Compensation Committee so
permits, by delivery of Common Shares already owned by the optionee. The
exercise price may also be delivered to the Trust by a broker pursuant to
irrevocable instructions to the broker from the optionee. No options shall be
transferable by the optionee other than by will or by the laws of descent and
distribution, and options may be exercised during the optionee's lifetime only
by the optionee, his or her guardian or legal representative.
DIVIDEND EQUIVALENT RIGHTS. Each option granted under the 1995 Plan
shall also generate dividend equivalent rights ("DERs") which shall entitle the
optionee to receive an additional Common Share for each DER received upon the
exercise of the option, at no additional cost, based on the following formula:
As of the last business day of each such calendar quarter, the amount of cash
dividends paid by the Trust on each Common Share with respect to that quarter
shall be divided by the fair market value per Common Share as of the last
business day of each calendar quarter to determine the actual number of DERs
accruing on each Common Share subject to the option. Such amount of DERs shall
be applied against the number of shares covered by the option to determine the
number of DERs which accrued during such quarter.
ADJUSTMENTS FOR COMMON SHARE DIVIDENDS, MERGERS, ETC. The
Compensation Committee will make appropriate adjustments as to the number and
kind of shares and the per share exercise prices to reflect share dividends,
share splits and similar events. In the event of a merger, liquidation, sale of
the Trust or similar event, the 1995 Plan and the options shall terminate,
unless provision is made in connection with such transaction for the assumption
of options granted, or the substitution for such options of new options of the
successor entity, with appropriate adjustment as to the number and kind of
shares and the per share exercise prices. In the event of such a termination,
all outstanding options shall be exercisable in full for at least fifteen days
prior to the date of such termination whether or not otherwise exercisable
during such period.
TAX WITHHOLDING. Optionees are responsible for the payment of any
federal, state or local taxes that the Trust is required by law to withhold upon
the exercise of any option granted by the 1995 Plan. Optionees may elect to
have such tax withholding obligations satisfied either by authorizing the Trust
to withhold Common Shares to be issued pursuant to an option exercise or by
transferring to the Common Shares having a value equal to the amount of such
taxes. Such an election is subject to certain limitations for participants
subject to the requirements of Section 16(b) of the Exchange Act.
AMENDMENTS AND TERMINATION. The Board of Trustees may at any time
amend the 1995 Plan. However, no amendment shall be effective unless approved
by the shareholders at an annual meeting or a special meeting held within twelve
months before or after the date of adoption of such amendment, where such
amendment increases the number of Common Shares issuable under the 1995 Plan,
effects any substantive change in the eligibility provisions of the 1995 Plan,
reduces the minimum option price, or materially increases benefits accruing to
participants under the 1995 Plan.
EFFECTIVE DATE OF 1995 PLAN. The 1995 Plan will become effective upon
the affirmative vote of the holders of at least a majority of the Common Shares
present or represented and entitled to vote at the Annual Meeting of
Shareholders. Subject to such approval of shareholders and to the requirement
that no Common Shares may be issued prior to such approval, options
- 22 -
<PAGE>
may be granted on and after adoption of the 1995 Plan by the Board of Trustees.
No option may be granted after the tenth anniversary of the effective date of
the 1995 Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Bucher, Colwell, Gassaway, Krout and Rostvold served as members of
the Trust's former Compensation Committee during the Trust's fiscal year ended
September 30, 1995. None of such individuals was, during such fiscal year, an
officer or employee of the Trust, or formerly an officer of the Trust or had any
relationship requiring disclosure by the Trust under Item 404 of Regulation S-K
promulgated under the Exchange Act.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Trust's executive officers
and Trustees, and persons who own more than 10% of a registered class of the
Trust's equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the New York Stock Exchange.
Officers, Trustees and greater than 10% shareholders are required by Securities
and Exchange Commission regulation to furnish the Trust with copies for all
Section 16(a) forms they file. To the Trust's knowledge, based solely on review
of the copies of such reports furnished to the Trust and written representations
that no other reports were required during the fiscal year ended September 30,
1995, all Section 16(a) filing requirements applicable to its executive
officers, Trustees and greater than 10% beneficial owners were satisfied.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth information concerning the only persons, entities or
groups which the Trust believes are the beneficial owners of five percent or
more of the outstanding shares of the Trust's Common Shares, as of December 18,
1995.
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------ ------------------------- -------------------
Mutual Beacon Fund(1) 3,880,280 34.6%
51 JFK Parkway
Short Hills, New Jersey 07078
Mutual Discovery Fund(1) 1,101,955 9.8%
51 JFK Parkway
Short Hills, New Jersey 07078
Intermarket Corporation 2,788,827 24.84%
667 Madison Avenue
20th Floor
New York, New York 10021
Angelo, Gordon & Co., L.P.(2) 1,260,632 10.75%
245 Park Avenue
New York, New York 10167
- ----------------
(1) Mutual Beacon Fund and Mutual Discovery Fund (collectively, the "Mutual
Funds") are two of the four series which constitute Mutual Series Fund
Inc., an open-ended, management investment company managed by Heine
Securities Corporation ("HSC"). Other advisory clients of HSC, each of
whom beneficially owns less than 5% of the Trust's shares, beneficially own
in the aggregate, an additional 628,813 shares of the Trust. Pursuant to
advisory contracts with the Mutual Funds and each of its other advisory
clients, HSC has sole voting and investment power over all the securities
- 23 -
<PAGE>
beneficially owned by its advisory clients. HSC disclaims beneficial
ownership over any of the shares of the Trust owned by its advisory
clients.
(2) Includes Common Shares held by investment funds and managed accounts
controlled by Angelo, Gordon & Co., L.P.
CONTROL SHARE STATUTE AND ITS EFFECT ON BENEFICIAL OWNERS
Subtitle 7 of Title 3 of the Maryland General Corporation Law (the
"Maryland Control Share Statute") generally excludes from shares entitled to
vote "control shares" (as described below) of a Maryland corporation acquired
pursuant to a "control share acquisition" (as described below), unless voting
rights for such shares have been approved by the shareholders of the corporation
by the affirmative vote of two-thirds of all votes entitled to be cast (other
than "interested shares", as described below) or, among other exceptions, such
acquisition of shares is made pursuant to a merger agreement with the
corporation or the corporation's charter or by-laws are amended to permit the
acquisition of such shares prior to the acquiring person's acquisition thereof.
"Control shares" generally means shares of a corporation acquired by a
person within any of the following ranges of voting power: (i) one-fifth or
more, but less than one-third of all voting power; (ii) one-third or more, but
less than a majority of all voting power; or (iii) a majority or more of all
voting power. Generally, only those shares acquired in the transaction that
causes a shareholder to own in excess of 20% of the voting common shares of a
corporation that is subject to the Maryland Control Share Statute and the voting
common shares thereafter acquired are precluded from voting under such statute.
"Control share acquisition" generally means the acquisition of ownership of, or
the right to direct the exercise of voting power with respect to, issued and
outstanding control shares, but does not include the acquisition of shares in a
merger, consolidation or share exchange to which the corporation is a party.
"Interested shares" generally means shares of a corporation in respect of which
an acquiring person, an officer of the corporation or an employee of the
corporation who is also a director or trustee of the corporation is entitled to
exercise voting power.
Certain entities related to Intermarket Corporation (the "Intermarket
Entities") may be deemed to own "control shares" under clause (i) of the
foregoing definition, and certain entities related to Mutual Series Fund Inc.
(the "Mutual Entities") may be deemed to own "control shares" under clause (ii)
of the foregoing definition. The Trust believes, based on information provided
to it by the Mutual Entities and the Intermarket Entities, that all of the
Common Shares held by the Mutual Entities and the Intermarket Entities were
received pursuant to the Trust's Prepackaged Plan. All of the Common Shares
owned by the Mutual Entities and the Intermarket Entities may therefore be
precluded from voting under the Maryland Control Share Statute. While the
language of the Control Share Acquisition Statute is not completely clear, the
Trust believes that Common Shares held by the Mutual Entities and the
Intermarket Entities are not covered by, and therefore have not lost their
voting power under, the Maryland Control Share Statute. (All references to
"corporations" in this section also refer to Maryland REITs.)
As stated above, the Maryland Control Share Statute provides a procedure by
which the voting rights for control shares may be approved by the shareholders
of the Trust. Such vote may either be requested by any shareholder who owns
control shares, in which case the Trust must present the issue for consideration
by its shareholders, or the Trust may, on its own volition, present the issue
for consideration by its shareholders and may call a meeting of shareholders
specifically for such purpose. The Board of Trustees did not intend, and
believes that the shareholders of the Trust who ratified the Trust's Prepackaged
Plan did not intend, to preclude the Mutual Entities and the Intermarket
Entities from voting any of their Common Shares. Moreover, the Board of
Trustees believes that it is in the best interests of the Trust that its
shareholders with the majority of the Trust's economic interest have the
corresponding voting power. The Board of Trustees has therefor resolved to
propose to the shareholders of the Trust at the Trust's upcoming annual meeting
that the voting power of the Common Shares held by the Mutual Entities and the
Intermarket Entities be approved.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information at December 18, 1995, taking into
effect the 1 for 33.33 reverse Common Share split with respect to the beneficial
ownership of the Common Shares by each Named Executive Officer and Trustee of
the Trust and by all Trustees and Named Executive Officers as a group. The
information set forth below is based upon filings with the Securities and
Exchange Commission, the Trust's share records, and information obtained by the
Trust from the persons named
- 24 -
<PAGE>
below. As of December 18, 1995, no individual Trustee or officer had
beneficial ownership of 1% or more of the outstanding Common Shares and all
Trustees and officers as a group beneficially owned .8% of the outstanding
Common Shares.
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP OF CLASS
- ------------------------ -------------------- --------
C.W. Strong, Jr. . . . . . . . . . . . . . . 70 (*)
James A. Dalton . . . . . . . . . . . . . . . 0 (*)
Daniel F. Hennessey . . . . . . . . . . . . . 17 (*)
Donald W. Burnes, Jr. . . . . . . . . . . . . 0 (*)
Victor H. Schlesinger . . . . . . . . . . . . 256 (*)
George R. Zoffinger . . . . . . . . . . . . . 8,443 (*)
Carl A. Mayer, Jr. . . . . . . . . . . . . . 5,000 (*)
Martin Bernstein . . . . . . . . . . . . . . 33,162(2) (*)
John B. Levy . . . . . . . . . . . . . . . . 9,206(3) (*)
Richard B. Jennings . . . . . . . . . . . . . 5,000 (*)
Richard S. Frary . . . . . . . . . . . . . . 23,775 (*)
Jeffrey Altman . . . . . . . . . . . . . . . 5,000(4) (*)
Trustees and Named Executive Officers(5) as a 89,965 (*)
group (12 persons) . . . . . . . . . . . . .
__________________
(*) Less than one percent
(1) The address of all Named Executive Officers is in care of the Trust.
(2) Includes 18,775 Common Shares owned by Evelyn Bernstein, Mr. Bernstein's
wife. Mr. Bernstein disclaims beneficial ownership of such shares.
(3) All 4,206 Common Shares owned by Judith Brown Levy, Mr. Levy's wife. Mr.
Levy disclaims beneficial ownership of such shares.
(4) Beneficial ownership of 5,000 of the Common Shares reported as
beneficially owned by Mr. Altman is vested in Heine Securities
Corporation pursuant to an agreement between Mr. Altman and Heine
Securities Corporation.
(5) Includes all Named and current Executive Officers.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) TRANSACTIONS WITH MANAGEMENT AND OTHERS.
The Trust is subleasing a portion of the 8th floor of 120 Albany Street
from the New Brunswick Development Authority, a not-for-profit 501(c)(3)
corporation for the benefit of the city of New Brunswick of which George R.
Zoffinger, C.E.O., President and Trustee of the Trust, is Chairman of the Board
of Trustees. The sublease covers 4000 square feet at an annual rental rate of
$75,000. The sublease is in effect until December 31, 1996, at which point the
Trust has the option to renew at the same rate for another year. The Trust has
three more subsequent options to renew the sublease at the current rental rate
in December 1997, 1998, and 1999.
(b) CERTAIN BUSINESS RELATIONSHIPS.
Jeffrey Altman, who was appointed in connection with the Trust's
Prepackaged Plan as Chairman of the Board of Trustees, is also a Vice President
of Mutual Series Fund Inc. since 1995. Two of the four series which constitute
Mutual Series Fund Inc. currently hold $50,327,000 in principal amount of the
Trust's Senior Notes.
- 25 -
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents Filed as a Part of the Report.
The following documents are filed as part of this report.
1. Financial Statements.
The financial statements of the Trust are set forth in the "INDEX TO
FINANCIAL STATEMENTS" on page 28.
2. Financial Statement Schedules.
See 3(d) below.
3. Exhibits.
(a) Exhibits are as set forth in the "INDEX TO EXHIBITS" on pages 49-51.
(b) REPORTS ON FORM 8-K. On August 25, 1995, the Registrant filed a
current report on Form 8-K regarding the closure of the consent solicitation for
its prepackaged plan of reorganization, commencement of its chapter 11
bankruptcy case, and the scheduling of a confirmation hearing of the prepackaged
plan of bankruptcy by the United States Bankruptcy Court for the Central
District of California.
(c) EXHIBITS, INCLUDING THOSE INCORPORATED BY REFERENCE. Exhibits are set
forth in the "INDEX TO EXHIBITS" on pages 49-51. Where so indicated by footnote
in the index, exhibits which were previously filed are incorporated by
reference. For exhibits incorporated by reference, the location of the exhibit
in the previous filing is indicated in parentheses. Copies of the exhibits are
available to shareholders upon payment of $.25 per page fee to cover the Trust's
expenses in furnishing the exhibits. For copies contact: Value Property Trust,
120 Albany Street, 8th floor, New Brunswick, New Jersey 08901.
(d) Financial Statement Schedules, except those indicated in the "INDEX TO
FINANCIAL STATEMENTS" on page 28, have been omitted because the required
information is included in the financial statements or notes thereto, or the
amounts are not significant.
- 26 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
VALUE PROPERTY TRUST
Date: December 29, 1995 By: /s/ GEORGE R. ZOFFINGER
--------------------------
George R. Zoffinger
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Each person in so signing also makes constitutes and appoints George R.
Zoffinger, President and Chief Executive Officer of Value Property Trust, and
each of them, his true and lawful attorney-in-fact, in his name, place and stead
to execute and cause to be filed with the Securities and Exchange Commission any
or all amendments to this report.
/s/ JEFFREY ALTMAN Chairman and Trustee December 29, 1995
- -------------------------------
Jeffrey Altman
President, Chief Executive
/s/ GEORGE R. ZOFFINGER Officer and Trustee December 29, 1995
- ------------------------------- (Principal Executive Officer
George R. Zoffinger
/s/ HUGH T. REGAN, JR. Treasurer and Secretary
- ------------------------------- (Principal Accounting December 29, 1995
Hugh T. Regan, Jr. Officer)
/s/ MARTIN BERNSTEIN Trustee December 29, 1995
- -------------------------------
Martin Bernstein
/s/ RICHARD S. FRARY Trustee December 29, 1995
- -------------------------------
Richard S. Frary
/s/ RICHARD B. JENNINGS Trustee December 29, 1995
- -------------------------------
Richard B. Jennings
/s/ JOHN B. LEVY Trustee December 29, 1995
- -------------------------------
John B. Levy
/s/ CARL A. MAYER, JR. Trustee December 29, 1995
- -------------------------------
Carl A. Mayer, Jr.
- 27 -
<PAGE>
VALUE PROPERTY TRUST
INDEX TO FINANCIAL STATEMENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . 29
Financial Statements
Statement of Operations
(Years ended September 30, 1995, 1994, 1993) . . . . . . . . . . . . . 30
Balance Sheet
(September 30, 1995 and 1994) . . . . . . . . . . . . . . . . . . . . 31
Statement of Cash Flows
(Years ended September 30, 1995, 1994 and 1993) . . . . . . . . . . . 32
Statement of Shareholder's Equity
(Years ended September 30, 1995, 1994 and 1993) . . . . . . . . . . . 33
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . 34
Financial Statements Schedules
Schedule XI --- Real Estate Accumulated
Depreciation and Amortization (September 30 1995) . . . . . . . . 44
Schedule XII --- Mortgage Loans on Real Estate
(September 30, 1995) . . . . . . . . . . . . . . . . . . . . . . 47
- 28 -
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Trustees and Shareholders
Value Property Trust
We have audited the accompanying balance sheets of Value Property Trust
(formerly Mortgage and Realty Trust) at September 30, 1995 and 1994 and the
related statements of operations, shareholders' equity, and cash flows for each
of the three years in the period ended September 30, 1995. Our audits also
included the financial statement schedules referenced at Item 14(a). These
financial statements and schedules are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As more fully described in Note 1 to the financial statements, on
September 22, 1995, the Bankruptcy Court confirmed the Trust's plan of
reorganization which was consummated on September 29, 1995 permitting the Trust
to emerge from proceedings under the Bankruptcy Code. The Trust implemented the
guidance as to the accounting for entities emerging from Chapter 11 set forth in
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
under the Bankruptcy Code" ("Fresh Start Reporting") as of September 30, 1995.
Due to the reorganization and the implementation of Fresh Start Reporting,
assets were recorded at reorganization value, liabilities were recorded at fair
values and outstanding obligations were discharged primarily in exchange for
cash, new indebtedness and equity. As a result, the balance sheet at September
30, 1995 reflects a new basis of accounting and, accordingly, is not comparable
to balance sheets prior to that date.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Value Property Trust, at
September 30, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 1995, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
aspects the information set forth therein.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
November 10, 1995
- 29 -
<PAGE>
STATEMENT OF OPERATIONS
YEARS ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
PRE-CONFIRMATION
--------------------------------------------------
1995 1994 1993
--------------- -------------- --------------
<S> <C> <C> <C>
Income:
Income of rental properties:
Rental income $ 24,608,000 $ 18,495,000 $ 17,368,000
Operating expense reimbursement 2,286,000 1,705,000 1,601,000
Interest and fee income on mortgage loans 9,353,000 14,725,000 19,027,000
Interest on short-term investments 3,086,000 1,238,000 237,000
Other 131,000 114,000 109,000
--------------- -------------- --------------
39,464,000 36,277,000 38,342,000
--------------- -------------- --------------
Expenses:
Interest 35,900,000 33,002,000 28,510,000
Expenses of rental properties:
Depreciation and amortization 7,306,000 5,839,000 5,500,000
Operating 11,702,000 9,827,000 10,199,000
Other operating expenses 4,518,000 4,839,000 5,258,000
Provision for losses on mortgage loans and related investments 3,000,000 2,000,000 37,000,000
--------------- -------------- --------------
62,426,000 55,507,000 86,467,000
--------------- -------------- --------------
Loss from operations before reorganization items,
and extraordinary item (22,962,000) (19,230,000) (48,125,000)
--------------- -------------- --------------
Reorganization items:
Professional fees and other (6,219,000) (2,360,000) (5,844,000)
Interest income 441,000 - -
Write down of invested assets to reorganization value (66,597,000) - -
--------------- -------------- --------------
Total reorganization items (72,375,000) (2,360,000) (5,844,000)
--------------- -------------- --------------
Net loss before extraordinary item (95,337,000) (21,590,000) (53,969,000)
--------------- -------------- --------------
Extraordinary item-Gain on extinguishment of debt 75,304,000 - -
--------------- -------------- --------------
Net loss $ (20,033,000) $ (21,590,000) $ (53,969,000)
--------------- -------------- --------------
--------------- -------------- --------------
Weighted average number of common shares outstanding 11,226,000 11,226,000 11,226,000
</TABLE>
* Per share amounts are not meaningful due to Fresh Start reporting
See accompanying notes.
-30-
<PAGE>
BALANCE SHEET
YEARS ENDED SEPTEMBER 30
ASSETS
<TABLE>
<CAPTION>
1995 1994
------------------- ------------------
(Post Confirmation) (Pre-Confirmation)
<S> <C> <C>
ASSETS HELD FOR SALE:
Mortgage loans $ 21,966,000 $ 38,051,000
Investment in partnerships 5,220,000 6,247,000
Real estate owned 42,059,000 47,768,000
-------------- --------------
69,245,000 92,066,000
-------------- --------------
ASSETS HELD FOR INVESTMENT:
Mortgage loans 35,013,000 60,712,000
Investment in partnerships 20,648,000 27,601,000
Notes receivable 633,000 917,000
Real estate owned 81,581,000 128,677,000
-------------- --------------
137,875,000 217,907,000
-------------- --------------
207,120,000 309,973,000
Less allowance for - (13,430,000)
-------------- --------------
207,120,000 296,543,000
Cash and cash equivalents 9,977,000 57,349,000
Restricted cash 6,791,000 2,983,000
Interest receivable and other assets 8,441,000 7,865,000
-------------- --------------
$ 232,329,000 $ 364,740,000
-------------- --------------
-------------- --------------
LIABILITIES
Senior Secured Notes (Due 2002) $ 109,975,000 $ -
Senior Secured Notes (Due 1995) - 290,000,000
Mortgage payable 17,535,000 17,593,000
Accounts payable and accrued expenses 4,745,000 4,546,000
Interest payable - 32,568,000
-------------- --------------
132,255,000 344,707,000
-------------- --------------
SHAREHOLDERS' EQUITY
Preferred shares, $1 par value: 3,500,000 shares
authorized, none issued - -
Common shares, $1 par value: 20,000,000 shares
authorized, 11,226,000 shares issued and
outstanding 11,226,000 11,226,000
Additional paid-in capital 88,848,000 182,375,000
Accumulated Deficit - (173,568,000)
-------------- --------------
Total shareholders' equity 100,074,000 20,033,000
-------------- --------------
-------------- --------------
$ 232,329,000 $ 364,740,000
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes.
-31-
<PAGE>
STATEMENT OF CASH FLOWS
YEARS ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
PRE-CONFIRMATION
---------------------------------------------------
1995 1994 1993
---------------- --------------- ---------------
<S> <C> <C> <C>
Net loss $ (20,033,000) $ (21,590,000) $ (53,969,000)
Add back (deduct) items not affecting cash and
cash equivalents:
Write down of invested assets
to reorganization value 66,597,000 - -
Extraordinary item-gain on extinguishment of debt (75,304,000) - -
---------------- --------------- ---------------
Loss from operations after reorganization and
extraordinary item (28,740,000) (21,590,000) (53,969,000)
---------------- --------------- ---------------
Adjustments to reconcile loss from operations to net
cash provided by operating activities:
Depreciation and amortization on real estate 7,306,000 5,839,000 5,500,000
Provision for losses 3,000,000 2,000,000 37,000,000
Increase (decrease) in payable and accrued expenses 199,000 (217,000) 106,000
Increase (decrease) in interest payable (32,568,000) 32,156,000 412,000
Decrease (increase) in receivable and other assets (576,000) (1,160,000) 2,669,000
Net change in interest reserves, deferred income (162,000) (582,000) (934,000)
Recoveries of charge-offs to allowance for losses 631,000 1,019,000 -
Other - (967,000) -
---------------- --------------- ---------------
Total adjustments (22,170,000) 38,088,000 44,753,000
---------------- --------------- ---------------
Net cash provided by (used in) operating activities (50,910,000) 16,498,000 (9,216,000)
---------------- --------------- ---------------
Cash flows from investing activities:
Investment in real estate:
Real estate owned (11,283,000) (7,116,000) (7,105,000)
Advances on mortgage loans (including
in-substance foreclosures) (733,000) (1,337,000) (1,737,000)
Partnerships (2,211,000) - (2,078,000)
Principal repayments on mortgage loans 22,711,000 34,308,000 24,964,000
Sale of real estate 3,350,000 6,360,000 16,170,000
Repayments on notes receivable 217,000 168,000 -
---------------- --------------- ---------------
Net cash provided by investing activities 12,051,000 32,383,000 30,214,000
---------------- --------------- ---------------
Cash flows from financing activities:
Payment on loan on equity investment (58,000) - -
Principal payment of senior secured notes (4,647,000) - (22,000,000)
Increase in restricted cash (3,808,000) (2,983,000) -
---------------- --------------- ---------------
Net cash used in financing activities (8,513,000) (2,983,000) (22,000,000)
---------------- --------------- ---------------
Net increase (decrease) (47,372,000) 45,898,000 (1,002,000)
Cash and cash equivalent and beginning of period 57,349,000 11,451,000 12,453,000
---------------- --------------- ---------------
Cash and cash equivalent at end of period $ 9,977,000 $ 57,349,000 $ 11,451,000
---------------- --------------- ---------------
---------------- --------------- ---------------
Supplemental schedule of non-cash investing activities:
Charge-offs against allowance for losses $ 5,515,000 $ 378,000 $ 44,545,000
---------------- --------------- ---------------
---------------- --------------- ---------------
</TABLE>
See accompanying notes.
-32-
<PAGE>
STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON SHARES PAID-IN ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
------------ -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1992 11,076,000 $ 11,076,000 $ 182,525,000 $ (98,009,000) $ 95,592,000
Shares issued-Litigation Settlement 150,000 150,000 (150,000) -
Net loss (53,969,000) (53,969,000)
------------ -------------- --------------- --------------- --------------
Balance at September 30, 1993 11,226,000 11,226,000 182,375,000 (151,978,000) 41,623,000
Net loss (21,590,000) (21,590,000)
------------ -------------- --------------- --------------- --------------
Balance at September 30, 1994 11,226,000 11,226,000 182,375,000 (173,568,000) 20,033,000
Net loss (20,033,000) (20,033,000)
Reverse stock split (10,889,000) (10,889,000) (268,905,000) (279,794,000)
Issuance of Common Stock 10,889,000 10,889,000 175,378,000 186,267,000
Adjustment to restate
accumulated deficit to zero 193,601,000 193,601,000
------------ -------------- --------------- --------------- --------------
Balance at September 30, 1995 11,226,000 $ 11,226,000 $ 88,848,000 $ 0 $ 100,074,000
------------ -------------- --------------- --------------- --------------
------------ -------------- --------------- --------------- --------------
</TABLE>
-33-
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF FINANCIAL INFORMATION AND PLAN OF REORGANIZATION
On September 29, 1995, the Trust's Prepackaged Plan of Reorganization was
declared effective by the United States Bankruptcy Court for the Central
District of California.
Under the Prepackaged Plan, holders of the Trust's $290,000,000 principal
amount of Senior Secured Uncertificated Notes due 1995 received (i) $110,000,000
principal amount of newly issued 11-1/8% Senior Secured Notes due 2002, (ii)
$71,000,000 ($25,000,000 paid in April 1993) in cash and (iii) approximately
10,889,430 new Common Shares representing in the aggregate approximately 97% of
the Common Shares outstanding after the effective date. In connection with the
Prepackaged Plan, the Trust effected a 1 for 33.33 for one reverse stock split
of its outstanding Common Shares.
In connection with its emergence from the Chapter 11 proceeding, the Trust
implemented Fresh Start Reporting as of September 30, 1995, as set forth in
Statement of Position 90-7 "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code." Fresh Start Reporting was required because (i) the
reorganization value of the Trust's assets immediately before the date of
confirmation was less than the total of all post-petition liabilities, (2) there
was more than a 50% change in the ownership of the Trust, and (3) there was a
permanent and substantive loss of control by existing shareholders. As a
result, all assets and liabilities were restated to reflect their respective
reorganization values or fair value. The September 30, 1995 balance sheet
amounts have been segregated by a black line in order to signify that the 1995
balance sheet is that of a new reporting entity and has been prepared on a basis
not comparable to the pre-confirmation balance sheet.
The Trust based the reorganization value of assets on the mid-point of the
range of values prepared by independent specialists in the field of real estate
valuation. The valuation of its real estate investments was prepared as of
March 31, 1995 and adjusted to September 30, 1995 for various accounts such as
cash and cash equivalents, accounts receivable and accounts payable.
The Trust's liabilities are stated at their fair value. The difference
between reorganization value of the assets and the fair value of the liabilities
is recorded as shareholders' equity with the accumulated deficit restated to
zero.
The real estate valuation analysis reflects the selection of 26 assets
representing 81% of the Trust's book value at March 31, 1995. The selection was
divided between east coast and west coast assets and generally represented the
highest dollar values in the portfolio.
The analysis factored in, among other things, (i) the most recent property
cash flow projections for the properties selected, (ii) where applicable, the
most recent operating rent roll and other financial information relative to the
assets selected, (iii) the most recent third party, independent appraisals,
where applicable and available, (iv) discussions with the respective asset
managers to determine loan status, property characteristics, current occupancy,
existing market rental rates, new leases, current payoff discussions and asset
sales, and (v) a review of limited market information for the properties.
The valuation of the asset portfolio assumed continued operation of the
portfolio for several years. Sales and pay-offs of certain assets occurred
throughout the analysis period (six years) and no additional investments were
made. Property cash flows, loan payments and pay-offs, and reversion amounts
(based on normalized capital expenditures in the reversion year) were discounted
to present value at 12 percent per year. Amounts do not include extraordinary
expenses for reorganization or litigation.
The going concern value was reduced by other operating expenses that would
be incurred over a six year period. The present value of expenses was
calculated by applying a capitalization rate of 10 percent to Year 6 stabilized
other expenses and discounting both the capitalized, stabilized Year 6 expenses
and the annual expenses at 12 percent. The net present value of operating
expenses was $27.3 million.
The effect of the Fresh Start Reporting on the Trust's historical cost
balance sheet at September 30, 1995 is as follows:
- 34 -
<PAGE>
- ----------------------------------------------
VALUE PROPERTY TRUST
BALANCE SHEET
AS OF SEPTEMBER 30, 1995
- ----------------------------------------------
<TABLE>
<CAPTION>
PRE- REORGANIZATION FRESH START POST-
CONFIRMATION ADJUSTMENTS ADJUSTMENTS CONFIRMATION
------------ -------------- ----------- ------------
($ in 000)
<S> <C> <C> <C> <C>
ASSETS
Assets held for sale:
Mortgage loans $30,225 ($8,259)(E) $21,966
Investments in partnerships 6,478 (1,258)(E) 5,220
Real estate owned 50,406 (8,347)(E) 42,059
-------- ---------- -------- -------
87,109 0 (17,864)(E) 69,245
-------- ---------- -------- -------
ASSETS HELD FOR INVESTMENT:
Mortgage loans 46,721 (11,708)(E) 35,013
Investments in partnerships 26,249 (5,601)(E) 20,648
Notes receivable 700 (67)(E) 633
Real estate owned 124,484 (42,903)(E) 81,581
-------- ---------- -------- -------
198,154 0 (60,279)(E) 137,875
-------- ---------- -------- -------
285,263 0 (78,143)(E) 207,120
Less: allowance for losses (11,546) 11,546 (E) 0
-------- ---------- -------- -------
273,717 0 (66,597)(E) 207,120
Cash & cash equivalents 56,002 (46,025)(A) 9,977
Restricted cash 6,791 6,791
Interest receivable and other assets 8,441 8,441
-------- ---------- -------- -------
Total assets $344,951 ($46,025) ($66,597) $232,329
-------- ---------- -------- -------
-------- ---------- -------- -------
LIABILITIES
Outstanding Notes $290,000 ($290,000)(B) $0
New Senior Notes 0 109,975 (B) 109,975
Mortgage payable 17,535 17,535
Interest payable 41,378 (41,378)(B) 0
Accounts payable and other 2,920 1,825 (C) 4,745
-------- ---------- -------- -------
Total liabilities 351,833 (219,578) 0 132,255
-------- ---------- -------- -------
SHAREHOLDERS' EQUITY
Common stock at par 11,226 11,226
Additional paid in capital 182,375 175,378 (D) (268,905)(F) 88,848
Accumulated deficit (200,483) (1,825)(C) 202,308 (F) 0
-------- ---------- -------- -------
Total shareholders' equity (6,882) 173,553 (66,597) 100,074
-------- ---------- -------- -------
Total liabilities and equity $344,951 ($46,025) ($66,597) $232,329
-------- ---------- -------- -------
-------- ---------- -------- -------
</TABLE>
-35-
<PAGE>
ADJUSTMENTS TO REFLECT REORGANIZATION
(A) Reflects a $46,025 payment to creditors made at implementation of the
plan.
(B) Reflects the cancellation of the Senior Secured notes due 1995 in the
face amount of $290,000 and the related interest payable on these notes
of $41,378 and the recording of the new Senior Notes due 2002 in the
face amount of $109,975.
(C) Reflects the cost of the termination pay plan ($1,325) and the cost
associated with the restructuring ($500).
(D) Reflects the conversion of amounts previously owed under the Senior
Secured notes due 1995 converted to a 97% interest in the common shares
of the reorganized Trust as follows:
<TABLE>
<CAPTION>
<S> <C>
Face amount of Senior Notes due 1995 $290,000
Interest payable 41,378
--------
Total amount payable to creditors 331,378
Less: New Senior Notes due 2002 (109,975)
Less: Cash payment to creditors (46,025)
--------
Amount previously due creditors converted to equity $175,378
--------
--------
</TABLE>
ADJUSTMENT TO REFLECT FRESH START ACCOUNTING
(E) Reflects adjustment made to carrying value of loans and owned real
estate to adjust to reorganization values.
(F) Reflects the adjustment of the deficit to zero as a result of the
restructure and the adjustment of additional paid in capital as follows:
<TABLE>
<CAPTION>
<S> <C>
Adjust deficit to reset to zero ($202,308)
Adjustment to carrying value of invested assets (66,597)
--------
($269,905)
--------
--------
</TABLE>
- 36 -
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
RECLASSIFICATIONS
Certain amounts in the September 30, 1994 pre-confirmation balance sheet
have been reclassified to conform with the September 30, 1995 post-
confirmation balance sheet.
INCOME TAXES
The Trust is a real estate investment trust (a "REIT") that has elected to
be taxed under Sections 856-860 of the Internal Revenue Code of 1986, as
amended. Accordingly, no provision has been made for income taxes in the
financial statements.
For the fiscal years ended September 30, 1995, 1994 and 1993, there were
significant differences between taxable net loss and net loss as reported
in the financial statements. The differences were related to the
recognition of bad debt deductions and accounting for reorganization costs
and Fresh Start Reporting. For financial accounting purposes, these items
are expensed currently, while for tax purposes some portion of these items
may be deferred to future periods or may not be deductible. In addition,
the Fresh Start Reporting discussed in Note 1 is not recognized for tax
purposes, and will result in future years book/tax differences.
The Trust incurred net operating losses ("NOLs") of $35 million, $38
million $31 million and $12 million for tax purposes in fiscal 1994, 1993,
1992 and 1991, respectively. The Trust estimates a net operating loss
before Cancellation of Indebtedness ("COD") income for tax purposes of
approximately $41 million for fiscal 1995. Beginning with fiscal 1996,
NOLs available to offset taxable income in future years will be
approximately $82 million after the recognition for tax purposes of the COD
income of approximately $75 million. These NOLs will be subject to
Internal Revenue Code Section 382 annual limitations on the use of the
NOLs. The Trust estimates this annual limitation to be approximately $6
million with any portion of the Section 382 limitation not used in any
taxable year carried forward up to fifteen years.
After the recognition of the COD income, the remaining NOLs available will
be $9 million, $38 million and $35 million from fiscal 1992, 1993 and 1994,
respectively.
The New Indenture restricts the payment of dividends, other than such
declaration and making of dividend payments that the Trust deems necessary
to preserve its status as a REIT, unless the consolidated net worth of the
Trust at the time of such payment and after giving effect thereto is at
least $50 million; provided, however, that the Trust shall in no event
declare or make any such dividend payment or other distribution if a
default or event of default under the New Indenture has occurred and is
continuing. Under the Internal Revenue Code, the Trust must distribute 95%
of its "REIT taxable income" to its shareholders to continue to qualify as
a REIT.
INTEREST INCOME
Interest income on each loan is recorded as earned. Interest income is not
recognized if, in the opinion of the Trustees, collection is doubtful. The
Trust generally considers loans as delinquent if payment of interest and/or
principal, as required by the terms of the note, is more than 60 days past
due. Accrual of interest income is generally terminated and foreclosure
proceedings are started if payment is more than 60 days past due.
- 37 -
<PAGE>
2. (continued)
ALLOWANCE FOR LOSSES
Prior to the implementation of Fresh Start Reporting, the allowance for
losses on mortgage loans and related investments was determined in
accordance with The American Institute of Certified Public Accountants
Statement of Position on Accounting Practices of Real Estate Investment
Trusts 75-2 ("SOP 75-2"), as amended. This statement requires adjustment
of the carrying value of mortgage loans to the lower of their carrying
value or estimated net realizable value. Estimated net realizable value is
the estimated selling price of a property offered for sale in the open
market allowing a reasonable time to find a buyer, reduced by the estimated
cost to complete and hold the property (including the estimated cost of
capital), net of estimated cash income.
With the implementation of Fresh Start Reporting, as of September 30, 1995,
the allowance for losses was reset to zero. Further provisions for losses
on mortgage loans and related investments in accordance with SOP 75-2 may
be necessary if there is deterioration in real estate markets, or there is
a significant increase in the Trust's cost of capital.
NET LOSS PER SHARE
Net loss per share for all pre-confirmation periods is not presented
because this information is not meaningful as a result of the
Reorganization and "Fresh Start Reporting".
DEPRECIATION AND AMORTIZATION
Depreciation and amortization are computed on the straight-line method over
an estimated useful life of 40 years for buildings and three to five years
for other property and lease commissions. Real estate held for investment
will be depreciated on a straight line method over the remaining life of
the asset.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents and restricted cash include short-term
investments (high grade commercial paper carried at a cost of $11.0 million
at September 30, 1995) with maturities ranging from 5 to 33 days.
- 38 -
<PAGE>
3. MORTGAGE LOANS AND INVESTMENT IN REAL ESTATE
The following table summarizes the Trust's mortgage loan portfolio:
<TABLE>
<CAPTION>
POST CONFIRMATION PRE-CONFIRMATION
----------------------- -----------------------
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
----------------------- -----------------------
NUMBER OF CARRYING NUMBER OF CARRYING
TYPE OF UNDERLYING SECURITY INVESTMENTS AMOUNT INVESTMENTS AMOUNT
- ------------------------------ ----------- -------- ----------- --------
($000) ($000)
<S> <C> <C> <C> <C>
Apartments 1 $ 170 2 $ 6,950
Residential/Condominium* 8 909 9 1,334
Office Buildings 3 4,579 3 6,353
Industrial Buildings 10 19,046 8 40,494
Research & Development Bldgs. 4 17,081 4 24,293
Retail Buildings 4 13,208 4 16,279
Hotel/Motels 1 1,986 1 3,060
-- -------- -- --------
Total 31 $ 56,979 31 $ 98,763
-- -------- -- --------
-- -------- -- --------
</TABLE>
_____________
* Includes 80 mortgage end loans on 8 investments at September 30, 1995 and
80 mortgage end loans on 9 investments at September 30, 1994.
The Trust's mortgage loan portfolio consists of loans located principally in
California, 51% and Pennsylvania, 18%.
As of September 30, 1995, there were four mortgage loans with a carrying
value of $12 million that were delinquent (more than 60 days past due) as to
principal and/or interest. Subsequent to September 30, 1995, the Trust
foreclosed on two of the properties totalling $5.1 million and has obtained
title to them.
During fiscal 1995 and 1994, loans totalling $38,834,000 and $104,142,000,
respectively, were extended beyond their original contractual maturity dates.
Loan terms are extended in the normal course of business due to financial
difficulties of the borrower.
During fiscal 1995 and 1994, seven loans totalling $26,101,000 and eight
loans totalling $81,501,000, respectively, had interest rate reductions due
to financial difficulties of the borrower.
At September 30, 1995 and 1994, mortgage loans outstanding consisted of fixed
rate loans of $41,050,000 and $101,851,000 floating rate loans of $15,929,000
and $40,096,000 and participating loans of $1,529,000 and $2,010,000,
respectively.
-39-
<PAGE>
The following table summarizes the Trust's real estate owned, net of
accumulated depreciation of $-0- at September 30, 1995 and $18,352,000 at
September 30, 1994:
<TABLE>
<CAPTION>
POST CONFIRMATION PRE-CONFIRMATION
----------------------- -----------------------
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
----------------------- -----------------------
NUMBER OF CARRYING NUMBER OF CARRYING
TYPE OF PROPERTY INVESTMENTS AMOUNT INVESTMENTS AMOUNT
- ------------------------------ ----------- -------- ----------- ---------
($000) ($000)
<S> <C> <C> <C> <C>
Apartments 3 $ 19,517 3 $ 21,012
Office Buildings 14 38,352 15 64,918
Industrial Buildings 9 19,904 10 37,217
Retail Buildings 5 41,133 5 47,313
Research & Development Bldgs 2 4,734 2 5,985
-- -------- -- --------
Total 33 $123,640 35 $176,445
-- -------- -- --------
-- -------- -- --------
</TABLE>
The following table summarized the Trust's investment in partnerships, net
of accumulated depreciation of $-0- at September 30, 1995 and $314,000
at September 30, 1994:
<TABLE>
<CAPTION>
POST CONFIRMATION PRE-CONFIRMATION
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
----------------------- -----------------------
NUMBER OF CARRYING NUMBER OF CARRYING
TYPE OF PROPERTY INVESTMENTS AMOUNT INVESTMENTS AMOUNT
- ------------------------------ ----------- -------- ----------- ---------
($000) ($000)
<S> <C> <C> <C> <C>
Industrial Buildings 3 $ 13,988 3 $ 15,772
Retail Buildings 2 11,880 2 18,076
-- -------- -- --------
Total 5 $ 25,868 5 $ 33,848
</TABLE>
The Trust may be liable for environmental problems on sold properties. At
September 30, 1995, the Trust was not aware of any environmental problems on
sold properties.
- 40 -
<PAGE>
4. ALLOWANCE FOR LOSSES
The changes in the allowance for losses for the years ended September 30,
1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
($ AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $13,430 $11,808 $19,353
Provisions charged to expense 3,000 2,000 37,000
-------- ------- -------
16,430 13,808 56,353
Less charges against allowance, net
of recoveries 16,430 378 44,545
-------- ------- -------
Balance at end of year $ -0- $13,430 $11,808
-------- ------- -------
-------- ------- -------
</TABLE>
The Trust adjusted the balance of allowance for losses at September 30,
1995 as part of "Fresh Start Reporting" (See Note 1).
5. BORROWINGS
MORTGAGE PAYABLE
The Trust has a mortgage payable of $17,535,000 outstanding at September
30, 1995. The contractual interest rate on this loan at September 30, 1995
was 10.75% (Prime + 2%, floor of 8.5%) and the loan was to mature on
December 5, 1995. In October 1995, the Trust made a paydown of $3.5
million, reducing the balance outstanding to $14 million and extending the
maturity date to December 20, 1996.
SENIOR SECURED NOTES DUE 2002
The 11-1/8% Senior Secured Notes (the "Notes") are secured obligations
(secured by a first priority lien on all of the Trust's collateral)
governed by the New Indenture between the Trust and Wilmington Trust Co.,
as Trustee, dated as of the effective date (September 29, 1995). Interest
on these Notes accrues at 11-1/8% per annum and is payable semi-annually in
arrears on each June 30 and December 31. The Trust is not required to make
mandatory redemption payments or sinking fund payments other than with
respect to Asset Sale Proceeds (as defined in the New Indenture). If at
any time the aggregate amount of Asset Sale Proceeds exceeds $10 million,
the Trust is required to make an offer to all holders of Notes to purchase
the maximum principal amount of Notes that, together with accrued and
unpaid interest thereon, may be purchased with 80% of any such asset sale
proceeds or 100% of net cash proceeds of Indebtedness incurred as permitted
under the New Indenture. The Trust has the option to redeem the Notes, in
whole or in part, at 100% of the principal amount plus accrued and unpaid
interest. The New Indenture includes affirmative covenants, negative
covenants and financial covenants. See Note 2 - Income Taxes - regarding
restrictions on dividend payments.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Financial Accounting Standards Board Statement No. 107--Disclosure of
Fair Value of Financial Statements ("SFAS 107") requires disclosure of fair
value information about financial instruments, whether or not recognized in
the balance sheet, for which it is practicable to estimate that value. In
cases where quoted market prices are not available, fair values are based
on estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard, the
derived fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in
-41-
<PAGE>
immediate settlement of the instrument. SFAS 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented do
not represent the underlying value of the Trust.
The carrying value of cash and cash equivalents approximates their fair
value because of the liquidity and short-term maturities of these
instruments.
The mortgage payable is a variable rate loan that reprices frequently, thus
fair value is based on the carrying amount of the loan.
7. SHARE OPTION PLAN
1984 SHARE OPTION PLAN
As part of the Plan of Reorganization, all options outstanding pursuant to
the 1984 Share Option Plan (348,500) were canceled.
1995 SHARE OPTION PLAN
On October 2, 1995, the Board of Trustees adopted a 1995 Share Option Plan
(the "1995 Plan") for Trustees, officers, employees and other key persons
of the Trust, subject to the approval of the 1995 Plan by the Trust's
shareholders.
The 1995 Plan provides for the grant of options to purchase up to 870,000
Common Shares at not less than 100% of the fair market value of the
Common Shares, subject to adjustment for share splits, share dividends and
similar events. To the extent that awards under the 1995 Plan do not vest
or otherwise revert to the Trust, the Common Shares represented by such
awards may be the subject of subsequent awards.
The 1995 Plan provides for the grant of incentive stock options ("Incentive
Options") which qualify under Section 422 of the Code and nonqualified
stock options ("Non-Qualified Options"). Holders of options also receive
dividend equivalent rights.
8. PENSION PLANS
On September 20, 1989, the Trustees adopted an Employees' Retirement Plan
effective September 30, 1989. On December 16, 1992, the Trustees amended
and restated the Employees' Retirement Plan effective January 1, 1992 (as
amended on July 20, 1994, and effective January 1, 1994 and as may be
further amended, the "Retirement Plan"). All employees are eligible to
participate in the Retirement Plan provided that they are at least 21 years
of age and have been employed for twelve consecutive months, during which
period the employee has completed at least 1000 hours of service. Under
the Retirement Plan, each eligible employee after completing five years of
vesting service becomes 100% vested and entitled to a retirement pension.
Benefits can be paid as a lump sum or as an annual retirement income for
life equal to the greater of (a) the sum of (i) 1.3% of the highest five-
year average annual base salary, multiplied by the number of years of
credited service up to and including 35 thereof and (ii) 0.4% of the
highest five-year average annual base salary in excess of Social Security
covered compensation (as adjusted every five years), multiplied by the
number of years of credited service up to and including 35 thereof or
(b) the sum of (i) 1.3% of the highest five-year average annual base
salary, multiplied by the number of credited service up to and including 15
thereof; (ii) 1.5% of the highest five-year average annual base salary,
multiplied by the number of years of credited service from 16 to 25 years
inclusive; (iii) 0.5% of the highest five-year average annual base salary,
multiplied by the number of years of credited service from 26 to 35 years
inclusive; and (iv) 0.4% of the highest five-year average annual base
salary in excess of Social Security covered compensation (as adjusted every
five years), multiplied by the number of years of credited service up to
and including 25 thereof.
-42-
<PAGE>
In November 1995, the Trustees amended the Retirement Plan effective
January 1, 1996 to switch from the Pension Benefit Guaranty Corporation
interest rate used for valuing lump sum distributions to the new General
Agreement on Tariffs and Trade interest rate and mortality table for
valuing lump sum distributions. As a result of this amendment, the current
market value of Retirement Plan assets approximates the current aggregate
lump sum amounts due to participants.
The Trust also maintains a 401(k) profit and sharing plan and trust.
Employer contributions are limited to 6% of participant's compensation,
with a maximum per year of $3,000 per participant. Profit sharing expense
was $72,000, $61,000 and $65,000 for years ended September 30, 1995, 1994
and 1993, respectively.
9. EMPLOYEE TERMINATION PLAN
A termination pay plan has been established to cover termination of
employment without cause during the period that the Notes, as defined, are
outstanding. Employees are entitled to compensation ranging from a minimum
of twelve weeks to a maximum of eighteen months pay. In addition, certain
health benefits will continue to be paid by the Trust over a period of time
equal to the period used in calculating severance pay. At September 30,
1995, the Trust accrued the $1.3 million cost of the Termination Pay Plan.
After fiscal year end, the majority of existing employees were terminated
and the Trust commenced payments to those employees.
10. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The quarterly results of operations (all pre-confirmation) for fiscal 1995
and 1994 are summarized as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------
DECEMBER 31 MARCH 31 JUNE 30 SEPTEMBER 30
----------- -------- -------- ------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
FISCAL 1995
Total income $ 10,002 $ 9,774 $ 10,038 $ 9,650
Interest expense 9,559 10,273 10,378 5,690
Provision for losses - 3,000 - -
Reorganization expense 370 1,135 1,063 3,651
Write down of invested assets to
reorganization value - - - (66,597)
Gain on extinguishment of debt - - - 75,304
Net loss (5,454) (10,263) (7,326) 3,010
FISCAL 1994
Total income $ 8,846 $ 8,420 $ 9,516 $ 9,495
Interest expense 7,799 7,663 8,360 9,180
Provision for losses - - - -
Reorganization expense 676 741 591 352
Net loss (4,656) (5,152) (4,745) (7,037)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
Per share amounts are not meaningful due to Fresh Start Reporting.
-43-
<PAGE>
VALUE PROPERTY TRUST
SCHEDULE XI
REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION AND AMORTIZATION
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
FRESH START
REPORTING ADJUSTMENTS (b)
INITIAL COST TO TRUST COSTS -------------------------
-------------------------- CAPITALIZED CHARGE OFF
(a) BUILDINGS & SUBSEQUENT TO ACCUMULATED
CLASSIFICATION ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION DEPRECIATION BASIS
-------------- ------------ ----------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS HELD FOR SALE
Apartments:
Other - $ 3,995,000 $ 17,005,000 $ 2,147,000 $2,300,000 $ (1,330,000)
Office Buildings:
Pennsylvania - 750,000 1,547,000 146,000 237,000 (255,000)
Other - 1,500,000 6,197,000 2,126,000 2,280,000 (1,693,000)
Industrial Buildings:
California - 316,000 - - - (46,000)
Pennsylvania - 550,000 1,731,000 1,210,000 227,000 (1,734,000)
Other 1,568,000 3,684,000 284,000 518,000 (1,223,000)
Research & Development Buildings:
Other - 685,000 2,216,000 - 116,000 (391,000)
Retail Buildings:
Other - 1,400,000 7,009,000 366,000 302,000 (1,721,000)
----------- ------------ ----------- ----------- ------------
10,764,000 39,389,000 6,279,000 5,980,000 (8,393,000)
----------- ------------ ----------- ----------- ------------
ASSETS HELD FOR INVESTMENT
Office Buildings:
California - 4,350,000 14,291,000 2,966,000 3,280,000 (8,067,000)
Pennsylvania - 1,790,000 18,010,000 1,614,000 3,449,000 (7,435,000)
Other - 3,903,000 11,719,000 2,142,000 2,162,000 (5,841,000)
Industrial Buildings:
California 6,375,000 14,637,000 6,501,000 6,786,000 (9,478,000)
Other - 630,000 4,231,000 683,000 463,000 (2,021,000)
Research & Development Buildings:
California - 1,390,000 1,725,000 158,000 104,000 (829,000)
Retail Buildings:
California 17,535,000 7,742,000 21,527,000 4,903,000 2,546,000 (4,445,000)
Pennsylvania - 1,585,000 8,982,000 - - (3,907,000)
Other - 250,000 1,179,000 70,000 125,000 (834,000)
----------- ----------- ------------ ----------- ----------- ------------
17,535,000 28,015,000 96,301,000 19,037,000 18,915,000 (42,857,000)
----------- ----------- ------------ ----------- ----------- ------------
TOTAL REAL ESTATE OWNED $17,535,000 $38,779,000 $135,690,000 $25,316,000 $24,895,000 $(51,250,000)
----------- ----------- ------------ ----------- ----------- ------------
----------- ----------- ------------ ----------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
AMOUNT CARRIED AT END OF PERIOD
----------------------------------------
BUILDINGS &
CLASSIFICATION LAND IMPROVEMENTS TOTAL
-------------- ----------- ------------ ------------
<S> <C> <C> <C>
ASSETS HELD FOR SALE
Apartments:
Other $ 3,900,000 $15,617,000 $19,517,000
Office Buildings:
Pennsylvania 390,000 1,561,000 1,951,000
Other 1,170,000 4,680,000 5,850,000
Industrial Buildings:
California 270,000 - 270,000
Pennsylvania 310,000 1,220,000 1,530,000
Other 760,000 3,035,000 3,795,000
Research & Development Buildings:
Other 480,000 1,914,000 2,394,000
Retail Buildings:
Other 1,350,000 5,402,000 6,752,000
----------- ----------- -----------
8,630,000 33,429,000 42,059,000
----------- ----------- -----------
ASSETS HELD FOR INVESTMENT
Office Buildings:
California 2,050,000 8,210,000 10,260,000
Pennsylvania 1,420,000 9,110,000 10,530,000
Other 1,960,000 7,801,000 9,761,000
Industrial Buildings:
California 2,250,000 8,999,000 11,249,000
Other 610,000 2,450,000 3,060,000
Research & Development Buildings:
California 470,000 1,870,000 2,340,000
Retail Buildings:
California 5,440,000 21,741,000 27,181,000
Pennsylvania 1,330,000 5,330,000 6,660,000
Other 110,000 430,000 540,000
----------- ----------- ------------
15,640,000 65,941,000 81,581,000
----------- ----------- ------------
TOTAL REAL ESTATE OWNED $24,270,000 $99,370,000 $123,640,000 (c)(d)
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
-44-
<PAGE>
VALUE PROPERTY TRUST
SCHEDULE XI
REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION AND AMORTIZATION
SEPTEMBER 30, 1995
NOTES:
(a) In addition to the encumbrances listed above, the new Senior Notes due
2002 will be secured by a first priority Lien on all of the Trust's
assets, including all personal property and real property held by the
Trust or any subsidiary.
(b) See Note 1 to financial statements.
(c) Cost for federal income tax purposes is $195,917,000.
(d) The changes in carrying amounts during the year ended September 30,
1995 are summarized as follows:
Balance at September 30, 1994 $ 66,880,000
Reclassification from foreclosure
property and mortgage loans 109,565,000
Additions during year:
Improvements 11,283,000
Deductions during year:
Sale of real estate $ 3,350,000
Charge off against allowance for losses 2,881,000
Adjustments for fresh start reporting 57,857,000 64,088,000
------------ ------------
Balance at September 30, 1995 $123,640,000
------------
------------
The changes in carrying amounts during the year ended September 30,
1994 are summarized as follows:
Balance at September 30, 1993 $ 65,012,000
Additions during year:
Improvements $ 1,847,000
Loan advance by construction lender 21,000 1,868,000
------------ ------------
Balance at September 30, 1994 $ 66,880,000
------------
------------
The changes in carrying amounts during the year ended September 30,
1993 are summarized as follows:
Balance at September 30, 1992 $ 46,400,000
Additions during year:
Reclassification from real estate
equities held for sale and other
assets $ 16,427,000
Improvements 2,505,000
Loan advance by construction lender 2,057,000 20,989,000
------------
Deductions during year:
Charge off against allowance for losses 2,377,000
------------
Balance at September 30, 1993 $ 65,012,000
------------
------------
-45-
<PAGE>
VALUE PROPERTY TRUST
SCHEDULE XI (CONTINUED)
REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION AND AMORTIZATION
SEPTEMBER 30, 1995
The change in accumulated depreciation and amortization during the year ended
September 30, 1995 is summarized as follows:
Balance at September 30, 1994 $ 10,023,000
Reclassification from foreclosure property 8,264,000
Additions during year:
Charge to income 6,608,000
Deductions during year:
Adjustment for fresh start reporting 24,895,000
------------
Balance at September 30, 1995 $ -0-
------------
------------
The change in accumulated depreciation and amortization during the year ended
September 30, 1994 is summarized as follows:
Balance at September 30, 1993 $ 7,799,000
Additions during year:
Charge to income 2,224,000
------------
Balance at September 30, 1994 $ 10,023,000
------------
------------
The change in accumulated depreciation and amortization during the year ended
September 30, 1993 is summarized as follows:
Balance at September 30, 1992 $ 3,132,000
Additions during year:
Reclassification from real estate equities
held for sale and other assets 2,553,000
Charge to income 2,114,000
------------
Balance at September 30, 1993 $ 7,799,000
------------
------------
-46-
<PAGE>
VALUE PROPERTY TRUST
SCHEDULE XII
MORTGAGE LOANS ON REAL ESTATE
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
LOANS SUBJECT
NUMBER CONTRACTUAL TO DELIQUENT
OF INTEREST AMOUNT OF PRINCIPAL
TYPE OF LOANS LOANS RATE FINAL MATURITY DATE MORTGAGES OR INTEREST
- ------------------------ -------- -------- ------------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS HELD FOR SALE:
Industrial buildings:
Carson, CA 1 7.00% November 1995 $ 4,029,000 -
Tucson, AZ 1 8.00% March 1999 4,385,000 -
Chula Vista, CA 1 10.00% August 2005 4,200,000 -
Other 1 10.00% January 2000 1,500,000 -
Research and development
buildings:
Santa Ana, CA 1 8.00% December 1999 12,168,000 -
Retail buildings:
Citrus Heights, CA 1 10.25% February 1996 3,957,000 -
------------ -----------
30,239,000 -
------------ -----------
ASSETS HELD FOR INVESTMENT:
Apartments 1 9.00% July 2000 217,000 -
Residential/Condominiums
(a) 80 6.20%-9.50% July 1995-June 2009 1,120,000 -
Office buildings:
Marina Del Rey, CA 1 9.00% October 1995 7,500,000 -
Other 2 7.25%-9.75% April 1999-June 1999 1,458,000 -
Industrial buidlings:
Chester, PA 1 10.00% December 1998 3,895,000 -
Worcester, MA 1 11.00% May 2002 2,423,000 -
Chino, CA 1 10.75% January 1995 4,514,000 4,514,000
Other 3 9.25%-10.00% July 1997-November 1999 870,000 -
Research and development
buildings:
San Dimas, CA 1 11.75% March 1995 2,484,000 2,484,000
Allentown, PA 1 5.00% December 1994 11,526,000 11,526,000
Other 1 9.00% November 1995 2,010,000 -
Retail buildings:
El Toro, CA 1 10.50% December 1999 9,191,000 -
Philadelphia, PA 1 8.25% December 1995 3,250,000 -
Other 1 8.88% November 1999 169,000 -
Hotel:
Sparks, NV 1 10.00% October 1996 3,060,000 -
------------ -----------
53,687,000 18,524,000
------------ -----------
Total contractual amount of mortgage loans 83,926,000 $18,524,000
-----------
-----------
Adjust contractual amount to reorganization value of
mortgage loans (26,947,000)
------------
Carrying Value of Mortgage Loans and Investments $ 56,979,000 (b)(c)
------------
------------
</TABLE>
-47-
<PAGE>
VALUE PROPERTY TRUST
SCHEDULE XII (CONTINUED)
MORTGAGE LOANS ON REAL ESTATE
SEPTEMBER 30, 1995
NOTES:
(a) Consists of 80 mortgage end loans on 8 projects.
(b) The aggregate cost for federal income tax purposes is $83,771,000.
(c) The change in carrying value of mortgage loans during the year ended
September 30, 1995 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Balance at September 30, 1994 $ 69,322,000
Reclassification from in-substance foreclosure 29,441,000
Advances on mortgage loans 733,000
Net change in interest reserves 162,000
------------------
99,658,000
Collections of principal (22,711,000)
Adjustment for fresh start accounting (19,968,000)
------------------
$ 56,979,000
------------------
------------------
</TABLE>
The change in carrying value of mortgage loans during the year ended
September 30, 1994 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Balance at September 30, 1993 $ 104,193,000
Advances on mortgage loans -
Transfer of real estate to mortgage loans 750,000
Net change in interest reserves, deferred income 480,000
------------------
105,423,000
Collections of principal (25,555,000)
Transfer to real estate (10,321,000)
Chargeoff against allowance for losses (225,000)
------------------
$ 69,322,000
------------------
------------------
</TABLE>
The change in carrying value of mortgage loans during the year ended
September 30, 1993 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Balance at September 30, 1992 $ 237,428,000
Advances on mortgage loans 602,000
Transfer of real estate to mortgage loans 348,000
Net change in interest reserves, deferred income 1,323,000
------------------
239,701,000
Collections of principal (24,604,000)
Transfer to real estate (110,218,000)
Chargeoff against allowance for losses (686,000)
------------------
$ 104,193,000
------------------
------------------
</TABLE>
-48-
<PAGE>
VALUE PROPERTY TRUST
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
---------- -----------
3.1(a) Amended and Restated Declaration of Trust dated
September 29, 1995 (14) (Exhibit 3.1).
3.1(b)(*) October 26, 1995 Amendment to Amended and
Restated Declaration of Trust dated September
29, 1995.
3.2 By-Laws, as amended through June 20, 1984 (2)
(Exhibit 3.3).
4.1(*) Form of Certificate for Common Shares.
4.2(a) Joint Plan of Reorganization Proposed by Debtor,
Creditors' Committee and Equity Security Holders
Committee (4) (Exhibit 10.11)
4.2(b) Modification to Joint Plan of Reorganization
Proposed by Debtor, Creditors' Committee and
Equity Security Holders Committee (5) (Exhibit
2).
4.2(c) Amendment No. 1 and Consent to Plan of
Reorganization dated as of September 30, 1991
(6) (Exhibit 4.4(c)).
4.2(d) Amendment No. 2 to Plan of Reorganization, dated
as of July 15, 1992 (7) (Exhibit 4.2(d)).
4.2(e) Prepackaged Plan of Reorganization as confirmed
by the Bankruptcy Court of the Central District
of California (14) (Exhibit 2.1).
4.3(a) Indenture dated as of July 15, 1992 between
Mortgage and Realty Trust (predecessor to Value
Property Trust) and Wilmington Trust Company, as
trustee, governing the registrant's Senior
Secured Uncertificated Notes due 1995 (7)
(Exhibit 4.3).
4.3(b) Indenture dated as of September 29, 1995 between
Mortgage and Realty Trust (predecessor to Value
Property Trust) and Wilmington Trust Company, as
trustee, governing the registrants 11-1/8%
Senior Secured Notes due 2002. (14) (Exhibit
4.1).
4.3(c) Amended and Restated Collateral and Security
Agreement between Mortgage and Realty Trust
(predecessor to Value Property Trust), its
Subsidiaries, its Lenders and Wilmington Trust
Company and William J. Wade as Collateral Agent,
dated as of September 29, 1995 (14) (Exhibit
4.2).
4.3(d) Letter of Agreement between Mortgage and Realty
Trust (predecessor to Value Property Trust) and
Wilmington Trust Company and William J. Wade as
Collateral Agent, dated as of September 29, 1995
(14) (Exhibit 4.3).
4.3(e) Pledge Agreement between Mortgage and Realty
Trust (predecessor to Value Property Trust) and
Wilmington Trust Company as Collateral Agent,
dated as of September 29, 1995 (14) (Exhibit
4.5).
10.1 1984 Share Option Plan (8) (Exhibit 19.1).
-49-
<PAGE>
10.2 Form of Incentive Stock Option Agreement under
the 1984 Share Option Plan (9) (Exhibit 10.9).
10.3 Form of Non-Qualified Stock Option Agreement
under the 1984 Share Option Plan (2) (Exhibit
10.19).
10.4 Amended and Restated Savings Incentive Plan
effective January 1, 1992 (7) (Exhibit 10.7).
10.5 Amended and Restated Employees' Retirement Plan
effective January 1, 1992 (7) (Exhibit 10.8).
10.6 Pension Plan for Trustees dated October 1, 1989
(10) (Exhibit 10.13).
10.7 Employee' Retention Plan dated October 17, 1990
as amended January 16, 1991 and March 10, 1991
(11) (Exhibit 19.1).
10.8 Resolutions of Amendment to Amended and Restated
Employees' Retirement Plan (13) (Exhibit 10.8).
10.9 Registration Rights Agreement between Mutual
Series Fund Inc., Intermarket Corporation,
Angelo, Gordon & Co., L.P., Emerald Partners,
Strome-Susskind & Co. and Mortgage and Realty
Trust (predecessor to Value Property Trust),
dated September 29, 1995 (14) (Exhibit 10.1).
November 28, 1995 Amendment to Registration
10.10(*) Rights Agreement dated September 29, 1995.
10.11 Form of 1995 Share Option Plan (15) (Exhibit A).
20.1 Press Release (12) (Exhibit 20.1).
20.2 Term Sheet (12) (Exhibit 20.2).
21 Subsidiaries (13) (Exhibit 21).
27(*) Financial Data Schedule.
- -------------
(1) Filed on May 13, 1993 as an exhibit to the Quarterly Report on Form 10-Q
(No. 1-6613) and incorporated herein by reference.
(2) Filed on December 6, 1984 as an exhibit to the Annual Report on Form 10-K
(No. 1-6613) and incorporated herein by reference.
(3) Filed on May 20, 1981 as an exhibit to Amendment No. 1 to the Registration
Statement on Form 8-A (No. 1-6613) and incorporated herein by reference.
(4) Filed on December 28, 1990 as an exhibit to the Annual Report on Form 10-K
(No. 1-6613) and incorporated herein by reference.
(5) Filed on March 14, 1991 as an exhibit to the Current Report on Form 8-K
(No. 1-6613) and incorporated herein by reference.
(6) Filed on December 27, 1991 as an exhibit to the Annual Report on Form 10-K
(No. 1-6613) and incorporated herein by reference.
(7) Filed on December 22, 1992 as an exhibit to the Annual Report on Form 10-K
(No. 1-6613) and incorporated herein by reference.
-50-
<PAGE>
(8) Filed on August 13, 1987 as an exhibit to the Quarterly Report on Form 10-Q
(No. 1-6613) and incorporated herein by reference.
(9) Filed on December 29, 1987 as an exhibit to the Annual Report on Form 10-K
(No. 1-6613) and incorporated herein by reference.
(10) Filed on December 21, 1989 as an exhibit to the Annual Report on Form 10-K
(No. 1-6613) and incorporated herein by reference.
(11) Filed on May 14, 1991 as an exhibit to the Quarterly Report on Form 10-Q
(No. 1-6613) and incorporated herein by reference.
(12) Filed on November 28, 1994 as an exhibit to the Current Report on Form 8-K
(No. 1-6613) and incorporated herein by reference.
(13) Filed on December 29, 1994 as an exhibit to the Annual Report on Form 10-K
(No. 1-6613) and incorporated herein by reference.
(14) Filed on October 13, 1995 as an exhibit to the Current Report on Form 8-K
(No. 1-6613) and incorporated herein by reference.
(15) Filed on December 12, 1995 as an Exhibit to the 1995 Proxy Statement for
fiscal year ended September 30, 1995.
(*) Exhibit filed with this Form 10-K.
-51-
<PAGE>
Exhibit 3.1(b)
MORTGAGE AND REALTY TRUST
ARTICLES OF AMENDMENT OF AMENDED AND RESTATED
DECLARATION OF TRUST
MORTGAGE AND REALTY TRUST, a Maryland real estate investment trust
(hereinafter called the "Trust"), having its principal office in the State of
Maryland in Baltimore City, Maryland, hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: The first sentence of section 1.1 of the Amended and Restated
Declaration of Trust, as amended and restated through September 29, 1995, of the
Trust is hereby amended in its entirety to read as follows:
1.1 NAME. The name of the Trust shall be "Value Property Trust".
SECOND: The second paragraph under the heading "Officers" of section 9.9
of the Amended and Restated Declaration of Trust, as amended and restated
through September 29, 1995, of the Trust is hereby amended in its entirety to
read as follows:
9.9 NAMES AND ADDRESSES OF TRUSTEES AND OFFICERS.
Officers:
Name Address
---- -------
George R. Zoffinger 120 Albany Street Plaza
President and C.E.O. 8th Floor
New Brunswick, NJ 08901
Hugh T. Regan, Jr. 15 East Delaware Trail
Secretary and Treasurer Medford, NJ 08055
THIRD: A majority of the Trustees of the Trust adopted resolutions
declaring advisable the amendments to the Amended and Restated Declaration of
Trust, as amended and restated through September 29, 1995, set forth in the
preceding first and second paragraphs.
FOURTH: The amendment to the Amended and Restated Declaration of Trust, as
amended and restated through September 29, 1995, as set forth in the first
paragraph was approved by the shareholders of the Trust. Such approval was by
affirmative vote of approximately 85% of all votes entitled to be cast thereon.
<PAGE>
FIFTH: The amendments to the Amended and Restated Declaration of Trust, as
amended and restated through September 29, 1995, as set forth in the first
paragraph hereof has been duly advised by the Trustees and, where appropriate,
approved by the shareholders of the Trust.
-2-
<PAGE>
Each of the Trustees of Mortgage and Realty Trust has caused these
presents to be signed, in counterpart, as of October 26, 1995.
MORTGAGE AND REALTY TRUST
By: /s/ MARTIN BERNSTEIN
---------------------------
Martin Bernstein, Trustee
By: /s/ RICHARD S. FRARY
---------------------------
Richard S. Frary, Trustee
By: /s/ JEFFREY A. ALTMAN
---------------------------
Jeffrey A. Altman, Trustee
By: /s/ RICHARD B. JENNINGS
---------------------------
Richard B. Jennings, Trustee
By: /s/ GEORGE R. ZOFFINGER
---------------------------
George R. Zoffinger, Trustee
By: /s/ JOHN B. LEVY
---------------------------
John B. Levy, Trustee
By: /s/ CARL A. MAYER
---------------------------
Carl A. Mayer, Trustee
-3-
<PAGE>
Exhibit 4.1
COMMON SHARES
NUMBER SHARES
T VALUE PROPERTY TRUST
A MARYLAND REAL ESTATE INVESTMENT TRUST
THIS CERTIFICATE IS TRANSFERABLE
IN THE CITIES OF BOSTON, MA. CUSIP 919904 10 2
AND NEW YORK, N.Y. SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE COMMON SHARES $1 PAR VALUE, IN
VALUE PROPERTY TRUST
CERTIFICATE OF STOCK
a real estate investment trust formed under the laws of the State of Maryland
under a Declaration of Trust dated as of October 8, 1970, as amended from time
to time, a copy of which is on file with the Transfer Agent, by all the terms
and provisions of which the holder or transferee hereof by accepting this
certificate agrees to be bound. The shares represented hereby are
transferable in the records of the Trust only by the registered holder hereof
or by his agent duly authorized in writing on delivery to a Transfer Agent of
this certificate properly endorsed or accompanied by a duly executed
instrument of transfer together with such evidence of the genuineness thereof
and such other matters as the Trust may reasonably require. This certificate
is not valid unless countersigned by the Transfer Agent and registered by the
Registrar.
In Witness Whereof, the Trustees of the Trust, acting as such Trustees and
not individually, have caused this certificate to be signed by the facsimile
signatures of its President and its Secretary and a facsimile of its seal to
be imprinted hereon.
Dated:
SECRETARY PRESIDENT
VALUE PROPERTY TRUST
ORGANIZED
1970
SEAL
MARYLAND
COUNTERSIGNED AND REGISTERED:
THE FIRST NATIONAL BANK OF BOSTON
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED OFFICER
<PAGE>
VALUE PROPERTY TRUST
PROVISIONS RELATING TO REDEMPTION AND PROHIBITION OF TRANSFER OF SHARES.
------------------------------------------------------------------------
THE SHARES OF CAPITAL STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE TRUST'S
MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUBJECT TO CERTAIN
PROVISIONS OF THE TRUST'S DECLARATION OF TRUST, NO PERSON MAY (A)
BENEFICIALLY OWN SHARES OF CAPITAL STOCK IN EXCESS OF THE OWNERSHIP LIMIT
UNLESS SUCH PERSON IS AN EXISTING HOLDER (IN WHICH CASE, THE EXISTING HOLDER
LIMIT SHALL BE APPLICABLE); (B) TRANSFER SHARES OF CAPITAL STOCK IF SUCH
TRANSFER WOULD RESULT IN THE SHARES OF CAPITAL STOCK BEING OWNED BENEFICIALLY
BY FEWER THAN 100 PERSONS; (C) BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES
OF CAPITAL STOCK WHICH WOULD RESULT IN THE TRUST BEING "CLOSELY HELD" UNDER
SECTION 856(H) OF THE CODE OR (D) CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK
IN EXCESS OF 9.9% OF THE VALUE OF THE OUTSTANDING CAPITAL STOCK OF THE TRUST
(UNLESS SUCH PERSON IS AN EXISTING CONSTRUCTIVE HOLDER). ANY PERSON WHO
ATTEMPTS TO BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN
EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE TRUST. FOR
PURPOSES OF THE OWNERSHIP RESTRICTION DESCRIBED IN CLAUSE (A) ABOVE, THE
"OWNERSHIP LIMIT" MEANS 9.9% OF THE VALUE OF THE OUTSTANDING SHARES OF
CAPITAL STOCK OF THE TRUST. CERTAIN TRANSACTIONS NOT INVOLVING THE DIRECT
TRANSFER OF CAPITAL STOCK OF THE TRUST MAY RESULT IN THE APPLICATION OF THE
RESTRICTIONS REFERRED TO ABOVE. ALL DEFINED TERMS IN THIS LEGEND HAVE THE
MEANINGS DEFINED IN THE TRUST'S DECLARATION OF TRUST, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON
TRANSFER, WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS IN
WRITING WITHIN FIVE (5) DAYS AFTER RECEIPT OF THE WRITTEN REQUEST. IF THE
RESTRICTIONS ABOVE ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED
HEREBY WILL BE TRANSFERRED AUTOMATICALLY AND BY OPERATION OF LAW TO A SPECIAL
TRUST AND SHALL BE DESIGNATED SHARES-IN-TRUST.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- __________ Custodian __________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _____________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT TAX IDENTIFICATION
NUMBER OF ASSIGNEE
- ----------------------------------------
- ----------------------------------------
- --------------------------------------------------------------------------------
(Please print or type name and address, including zip code, of assignee
- --------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------
of beneficial interest represented by the within certificate and do hereby
irrevocably constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said shares on the books of the within-named Trust, with full
power of substitution in the premises.
Dated
---------------------------------------
-------------------------------------------------------
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH
NOTICE: THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED: -------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, DIVIDENDS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
WHEN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM).
PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
Exhibit 10.10
FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
This Amendment is made and entered into as of this 28th day of November,
1995 by and among Value Property Trust (the "Trust," formerly Mortgage and
Realty Trust) and the holders of registrable securities of the Trust listed on
the signature page hereto (the "Holders").
WHEREAS, the Trust and the Holders entered into a Registration Rights
Agreement dated September 29, 1995 (the "Agreement");
WHEREAS, pursuant to paragraph 2(a) of the Agreement, the Trust is required
to file a registration statement on Form S-3 (the "Form S-3") with the
Securities and Exchange Commission within sixty (60) days of September 29, 1995.
WHEREAS, the parties hereto wish to extend such time period;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Pursuant to paragraph 11(a) of the Agreement, the Holders hereby
consent to, and the parties hereto hereby agree to, the amendment of paragraph
2(a) of the Agreement to provide that the Trust shall file the Form S-3 with the
Securities and Exchange Commission by January 1, 1996.
2. The Agreement and this Amendment shall be read together and shall have
effect as if the provisions of the Agreement and this Amendment were contained
in one agreement. Any provision of the Agreement not amended by this Amendment
shall remain in full
<PAGE>
force and effect as provided in the Agreement immediately prior to the date
hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
dated first written above.
VALUE PROPERTY TRUST
By:_______________________________________________
Title:
HOLDERS
MUTUAL SERIES FUND, INC.
By:_______________________________________________
Title:
INTERMARKET CORP.
By:_______________________________________________
Title:
ANGELO, GORDON & CO.
By:_______________________________________________
Title:
231401.c1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 16,768
<SECURITIES> 0
<RECEIVABLES> 8,441
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 232,329
<CURRENT-LIABILITIES> 0
<BONDS> 127,510
<COMMON> 11,226
0
0
<OTHER-SE> 88,848
<TOTAL-LIABILITY-AND-EQUITY> 232,329
<SALES> 0
<TOTAL-REVENUES> 39,464
<CGS> 0
<TOTAL-COSTS> 23,526
<OTHER-EXPENSES> 72,375
<LOSS-PROVISION> 3,000
<INTEREST-EXPENSE> 35,900
<INCOME-PRETAX> (95,337)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 75,304
<CHANGES> 0
<NET-INCOME> (20,033)
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>PER SHARE AMOUNTS ARE NOT MEANINGFUL DUE TO FRESH START REPORTING
</FN>
</TABLE>
