<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1994 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
---------------------------
Commission file number 1-9663
MID-AMERICA REALTY INVESTMENTS, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 47-0700007
(State of incorporation) (I.R.S. Employee Identification No.)
11506 NICHOLAS STREET, SUITE 100, OMAHA, NEBRASKA 68154
(Address of principal executive offices) (Zip Code)
(402) 496-3300
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
COMMON STOCK, PAR VALUE $0.01 PER SHARE NEW YORK STOCK EXCHANGE
(Title of Each Class) (Name of Exchange on which registered)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) 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 Form 10-K. [X]
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
----- -----
The number of shares of common stock outstanding as of March 3, 1995 was
8,279,892 shares. The aggregate market value of the 8,279,892 shares of common
stock held by non-affiliates on such date was $66,239,136.
The following documents are incorporated into this report by reference: a
portion of the Company's proxy statement for its 1995 Annual Meeting of
Shareholders ("1995 Proxy Statement") is incorporated by reference in Part
III.
Total Pages: 52
Exhibit Index on Page: 49
1
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MID-AMERICA REALTY INVESTMENTS, INC.
1994 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
PAGE
----
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . 7
Item 4. Submission of Matters to a Vote of Security Holders. . 7
PART II
Item 5. Market for the Company's Common Stock and Related
Shareholder Matters. . . . . . . . . . . . . . . . 8
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . 9
Item 8. Financial Statements and Supplementary Data. . . . . . 15
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure. . . . . . . . 15
PART III
Item 10. Directors and Executive Officers of the Company. . . . 15
Item 11. Executive Compensation . . . . . . . . . . . . . . . . 15
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . 15
Item 13. Certain Transactions and Relationships . . . . . . . . 15
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . 15
2
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PART I
ITEM 1. BUSINESS
GENERAL DESCRIPTION OF BUSINESS
Mid-America Realty Investments, Inc. (the "Company") is a self-administered
real estate investment trust ("REIT") which owns, manages and operates income-
producing commercial real estate, primarily enclosed malls and neighborhood
shopping centers. The Company was incorporated under the laws of Maryland in
October 1986. The Company owned at December 31, 1994 18 neighborhood shopping
centers and four enclosed malls located in Nebraska, Iowa, South Dakota,
Minnesota, Michigan, Wisconsin, Indiana, Arkansas, Georgia and Tennessee.
Additionally, the Company is a 50% partner in Mid-America Bethal Limited
Partnership ("Mid-America Bethal") which owns two neighborhood shopping centers
and one enclosed mall. Most of the properties are situated in middle-sized
communities and, in many cases, represent the major retail facility in their
trade areas.
The Company's investment objectives are to own and manage income-producing
commercial real estate that will provide cash for distribution to its
shareholders on a quarterly basis and preserve investor capital, while providing
potential for capital appreciation. The Company's policy is to acquire
commercial properties that are capable of generating income through active
management, leasing, re-leasing or development of additional tenant space.
DEVELOPMENTS DURING 1994
NAME CHANGE
On April 28, 1994, after approval by the Board of Directors and
shareholders, the Company amended its Articles of Incorporation to change the
Company's name to Mid-America Realty Investments, Inc. from Dial REIT, Inc. The
Company believes the name change was advisable for two reasons. First, the new
name reflects the Company's emphasis on real estate investments located in the
central United States. Second, the new name further reflects the separation of
the Company from various persons and companies formerly related to the Company.
Such formerly related persons continue to operate real estate investments,
brokerage, property management, and leasing businesses under variations of the
name "Dial".
In conjunction with the Company's name change, Dial Bethal Limited
Partnership filed an amendment to its Certificate of Limited Partnership
changing the partnership name to Mid-America Bethal Limited Partnership.
PROPERTY TRANSACTIONS
SOUTHPORT CENTRE - On January 13, 1994, the Company completed the
acquisition of Southport Centre, a 125,000 square foot neighborhood shopping
center in Apple Valley (suburban Minneapolis), Minnesota. The purchase price,
including acquisition costs, was $12,985,000 with $12,835,000 paid in cash
(primarily from one of the Company's acquisition lines of credit) and $150,000
paid through the issuance of 15,585 shares of the Company's common stock. The
acquisition was effective January 1, 1994 using the purchase method of
accounting.
FITCHBURG RIDGE SHOPPING CENTER - On August 31, 1994, the Company completed
the acquisition of Fitchburg Ridge Shopping Center, a 50,000 square foot
neighborhood shopping center in Fitchburg (suburban Madison), Wisconsin for
$2,071,000, including acquisition costs. The acquisition was funded from one of
the Company's acquisition lines of credit. The acquisition was accounted for
using the purchase method of accounting.
INVESTMENT IN VALLEY PARK CENTRE - On April 29, 1994, the Company's loan on
Valley Park Centre was paid in full. Because the Company has accounted for the
loan as a real estate investment, the payoff of the loan resulted in a gain of
$1,260,000, net of transaction costs. The proceeds of $4,049,000 were used to
retire adjustable rate debt.
VILLAGE SQUARE - On December 15, 1994, the Company completed the sale of
Village Square, a 71,000 square foot neighborhood shopping center in Inver Grove
Heights, Minnesota. The gross sales price was $810,000 resulting in a loss of
approximately $790,000. The net proceeds were used to repay adjustable rate
debt. The Company sold the property rather than incurring significant capital
investment for renovation to meet the Company's current portfolio standards.
3
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OUTLOT SALES - During 1994, the Company sold two outlots for $495,000
resulting in gains of $220,000.
INTEREST IN TWIN OAKS CENTRE - Walgreens, a major anchor tenant of the Twin
Oaks Centre, vacated the property in the second quarter of 1994. Although
Walgreen's continues to pay rent, Company management reviewed the adverse effect
of the Walgreens exit on property lease-up and cash flows from related tax
increment financing bonds and provided additional loss reserves with respect to
the Company's loan on the property in the second quarter of 1994 of $3,150,000.
RECENT EVENTS
MANAGEMENT
In January 1995, Dennis G. Gethmann was named president and chief operating
officer. Mr. Gethmann has served as the chief financial officer since joining
the Company in October 1993. In addition to overseeing the financial and
accounting departments, Mr. Gethmann is responsible for the day-to-day
operations of the Company and assisting the Company's chief executive officer,
Jerome L. Heinrichs, in the development and implementation of corporate
strategies.
LOAN COMMITMENTS
Since December 31, 1994, the Company has secured commitments for $8,000,000
of 9.20% mortgage financing on the Southport Centre and $6,500,000 of 9.08%
mortgage financing on the Edgewood Shopping Centers. Each mortgage has a seven-
year term requiring interest only payments for the first five years, with
subsequent payments based upon a 25 year amortization. The loan proceeds will
be primarily used to retire adjustable rate debt.
PROPERTY MANAGEMENT AND LEASING
The Company is a fully integrated real estate company and manages its own
properties through Mid-America Centers Corp. (formerly Dial Enterprises Corp.),
its wholly-owned subsidiary. The management and leasing of the properties is
"hands on" and conducted by experienced professionals with knowledge of local
markets and relationships with local and national retailers.
INDUSTRY AND GEOGRAPHIC FACTORS
The Company is subject to various risks typically associated with the
ownership of real estate, such as defaults or non-renewal of leases, increased
operating costs or costs resulting from leveraging, changes in interest rates
and the availability of favorable financing which may render the sale or
refinancing of properties difficult or unattractive, environmental problems,
problems attributable to the location of properties, changes in general or
local economic conditions, changes in real estate and zoning laws, and increases
in real property tax rates. Real estate investments tend to be illiquid and,
consequently, the Company would have difficulty responding to adverse changes in
any of the aforementioned factors or similar factors (particularly if adverse
changes occur in Nebraska and the greater Midwest where most of the Company's
properties are located).
CERTAIN SIGNIFICANT TENANTS
The continued success of the Company's anchor tenants is important to the
success of the Company's properties because such anchor tenants attract other
tenants and customers to the shopping center. Wal-Mart, Herberger's, Hy-Vee
grocery stores, Kmart, J.C. Penney, Target and/or Shopko anchored a total of 17
of the Company's properties either as tenants or as occupants of buildings
adjacent to the properties and lease in the aggregate approximately 32% of the
total leasable space in the Company's properties.
Additionally, Kmart, Hy-Vee grocery stores, Herberger's and/or Wal-Mart
anchored all Mid-America Bethal properties as either tenants or as occupants of
buildings adjacent to the properties and lease in the aggregate approximately
38% of the total leasable space in the Mid-America Bethal properties.
The only tenant that occupies more than 10% of the gross leasable space of
the properties owned by the Company at December 31, 1994 is Wal-Mart, whose five
stores at properties owned by the Company occupy approximately 15% of total
gross leasable area. Wal-Mart also operates stores adjacent to five of the
Company's properties and to one of Mid-America Bethal's properties.
4
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ENVIRONMENTAL MATTERS
Pursuant to the terms of the Company's leases with its tenants, the Company
does not have control over the operational activities of its tenants, nor does
it monitor its tenants with respect to environmental matters. Although the
Company is not aware of any environmental liabilities in connection with any of
its properties, the owner of real property with latent hazardous waste problems
may be liable for such problems even if such problems were not caused by the
current landowner. Liability for such problems under federal and state law is
generally strict, joint and several.
COMPETITION
The Company competes for acquisitions of real property with a wide variety
of investors, including insurance companies, pension funds, corporate and
individual real estate developers, other REITs and syndicators, many of which
have investment objectives similar to those of the Company and may have greater
financial resources, larger staffs and longer operating histories than those of
the Company. In addition, it competes with other owners of similar properties
for tenants on the basis of location, rental rates, amenities and other factors.
INSURANCE
The Company considers its insurance coverage to be adequate. The Company
carries comprehensive general liability coverage with limits of liability of no
less than $5,000,000 per occurrence to insure against liability claims and
provide for the cost of defense. Similarly, the Company is insured against the
risk of direct physical damage in amounts structured to reimburse the Company on
a replacement cost basis for amounts incurred to repair or rebuild each
property, including loss of rental income during the period of repair or
reconstruction. The Company is insured against losses from earthquakes, which
coverage has a 5% deductible. The Company does not carry specific flood
insurance as none of the properties are in designated 100-year flood plains.
EMPLOYEES
The Company and its subsidiary had 91 employees (67 full-time and 24 part-
time) at December 31, 1994. The executive office in Omaha had 22 employees at
December 31, 1994.
TAXATION OF THE COMPANY AND ITS SHAREHOLDERS
The Company was organized and intends to conduct its operations so as to
continue to qualify for taxation as a REIT under Sections 856-860 of the
Internal Revenue Code of 1986. A REIT generally is not subject to federal
corporate income tax on its net income if certain requirements are met. To
qualify as a REIT, the Company is required, among other things, to meet certain
stock ownership, income, asset and distribution rules and tests. As a REIT, the
Company distributes to its shareholders substantially all of its cash flow from
operations and, in any event, at least 95% of its real estate investment trust
taxable income.
CERTAIN RESTRICTIONS ON TRANSFER OF COMMON STOCK
Provisions of the Company's Articles of Incorporation, primarily intended
to enable the Company to maintain its status as a REIT, authorize the Company i)
to refuse to transfer common stock to, or prohibit exercise of shareholder
rights by, any person who as a result would beneficially own, directly or
indirectly by attribution, common stock in excess of 9.8% of the total
outstanding capital stock of the Company ("Excess Shares") and ii) to redeem
Excess Shares of common stock, the accumulation of which would jeopardize the
status of the Company as a REIT.
5
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ITEM 2. PROPERTIES
The following tables set forth information concerning each of the
properties that the Company owns directly or has an equity interest in through
Mid-America Bethal as of December 31, 1994.
<TABLE>
<CAPTION>
DATE GROSS
ACQUIRED LEASABLE LEASED RATE
OR AREA AT YEAR END(1) 1995
COMPLETED (SQ. FT.) 1994 1993 BASE RENT(2)
--------- --------- ---- ---- ------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
COMPANY PROPERTIES:
ENCLOSED MALLS:
Delta Plaza -
Escanaba, Michigan 12/30/86 188,000 92% 83% $ 911
Lakewood Mall -
Aberdeen, South Dakota 08/28/92 227,000 83% 79% 1,253
Monument Mall -
Scottsbluff, Nebraska 12/30/86 192,000 96% 96% 1,156
Thunderbird Mall -
Virginia, Minnesota 12/30/86 256,000 98% 98% 1,398
------- --- --- -----
863,000 92% 89% 4,718
NEIGHBORHOOD SHOPPING CENTERS:
Bishop Heights -
Lincoln, Nebraska 12/30/86 26,000 100% 100% 154
Cornhusker Plaza - South
Sioux City, Nebraska 06/27/91 63,000 77% 76% 341
Eastville Plaza -
Fremont, Nebraska 12/30/86 69,000 100% 98% 433
Edgewood Shopping Center -
Lincoln, Nebraska
Phase I 06/01/87 72,000 98% 94% 530
Phase II 06/26/91 100,000 100% 100% 764
Fairacres Shopping Center -
Oshkosh, Wisconsin 12/22/92 74,000 94% 94% 581
Fitchburg Ridge Shopping Center -
Fitchburg, Wisconsin 08/31/94 50,000 100% ---- 273
Germantown Shopping Center -
Jasper, Indiana 12/21/88 232,000 97% 99% 996
Ile de Grand -
Grand Island, Nebraska 04/09/87 82,000 100% 100% 467
Kimberly West Shopping Center -
Davenport, Iowa 12/14/92 97,000 94% 98% 678
Macon County Plaza -
Lafayette, Tennessee 12/21/88 87,000 80% 82% 226
Meadows Shopping Center -
Lincoln, Nebraska 06/01/88 68,000 100% 100% 494
Miracle Hills Park Shopping Center -
Omaha, Nebraska 07/05/88 71,000 100% 97% 735
Moorland Square -
New Berlin, Wisconsin 11/23/92 71,000 100% 99% 554
Rivergate Shopping Center -
Shelbyville, Indiana 12/21/88 108,000 100% 96% 536
Shenandoah Plaza -
Newnan, Georgia 12/21/88 141,000 100% 100% 686
</TABLE>
6
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<TABLE>
<CAPTION>
DATE GROSS LEASED RATE
ACQUIRED LEASABLE AT YEAR END(1)
OR AREA -------------- 1995
COMPLETED (SQ. FT.) 1994 1993 BASE RENT(2)
--------- --------- ---- ---- ------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Southport Centre -
Apple Valley, Minnesota 01/01/94 125,000 98% ---- 1,454
Town West Center -
Paragould, Arkansas 12/21/88 143,000 99% 98% 478
Westview Plaza -
McCook, Nebraska 12/30/86 17,000 94% 94% 74
--------- --- --- -------
1,696,000 97% 96% 10,454
--------- --- --- -------
Total Enclosed Malls and
Neighborhood Centers 2,559,000 95% 93% $15,172
--------- --- --- -------
--------- --- --- -------
MID-AMERICA BETHAL LIMITED PARTNERSHIP PROPERTIES (3):
ENCLOSED MALLS:
Imperial Mall -
Hastings, Nebraska 11/30/87 324,000 90% 95% $ 1,700
NEIGHBORHOOD SHOPPING CENTERS:
Stockyards -
Omaha, Nebraska
Plaza (Phase I) 06/01/89 103,000 92% 89% 712
Theaters (Phase II) 07/17/90 26,000 100% 100% 232
Taylor Heights Shopping Center -
Sheboygan, Wisconsin 07/30/90 85,000 100% 94% 790
--------- ---- --- -------
214,000 96% 94% 1,734
--------- --- --- -------
Total Enclosed Malls and
Neighborhood Centers 538,000 92% 93% $ 3,434
--------- --- --- -------
--------- --- --- -------
</TABLE>
------------------------------
(1) Leased rate represents the percentage of gross leasable area which is
leased to third-party tenants.
(2) Amounts are based on the 1995 lease terms of existing tenants at December
31, 1994.
(3) The Company owns a 50% partnership interest in Mid-America Bethal Limited
Partnership. All information presented is for the entire center.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to a number of lawsuits and claims for various
amounts which arise out of the normal course of business. In the opinion of
management, the disposition of claims currently pending will not have a material
adverse effect on the Company's financial position or results of operations.
On July 10, 1992, M.C.P. Limited Partners, Inc. ("M.C.P."), a limited
partner in Twin Oaks Centre L.P., filed a lawsuit in circuit court in Rock
Island County, Illinois, against Twin Oaks Centre L.P., the general and limited
partners of Twin Oaks Centre L.P. (who are formerly related to the Company) and
the Company. The lawsuit alleges that the formerly related general and limited
partners and the Company acted in collusion and in breach of fiduciary duty to
negate the value of Twin Oaks Centre and to enable the Company to attempt to
acquire Twin Oaks Centre at less than fair value. M.C.P. is seeking i) to have
the Company enjoined from taking any actions to enforce its rights under the
loan agreements with Twin Oaks Centre L.P. (such as foreclosure) until Twin Oaks
Centre is "leased up", ii) to have the Company transfer back to Twin Oaks Centre
L.P. the net proceeds received from a $3,200,000 mortgage loan obtained by Twin
Oaks Centre L.P. (which proceeds were applied to the Company's construction
loan), and iii) punitive damages of $2,000,000. Management believes that the
allegations are without merit.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the fourth quarter of 1994.
7
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol MDI. The following table sets forth the high and low sale prices of
the Common Stock, as reported on the New York Stock Exchange Composite Tape and
the dividends declared per share of Common Stock by the Company for each
calendar quarter in the periods indicated. Dividends declared for a calendar
quarter were paid in the next calendar quarter. The stock price at the close of
business on December 31, 1994 was $7.25.
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
--------- ------------ --------
<S> <C> <C> <C>
1993:
First Quarter $ 13-3/8 $ 9-1/8 $ .22
Second Quarter $ 13-7/8 $ 10-5/8 $ .22
Third Quarter $ 11-5/8 $ 10-1/4 $ .22
Fourth Quarter $ 12 $ 9-1/2 $ .22
1994:
First Quarter $ 10-5/8 $ 9-1/2 $ .22
Second Quarter $ 10-1/8 $ 8-7/8 $ .22
Third Quarter $ 9-7/8 $ 8-7/8 $ .22
Fourth Quarter $ 9-3/8 $ 6-7/8 $ .22
</TABLE>
At December 31, 1994, there were 8,279,892 shares of common shares issued
and outstanding which were held by approximately 2,200 shareholders of record.
The shareholders of record do not reflect the persons or entities who held their
stock in nominee or "street" name.
ITEM 6. SELECTED FINANCIAL DATA
Certain reclassifications, as described in the Notes to Consolidated
Financial Statements, have been made to prior year financial data to conform to
those classifications used in 1994.
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Total Revenues $ 21,152 $ 18,433 $ 16,510 $ 14,684 $ 15,034
Net Income (loss) $ (128) $ 2,196 $ 1,221 $ 1,952 $ 5,604
Dividends Declared:
Ordinary Income $ 2,650 $ 3,222 $ 1,369 $ 5,265 $ 5,998
Return of Capital 4,637 4,051 4,843 3,054 2,919
--------- --------- --------- --------- ---------
$ 7,287 $ 7,273 $ 6,212 $ 8,319 $ 8,917
Per Share Amounts:
Net Income (loss) $ (.02) $ .27 $ .23 $ .37 $ 1.06
Dividends Declared -
Ordinary Income $ .32 $ .39 $ .26 $ 1.00 $ 1.13
Return of Capital .56 .49 .92 .58 .55
--------- --------- --------- --------- ---------
$ .88 $ .88 $ 1.18 $ 1.58 $ 1.68
Weighted Average Number
of Shares Outstanding 8,280,052 8,092,024 5,264,627 5,264,786 5,303,817
OTHER DATA
Funds From Operations (1)(2) $ 8,018 $ 7,629 $ 5,978 $ 5,548 $ 9,104
<FN>
-----------------------------
(1) Persons formerly related to the Company are obligated to pay certain
amounts to the Company as described in the Notes to Consolidated Financial
Statements. Such amounts are not included in the Funds From Operations
shown above.
8
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(2) Management considers Funds From Operations to be an appropriate measure of
the performance of an equity REIT. The Company calculates Funds From
Operations based upon the definition adopted by the National Association of
Real Estate Investment Trusts ("NAREIT"). Funds From Operations is defined
as net income before gains/losses from property sales adjusted for non-cash
items in the income statement, such as depreciation and amortization.
Funds From Operations should not be considered by the reader as an
alternative to net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity.
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Real Estate Investments:
Property, net $ 127,261 $ 116,439 $ 119,866 $ 86,921 $ 77,858
Investment in Mid-America
Bethal 16,367 16,522 15,732 15,084 15,061
Interest in Twin Oaks Centre, net 2,953 5,697 5,276 ---- ----
Investment in Valley Park Centre ---- 2,889 3,498 4,328 ----
Construction and Other Loan
Agreements ---- ---- ---- 16,003 18,809
--------- --------- --------- --------- ---------
$ 146,581 $ 141,547 $ 144,372 $ 122,336 $ 111,728
Total Assets $ 151,442 $ 147,178 $ 151,049 $ 126,789 $ 117,368
Mortgages and Notes Payable $ 63,486 $ 51,868 $ 78,105 $ 48,278 $ 32,649
Shareholders' Equity $ 86,813 $ 94,081 $ 72,381 $ 77,372 $ 83,771
Shares Outstanding 8,279,892 8,264,627 5,264,627 5,264,627 5,267,527
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Mid-America Realty Investments, Inc. (the "Company") was organized in
October 1986 as a real estate investment trust and first issued shares of its
common stock to the public in December 1986 to finance the acquisition of seven
properties. Since that time, 18 additional properties (or equity interests
therein) have been acquired through cash, debt financing and/or in exchange for
common stock. The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto.
Certain reclassifications, as described in the Notes to Consolidated
Financial Statements, have been made to prior year financial data to conform to
those classifications used in 1994.
CAPITAL RESOURCES AND LIQUIDITY
The Company's primary source of funds are (i) cash generated from
operations which includes dividends from Mid-America Bethal, (ii) borrowings,
(iii) sales of real estate, and (iv) principal repayments on notes receivable.
Management anticipates that these sources will provide the necessary funds for
its operating expenses, interest expense on outstanding indebtedness, recurring
capital expenditures and dividends to shareholders in accordance with REIT
requirements, during the next twelve months. Management also believes that it
has capital, and the access to capital resources, sufficient to expand and
develop its business in accordance with its strategy for growth. In general,
the Company intends to acquire and finance additional real estate properties and
investments, to the extent possible, in such a manner as to maintain the ability
to make regular distributions to shareholders. However, the future issuance of
debt or equity securities by the Company or the acquisition of new properties or
investments could affect the yield to shareholders.
At December 31, 1994, the Company had invested approximately 97% of its
assets in enclosed malls and neighborhood shopping centers, including the
Company's investment in Mid-America Bethal and interest in Twin Oaks Centre.
The remainder of the Company's assets primarily consisted of accounts and notes
receivable.
Total cash flows from investing activities were $12,283,000. Net cash
flows provided during 1994 from the sales of real estate totaled $1,224,000. In
addition, net proceeds of $3,974,000 were received primarily from the payoff of
the Valley Park Centre loan. Also, as described in Note B to the Consolidated
Financial Statements for the year ended December 31, 1994, the Company completed
the acquisition of Southport Centre. The purchase was
9
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financed by $12,835,000 paid in cash and $150,000 paid through the issuance of
15,585 shares of the Company's Common Stock. In addition, the Company acquired
Fitchburg Ridge Shopping Center for $2,071,000.
Net cash flows from financing activities were $4,331,000. This was due
primarily to the purchase of Southport Centre and Fitchburg Ridge which were
financed through the acquisition lines of credit. Dividends paid for the year
ended December 31, 1994 were $.88 per share or $7,286,446. At the present time,
the Company has sufficient funds to support operations and the payment of the
dividend in accordance with the Company's dividend policy.
At December 31, 1994, the Company had a debt-to-equity ratio of .73 to 1,
compared to .55 to 1 at December 31, 1993, based upon the ratio of mortgages and
notes payable to total shareholders' equity. The increase in the ratio from
December 31, 1993 resulted primarily from a $14,766,000 increase in the
Company's acquisition lines of credit to fund the acquisitions of Southport
Centre and Fitchburg Ridge Shopping Center. The Company's ratio of debt to
total market capitalization was 51% at December 31, 1994 and 39% at December 31,
1993.
Since December 31, 1994, the Company has secured commitments for $8,000,000
of 9.20% mortgage financing on the Southport Centre and $6,500,000 of 9.08%
mortgage financing on the Edgewood Shopping Centers. Each mortgage has a seven-
year term requiring interest only payments for the first five years, with
subsequent payments based upon a 25 year amortization. The loan proceeds
(after repaying the existing Edgewood Shopping Center loan) will be primarily
used to retire adjustable acquisition related debt. After the application of
these proceeds, the Company will have approximately $17,694,000 available under
acquisition lines of credit.
After giving effect to the commitments described in the preceeding
paragraph, mortgages and revolving credit agreements of $23,112,000 will mature
during 1995. Mortgages collateralized by the Cornhusker Plaza ($3,712,000 at
9.75%), Lakewood Mall ($7,761,000 at 8.50%), and Fairacres Shopping Center
($3,822,000 at 9.5%) are expected to be extended for three to seven year periods
by the existing lender. Revolving credit agreements which mature during 1995
and are expected to be extended for one year at similar terms.
RESULTS OF OPERATIONS - YEARS ENDED DECEMBER 31, 1994 AND 1993
The net loss for the year ended December 31, 1994 was $128,000, or $.02 per
share, which included a provision for loss on the Company's interest in Twin
Oaks Centre of $3,150,000, or $.38 per share, and net gains on sales of real
estate of $690,000, or $.08 per share. These results compare to net income for
the year ended December 31, 1993 of $2,196,000 or $.27 per share.
The decrease in net income for the year ended December 31, 1994 compared to
the year ended December 31, 1993 was primarily due to the following: the
provision for loss on the Company's interest in Twin Oaks Centre of $3,150,000,
an increase of $734,000 in interest expense, an increase of $797,000 in real
estate taxes and other property costs, an increase of $525,000 in depreciation
and amortization and an increase of $662,000 in property management and
administrative expenses. The Company also experienced an increase of $2,719,000
in total revenues, a $672,000 increase from gains on sales of real estate, and a
$153,000 increase from the Company's equity in Mid-America Bethal.
RENTAL INCOME
Rental income for the year ended December 31, 1994 was $15,615,000 compared
to $13,336,000 for the year ended December 31, 1993, an increase of $2,279,000
or 17%. Rental income recorded during the year ended December 31, 1994 from the
Southport Centre (acquired January 1994) and Fitchburg Ridge Shopping Center
(acquired August 1994) was $1,624,000 and $105,000, respectively. The remainder
of the increase reflects the effect of new leases and rent increases.
REIMBURSEMENT INCOME
Reimbursement income for the year ended December 31, 1994 was $4,366,000
compared to $3,694,000 for the year ended December 31, 1993, an increase of
$672,000 or 18%. Reimbursement income recorded during the year ended December
31, 1994 from the Southport Centre and Fitchburg Ridge Shopping Center was
$498,000 and $34,000, respectively. The remainder of the increase reflects the
effect of new leases.
10
<PAGE>
PROPERTY MANAGEMENT INCOME
Property management income, which primarily consists of lease and property
management fees from properties managed for Mid-America Bethal, was $211,000 for
the year ended December 31, 1994 compared to $222,000 for the year ended
December 31, 1993, a decrease of $11,000 or 5%. The decrease is attributable to
fewer new leases at properties owned by Mid-America Bethal during 1994 compared
to 1993.
OTHER INCOME
Other income for the year ended December 31, 1994 was $960,000 compared to
$1,181,000 for the year ended December 31, 1993, a decrease of $221,000 or 19%.
The decrease is primarily attributable to a $130,000 decrease in interest income
related to the Company's interest in Twin Oaks Centre and notes receivable.
REAL ESTATE TAXES
Real estate taxes for the year ended December 31, 1994 were $2,815,000
compared to $2,424,000 for the year ended December 31, 1993, an increase of
$391,000 or 16%. Real estate taxes related to the Southport Centre and
Fitchburg Ridge Shopping Center recorded during the year ended December 31, 1994
were $410,000.
OTHER PROPERTY COSTS
Other property costs for the year ended December 31, 1994 were $3,651,000
compared to $3,245,000 for the year ended December 31, 1993, an increase of
$406,000 or 13%. Other property costs recorded during the year ended December
31, 1994 related to the Southport Centre and Fitchburg Ridge Shopping Center
were $132,000. The remainder of the increase relates primarily to higher
general liability and property insurance costs and repairs and maintenance.
INTEREST EXPENSE
Interest expense for the year ended December 31, 1994 was $5,389,000
compared to $4,655,000 for the year ended December 31, 1993, an increase of
$734,000 or 16%. Interest expense related to the Southport Centre and Fitchburg
Ridge Shopping Center recorded during the year ended December 31, 1994 was
$1,018,000 and $57,000, respectively. These increases in interest expense were
offset by the full year impact of the reduction of debt by proceeds from the
January 1993 issuance of common stock.
ADMINISTRATIVE EXPENSES
Administrative expenses for the year ended December 31, 1994 were
$1,540,000 compared to $1,299,000 for the year ended December 31, 1993, an
increase of $241,000 or 19%. The increase related primarily to a $150,000
increase in personnel, legal and consulting costs and a $50,000 increase related
to the Company's name change.
PROPERTY MANAGEMENT EXPENSES
Property management expenses for the year ended December 31, 1994 were
$1,277,000 compared to $856,000 for the year ended December 31, 1993, an
increase of $421,000 or 49%. The increase relates primarily to an increased
number of acquisition, leasing and marketing personnel.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense for the year ended December 31, 1994
was $5,047,000 compared to $4,522,000 for the year ended December 31, 1993, an
increase of $525,000 or 12%. Depreciation and amortization expense related to
the Southport Centre and Fitchburg Ridge Shopping Center was $292,000 and
$16,000, respectively. The remainder of the increase relates primarily to
renovation and expansion projects and tenant finish projects which were
completed in the fourth quarter of 1993 and the first quarter of 1994.
PROVISION FOR LOSS ON INTEREST IN TWIN OAKS CENTRE
The increase in the Company's loss reserve relating to its interest in Twin
Oaks Centre for the year ended December 31, 1994 was $3,150,000. This amount
reflects charges to reduce the recorded value of the Company's loan to the Twin
Oaks Centre L.P. (which is recorded on the Consolidated Balance Sheet as
"Interest in Twin Oaks Centre") to the fair value of the underlying collateral.
The collateral for the Company's loan to the Twin Oaks Centre L.P. includes
the Twin Oaks Centre (the "Centre") a 95,000 square-foot neighborhood shopping
center in Silvis, Illinois, and tax increment financing bonds issued in
connection with the Centre. Walgreens, a major anchor tenant of the Centre,
vacated in the second quarter
11
<PAGE>
of 1994. Although Walgreens continues to pay rent, Company management reviewed
the adverse effect of the Walgreens exit on property lease-up and cash flows
from the tax increment financing bonds and provided additional loss reserves
with respect to the Company's loan on the property in the second quarter of
1994.
EQUITY IN EARNINGS OF MID-AMERICA BETHAL LIMITED PARTNERSHIP
The Company's equity in earnings of Mid-America Bethal Limited Partnership
for the year ended December 31, 1994 was $899,000 compared to $746,000 for the
year ended December 31, 1993, an increase of $153,000 or 21%. The increase is
the result of leasable space at one of Bethal's properties increasing by
approximately 50,000 square feet through the construction of a 91,000 square
foot K-Mart. The K-Mart store opened for business and commenced paying annual
rent of $461,000 in November 1993.
RESULTS OF OPERATIONS - YEARS ENDED DECEMBER 31, 1993 AND 1992
Net income for the year ended December 31, 1993 was $2,196,000 or $.27 per
share compared to $1,221,000 or $.23 per share, an increase of $975,000 or 80%.
The per share amounts are based upon the weighted average number of shares
outstanding for the years ending December 31, 1993 and 1992 of 8,092,024 and
5,264,627, respectively. The increase in the weighted average number of shares
outstanding in 1993 reflects the 3,000,000 shares of common stock issued in
January 1993.
The increase in net income for the year ended December 31, 1993 compared to
the year ended December 31, 1992 was primarily due to the following: a
$1,923,000 increase in total revenues, a $528,000 decrease in interest expense
and a $346,000 decrease in property management expenses. The Company also
experienced a $1,164,000 increase in real estate taxes and other property costs,
a $398,000 increase in depreciation and amortization, a $146,000 decrease in the
Company's equity in earnings of Mid-America Bethal and a $132,000 increase in
administrative expenses.
RENTAL INCOME
Rental income for the year ended December 31, 1993 was $13,336,000 compared
to $11,556,000 for the year ended December 31, 1992 (a 15% increase). Rental
income recorded for Lakewood Mall and Kimberly West for the year ended December
31, 1993 was $2,041,000 compared to $1,513,000 recorded for the period from June
1, 1992 to December 31, 1992. Rental income recorded for Moorland Square and
Fairacres Shopping Center for the year ended December 31, 1993 was $1,005,000
compared to $79,000 for the periods from the respective dates of acquisition to
December 31, 1992. The remainder of the increase in rental income in 1993
reflects the effect of new leases at Monument Mall, Delta Plaza and Edgewood
Shopping Center - Phases I and II. These increases were offset by the loss of
tenants in 1993 at Germantown Shopping Center, Macon County and Cornhusker
Plaza.
REIMBURSED EXPENSES
Reimbursed expenses for the year ended December 31, 1993 were $3,694,000
compared to $2,806,000 for the year ended December 31, 1992 (a 32% increase).
The increase in reimbursed expenses reflects i) the additional properties
included in the operations of the Company during 1993, ii) the effect of new
leases at the Company's properties mentioned above, and iii) higher billings to
tenants on existing properties based on higher maintenance expenses and real
estate taxes for 1993.
PROPERTY MANAGEMENT INCOME
Property management income for the year ended December 31, 1993 was
$222,000 compared to $830,000 for the year ended December 31, 1992 (a 73%
decrease). The decrease was due to the Company's decision to provide property
management and leasing services exclusively for properties owned by the Company
and Mid-America Bethal effective January 1, 1993.
OTHER INCOME
Other income for the year ended December 31, 1993 was $1,181,000 compared
to $1,318,000 for the year ended December 31, 1992 (a 10% decrease). The
decrease in other income primarily reflects the change in accounting for the
amounts advanced on Lakewood Mall, Kimberly West and Twin Oaks Centre from
accounting for these amounts as loans to accounting for the amounts advanced as
though the Company had an equity interest in these properties as of June 1,
1992. For the period from January 1, 1992 to May 31, 1992, the Company
recognized $630,000 in interest income under the loan agreements on Lakewood
Mall, Kimberly West and Twin Oaks Centre.
12
<PAGE>
REAL ESTATE TAXES
Real estate taxes for the year ended December 31, 1993 were $2,424,000
compared to $1,824,000 for the year ended December 31, 1992 ( a 33% increase).
Real estate taxes for Lakewood Mall and Kimberly West were $475,000 for the year
ended December 31, 1993 compared to $324,000 for the period from June 1, 1992 to
December 31, 1992. Real estate taxes for Moorland Square and Fairacres Shopping
Center for the year ended December 31, 1993 were $305,000 compared to $4,000 for
the periods from the respective dates of acquisition to December 31, 1992. The
remainder of the increase is due to the effect of the addition of leasable space
and renovations of the Company's properties that occurred in 1991 and 1992.
OTHER PROPERTY COSTS
Other property costs for the year ended December 31, 1993 were $3,245,000
compared to $2,681,000 for the year ended December 31, 1992 (a 21% increase).
Other property costs for Lakewood Mall and Kimberly West were $463,000 for the
year ended December 31, 1993 compared to $302,000 for the period from June 1,
1992 to December 31, 1992. Property costs for Moorland Square and Fairacres
Shopping Center for the year ended December 31, 1993 were $199,000 compared to
$7,000 for the periods from the respective dates of acquisition to December 31,
1992. The remainder of the increase is primarily due to higher repairs and
maintenance at the Company's properties. Most of these costs are billable to
the tenants under terms of the lease agreements.
PROPERTY MANAGEMENT EXPENSES
Property management expenses for the year ended December 31, 1993 were
$856,000 compared to $1,202,000 for the year ended December 31, 1992 (a 29%
decrease). The decrease was due to the Company's decision to provide property
management and leasing services exclusively for properties owned by the Company
and Mid-America Bethal effective January 1, 1993.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization charges for the year ended December 31, 1993
were $4,522,000 compared to $4,124,000 for the year ended December 31, 1992 (a
10% increase). Charges for Lakewood Mall and Kimberly West for the year ended
December 31, 1993 were $649,000 compared to $443,000 for the period from June 1,
1992 to December 31, 1992. Charges for Moorland Square and Fairacres Shopping
Center for the year ended December 31, 1993 were $274,000 compared to $10,000
for the periods from the respective dates of acquisition to December 31, 1992.
The remainder of the increase in 1993 is primarily due to the completion of
renovation projects at Delta Plaza and Ile de Grand during 1992 and the
expansion of Monument Mall in 1993. In connection with the termination of the
referral fee agreement with Dial Properties, Inc., the Company wrote off
$271,000 of intangible assets in 1992 established upon the acquisition of Mid-
America Centers Corp. (formerly Dial Enterprises) in April 1990.
INTEREST EXPENSE
Interest expense for the year ended December 31, 1993 was $4,655,000
compared to $5,183,000 for the year ended December 31, 1992 (a 10% decrease).
Interest expense for the year ended December 31, 1993 was comprised of
$4,724,000 of interest incurred on the Company's mortgages and notes payable,
net of $68,000 of interest capitalized. Interest expense for the year ended
December 31, 1992 was comprised of $5,262,000 of interest incurred on the
Company's mortgages and notes payable, net of $79,000 of interest capitalized.
The decrease in interest incurred reflects the use of proceeds from the
January 1993 sale of common stock, which offsets increases from i) additional
borrowings by the Company in 1992 to finance the renovation of several of the
Company's properties, ii) additional funds needed to complete the conversion of
the loan agreements on Lakewood Mall and Kimberly West to an equity interest and
to complete the construction of Twin Oaks Centre, iii) the recording of interest
expense on Lakewood Mall and Kimberly West, which totaled $1,020,000 for the
year ended December 31, 1993 compared to $725,000 for the period from June 1,
1992 to December 31, 1992, and iv) borrowings from the acquisition of Moorland
Square and Fairacres Shopping Center, which totaled $788,000 for the year ended
December 31, 1993 compared to $46,000 for the periods from the respective dates
of acquisition to December 31, 1992. Proceeds of the January 1993 sale of
common stock were used to reduce the balances on the Company's working line of
credit and short-term notes payable and to retire the mortgages on Monument
Mall, Delta Plaza and Thunderbird Mall, which combined to reduce interest
expense by approximately $1,773,000 in 1993.
13
<PAGE>
ADMINISTRATIVE EXPENSES
Administrative expenses for the year ended December 31, 1993 were
$1,299,000 compared to $1,167,000 for the year ended December 31, 1992 (a 11%
increase). Administrative expenses increased due to the addition of new
employees and higher salary levels for existing employees.
EQUITY IN EARNINGS OF MID-AMERICA BETHAL
The Company's equity in earnings of Mid-America Bethal for the year ended
December 31, 1993 was $746,000 compared to $892,000 for the year ended December
31, 1992 (a 16% decrease). The decrease in the earnings of Mid-America Bethal
was primarily due to i) the loss of rents from small shop tenants who vacated in
1992 and 1993 at Stockyards Plaza and Taylor Heights and ii) the impact of the
construction of a new store for Kmart at Imperial Mall.
FUNDS FROM OPERATIONS
Management considers Funds From Operations to be the most appropriate
measure of the performance of an equity REIT. The Company defines Funds From
Operations as net income before gains/losses from property sales adjusted for
non-cash items in the income statement, such as depreciation and amortization.
Funds From Operations should not be considered by the reader as an alternative
to net income as an indicator of the Company's operating performance or to cash
flows as a measure of liquidity.
Funds From Operations were $8,018,000 for the year ended December 31, 1994
compared to $7,629,000 for the year ended December 31, 1993. The increase of
$389,000 was primarily due to an increase in Funds From Operations related to
the acquisition of the Southport Centre and Fitchburg Ridge Shopping Center of
$432,000, net of related interest charges.
Funds From Operations is computed as follows:
(in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
----------------------------------
<S> <C> <C> <C>
Net Income (loss) $ (128) $ 2,196 $ 1,221
Accruals for "straight-line" rents (139) (45) (116)
Depreciation and Amortization(1) 5,047 4,522 4,124
Provision for loss on Interest in
Twin Oaks Centre 3,150 ---- ----
Gains on Sales of Real Estate, net(2) (690) (18) ----
Investment in Mid-America Bethal:
Equity in Earnings (899) (746) (892)
Equity in Funds From Operations(3) 1,493 1,303 1,408
Investment in Valley Park Centre:
Equity in Loss 53 66 96
Equity in Funds From Operations 122 342 309
Other 9 9 (172)
-------- -------- --------
Funds From Operations(4) $ 8,018 $ 7,629 $ 5,978
-------- -------- --------
-------- -------- --------
<FN>
------------------------------
(1) Depreciation and Amortization for the year ended December 31, 1994
consisted of real property depreciation of $4,299,000, other depreciation
of $73,000, lease fee amortization of $343,000, loan fee amortization of
$278,000 and intangible amortization of $54,000. Repairs and maintenance
expensed as "Property Costs" during 1994 totaled $948,000.
(2) Gains on sales of real estate for the year ended December 31, 1994
consisted of a $1,260,000 gain from the payoff of the Valley Park Centre
loan, gains of $220,000 from the sale of two outlots and a $790,000 loss
on the sale of Village Square.
14
<PAGE>
(3) Equity in Funds From Operations of Mid-America Bethal for the year ended
December 31, 1994 included real property depreciation of $548,000, other
depreciation of $13,000 and lease fee amortization of $25,000.
(4) Beginning with the quarter ended March 31, 1994, the Company began
reporting Funds From Operations without the impact of amounts owed by
persons formerly related to the Company as described in the Notes to
Consolidated Financial Statements. Such amounts are not included in Funds
From Operations for any year presented above.
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item appear in the audited
consolidated financial statements and schedules included herein and listed in
the index on page 17 of this report. The supplementary data required by this
item appears at footnote M entitled "Quarterly Information (Unaudited)" on page
30 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change in the Company's independent accountants during
the two most recent fiscal years.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated by reference to the
Sections entitled "Persons Nominated for Election as Directors" and "Executive
Officers of the Company" in the 1995 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Sections entitled "Director Meetings and Compensation", "Summary Compensation
Table", "Option Exercises in 1994 and Year-End Values Table", and "Employment
Agreements" in the 1995 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Sections entitled "Ownership of Shares by Directors and Executive Officers" and
"Ownership of Certain Beneficial Owners" in the 1995 Proxy Statement.
ITEM 13. CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Company has no transactions or relationships reportable pursuant to
this Item.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
(1) Financial Statements:
The audited Consolidated Financial Statements and Schedules of Mid-
America Realty Investments, Inc. are included herein and listed on the
index on page 17 of this report.
(2) Financial Statement Schedules:
Certain financial statement schedules of Mid-America Realty
Investments, Inc. are included herein and listed on the index on page
17 of this report.
(3) Exhibits:
The Exhibit Index, set forth below, is incorporated herein by
reference.
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the last quarter of
the fiscal year ended December 31, 1994.
(c) EXHIBITS
See Item 14(a)(3) above.
15
<PAGE>
(d) FINANCIAL STATEMENTS REQUIRED BY REGULATIONS S-X WHICH ARE EXCLUDED
FROM THE ANNUAL REPORT BY RULE 14a-3(b)
The financial statements and schedules of Mid-America Bethal Limited
Partnership (financial statements of significant subsidiary, pursuant to
Rule 3-09) are filed as part of this report.
16
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
The following Consolidated Financial Statements of Mid-America Realty
Investments, Inc. and the related Independent Auditors' Report are included in
Item 8 and Item 14 (a) (1):
PAGE
-------
Report of Management . . . . . . . . . . . . . . . . . . . . 18
Independent Auditors' Report . . . . . . . . . . . . . . . . 19
Consolidated Balance Sheets at December 31, 1994 and 1993. . 20
Consolidated Statements of Operations for the years
ended December 31, 1994, 1993, and 1992 . . . . . . . . 21
Consolidated Statements of Changes in Shareholders'
Equity for the years ended December 31, 1994, 1993,
and 1992. . . . . . . . . . . . . . . . . . . . . . . . 22
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993, and 1992 . . . . . . . . . . . 23
Notes to Consolidated Financial Statements . . . . . . . . . 25
The following Consolidated Financial Statement Schedules of Mid-America
Realty Investments, Inc. are included in Item 14 (a) (2):
Schedule XI - Real Estate and Accumulated Depreciation . . . 34
All other schedules have been omitted because they are not applicable
or not required, or because the required information is shown in the
consolidated financial statements or notes thereto.
17
<PAGE>
REPORT OF MANAGEMENT
The management of Mid-America Realty Investments, Inc. has prepared and is
responsible for the consolidated financial statements and other financial
information included in this Form 10-K Annual Report. The consolidated
financial statements have been prepared in conformity with generally accepted
accounting principles and include amounts that are based upon informed judgments
and estimates by management. The other financial information in this annual
report is consistent with the consolidated financial statements.
The Company maintains a system of internal accounting controls. Management
believes the internal accounting controls provide reasonable assurance that
transactions are executed and recorded in accordance with Company policy and
procedures and that the accounting records may be relied on as a basis for
preparation of the consolidated financial statements and other financial
information.
The Audit Committee of the Board of Directors, composed of directors who
are not employees of the Company, meets periodically with management and the
independent auditors to discuss the adequacy of internal accounting controls and
the quality of financial reporting. The independent auditors have full and free
access to the Audit Committee.
/s/ JEROME L. HEINRICHS /s/ DENNIS G. GETHMANN
Jerome L. Heinrichs Dennis G. Gethmann
CHAIRMAN AND CHIEF EXECUTIVE OFFICER PRESIDENT AND CHIEF OPERATING OFFICER
18
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Mid-America Realty Investments, Inc.
We have audited the accompanying consolidated balance sheets of Mid-America
Realty Investments, Inc. and subsidiary as of December 31, 1994 and 1993, and
the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1994.
Our audits also included the financial statement schedules listed in the Index
at Item 14(a)(2). These financial statements and financial statement schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements and financial statement 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.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Mid-America Realty Investments,
Inc. and subsidiary as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
February 17, 1995
Omaha, Nebraska
19
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
ASSETS 1994 1993
---------- --------
<S> <C> <C>
Cash $ ---- $ 182
Accounts receivable, net of allowance
of $161,000 and $135,000 1,345 1,343
Notes receivable, net of allowance of
$160,000 866 997
Property:
Land and land improvements 36,812 32,460
Buildings 109,356 99,068
Equipment and fixtures 559 490
Construction-in-progress 334 306
--------- ---------
147,061 132,324
Less: Accumulated depreciation (19,800) (15,885)
--------- ---------
127,261 116,439
Interest in Twin Oaks Centre, net of allowances
of $4,900,000 and $1,750,000 2,953 5,697
Investment in Mid-America Bethal
Limited Partnership 16,367 16,522
Investment in Valley Park Centre ---- 2,889
Intangible assets, less accumulated
amortization of $3,503,000 and $2,867,000 2,463 2,562
Other assets 187 547
--------- ---------
$ 151,442 $ 147,178
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages and notes payable $ 63,486 $ 51,868
Accrued liabilities 1,143 1,229
--------- ---------
Total Liabilities 64,629 53,097
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.01 par value; authorized
25,000,000 shares; issued and outstanding
8,279,892 and 8,264,627 shares 83 83
Capital in excess of par value 119,677 119,530
Distributions in excess of net income (32,947) (25,532)
--------- ---------
Total Shareholders' Equity 86,813 94,081
--------- ---------
$ 151,442 $ 147,178
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
20
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(COLUMNAR DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1993 1992
---------- ---------- ----------
REVENUES:
<S> <C> <C> <C>
Rental income $ 15,615 $ 13,336 $ 11,556
Reimbursement income 4,366 3,694 2,806
Property management income 211 222 830
Other income 960 1,181 1,318
---------- ---------- ----------
Total Revenues 21,152 18,433 16,510
EXPENSES:
Real estate taxes 2,815 2,424 1,824
Other property costs 3,651 3,245 2,681
Interest expense 5,389 4,655 5,183
Administrative expenses 1,540 1,299 1,167
Property management expenses 1,277 856 1,202
Depreciation and amortization 5,047 4,522 4,124
Provision for loss on interest in
Twin Oaks Centre 3,150 ---- ----
---------- ---------- ----------
Total Expenses 22,869 17,001 16,181
---------- ---------- ----------
Income (Loss) Before Equity in
Earnings of Mid-America Bethal
Limited Partnership and Gains on
Sales of Real Estate (1,717) 1,432 329
Equity in Earnings of Mid-America Bethal
Limited Partnership 899 746 892
---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS (818) 2,178 1,221
Gains on Sales of Real Estate, net 690 18 ----
---------- ---------- ----------
NET INCOME (LOSS) $ (128) $ 2,196 $ 1,221
---------- ---------- ----------
---------- ---------- ----------
Weighted Average Shares
Outstanding During Period 8,280,052 8,092,024 5,264,627
---------- ---------- ----------
---------- ---------- ----------
NET INCOME (LOSS) PER SHARE $ (.02) $ .27 $ .23
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
21
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITAL IN DISTRIBUTIONS
COMMON EXCESS OF IN EXCESS OF
STOCK PAR VALUE NET INCOME TOTAL
---------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1992 $ 53 $ 92,783 $ (15,464) $ 77,372
Net income ---- ---- 1,221 1,221
Dividends declared and paid -
$1.18 per share ---- ---- (6,212) (6,212)
--------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1992 53 92,783 (20,455) 72,381
Issuance of shares (net of costs
of $1,723,000) 30 26,747 ---- 26,777
Net income ---- ---- 2,196 2,196
Dividends declared and paid -
$.88 per share ---- ---- (7,273) (7,273)
--------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1993 83 119,530 (25,532) 94,081
Issuance of shares ---- 150 ---- 150
Repurchase of shares ---- (3) ---- (3)
Net loss ---- ---- (128) (128)
Dividends declared and paid -
$.88 per share ---- ---- (7,287) (7,287)
--------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1994 $ 83 $ 119,677 $ (32,947) $ 86,813
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
22
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1993 1992
----------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net Income (loss) $ (128) $ 2,196 $ 1,221
Adjustments:
Depreciation and amortization 5,047 4,522 4,124
Provision for loss on interest in
Twin Oaks Centre 3,150 ---- ----
Investment in Mid-America Bethal
Limited Partnership:
Equity in earnings (899) (746) (892)
Distributions received 1,050 1,300 1,308
Gains on sales of real estate, net (690) (18) ----
Increase (decrease) in related liabilities (84) 40 (419)
(Increase) decrease in related assets 324 102 (296)
Other ---- 292 130
---------- --------- ---------
Net Cash Flows From Operating Activities 7,770 7,688 5,176
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of real estate 1,224 2,188 ----
Principal repayments of notes receivable 131 235 883
Interest in Twin Oaks Centre (406) (309) (644)
Investment in Mid-America Bethal
Limited Partnership ---- (1,300) (1,057)
Payments from Valley Park Centre 3,974 200 430
Additions to property:
Purchase of new properties (14,636) ---- (8,212)
Renovation and expansion projects (724) (1,355) (3,403)
Tenant improvements (563) (1,105) (907)
Other capital expenditures (579) (384) (35)
Cash paid for leasing fees (237) (322) (260)
Cash paid for loan fees and other assets (467) (232) (441)
---------- --------- ---------
Net Cash Flows From Investing Activities (12,283) (2,384) (13,646)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (payments) on short-term debt, net 12,139 (8,350) 1,875
Proceeds of mortgages payable ---- ---- 22,188
Payments on mortgages payable at maturity ---- (16,405) (8,450)
Scheduled principal payments on mortgages (521) (561) (337)
Proceeds from sale of common stock ---- 28,500 ----
Cash paid for costs of public offering ---- (1,684) (39)
Dividends paid (7,287) (7,273) (6,212)
---------- --------- ---------
Net Cash Flows From Financing Activities 4,331 (5,773) 9,025
---------- --------- ---------
INCREASE (DECREASE) IN CASH (182) (469) 555
CASH, BEGINNING OF YEAR 182 651 96
---------- --------- ---------
CASH, END OF YEAR $ ---- $ 182 $ 651
---------- --------- ---------
---------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
23
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
1994: (A) In connection with the acquisition of Southport Centre, the
Company issued 15,585 shares of common stock to the seller.
(B) The Company obtained a $5,000,000 working capital line of credit
and allowed its existing working line of credit to expire.
(C) Both of the Company's acquisition lines of credit were extended
one year to July 1995.
(D) The Company's adjustable-rate mortgage on Fairacres Shopping
Center was reduced by $2,000,000 and extended to July 1995. The
$2,000,000 was funded through one of the Company's acquisition
lines of credit.
1993: None
1992: (A) In connection with the acquisition of Fairacres Shopping Center,
the Company assumed the existing construction loan with an
outstanding balance of $6,528,000.
(B) In connection with the acquisition of Lakewood Mall, the Company
recorded the assumption of the existing construction loan, which
was modified with an outstanding balance of $8,000,000.
See notes to consolidated financial statements.
24
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
A. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES:
DESCRIPTION OF BUSINESS - Mid-America Realty Investments, Inc. (the
"Company"), a Maryland corporation, owns and manages income-producing
properties, primarily enclosed malls and neighborhood shopping centers. The
Company has qualified as a real estate investment trust ("REIT") under the
provisions of the Internal Revenue Code.
At December 31, 1994, the Company owned 18 neighborhood shopping centers
and four enclosed malls located as follows: nine in Nebraska, three in
Wisconsin, two each in Indiana and Minnesota, and one each in Arkansas, Georgia,
Iowa, Michigan, South Dakota and Tennessee. Additionally, the Company is a 50%
partner in Mid-America Bethal Limited Partnership which owns two neighborhood
shopping centers in Nebraska and Wisconsin and one enclosed mall in Nebraska.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements are
prepared on an accrual basis and include the accounts of the Company and its
wholly-owned subsidiary, Mid-America Centers Corp. All significant intercompany
balances and transactions have been eliminated. Certain reclassifications have
been made to the 1992 and 1993 financial statements to conform to those
classifications used in 1994.
CASH AND CASH EQUIVALENTS - The Company considers short-term investments
with a maturity at acquisition of three months or less as cash equivalents.
INVESTMENT IN MID-AMERICA BETHAL LIMITED PARTNERSHIP - The Company's 50%
investment in Mid-America Bethal Limited Partnership ("Mid-America Bethal") is
accounted for using the equity method.
PROPERTY - Property is stated at the lower of depreciated cost or the
amount estimated to be recoverable through future cash flows from property
operations and dispositions. Assets are depreciated using the straight-line
method over the following lives: land improvements - 15 years; buildings - 40
years; tenant improvements - term of the lease; and equipment and fixtures - 5
to 7 years.
INTANGIBLE ASSETS - Fees paid for leasing commissions on new or renewed
leases are amortized using the straight-line method over the initial term or
extension of the lease. Costs incurred to obtain mortgages and notes payable
are being amortized over the term of the obligation or agreement. Intangible
assets from the acquisition of Mid-America Centers Corp. are being amortized
using the straight-line method over a 60-month or 120-month period.
LEASES - All leases with tenants are classified as operating leases.
REVENUE RECOGNITION - Minimum rents from tenants are recognized based upon
total fixed cash flow over the initial term of the lease, using the straight-
line method. Percentage rents are based upon tenant sales levels for a
specified period. Reimbursed expenses for real estate taxes, common area
maintenance, utilities, janitorial and building maintenance are recognized in
the period in which the expenses are incurred, based upon the provisions of the
tenant's lease.
FEDERAL INCOME TAXES - The Company has qualified as a REIT under the
Internal Revenue Code and, accordingly, will not be subject to federal income
taxes on amounts distributed to shareholders provided certain requirements are
met, including the provision that at least 95% of its real estate investment
trust taxable income is distributed by March 15 of the following year.
25
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
A. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES: (CONTINUED)
The dividends paid during 1994, 1993 and 1992 were allocated between
ordinary income and non-taxable return of capital as follows (amounts are per
share):
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Ordinary income $ .32 $ .39 $ .26
Return of capital .56 .49 .92
------ ------ -------
$ .88 $ .88 $ 1.18
------ ------ -------
------ ------ -------
</TABLE>
REPURCHASE OF COMMON STOCK - Under the laws of the state of Maryland, all
shares of common stock reacquired by the Company must be retired.
EARNINGS PER SHARE - The computation of earnings per share is based upon
the weighted average number of shares outstanding during the period.
B. PROPERTY TRANSACTIONS:
SOUTHPORT CENTRE - On January 13, 1994, the Company completed the
acquisition of Southport Centre in Apple Valley, Minnesota. The purchase price,
including acquisition costs, was $12,985,000 with $12,835,000 paid in cash and
$150,000 paid through the issuance of 15,585 shares of the Company's common
stock. The acquisition was effective January 1, 1994 using the purchase method
of accounting. For the year ended December 31, 1994, Southport Centre's total
revenues and expenses (excluding interest on related debt) were $2,157,000 and
$891,000, respectively.
FITCHBURG RIDGE SHOPPING CENTER - On August 31, 1994, the Company completed
the acquisition of Fitchburg Ridge Shopping Center in Fitchburg, Wisconsin for
$2,071,000, including acquisition costs. The acquisition was accounted for
using the purchase method of accounting. For the year ended December 31, 1994,
Fitchburg Ridge Shopping Center's total revenues and expenses (excluding
interest on related debt) which are included in the accompanying Consolidated
Statements of Operations were $139,000 and $58,000, respectively.
VILLAGE SQUARE - On December 15, 1994, the Company completed the sale of
Village Square in Inver Grove Heights, Minnesota. The gross sales price was
$810,000 resulting in a loss of approximately $790,000.
C. NOTES RECEIVABLE:
Notes receivable consists of four separate notes from parties formerly
related to the Company. The notes carry interest rates from 9% to 12%, mature
in varying amounts through 2004 and are collateralized by specific tangible
assets and/or personal guarantees.
D. INTEREST IN TWIN OAKS CENTRE:
In December 1989, the Company entered into a mortgage loan with Twin Oaks
Centre L.P. for the construction of Twin Oaks Centre in Silvis, Illinois. The
loan, with an unpaid principal balance of $7,233,000 at December 31, 1994, is
secured by the Twin Oaks Centre and tax increment financing bonds payable from
incremental sales and real estate taxes to be generated by the shopping center
and adjacent properties, which are currently undeveloped.
26
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
D. INTEREST IN TWIN OAKS CENTRE: (CONTINUED)
The Company considered the Twin Oaks Centre L.P. loan impaired and
therefore recorded charges in the second quarter of 1994 to reduce the recorded
balance of the loan to the estimated value of the underlying collateral.
Provisions were based on management's estimate of value of the collateral
considering the current and anticipated future operating conditions. Walgreens,
a major anchor tenant of the Twin Oaks Centre, vacated in the second quarter of
1994. Although Walgreens continues to pay rent, Company management reviewed the
adverse effect of the Walgreens exit on property lease-up and cash flows from
the related tax increment financing bonds and provided additional loss reserves
in 1994 of $3,150,000.
On July 10, 1992, M.C.P. Limited Partners, Inc. ("M.C.P."), a limited
partner in Twin Oaks Centre L.P., filed a lawsuit in circuit court in Rock
Island County, Illinois against Twin Oaks Centre L.P., the general and limited
partners of Twin Oaks Centre L.P. (who are formerly related to the Company) and
the Company. The lawsuit alleges that the formerly related general and limited
partners and the Company acted in collusion and in breach of fiduciary duty to
negate the value of Twin Oaks Centre and to enable the Company to attempt to
acquire Twin Oaks Centre at less than fair value. M.C.P. is seeking i) to have
the Company enjoined from taking any actions to enforce its rights under the
loan agreements with Twin Oaks Centre L.P. (such as foreclosure) until Twin Oaks
Centre is "leased up", ii) to have the Company transfer back to Twin Oaks Centre
L.P. the net proceeds received from a $3,200,000 mortgage loan obtained by Twin
Oaks Centre L.P. (which proceeds were applied to the Company's loan), and iii)
punitive damages of $2,000,000. Management believes that the allegations are
without merit.
In prior years, a first mortgage (which is a direct obligation of Twin Oaks
Centre L.P.) was recorded in the Company's Consolidated Balance Sheet under
"Mortgages and Notes Payable". Such amount, in prior years, has been
reclassified to "Interest in Twin Oaks Centre" to conform to the classification
used in 1994.
E. INVESTMENT IN MID-AMERICA BETHAL LIMITED PARTNERSHIP:
The Company has a 50% general partnership interest in Mid-America Bethal, a
Nebraska limited partnership. The Company is the managing general partner of
Mid-America Bethal and a European investor is the limited partner. Mid-America
Bethal owns and operates one enclosed mall and two neighborhood shopping
centers.
27
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
E. INVESTMENT IN MID-AMERICA BETHAL LIMITED PARTNERSHIP: (CONTINUED)
Summarized financial information on Mid-America Bethal is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1993
----------- -----------
<S> <C> <C>
BALANCE SHEETS:
Assets:
Cash and cash equivalents $ 829 $ 5
Property, net of accumulated depreciation
of $5,188,000 and $4,065,000 30,918 31,924
Other assets 561 681
---------- ----------
$ 32,308 $ 32,610
---------- ----------
---------- ----------
Liabilities and Partners' Capital:
Accrued liabilities $ 33 $ 33
Partners' capital 32,275 32,577
---------- ----------
$ 32,308 $ 32,610
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1994 1993 1992
----------- ---------- ---------
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS:
Total Revenues $ 4,264 $ 3,904 $ 4,029
---------- ---------- ----------
---------- ---------- ----------
Net Income $ 1,798 $ 1,492 $ 1,785
---------- ---------- ----------
---------- ---------- ----------
EQUITY IN EARNINGS OF MID-AMERICA
BETHAL RECORDED BY THE COMPANY
$ 899 $ 746 $ 892
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
Mid-America Centers Corp. has agreements with Mid-America Bethal for the
management and leasing of properties owned by Mid-America Bethal. For the years
ended December 31, 1994, 1993 and 1992, Mid-America Bethal paid property
management fees of $172,000, $158,000, and $146,000, respectively, and incurred
and capitalized leasing commissions of $39,000, $52,000, and $91,000,
respectively. In addition, the Company administers the day-to-day activities of
Mid-America Bethal. For these services during each of the three years ended
December 31, 1994, the Company received administrative fees from Mid-America
Bethal of $20,000.
F. INVESTMENT IN VALLEY PARK CENTRE:
The Company had a loan agreement with Valley Park Limited Partnership, a
party formerly related to the Company, to facilitate the construction of Valley
Park Centre in Russelville, Arkansas. At December 31, 1993, the amount funded
under this agreement was $4,049,000. Because the Company was entitled to share
in the net cash generated from the operation and from the sale of Valley Park
Centre, the loan was accounted for as a real estate investment. On April 9,
1994, the loan was paid in full resulting in a gain of $1,260,000, net of
transaction costs.
28
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
G. MORTGAGES AND NOTES PAYABLE:
Mortgages and notes payable are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
MAXIMUM INTEREST ANNUAL MATURITY -----------------
AVAILABLE RATE PAYMENT DATE 1994 1993
--------- -------- ------- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Fixed Rate Mortgage Debt:
Mortgages and Notes Payable:
Cornhusker Plaza 9.75% $ 396 June 1995 $ 3,712 $ 3,743
Lakewood Mall 8.50% $ 768 Aug. 1995 7,761 7,869
Twin Oaks Centre Loan 8.25% $ 84 Apr. 1996 743 765
Miracle Hills Park 9.00% $ 456 Aug. 1997 3,403 3,447
Meadows S.C. 9.88% $ 348 Nov. 1998 3,091 3,132
Bishop Heights 9.75% $ 96 Nov. 2000 714 744
Eastville Plaza 8.25% $ 324 Feb. 2001 2,966 2,994
Rivergate S.C. 10.00% $ 336 Jan. 2002 3,143 3,164
Shenandoah Plaza 10.00% $ 456 Jan. 2002 4,223 4,252
Moorland Square 9.00% $ 384 Nov. 2002 3,707 3,754
Kimberly West 8.00% $ 408 Dec. 2002 4,231 4,294
------ ------- -------
Total 9.07% 37,694 38,158
Other Notes and Obligations 11.00% 26 50
------ ------- -------
Total Fixed-Rate Mortgage Debt 9.07% 37,720 38,208
Adjustable-Rate Debt:
Revolving Credit Agreements:
Working Line of Credit $ 5,000 9.00% July 1995 138 2,875
Lines of Credit for
Acquisitions: $10,000 9.00% July 1995 4,056 ----
$15,000 9.00% July 1995 12,750 ----
------ ------- -------
9.00% 16,944 2,875
Mortgage Loans:
Edgewood S.C.-Phase II $ 5,000 9.00% July 1995 5,000 4,785
Fairacres S.C. $ 3,822 9.50% July 1995 3,822 6,000
------ ------- -------
9.22% 8,822 10,785
------ ------- -------
Total Adjustable-Rate Debt 9.07% 25,766 13,660
------ ------- -------
Total Mortgages and Notes Payable 9.07% $63,486 $51,868
----- ------- -------
----- ------- -------
</TABLE>
In July 1994, the Company renewed its revolving credit agreement with a
local bank which consist of a $5,000,000 working capital line and a $10,000,000
acquisitions line. Interest is charged at 1/2% over the national prime rate or
9% at December 31, 1994. The revolving credit agreement is collateralized by
Monument Mall, Germantown Shopping Center and Ile de Grand. The local bank
charges an unused commitment fee of 1/8%. At December 31, 1994, $138,000 was
outstanding on the $5,000,000 working capital line of credit and $4,056,000 was
outstanding on the $10,000,000 acquisitions line.
In July 1994, the Company renewed its revolving credit agreement with a
separate local bank for a $15,000,000 acquisitions line. Interest is charged at
1/2% over the national prime rate or 9% at December 31, 1994. The revolving
credit agreement is collateralized by Thunderbird Mall, Delta Plaza, Macon
County Plaza and Town West Center. The local bank charges an unused commitment
fee of 1/4%. At December 31, 1994, $12,750,000 was outstanding on the
$15,000,000 acquisitions line of credit.
29
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
G. MORTGAGES AND NOTES PAYABLE: (CONTINUED)
Since December 31, 1994, the Company has secured commitments for $8,000,000
of 9.20% mortgage financing on the Southport Centre and $6,500,000 of 9.08%
mortgage financing on the Edgewood Shopping Centers. Both mortgages have a
seven-year term requiring interest only payments for the first five years with
subsequent payments based upon a 25 year amortization. The loan proceeds will
be primarily used to retire adjustable rate debt.
Principal maturities of total mortgages and notes payable, after giving
effect to the commitments described above, for the next five years are as
follows: 1995 - $23,112,000; 1996 - $1,062,000; 1997 - $3,615,000; 1998 -
$3,249,000; 1999 - $314,000; 2000 and thereafter - $32,134,000.
Substantially all of the Company's properties serve as collateral on one or
more of the above-mentioned obligations. The Company was in compliance with all
debt covenants at December 31, 1994 which require, among other covenants, that
the Company's total debt will not exceed 50% of total assets.
H. COMMITMENTS AND CONTINGENCIES:
YIELD MAINTENANCE AGREEMENT - In June 1992, the Company entered into a
Yield Maintenance Agreement, as amended, (the "YMA") with parties formerly
related to the Company. Under the YMA, the formerly related parties guarantee a
10% return from June 1, 1992 to December 31, 1996, calculated on a quarterly
basis, to the Company based upon the amount of the Company's Investment Base for
five specific properties purchased from the formerly related parties. If the
net operating income of the properties after debt service on a quarterly basis
does not exceed the required 10% return, the difference (defined as the
"Arrearage" in the YMA) is owed to the Company by the formerly related parties.
The formerly related parties have the option of paying the Arrearage in cash
every quarter or having it added to the Investment Base.
Under the YMA, the market value of these properties will be determined as
of December 31, 1996. The determined market value will be based on a 10.25%
capitalization rate applied to net operating income for the year ended December
31, 1996. If the determined market value of the properties is different than
the Company's Adjusted Acquisition Cost, the difference will be paid by or owed
to the Company, subject to certain limits.
The obligations of the formerly related parties under the YMA are limited
to $2,800,000 and are secured by promissory notes. The promissory notes are
personally guaranteed by the formerly related parties and are collateralized by
specific tangible collateral.
Under the YMA, the Company has an assignment of a 50% interest in Kearney
Mall Associates, Ltd., Limited Partnership, whose limited partners were formerly
related to the Company, which owns Hilltop Mall in Kearney, Nebraska.
Cumulative amounts received under this assignment totaled $201,000 through
December 31, 1994.
At December 31, 1994, accumulated YMA arrearages (which are not reflected
in the consolidated financial statements) exceeded the guaranteed limits.
LITIGATION - The Company is subject to a number of lawsuits and claims for
various amounts which arise out of the normal course of business. In the
opinion of management, the disposition of claims currently pending will not have
a material adverse effect on the Company's financial position or results of
operations.
30
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
I. SHAREHOLDERS' EQUITY:
The Company completed on January 22, 1993 the public sale of 3,000,000
shares of common stock and received net proceeds of $26,777,000 (after placement
agent fees and out-of-pocket expenses). The proceeds from the sale were used to
retire debt and provide funds for expansion projects.
J. EMPLOYEE BENEFIT AND STOCK OPTION PLAN:
RETIREMENT SAVINGS PLAN - In 1994, the Company established a qualified
savings 401(k) plan covering substantially all full-time employees.
Participants may contribute up to 15.0% of their pre-tax base pay with the
Company matching contributions equal to 1.0% of the first 4.0% of participant
contributions. Participants vest immediately in Company contributions over five
years. Contribution expense was $19,000 for the year ended December 31, 1994.
STOCK OPTION PLAN - Pursuant to the Amended Stock Option Plan ("Amended
Plan"), which was approved by shareholders on June 3, 1992, the Company's Board
of Directors is authorized to issue options to purchase shares of common stock
at the then current market price of such shares to employees of the Company and
Mid-America Centers Corp. The Amended Plan provides that options may not be
issued for more than an aggregate of 175,000 shares. Stock options became
exercisable over discretionary periods not to exceed 10 years from the date of
grant.
Following is a summary of the option activity under the Amended Plan:
<TABLE>
<CAPTION>
SHARES
UNDER OPTION OPTION PRICE PER SHARE
------------ ----------------------
<S> <C> <C>
Outstanding January 1, 1992 ---- ----
Granted 108,000 $10.375 to $25.375
--------
Outstanding December 31, 1992 108,000 $10.375 to $25.375
Granted 140,000 $10.75
Canceled (108,000) $10.375 to $25.375
---------
Outstanding December 31, 1993 140,000 $10.75
Forfeited (15,000) $10.75
---------
Outstanding at December 31, 1994 125,000 $10.75
---------
---------
</TABLE>
At December 31, 1994, 33,000 stock options were exercisable.
K. DISCLOSURE OF FAIR VALUE:
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments." The estimated fair value amounts have been determined
by the Company, using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1994. Although
management is not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date, and current
estimates of fair value may differ significantly from the amounts presented
herein.
31
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
K. DISCLOSURE OF FAIR VALUE: (CONTINUED)
CASH, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE:
The carrying amounts of these items are a reasonable estimate of their fair
value.
NOTES RECEIVABLE:
The carrying amounts of these items represents the Company's reasonable
estimate of their fair value.
MORTGAGES AND NOTES PAYABLE - FIXED RATE MORTGAGE DEBT:
At December 31, 1994, the carrying amount was $37,720,000 compared to an
estimated fair market value of approximately $37,365,000. Interest rates that
are currently available to the Company for the issuance of mortgages with
similar terms and remaining maturities were used to estimate fair value of these
mortgages.
L. LEASING ACTIVITIES:
Spaces in the Company's properties are leased under operating leases with
initial terms ranging from one to 40 years. Certain of the leases contain
options to renew. Leases generally provide for minimum rents and percentage
rents plus reimbursement of certain operating expenses. The majority of tenants
pay reimbursements for their pro rata share of certain operating expenses.
Rent income in excess of base rent from tenants with percentage rent
provisions (based upon tenant sales levels for a specified period) for the years
ended December 31, 1994, 1993 and 1992 was $366,000, $387,000 and $359,000,
respectively.
Wal-Mart, Herberger's, Hy-Vee grocery stores, Kmart, Target and/or Shopko
and J.C. Penney anchored a total of 17 of the Company's properties either as
tenants or as occupants of buildings adjacent to the properties and lease in the
aggregate approximately 32% of the total leasable space in the Company's
properties.
Additionally, Kmart, Hy-Vee grocery stores, Herberger's and/or Wal-Mart
anchored all Mid-America Bethal properties as either tenants or as occupants of
buildings adjacent to the properties and lease approximately 38% of the total
leasable space in the Mid-America Bethal properties.
The only tenant that occupies more than 10% of the gross leasable space of
the properties owned by the Company at December 31, 1994 is Wal-Mart, whose five
stores at properties owned by the Company occupy approximately 15.0% of total
gross leasable area. Wal-Mart also operates stores adjacent to five of the
Company's properties and to one of Mid-America Bethal's properties.
Future base rents under non-cancelable operating leases on properties owned
solely by the Company at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
OTHER
YEAR ENDING DECEMBER 31, WAL-MART TENANTS TOTAL
------------------------ ------------ ------------ ------------
<S> <C> <C> <C>
1995 $ 1,225 $ 13,947 $ 15,172
1996 1,225 12,750 13,975
1997 1,225 11,094 12,319
1998 1,225 9,905 11,130
1999 1,225 9,122 10,347
Thereafter 8,108 66,634 74,742
------------ ------------ ------------
$ 14,233 $ 123,452 $ 137,685
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The Company had no tenant which in any of the three years ended December 31,
1994 would have derived 10 percent or more of the Company's rental income or
total revenues.
32
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
M.QUARTERLY INFORMATION (UNAUDITED):
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994:
Total revenues $ 5,275 $ 5,286 $ 5,140 $ 5,451 $ 21,152
Net income (loss) (1) $ 575 $ (1,285) $ 512 $ 70 $ (128)
Net income (loss) per share $ .07 $(.16) $ .06 $ .01 $(.02)
Dividends declared per share $ .22 $ .22 $ .22 $ .22 $ .88
Weighted average number
of shares outstanding 8,280,212 8,280,212 8,279,892 8,279,892 8,280,052
Year Ended December 31, 1993:
Total revenues $ 4,816 $ 4,421 $ 4,516 $ 4,680 $ 18,433
Net income $ 146 $ 629 $ 692 $ 729 $ 2,196
Net income per share $ .02 $ .08 $ .08 $ .09 $ .27
Dividends declared per share $ .22 $ .22 $ .22 $ .22 $ .88
Weighted average number
of shares outstanding 7,564,627 8,264,627 8,264,627 8,264,627 8,092,024
<FN>
(1) The variation in income (loss) noted in the second quarter of 1994 was due
to the $3,150,000 loss reserve relating to the Company's interest in Twin
Oaks Centre for the year ended December 31, 1994. This amount reflects
charges to reduce the recorded value of the Company's loan to the Twin Oaks
Centre L.P. (which is recorded on the Consolidated Balance Sheet as
"Interest in Twin Oaks Centre") to the fair value of the underlying
collateral.
The collateral for the Company's loan to the Twin Oaks Centre L.P. includes
the Twin Oaks Centre (the "Centre") a 95,000 square-foot neighborhood
shopping center in Silvis, Illinois, and tax increment financing bonds
issued in connection with the Centre. Walgreens, a major anchor tenant of
the Centre, vacated in the second quarter of 1994. Although Walgreens
continues to pay rent, Company management reviewed the adverse effect of
the Walgreens exit on property lease-up and cash flows from the tax
increment financing bonds and provided additional loss reserves with
respect to the Company's loan on the property in the second quarter of
1994.
</TABLE>
33
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Reductions
Additional from Master Gross Amount at Which
Initial Cost to Company Costs Lease Carried at December 31, 1994
-------------------------- Subsequent and Income -----------------------------------------
Encum- Buildings and to Guarantee Buildings and
Description brances Land Improvements Acquisition Payments Land Improvements Total
---------------- ------- ----------- ------------- ------------- ------------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Monument Mall, Line of
Scottsbluff, NE Credit(2) $ 420 $ 9,691 $ 2,791 $ (1,612) $ 353 $ 10,937 $ 11,290
Delta Plaza, Line of
Escanaba, MI Credit(2) 527 6,949 4,340 (311) 1,096 10,409 11,505
Thunderbird Mall, Line of
Virginia, MN Credit(2) 306 6,027 3,131 ---- 305 9,159 9,464
Eastville Plaza,
Fremont, NE $ 2,966 706 3,529 620 (403) 633 3,819 4,452
Bishop Heights,
Lincoln, NE $ 714 710 723 147 ---- 710 870 1,580
Westview Plaza,
McCook, NE None 90 1,010 24 (142) 78 904 982
Ile de Grand, Line of
Grand Island, NE Credit(2) 690 2,880 796 ---- 690 3,676 4,366
Edgewood-Phase I,
Lincoln, NE None 1,396 1,993 1,284 ---- 1,396 3,277 4,673
Edgewood-Phase II,
Lincoln, NE $ 5,000 1,387 4,327 735 ---- 1,387 5,062 6,449
The Meadows,
Lincoln, NE $ 3,091 1,179 3,121 19 ---- 1,179 3,140 4,319
Miracle Hills Park,
Omaha, NE $ 3,403 2,250 4,972 424 (330) 2,147 5,169 7,316
Macon County, Line of
Lafayette, TN Credit(2) $ 228 $ 3,021 $ 46 $ (40) $ 225 $ 3,030 $ 3,255
<CAPTION>
Accumulated
Depreciation Date of
at Completion Acquisition
December 31, Date for or
Description 1994 Construction Completion
--------------- ------------- ------------ -----------
<S> <C> <C> <C>
Monument Mall,
Scottsbluff, NE $ (2,637) 08/1986 12/30/86
Delta Plaza,
Escanaba, MI (2,009) 09/1971 12/30/86
Thunderbird Mall,
Virginia, MN (1,781) 09/1971 12/30/86
Eastville Plaza,
Fremont, NE (1,001) 08/1986 12/30/86
Bishop Heights,
Lincoln, NE (235) 09/1971 12/30/86
Westview Plaza,
McCook, NE (240) 12,1985 12/30/86
Ile de Grand,
Grand Island, NE (810) 07/1977 04/09/87
Edgewood-Phase I,
Lincoln, NE (802) 09/1980 06/01/87
Edgewood-Phase II,
Lincoln, NE (568) 06/1991 06/26/91
The Meadows,
Lincoln, NE (679) 12/1987 06/01/88
Miracle Hills Park,
Omaha, NE (1,186) 03/1987 07/05/88
Macon County,
Lafayette, TN $ (627) 12/1985 12/21/88
</TABLE>
34
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Reductions
Additional from Master Gross Amount at Which
Initial Cost to Company Costs Lease Carried at December 31, 1994
-------------------------- Subsequent and Income -----------------------------------------
Encum- Buildings and to Guarantee Buildings and
Description brances Land Improvements Acquisition Payments Land Improvements Total
---------------- ------- ----------- ------------- ------------- ------------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Town West Center, Line of
Paragould, AR Credit(2) 366 4,263 48 ---- 366 4,311 4,677
Rivergate,
Shelbyville, IN $ 3,143 163 4,058 277 (25) 162 4,311 4,473
Germantown, Line of
Jasper, IN Credit(2) 488 8,766 335 (15) 540 9,034 9,574
Shenandoah Plaza,
Newnan, GA $ 4,223 485 5,281 94 ---- 485 5,375 5,860
Cornhusker Plaza,
South Sioux
City,NE $ 3,712 1,185 3,169 4 (26) 1,185 3,147 4,332
Lakewood Mall,
Aberdeen, SD $ 7,761 6001 3,890 514 ---- 1,040 14,414 15,454
Kimberly West,
Davenport, IA $ 4,231 1,700 4,653 69 ---- 1,790 4,722 6,512
Moorland Square,
New Berlin, WI $ 3,707 1,550 3,750 100 ---- 1,927 3,850 5,777
Fairacres,
Oshkosh, WI $ 3,822 1,500 3,310 282 ---- 1,600 3,592 5,192
Southport Centre,
Apple Valley, MN None 3,675 8,946 ---- ---- 3,675 8,946 12,621
Fitchburg Ridge,
Fitchburg, WI None $ 500 $ 1,545 $ ---- $ ---- $ 500 $ 1,545 $ 2,045
-------- --------- ---------- ---------- --------- ----------- ---------
$ 22,100 $ 109,876 $ 16,081 $ (2,904) $ 23,469 $ 122,699 $ 146,168
-------- --------- ---------- ---------- --------- ----------- ---------
-------- --------- ---------- ---------- --------- ----------- ---------
<CAPTION>
Accumulated
Depreciation Date of
at Completion Acquisition
December 31, Date for or
Description 1994 Construction Completion
--------------- ------------- ------------ -----------
<S> <C> <C> <C>
Town West Center,
Paragould, AR (818) 04/1987 12/21/88
Rivergate,
Shelbyville, IN (772) 03/1986 12/21/88
Germantown,
Jasper, IN (1,598) 12/1985 12/21/88
Shenandoah Plaza,
Newnan, GA (1,053) 02/1988 12/21/88
Cornhusker Plaza,
South Sioux
City,NE (360) 02/1990 06/27/91
Lakewood Mall,
Aberdeen, SD (1,153) 08/1990 08/28/92
Kimberly West,
Davenport, IA (369) 01/1989 12/14/92
Moorland Square,
New Berlin, WI (225) 02/1990 11/23/92
Fairacres,
Oshkosh, WI (268) 05/1992 12/22/92
Southport Centre,
Apple Valley, MN (251) 01/1992 01/01/94
Fitchburg Ridge,
Fitchburg, WI $ (13) 12/1980 08/31/94
----------
$ (19,455)
----------
----------
<FN>
(1) The aggregate cost for federal income tax purposes for these properties is
approximately $145,152,000.
(2) Revolving credit agreements totaled $16,944,000 at December 31, 1994.
</TABLE>
35
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Buildings
Land and Tenant Equipment Construction-
Land Improvements Improvements and Fixtures in-Progress Total
--------- ------------ ------------ ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
REAL ESTATE
Balance, January 1, 1992 $ 14,044 $ 10,385 $ 70,389 $ 363 $ 715 $ 95,897
Additions at cost 5,353 2,841 23,821 35 2,724 34,775
Reclassification of amounts
to land and outlots held for sale (1,433) (736) ---- ---- ---- (2,170)
Transfer of assets when placed
into service 591 ---- 2,357 ---- (2,948) ----
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1992 18,555 12,490 96,567 398 491 128,502
Additions at cost 1 133 1,391 114 1,039 2,678
Retirements (9) ---- (115) (22) ---- (147)
Transfer of assets when placed
into service ---- ---- 1,224 ---- (1,224) ----
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1993 18,547 12,623 99,067 490 306 131,034
Additions at cost 4,175 890 11,217 77 523 16,884
Retirements (268) (171) (1,425) (8) ---- (1,872)
Reclassification of outlots held for
sale to land 1,015 ---- ---- ---- ---- 1,015
Transfer of assets when place
into service ---- ---- 495 ---- (495) ----
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1994 $ 23,469 $ 13,343 $ 109,356 $ 559 $ 334 $ 147,061
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
ACCUMULATED DEPRECIATION
Balance, January 1, 1992 $ ---- $ 2,265 $ 6,557 $ 154 $ ---- $ 8,977
Additions charged to costs and expenses ---- 73 42,321 64 ---- 3,119(A)
Retirements ---- ---- ---- ---- ---- ----
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1992 ---- 2,999 8,878 218 ---- 12,096
Additions charged to costs and expenses ---- 843 2,887 81 ---- 3,811(B)
Retirements ---- ---- ---- (22) ---- (22)
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1993 ---- 3,842 11,765 277 ---- 15,885
Additions charged to costs and expenses ---- 894 3,325 73 4,294(C)
Retirements ---- (89) (282) (6) ---- (379)
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1994 $ ---- $ 4,647 $ 14,808 $ 344 $ ---- $ 19,800
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
<FN>
(A) Depreciation expense for the year ended December 31, 1992 of $3,211,000 is
comprised of depreciation on the Company's properties of $3,119,000 (as
shown above) plus $92,000 of depreciation recognized on the Company's
interest in Twin Oaks Centre.
(B) Depreciation expense for the year ended December 31, 1993 of $3,968,000 is
comprised of depreciation on the Company's properties of $3,811,000 (as
shown above) plus $157,000 of depreciation recognized on the Company's
interest in Twin Oaks Centre.
36
<PAGE>
(C) Depreciation expense for the year ended December 31, 1994 of $4,372,000 is
comprised of depreciation on the Company's properties of $4,294,000 (as
shown above) plus $78,000 of depreciation recognized on the Company's
interest in Twin Oaks Centre.
</TABLE>
37
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
The following Financial Statements of Mid-America Bethal Limited Partnership and
the related Independent Auditors' Report are included in Item 14(d) of Mid-
America Realty Investments, Inc.'s Form 10-K:
PAGE
------
Independent Auditors' Report . . . . . . . . . . . . . . . . 38
Balance Sheets at December 31, 1994 and 1993 . . . . . . . . 39
Statements of Income for the years ended December 31,
1994, 1993, and 1992. . . . . . . . . . . . . . . . . . 40
Statements of Changes in Partners' Capital for the years
ended December 31, 1994, 1993, and 1992 . . . . . . . . 41
Statements of Cash Flows for the years ended December 31,
1994, 1993, and 1992. . . . . . . . . . . . . . . . . . 42
Notes to Financial Statements... . . . . . . . . . . . . . . 43
The following Financial Statement Schedules of Mid-America Bethal Limited
Partnership are furnished pursuant to Rule 3-09:
Schedule XI - Real Estate and Accumulated Amortization . . . 45
All other schedules have been omitted because they are not applicable or not
required or because the required information is shown in the financial
statements or notes thereto.
38
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Mid-America Bethal Limited Partnership
Omaha, Nebraska
We have audited the accompanying balance sheets of Mid-America Bethal
Limited Partnership as of December 31, 1994 and 1993, and the related
statements of income, partners' capital and cash flows for each of the three
years in the period ended December 31, 1994. Our audits also included the
financial statement schedules listed in the Index on page 34. These
financial statements and financial statement schedules are the responsibility
of the Partnership's management. Our responsibility is to express an opinion
on the financial statements and financial statement 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.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Mid-America Bethal Limited Partnership as of
December 31, 1994 and 1993, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1994 in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
DELOITTE & TOUCHE LLP
February 17, 1995
Omaha, Nebraska
39
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
---------------------------
ASSETS 1994 1993
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 829,516 $ 5,396
Accounts receivable, net of allowances
of $101,000 and $55,000 294,156 389,738
Property:
Land and land improvements 6,489,085 6,457,478
Buildings 29,384,934 29,295,883
Equipment and fixtures 231,353 231,353
----------- -----------
36,105,372 35,984,714
Less: Accumulated depreciation (5,187,711) (4,061,186)
----------- -----------
30,917,661 31,923,528
Intangible assets, less accumulated
amortization of $134,322 and $84,209 262,611 274,824
Other assets 4,233 16,777
----------- -----------
$32,308,177 $32,610,263
----------- -----------
----------- -----------
LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities $ 33,599 $ 33,519
Partners' capital 32,274,578 32,576,744
----------- -----------
$32,308,177 $32,610,263
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements.
40
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Rental income $ 3,451,278 $ 3,058,639 $ 3,148,725
Reimbursement income 757,982 804,272 825,990
Other income 54,363 40,986 54,396
----------- ----------- -----------
Total Revenues 4,263,623 3,903,897 4,029,111
EXPENSES:
Real estate taxes 337,674 336,376 306,241
Management fees 172,609 157,583 146,343
Other property costs 767,845 787,713 720,626
Administrative expenses 15,418 32,339 32,498
Depreciation and amortization 1,172,243 1,098,353 1,038,871
----------- ----------- -----------
Total Expenses 2,465,789 2,412,364 2,244,579
----------- ----------- -----------
NET INCOME $ 1,797,834 $ 1,491,533 $ 1,784,532
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to financial statements.
41
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Albeth
Mid-America Realty Investments
Investments Inc. L.P. Total
------------------ ------------ -------------
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1992 $ 14,900,339 $ 14,900,340 $ 29,800,679
Partner contributions:
Imperial Mall improvements 1,057,500 1,057,500 2,115,000
Allocation of net income 892,266 892,266 1,784,532
Distributions paid (1,307,500) (1,307,500) (2,615,000)
------------- ------------- -------------
BALANCE, DECEMBER 31, 1992 15,542,605 15,542,606 31,085,211
Partner contributions:
Imperial Mall improvements 1,300,000 1,300,000 2,600,000
Allocation of net income 745,767 745,766 1,491,533
Distributions paid (1,300,000) (1,300,000) (2,600,000)
------------- ------------- -------------
BALANCE, DECEMBER 31, 1993 16,288,372 16,288,372 32,576,744
Allocation of net income 898,917 898,917 1,797,834
Distributions paid (1,050,000) (1,050,000) (2,100,000)
------------- ------------- -------------
BALANCE, DECEMBER 31, 1994 $ 16,137,289 $ 16,137,289 $ 32,274,578
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See notes to financial statements.
42
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,797,834 $ 1,491,533 $ 1,784,532
Adjustments:
Depreciation and amortization 1,172,243 1,098,353 1,038,871
Increase (decrease) in related liabilities 80 (1,239) (7,461)
(Increase) decrease in related assets 112,429 112,986 (63,220)
----------- ----------- -----------
Net Cash Flows From Operating Activities 3,082,586 2,701,633 2,752,722
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property:
Renovation and expansion projects ---- (3,305,577) (981,157)
Tenant improvements (31,607) (136,989) (649,052)
Other capital expenditures (89,051) ---- (1,730)
Cash paid for leasing fees (37,808) (113,696) (120,219)
Other receipts and payments ---- 17,277 20,000
----------- ----------- -----------
Net Cash Flows From Investing Activities (158,466) (3,538,985) (1,732,158)
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions by partners ---- 2,600,000 2,115,000
Distributions made to partners (2,100,000) (2,600,000) (2,615,000)
Net change in restricted funds ---- ---- 22,504
----------- ----------- -----------
Net Cash Flows From Financing Activities (2,100,000) ---- (477,496)
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS: 824,120 (837,352) 543,068
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 5,396 842,748 299,680
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 829,516 $ 5,396 $ 842,748
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to financial statements.
43
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DESCRIPTION OF BUSINESS - Mid-America Bethal Limited Partnership,
formerly Dial Bethal Limited Partnership (Mid-America Bethal), a Nebraska
limited partnership, was formed on June 1, 1989 between Mid-America Realty
Investments, Inc. (Mid-America Realty) and Albeth Investments, L.P.
(Albeth), pursuant to provisions of an Amended and Restated Partnership
Agreement (the "Partnership Agreement"). Mid-America Realty holds a 50%
interest and is the Managing General Partner of the Partnership. Albeth
holds a 50% limited partner interest.
On October 31, 1994, Dial Bethal Limited Partnership filed an amendment
to the Certificate of Limited Partnership changing its name to Mid-America
Bethal Limited Partnership.
CASH AND CASH EQUIVALENTS - Mid-America Bethal considers short-term
investments with a maturity at acquisition of three months or less as cash
equivalents.
PROPERTY - Property is stated at cost and is depreciated using the
straight-line method over the following lives: land improvements - 15
years; buildings - 40 years; tenant improvements - term of the lease; and
equipment and fixtures - 5 to 7 years.
INTANGIBLE ASSETS - Costs incurred in the organization of Mid-America
Bethal are amortized using the straight-line method over a 60-month period.
Fees paid for leasing commissions on new or renewed leases are amortized
using the straight-line method over the initial term or extension of the
lease.
LEASES - All leases with tenants are classified as operating leases.
REVENUE RECOGNITION - Minimum rents from tenants are recognized monthly
based upon total fixed cash flow over the initial term of the lease, using
the straight-line method. Percentage rents are based upon tenant sales
levels for a specified period. Reimbursed expenses for real estate taxes,
common area maintenance, utilities, janitorial and building maintenance are
recognized in the period in which the expenses are incurred, based upon the
provisions of the tenant's lease.
INCOME TAXES - The financial statements do not include any provision for
income taxes as Mid-America Bethal is not a taxable entity. The individual
partners are responsible for their share of taxable income.
RECLASSIFICATIONS - Certain reclassifications have been made to the 1992
and 1993 financial statements to conform to those classifications used in
1994.
B. RELATED PARTY TRANSACTIONS:
ADMINISTRATION OF MID-AMERICA BETHAL - Pursuant to the Partnership
Agreement, Mid-America Realty provides administrative services and manages
the day-to-day affairs of Mid-America Bethal as Managing General Partner.
For these services during each of the years ended December 31, 1994, 1993,
and 1992, Mid-America Bethal paid $20,000.
44
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
B. RELATED PARTY TRANSACTIONS: (CONTINUED)
PROPERTY MANAGEMENT AND LEASING - Mid-America Bethal has entered into
property management agreements with Mid-America Centers Corp., a wholly-
owned subsidiary of Mid-America Realty. Under these agreements, Mid-America
Centers is responsible for the day-to-day operations of all the properties,
including leasing, rent collections and maintenance. For these services,
Mid-America Bethal pays a management fee of 4% of gross revenues.
Mid-America Centers also receives leasing commissions upon the obtaining of
new tenant leases, the renegotiation of existing tenant leases and the
renewal of existing tenant leases if the tenants did not have a renewal
option in the original lease. For the years ended December 31, 1994, 1993,
and 1992, $172,609, $157,583, and $146,343, respectively, was incurred for
management fees and $39,222, $52,373, and $90,892, respectively, was
incurred and capitalized as leasing fee commissions.
C. CONSTRUCTION COMMITMENT:
Mid-America Bethal entered into a settlement and lease termination
agreement in October 1992 with F.W. Woolworth Co. ("Woolworth"), which
previously leased a 41,770 square-foot store at Imperial Mall. Under the
lease agreement, Woolworth paid $74,977 in rental income and no expense
reimbursements on an annual basis. The agreement was entered into in order
to obtain the Woolworth space so it could be razed and a new store for
Kmart Corporation ("Kmart") could be constructed. Mid-America Bethal has a
lease with Kmart for a 91,266 square-foot store, for which Kmart pays
$460,894 in rental income on an annual basis and is responsible for all
costs of its building. The Woolworth store closed and the lease was
terminated on October 13, 1992. The Kmart store opened for business and
commenced paying rent on November 11, 1993. The cost to terminate the
Woolworth lease was $500,000 and the total cost to construct the Kmart
store was approximately $3,741,000. These costs were financed by equal
cash contributions from Mid-America Realty and Albeth.
D. LEASING ACTIVITIES:
Space in the properties is leased under operating leases with initial
terms ranging from one year to thirty years. Certain of the leases contain
options to renew. Leases generally provide for minimum rents and
percentage rents plus reimbursement of certain operating expenses. The
majority of tenants pay reimbursements for their pro rata share of certain
operating expenses.
Rent income in excess of base rent for tenants with percentage rent
provisions (based upon tenants sales levels for a specified period) for the
years ended December 31, 1994, 1993, and 1992 was $122,619, $102,878, and
$158,288, respectively.
Future base rents under non-cancelable operating leases at December 31,
1994 are as follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amount
------------------------ -------------
<S> <C>
1995 $ 3,433,608
1996 3,132,572
1997 3,026,214
1998 2,956,249
1999 2,634,745
Thereafter 20,828,666
------------
$ 36,012,054
------------
------------
</TABLE>
45
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Reductions
Additional from Master
Initial Cost to Company Costs Lease
----------------------------- Subsequent and Income
Encum- Buildings and to Guarantee
Description brances Land Improvements Acquisition Payments
----------------- ------- ------------ ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Imperial Mall,
Hastings, NE None $ 677,826 $11,851,303 $6,596,455 $ ----
Stockyards Plaza,
Omaha, NE None 944,111 6,602,742 493,700 (372,877)
Stockyards Theatres,
Omaha, NE None 251,645 1,849,242 ---- ----
Taylor Heights
Shopping Center,
Sheboygan, WI None 1,029,223 5,697,723 252,926 ----
----------- ----------- ---------- ---------
$2,902,805 $26,001,010 $7,343,081 $(372,877)
----------- ----------- ---------- ---------
----------- ----------- ---------- ---------
<CAPTION>
Gross Amount at Which Accumulated
Carried at December 31, 1994 Depreciation Date of
------------------------------------------ at Completion Acquisition
Buildings and December 31, Date for or
Description Land Improvements Total 1994 Construction Completion
----------------- ------------- -------------- -------------- -------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Imperial Mall,
Hastings, NE $ 834,020 $18,291,564 $19,125,584 $(2,565,794) 09/1970 12/01/87
Stockyards Plaza,
Omaha, NE 1,041,577 6,626,099 7,667,676 (1,227,480) 08/1988 06/01/89
Stockyards Theatres,
Omaha, NE 251,645 1,849,242 2,100,887 (288,923) 06/1990 07/17/90
Taylor Heights
Shopping Center,
Sheboygan, WI 1,034,231 5,945,641 6,979,872 (899,927) 02/1989 07/30/90
----------- ----------- ----------- ------------
$ 3,161,473 $32,712,546 $35,874,019 $(4,982,124)
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
<FN>
(1) The aggregate cost for federal income tax purposes for these properties is
approximately $35,874,000.
</TABLE>
46
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
<TABLE>
<CAPTION>
Buildings
Land and Tenant Equipment Construction-
Land Improvements Improvements and Fixtures in-Progress Total
------------ ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
REAL ESTATE
Balance, January 1, 1992 $ 3,164,152 $ 3,298,431 $ 23,857,804 $ 229,624 $ 384,741 $ 30,934,752
Additions at cost ---- ---- 577,944 18,729 1,049,139 1,645,812
Retirements ---- ---- ---- (17,000) ---- (17,000)
Transfer of assets when
placed into service ---- ---- 616,953 ---- (616,953) ----
Reductions to basis due to
master lease payments (2,679) (2,426) (16,310) ---- ---- (21,415)
----------- ----------- ------------ ---------- ----------- ------------
Balance, December 31, 1992 3,161,473 3,296,005 25,036,391 231,353 816,927 32,542,149
Additions at cost ---- ---- 170,270 ---- 3,272,295 3,442,565
Retirements ---- ---- ---- ---- ---- ----
Transfer of assets when
placed into service ---- ---- 4,089,222 ---- (4,089,222) ----
----------- ----------- ------------ ---------- ----------- ------------
Balance, December 31, 1993 3,161,473 3,296,005 29,295,883 231,353 ---- 35,984,714
Additions at cost ---- 31,607 89,051 ---- 120,658
Retirements ---- ---- ---- ---- ----
Transfer of assets when
placed into service ---- ---- ---- ---- ----
----------- ----------- ------------ ---------- ----------- ------------
Balance, December 31, 1994 $ 3,161,473 $ 3,327,612 $ 29,384,934 $ 231,353 $ ---- $ 36,105,372
----------- ----------- ------------ ---------- ----------- ------------
----------- ----------- ------------ ---------- ----------- ------------
ACCUMULATED DEPRECIATION
Balance, January 1, 1992 ---- 484,706 1,415,384 95,651 ---- 1,995,741
Additions charged to costs
and expenses ---- 219,562 748,589 42,249 ---- 1,010,400
Retirements ---- ---- ---- (5,101) ---- (5,101)
----------- ----------- ------------ ---------- ----------- ------------
Balance, December 31, 1992 ---- 704,268 2,163,973 132,799 ---- 3,001,040
Additions charged to costs
and expenses ---- 218,287 799,265 42,594 ---- 1,060,146
Retirements ---- ---- ---- ---- ---- ----
----------- ----------- ------------ ---------- ----------- ------------
Balance, December 31, 1993 ---- 922,555 2,963,238 175,393 ---- 4,061,186
Additions charged to costs
and expenses ---- 221,949 874,382 30,194 ---- 1,126,525
Retirements ---- ---- ---- ---- ---- ----
----------- ----------- ------------ ---------- ----------- ------------
Balance, December 31, 1994 $ ---- $ 1,144,504 $ 3,837,620 $ 205,587 $ ---- $ 5,187,711
----------- ----------- ------------ ---------- ----------- ------------
----------- ----------- ------------ ---------- ----------- ------------
</TABLE>
47
<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 behalf
by the undersigned, thereunto duly authorized.
MID-AMERICA REALTY INVESTMENTS, INC.
BY: /s/ JEROME L. HEINRICHS February 28, 1995
--------------------------------
Jerome L. Heinrichs, Chairman 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.
/s/ JEROME L. HEINRICHS February 28, 1995
-----------------------------------------
Jerome L. Heinrichs, Director and
Chief Executive Officer
/s/ MICHAEL F. LAWLER February 28, 1995
-----------------------------------------
Michael F. Lawler, Director
/s/ DANIEL A. BURKHARDT February 28, 1995
-----------------------------------------
Daniel A. Burkhardt, Director
/s/ E. STANLEY KROENKE February 28, 1995
-----------------------------------------
E. Stanley Kroenke, Director
/s/ JOHN L. MAGINN February 28, 1995
-----------------------------------------
John L. Maginn, Director
/s/ DENNIS G. GETHMANN February 28, 1995
-----------------------------------------
Dennis G. Gethmann, President and
Chief Operating Officer (Principal
Financial and Accounting Officer)
48
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
------- ----------- ----
3. Articles of Incorporation and By-Laws
3.1 Articles of Incorporation of the Company, as amended,
incorporated by reference to Exhibit 3.1 of the Company's
Form 10-Q for the quarter ended March 31, 1994.
3.2 By-Laws of the Company, as amended, incorporated by
reference to the Company's Registration Statement on
Form S-2 (Reg. No. 33-54878) filed on November 24, 1992.
10. Material Contracts
10.1 Purchase and Sale Agreement dated June 1, 1992 by and
between the Company, Lakewood Associates Limited
Partnership, Twin Oaks Centre Limited Partnership,
Kimberly West Shopping Center Limited Partnership, Donald
F. Day, Christopher R. Held, Terry L. Clauff and James M.
Thorburn incorporated by reference to Exhibit 10.1 on the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992.
10.2 Yield Maintenance Agreement dated June 1, 1992 by and
between the Company, Lakewood Associates Limited
Partnership, Twin Oaks Centre Limited Partnership,
Kimberly West Shopping Center Limited Partnership, Donald
F. Day, Christopher R. Held, Terry L. Clauff and James M.
Thorburn incorporated by reference to Exhibit 10.2 on the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992.
10.3 Letter dated August 28, 1992 amending the Yield
Maintenance Agreement dated June 1, 1992 by and between
the Company and Lakewood Associates Limited Partnership,
Kimberly West Shopping Center Limited Partnership, Donald
F. Day, Christopher R. Held, Terry L. Clauff and James M.
Thorburn incorporated by reference to Exhibit 10.3 on the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992.
10.4 Letter of Intent dated September 29, 1992 by and between
National-Moorland Associates Limited Partnership,
Fairgrounds Limited Partnership and the Company
incorporated by reference to Exhibit 10.4 of the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992.
10.5 Reimbursement Agreement dated September 1, 1988 by and
between Kearney Mall Associates, Ltd., Limited
Partnership and the Company incorporated by reference to
Exhibit 10.5 of the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1992.
10.6 Promissory Note dated December 22, 1989 by Twin Oaks
Centre Limited Partnership incorporated by reference to
Exhibit 10.9 of the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1992.
10.7 Guaranty Agreement dated December 22, 1989 by Twin Oaks
Centre, Inc., Donald F. Day, Christopher R. Held, James M.
Thorburn, T.L. Clauff and the Company incorporated by
reference to Exhibit 10.10 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1992.
10.8 Promissory Note dated December 22, 1989 by Twin Oaks
Centre Limited Partnership incorporated by reference to
Exhibit 10.11 of the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1992.
10.9 Guaranty Agreement dated December 22, 1989 by Twin Oaks
Centre, Inc., Donald F. Day, Christopher R. Held, James
M. Thorburn, T.L. Clauff and the Company incorporated by
reference to Exhibit 10.12 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1992.
10.10 Company Stock Option Plan (as amended and restated June
1994). . . . . . . . . . . . . . . . . . . . . . . . . . 50
49
<PAGE>
Exhibit Description Page
------- ----------- ----
10.11 Incentive Stock Option Agreement dated May 21, 1992 by
and between Jerome L. Heinrichs and the Company
incorporated by reference to Exhibit 10.22 of the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992.
10.12 Stock Option Agreement dated October 27, 1993 by and
between Jerome L. Heinrichs and the Company filed as
Exhibit 10.12 to the 1993 Form 10-K and incorporated by
reference herein.
10.13 Employment Agreement dated April 13, 1992 by and between
Jerome L. Heinrichs and the Company incorporated by
reference to Exhibit 10.23 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1992.
10.14 Employment Agreement dated January 20, 1994 by and
between Dennis G. Gethmann and the Company filed as
Exhibit 10.12 to the 1993 Form 10-K and incorporated
by reference herein.
10.15 Company's Executive Death Benefit Plan incorporated by
reference to Exhibit 10.1 of the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994.
10.16 Company's Executive Deferred Compensation Plan
incorporated by reference Exhibit 10.2 of the Company's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994.
21. Subsidiaries of the registrant . . . . . . . . . . . . . . . . . 60
23. Consent of Experts and Counsel.
23.1 Consent of Deloitte & Touche LLP . . . . . . . . . . . . 61
Pursuant to Item 601(b) (4) of Regulation S-K, certain instruments with respect
to the Company's long-term debt obligations are not filed with this Form 10-K.
The Company will furnish a copy of any such long-term debt agreement to the
Securities and Exchange Commission upon request.
Management contracts and compensatory plans are set forth as Exhibits 10.10
through 10.16.
50
<PAGE>
EXHIBIT 21
NAME OF SUBSIDIARY STATE OF INCORPORATION
------------------ ----------------------
Mid-America Centers Corp. Nebraska
(formerly Dial Enterprises Corp.)
51
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-87066 of Mid-America Realty Investments, Inc. on Form S-8 of our report
dated February 17, 1995 appearing in this Annual Report on Form 10-K of
Mid-America Realty Investments, Inc. for the year ended December 31, 1994.
February 17, 1995
Omaha, Nebraska
52
