<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
-------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------- -----------
COMMISSION FILE NUMBER 1-9663
------------
Mid-America Realty Investments, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 47-0700007
--------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11506 Nicholas Street, Suite 100, Omaha, NE 68154
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (402) 496-3300
-------------------------
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 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
---
At July 31, 1995, the registrant had 8,279,892 shares of common stock
outstanding.
1
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
FORM 10-Q
INDEX
PAGE
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
at June 30, 1995 and December 31, 1994. 3
Consolidated Statements of Operations
for the Three and Six Months Ended June 30,
1995 and 1994. 4
Consolidated Statements of Cash Flows
for the Six Months Ended June 30,
1995 and 1994. 5
Notes to Consolidated Financial Statements. 6-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 10-14
Part II. Other Information 15
Signatures 16
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Columnar Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
ASSETS
Cash $ ---- $ ----
Accounts receivables, net of allowances
of $167,000 and $161,000 1,575 1,345
Notes receivable, net of allowance of
$160,000 823 866
Property:
Land and land improvements 37,896 36,812
Buildings 112,941 109,356
Equipment and fixtures 559 559
Construction-in-progress 804 334
--------- ---------
152,200 147,061
Less: Accumulated depreciation (21,994) (19,800)
--------- ---------
130,206 127,261
Interest in Twin Oaks Centre, net of loss reserves of
$0 and $4,900,000 ---- 2,953
Investment in Mid-America Bethal Limited Partnership 15,804 16,367
Intangible assets, less accumulated
amortization of $2,301,000 and $2,110,000 2,159 2,463
Other assets 2,919 187
--------- ---------
$ 153,486 $ 151,442
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages and notes payable $ 67,076 $ 63,486
Accrued liabilities 1,507 1,143
--------- ---------
Total Liabilities 68,583 64,629
Commitment and Contingencies
Shareholders' Equity
Common stock, $.01 par value; 25,000,000 shares authorized;
8,279,892 shares issued and outstanding 83 83
Capital in excess of par value 119,677 119,677
Distributions in excess of net income (34,857) (32,947)
--------- ---------
Total Shareholders' Equity 84,903 86,813
--------- ---------
$ 153,486 $ 151,442
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Columnar Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30,
-------- --------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 4,092 $ 3,852 $ 8,223 $ 7,726
Reimbursed expenses 1,191 1,104 2,438 2,232
Property management and leasing income 60 50 112 118
Other income 145 280 308 494
------- ------- ------- -------
Total Revenues 5,488 5,286 11,081 10,570
EXPENSES:
Real estate taxes 768 651 1,471 1,341
Other property costs 940 904 1,797 1,844
Interest expense 1,517 1,262 2,967 2,572
Administrative expenses 287 332 761 738
Property management and leasing expenses 187 513 424 790
Depreciation and amortization 1,288 1,227 2,513 2,543
Provision for loss on interest in Twin Oaks Centre ---- 3,150 ---- 3,150
------- ------- ------- -------
Total Expenses 4,987 8,039 9,933 12,978
------- ------- ------- -------
Income (Loss) Before Equity in Earnings of
Mid-America Bethal Limited Partnership 501 (2,753) 1,148 (2,408)
Equity in Earnings of Mid-America Bethal
Limited Partnership 219 229 461 459
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS 720 (2,524) 1,609 (1,949)
Gain on Sale of Real Estate 124 1,239 124 1,239
------- ------- ------- -------
NET INCOME (LOSS) $ 844 $(1,285) $ 1,733 $ (710)
------- ------- ------- -------
------- ------- ------- -------
Weighted Average Shares
Outstanding During Period 8,279,892 8,280,212 8,279,892 8,280,212
--------- --------- --------- ---------
--------- --------- --------- ---------
NET INCOME (LOSS) PER SHARE $ .10 $ (.16) $ .21 $ (.09)
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------
1995 1994
-----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 1,733 $ (710)
Adjustments:
Depreciation and amortization 2,513 2,543
Provision for loss on interest in Twin Oaks Centre ---- 3,150
Investment in Mid-America Bethal
Limited Partnership:
Equity in earnings (461) (459)
Distributions received 800 ----
Gain on sale of real estate (124) (1,239)
Increase (decrease) in related liabilities 211 (727)
Increase in related assets (754) (667)
Other ---- 40
--------- ---------
Net Cash Flows From Operating Activities 3,918 1,931
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 174 4,049
Principal repayments of notes receivable 42 ----
Interest in Twin Oaks Centre ---- (138)
Payments from Valley Park Centre ---- 122
Additions to property:
Purchase of new properties ---- (12,985)
Renovation and expansion projects (591) (283)
Tenant improvements (244) ----
Payments from Yield Maintenance Agreement 58 ----
Cash paid for leasing fees (108) (94)
--------- ---------
Net Cash Flows From Investing Activities (669) (9,329)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (payments) on short-term debt, net (4,936) 11,018
Proceeds of mortgages payable 14,500 ----
Scheduled principal payments on mortgages (9,008) (121)
Cash paid for loan fees (162) ----
Dividends paid (3,643) (3,643)
--------- ---------
Net Cash Flows From Financing Activities (3,249) 7,254
--------- ---------
NET CHANGE IN CASH ---- (144)
CASH, BEGINNING OF PERIOD ---- 182
--------- ---------
CASH, END OF PERIOD $ ---- $ 38
--------- ---------
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
A. BASIS OF CONSOLIDATION AND PRESENTATION:
The unaudited consolidated financial statements are prepared on an accrual
basis and include the accounts of Mid-America Realty Investments, Inc. (the
"Company") and its wholly-owned subsidiary, Mid-America Centers Corp. The
unaudited consolidated financial statements should be read in conjunction with
the audited consolidated financial statements included in the Company's 1994
Annual Report on Form 10-K for the year ended December 31, 1994.
The information furnished herein reflects all adjustments, which consist of
normal recurring accruals, which are, in the opinion of management, necessary to
fairly present the financial results for the interim periods presented. The
results for the six months ended June 30, 1995 and 1994 are not necessarily
indicative of the operating results for the full year.
All material intercompany transactions and profits have been eliminated in
consolidation. Certain reclassifications have been made to the 1994 financial
statements to conform to those classifications used in 1995.
Net income per share was determined by dividing net income for the periods
presented by the weighted average number of shares of common stock outstanding
for the period.
B. INVESTMENT IN MID-AMERICA BETHAL LIMITED PARTNERSHIP:
Mid-America Bethal Limited Partnership ("Mid-America Bethal") was formed on
June 1, 1989 by the Company and a European investor. The Company has a 50%
interest in Mid-America Bethal and is the managing general partner. The
European investor has a 50% interest and is the limited partner.
Summarized financial information on Mid-America Bethal is as follows:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
<S> <C> <C>
BALANCE SHEETS:
Assets:
Cash $ 706 $ 829
Property, net of depreciation of
$5,736 and $5,188,000 30,410 30,918
Other assets 562 561
-------- --------
$ 31,678 $ 32,308
-------- --------
-------- --------
Liabilities and Partners' Capital:
Accounts payable and other
liabilities $ 82 $ 33
Partners' capital 31,596 32,275
-------- --------
$ 31,678 $ 32,308
-------- --------
-------- --------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1995 1994
---- ----
<S> <C> <C>
STATEMENTS OF OPERATIONS:
Total Revenues $ 2,140 $ 1,062
-------- --------
-------- --------
Net Income $ 921 $ 460
-------- --------
-------- --------
</TABLE>
C. TWIN OAKS CENTRE:
On April 19, 1995, the Company entered into a settlement agreement (the
"Settlement") with the Twin Oaks Centre Limited Partnership (the
"Partnership"). The Partnership was in default on a mortgage loan to the
Company. Pursuant to the Settlement, the Company took ownership of the
underlying collateral which consisted of the Twin Oaks Centre (the "TOC")
and tax increment financing bonds (the "TIF Bonds") payable from
incremental sales and real estate taxes generated by the shopping center
and adjacent properties. Certain limited partners had initiated litigation
against the Company which was dismissed as a part of the settlement.
The TOC is a 95,000 square foot neighborhood shopping center in Silvis,
Illinois. At April 19, 1995 and June 30, 1995, the TOC was 86% leased and
73% occupied. Walgreens vacated in the second quarter of 1994 but
continues to pay annual rent of $119,000.
In conjunction with the Settlement, the Company transferred from "Interest
in Twin Oaks Centre" on the Consolidated Balance Sheet, the estimated value
of the TOC ($4,163,000) to "Property", the estimated value of the TIF Bonds
($2,000,000) to "Other Assets", and the balance of a first mortgage (the
"TOC Loan"), which was assumed by the Company, to "Mortgages and Notes
Payable". The TOC Loan had a balance of $3,033,000 on April 19, 1995.
For the period from April 19, 1995 to June 30, 1995, the Twin Oaks Centre's
total revenues and expenses, excluding interest on related debt, which are
included in the accompanying Consolidated Statement of Operations, were
$108,000 and $29,000, respectively.
A portion of previously recorded book losses associated with the Company's
investment in Twin Oaks Centre have not been utilized for income tax
purposes. As a result of the Settlement, these losses are expected to
effect the taxation of dividends paid during 1995 by increasing the return
of capital portion and decreasing the ordinary income portion.
D. MORTGAGES AND NOTES PAYABLE:
Mortgages and notes payable are comprised of the following:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
Mortgages Payable $ 55,049 $ 46,516
Working Capital Line of Credit
($5,000,000 available at prime plus 1/2% due July 1995) ---- 138
Acquisitions Line of Credit
($10,000,000 available at prime plus 1/2% due July 1995) 3,258 4,056
Acquisitions Line of Credit
($15,000,000 available at prime plus 1/2% due July 1995) 8,750 12,750
Other 19 26
---------- ------------
$ 67,076 $ 63,486
---------- ------------
---------- ------------
</TABLE>
7
<PAGE>
During the six months ended June 30, 1995, the Company:
i) finalized an $8,000,000, 9.2% fixed rate mortgage loan secured by the
Southport Centre and a $6,500,000, 9.08% fixed rate mortgage loan
secured by the Edgewood Shopping Centers. The net proceeds from these
loans were primarily used to repay the maturing $5,000,000 adjustable
rate mortgage loan secured by Phase I of the Edgewood Shopping Centers
and to repay variable rate acquisition line debt. Both of these loans
have seven-year terms requiring interest only payments for the first
five years, with subsequent payments based upon a 25-year amortization;
and
ii) assumed the TOC Loan as described in note C to the unaudited
consolidated financial statements. The TOC Loan requires monthly
principal and interest payments of $28,000, based upon a fixed interest
rate of 8.25% and a 15-year amortization, and matures in April 1996.
At June 30, 1995, the TOC Loan had a balance of $3,034,000; and
iii) repaid the maturing fixed rate mortgage loan secured by the Cornhusker
Plaza primarily from proceeds of the $10,000,000 acquisitions line.
The Cornhusker Plaza mortgage loan had a balance prior to being repaid
of $3,697,000 and was priced at 9.75%.
Subsequent to June 30, 1995, the Company:
i) repaid the maturing adjustable rate mortgage loan secured by the
Fairacres Shopping Center primarily from proceeds of the $10,000,000
acquisitions line. The Fairacres Shopping Center mortgage loan had a
balance prior to being repaid of $3,783,000 and was priced at 100 basis
points over prime; and
ii) renegotiated the terms of its revolving credit agreements. The
$5,000,000 working capital and $10,000,000 acquisitions lines of credit
were extended to July 1998 for an extension fee of $17,500. The
$5,000,000 working capital line is priced at 200 basis points above the
London International Banking Offering Rate (LIBOR), while the
$10,000,000 acquisitions line is priced at 250 basis points above
LIBOR. The interest rate on these two lines of the revolving credit
agreement are fixed at 7-7/8% and 8-3/8% respectively until January 31,
1996. Both the $5,000,000 and $10,000,000 lines require an annual
unused commitment fee of 25 basis points. The $15,000,000 acquisitions
line of credit was extended until July 1997 with the interest rate
remaining variable at 1/2% over the national prime; non-use fee of 25
basis points was eliminated.
E. COMMITMENTS AND CONTINGENCIES:
In 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"
(as defined in the YMA) for five specific properties (listed below)
purchased from the formerly related parties. If the cash flow (as
defined in the YMA) 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" (as
defined in the YMA) for the year ended December 31, 1996. If the
determined market value of the properties is different than the
Company's "adjusted Acquisition Cost" (as defined in the YMA), the
difference will be paid by or owed to the Company, subject to certain
limits as defined in the YMA.
8
<PAGE>
The obligations of the formerly related parties under the YMA relative
to Lakewood Mall, Kimberly West and Twin Oaks Centre are limited to
$2,300,000 and are secured by a promissory note in the principal amount
of $2,300,000. This promissory note is personally guaranteed by the
formerly related parties and is collateralized by specific tangible
collateral.
The obligations of the formerly related parties under the YMA relative
to Moorland Square and Fairacres Shopping Center are limited to
$500,000 and are secured by a promissory note in the principal amount
of $500,000. This promissory note is personally guaranteed by the
formerly related parties.
Under the YMA, the Company has an assignment of a 50% interest in
Kearney Mall Associates, Ltd., Limited Partnership ("Kearney Mall
Associates"), whose limited partners were formerly related to the
Company, which owns Hilltop Mall in Kearney, Nebraska. From the
operations of Hilltop Mall for the six months ended June 30, 1995, the
Company received $58,000, which was applied to reduce the book value of
the related properties. Cumulative amounts received under this
assignment totaled $259,000 through June 30, 1995 and reduce the
guaranteed limits described above.
At June 30, 1995, accumulated YMA arrearages (which are not reflected
in the consolidated financial statements) exceeded the guaranteed
limits.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES:
The Company's primary source of funds are (i) cash generated from operations
which includes distributions 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 June 30, 1995, the Company had invested approximately 95% of its assets in
enclosed malls and neighborhood shopping centers, including the Company's
investment in Mid-America Bethal. The remainder of the Company's assets
primarily consisted of accounts and notes receivable.
At June 30, 1995, the Company had a debt-to-equity ratio of .79 to 1, compared
to .73 to 1 at December 31, 1994, based upon the ratio of mortgages and notes
payable to total shareholders' equity. The increase in the debt-to-equity ratio
from December 31, 1994 resulted primarily from the assumption of the TOC Loan as
described in note C to the unaudited consolidated financial statements. The
Company's ratio of debt to total market capitalization was 50% at June 30, 1995
and 51% at December 31, 1994.
INVESTING ACTIVITIES
During the six months ended June 30, 1995, net cash flows used in investing
activities were $669,000 which related primarily to costs associated with the
Moorland Square expansion and tenant improvements. These costs were offset by
proceeds from the sale of an outlot at the Fairacres Shopping Center, payments
under the YMA and principal repayments on notes receivable.
The 10,000 square foot expansion at Moorland Square was completed in April 1995
at a total cost of approximately $750,000, including tenant improvements of
$170,000. Cash paid for the Moorland Square expansion during the six months
ended June 30, 1995 was $577,000.
During the six months ended June 30, 1995, cash paid for tenant improvements was
$137,000, excluding tenant improvements related to the Moorland Square
expansion. Cash paid for lease fees was $108,000. New leases for 36,000 square
feet, excluding the Moorland Square expansion, were executed during the six
months ended June 30, 1995.
FINANCING ACTIVITIES
During the six months ended June 30, 1995, net cash flows used in financing
activities were $3,249,000 which related primarily to dividends paid of
$3,643,000. This financing cost was offset by a net increase from December 31,
1994 in mortgages and notes payable, excluding the TOC Loan, of $556,000.
Cash dividends of $.22 per share were paid in the first and second quarters of
1995. A portion of the dividends paid in 1995 represent a return of capital,
the exact amount of which will not be determined until January 1996. Previously
recorded book losses associated with the Company's investment in Twin Oaks
Centre have not been utilized for income tax purposes. As a result of the
Settlement, as described in note C to the unaudited consolidated
10
<PAGE>
financial statements, these losses are expected to effect the taxation of
dividends paid during 1995 by increasing the return of capital portion and
decreasing the ordinary income portion.
For a description of certain mortgage refinancing and line of credit extensions
during the fiscal year to date, see note D to the unaudited consolidated
financial statements.
The 8.50% fixed rate mortgage loan collateralized by the Lakewood Mall matures
in August 1995 and is expected to be extended for three years at similar rates
by the existing lender. At July 31, 1995, the Lakewood Mall mortgage loan had a
balance of $7,693,000.
RESULTS OF OPERATIONS:
Net income for the three months ended June 30, 1995 was $844,000 or $.10 per
share compared to a loss of $1,285,000 or $.16 per share for the three months
ended June 30, 1994. Net income for the six months ended June 30, 1995 was
$1,733,000 or $.21 per share compared to a loss of $710,000 or $.09 per share
for the six months ended June 30, 1994. The increase in both the three and six
months ended June 30, 1995 compared to the three and six months ended June 30,
1994 is due primarily to the effect of the $3,150,000 provision for loss on Twin
Oaks in the three months ended June 30, 1994. The improvements in net income
were partially offset by a $1,115,000 decrease in Gain on Sale of Real Estate.
RENTAL INCOME:
Rental income for the six and three months ended June 30, 1995 was $8,223,000
and $4,092,000, respectively, compared to $7,726,000 and $3,852,000,
respectively, for the six and three months ended June 30, 1994. The increase of
$549,000 for the second quarter of 1995 compared to the second quarter of 1994
and $497,000 for the six months ended June 30, 1995 compared to the six months
ended June 30, 1994 was due primarily to an increase of $142,000 in percentage
rents collected. The remainder of the increase reflects the effect of new
leases, rent increases, and the acquisitions of Fitchburg Ridge and Twin Oaks
Centre which were not reflected in the June 1994 figures.
REIMBURSEMENT INCOME:
Reimbursement income for the six and three months ended June 30, 1995 was
$2,438,000 and $1,191,000, respectively, compared to $2,232,000 and $1,104,000,
respectively, for the six and three months ended June 30, 1994. The increase
was due primarily to one-time tenant charges of approximately $75,000 related to
lease audits. The remainder of the increase reflects the effect of new leases.
OTHER INCOME:
Other income for the six and three months ended June 30, 1995 was $308,000 and
$145,000, respectively, compared to $494,000 and $280,000, respectively, for the
six and three months ended June 30, 1994. The decrease is primarily
attributable to a decrease in interest income related to the Company's interest
in Twin Oaks Centre (and related TIF Bonds) and notes receivable.
OTHER PROPERTY COSTS:
Other property costs for the six months ended June 30, 1995 were $1,797,000
compared to $1,844,000 for the six months ended June 30, 1994, a decrease of
$47,000 or 3%. The decrease is primarily attributable to a reduction in weather
related costs (snow removal, utilities, etc.), and a reduction in property
personnel during the six months ended June 30, 1995 compared to the six months
ended June 30, 1994.
11
<PAGE>
Other property costs for the three months ended June 30, 1995 were $940,000
compared to $904,000 for the three months ended June 30, 1994, an increase of
$36,000 or 4%. The increase is primarily due to Fitchburg Ridge and Twin Oaks
Centre operations not reflected in the second quarter 1994 figures.
INTEREST EXPENSE:
Interest expense for the six and three months ended June 30, 1995 was $2,967,000
and $1,517,000, respectively, compared to $2,572,000 and $1,262,000,
respectively, for the six and three months ended June 30, 1994. The increase in
both the three and six months ended June 30, 1995 compared to the three and six
months ended June 30, 1994 is due primarily to an increase in average total debt
and average cost of funds. The Company's average total debt was $64,836,000
during the six months ended June 30, 1995 compared to $64,226,000 during the six
months ended June 30, 1994. In addition, the Company's weighted average cost of
funds was 9.2% during the first six months of 1995 compared to 8.01% during the
same period of 1994.
ADMINISTRATIVE EXPENSES:
Administrative expenses for the six months ended June 30, 1995 were $761,000
compared to $738,000 for the six and three months ended June 30, 1994, an
increase of $23,000 or 3%. The increase relates primarily to increased
professional fees and general compensation increases.
Administrative expenses for the three months ended June 30, 1995 were $287,000
compared to $332,000 for the three months ended June 30, 1994, a decrease of
$45,000 or 14%. This decrease is primarily attributable to expenses related to
the Company's name change expensed during the second quarter of 1994.
PROPERTY MANAGEMENT EXPENSES:
Property management expenses for the six and three months ended June 30, 1995
were $424,000 and $187,000, respectively, compared to $790,000 and $513,000,
respectively, for the six and three months ended June 30, 1994. The decrease is
primarily attributable to a reduction in property management administrative
personnel.
FUNDS FROM OPERATIONS:
Management considers Funds from Operations to be the most appropriate measure of
the performance of an equity real estate investment trust ("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 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 $4,356,000 for the six months ended June 30, 1995
compared to $4,221,000 for the six months ended June 30, 1994, an increase of
$135,000 or 3%. The increase is primarily attributable to an increase in net
income which was partially offset by a reduction in the equity in the
investment in Valley Park Centre. The Company had a loan with Valley Park
Limited Partnership which was accounted for as a real estate investment and was
paid in full in the second quarter of 1994.
Funds From Operations is computed as follows:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1995 1994 1995 1994
------------------- --------------------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
Net Income (Loss) $ 1,733 $ (710) $ 844 $(1,285)
<PAGE>
Accruals for "straight-line" rents (67) (4) (39) (4)
Depreciation and Amortization (1) 2,513 2,543 1,288 1,225
Provision for loss on interest in Twin Oaks Centre ---- 3,150 ---- (3,150)
Gain on sale of real estate (124) (1,239) (124) (1,239)
Investment in Mid-America Bethal:
Equity in Earnings (461) (459) (219) (229)
Equity in Funds From Operations (2) 762 765 374 392
Investment in Valley Park Centre:
Equity in Loss ---- 53 ---- ----
Equity in Funds from Operations ---- 122 ---- 21
------- ------- ------- -------
Funds From Operations $ 4,356 $ 4,221 $ 2,124 $ 2,031
------- ------- ------- -------
------- ------- ------- -------
<FN>
-------------------------
(1) Depreciation and Amortization for the six months ended June 30, 1995
consisted of real property depreciation of $2,157,000, other depreciation
of $37,000, lease fee amortization of $152,000, loan fee amortization of
$117,000 and intangible amortization of $50,000. Repairs and maintenance
expensed as "Property Costs" during the six months ended June 30, 1995
totaled $313,000.
(2) Equity in Funds From Operations of Mid-America Bethal for the six months
ended June 30, 1995 included real property depreciation of $530,000, other
depreciation of $18,000 and lease fee amortization of $25,000.
</TABLE>
The Funds From Operations reported above do not reflect recommendations
contained in the Funds From Operations White Paper (the "FFO White Paper")
recently adopted by the National Association of Real Estate Investment Trusts to
standardize financial reporting by real estate investment trusts. Had the
Company adopted the recommendations prescribed in the FFO White Paper (which is
suggested for reporting periods beginning after January 1, 1996), Funds From
Operations for the six months ended June 30, 1995 and 1994 would have been
approximately $.02 per share lower than reported.
TENANT AND LEASING INFORMATION:
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 Limited Partnership:
<TABLE>
<CAPTION>
(SQUARE FOOTAGE IN THOUSANDS)
GROSS LEASEABLE AREA LEASED SPACE (1) LEASED %
-------------------------- -------------------------- --------------------------
6/30/95 12/31/94 6/30/94 6/30/95 12/31/94 6/30/94 6/30/95 12/31/94 6/30/94
------- -------- ------- ------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-America Realty Investments, Inc.:
Neighborhood shopping centers 1,800 1,696 1,683 1,731 1,641 1,614 96% 97% 96%
Enclosed malls 863 863 847 798 796 765 93% 92% 90%
------- -------- ------- ------- -------- ------- --- --- ---
2,663 2,559 2,530 2,529 2,437 2,379 95% 95% 94%
Mid-America Bethal L.P. (2) 538 538 538 499 495 480 93% 92% 89%
------- -------- ------- ------- -------- ------- --- --- ---
3,201 3,097 3,068 3,028 2,932 2,859 95% 95% 93%
------- -------- ------- ------- -------- ------- --- --- ---
------- -------- ------- ------- -------- ------- --- --- ---
<FN>
-------------------------
(1) Leased space represents the percentage of gross leasable area which is
leased to third-party tenants. Average leased space at Company-owned
properties was 95% during the six months ended June 30, 1995 compared to
94% during the six months ended June 30, 1994.
(2) The Company owns a 50% partnership interest in Mid-America Bethal Limited
Partnership. All information presented is for the entire partnership.
</TABLE>
13
<PAGE>
In April 1995, the Company completed a 10,000 square foot expansion at Moorland
Square. At August 11, 1995, 100% of the expansion space is leased.
Fitchburg Ridge Shopping Center, which was acquired in August 1994, has 50,000
square feet of leasable area and is 100% leased at June 30, 1995. Village
Square, which was sold in December 1994, had 71,000 square feet of leasable area
of which 87% was leased.
14
<PAGE>
PART II. OTHER INFORMATION
Item 5. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
27 Financial Data Schedule
B. REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1995.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MID-AMERICA REALTY INVESTMENTS, INC.
/s/ Jerome L. Heinrichs Date: August 11, 1995
------------------------------ -------------------------------
Jerome L. Heinrichs,
Chief Executive Officer
/s/ Dennis G. Gethmann Date: August 11, 1995
------------------------------ -------------------------------
Dennis G. Gethmann
President and Principal Financial Officer
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,725
<ALLOWANCES> 327
<INVENTORY> 0
<CURRENT-ASSETS> 3,052
<PP&E> 152,200
<DEPRECIATION> 21,994
<TOTAL-ASSETS> 153,486
<CURRENT-LIABILITIES> 1,507
<BONDS> 67,076
<COMMON> 83
0
0
<OTHER-SE> 84,820
<TOTAL-LIABILITY-AND-EQUITY> 153,486
<SALES> 0
<TOTAL-REVENUES> 11,081
<CGS> 0
<TOTAL-COSTS> 3,658
<OTHER-EXPENSES> 2,688
<LOSS-PROVISION> 35
<INTEREST-EXPENSE> 2,967
<INCOME-PRETAX> 1,733
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,733
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,733
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
