<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 September 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
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Mid-America Realty Investments, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 47-0700007
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11506 Nicholas Street, Suite 100, Omaha, NE 68154
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(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 October 31, 1995, the registrant had 8,280,524 shares of common stock
outstanding.
1
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MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
FORM 10-Q
INDEX
Page
-----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
at September 30, 1995 and December 31, 1994. 3
Consolidated Statements of Operations
for the Three and Nine Months Ended September 30,
1995 and 1994. 4
Consolidated Statements of Cash Flows
for the Nine Months Ended September 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. 10-13
Part II. Other Information 14
Signatures 15
Exhibit 27 16
2
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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>
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
ASSETS
Cash $ ---- $ ----
Accounts receivables, net of allowances
of $193,000 and $161,000 1,688 1,345
Notes receivable, net of allowance of
$160,000 763 866
Property:
Land and land improvements 38,545 36,812
Buildings 112,365 109,356
Equipment and fixtures 559 559
Construction-in-progress ---- 334
-------- ---------
151,469 147,061
Less: Accumulated depreciation (23,103) (19,800)
-------- ---------
128,366 127,261
Interest in Twin Oaks Centre, net of loss reserves of
$0 and $4,900,000 ---- 2,953
Investment in Mid-America Bethal Limited Partnership 15,710 16,367
Intangible assets, less accumulated
amortization of $2,444,000 and $2,110,000 2,168 2,463
Other assets 3,021 187
-------- ---------
$ 151,716 $ 151,442
-------- ---------
-------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages and notes payable $ 65,947 $ 63,486
Accrued liabilities 1,860 1,143
-------- ---------
Total Liabilities 67,807 64,629
Commitment and Contingencies
Shareholders' Equity
Common stock, $.01 par value; 25,000,000 shares authorized;
8,280,524 shares issued and outstanding 83 83
Capital in excess of par value 119,682 119,677
Distributions in excess of net income (35,856) (32,947)
-------- ---------
Total Shareholders' Equity 83,909 86,813
-------- ---------
$ 151,716 $ 151,442
-------- ---------
-------- ---------
</TABLE>
See notes to consolidated financial statements.
3
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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 Nine Months Ended
September 30, September 30,
-------------------- ---------------------
1995 1994 1995 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 4,198 $ 3,837 $12,421 $11,563
Reimbursed expenses 1,116 1,046 3,554 3,278
Property management and leasing income 61 32 156 150
Other income 142 225 450 641
--------- --------- --------- --------
Total Revenues 5,517 5,140 16,581 15,632
EXPENSES:
Real estate taxes 838 772 2,303 2,113
Other property costs 633 916 2,573 2,681
Property management and leasing expenses 189 234 553 1,024
Interest expense 1,518 1,382 4,485 3,954
Administrative expenses 497 400 1,164 1,138
Depreciation and amortization 1,281 1,238 3,794 3,782
Provision for loss on interest in Twin Oaks
Centre ---- ---- ---- 3,150
--------- --------- --------- --------
Total Expenses 4,956 4,942 14,872 17,842
--------- --------- --------- --------
Income (Loss) Before Equity in Earnings of
Mid-America Bethal Limited Partnership 561 198 1,709 (2,210)
Equity in Earnings of Mid-America Bethal
Limited Partnership 262 224 722 683
--------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS 823 422 2,431 (1,527)
Gain on Sale of Real Estate ---- 90 124 1,329
--------- --------- --------- ---------
NET INCOME (LOSS) $ 823 $ 512 $ 2,555 $ (198)
--------- --------- --------- ---------
--------- --------- --------- ---------
NET INCOME (LOSS) PER SHARE $ .10 $ .06 $ .31 $ (.02)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted Average Shares
Outstanding During Period 8,279,892 8,279,892 8,279,892 8,280,105
--------- --------- --------- ---------
--------- --------- --------- ---------
DIVIDENDS DECLARED PER SHARE $ .22 $ .22 $ .66 $ .66
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
4
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MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1995 1994
------------ ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 2,555 $ (198)
Adjustments:
Depreciation and amortization 3,794 3,782
Provision for loss on interest in
Twin Oaks Centre ---- 3,150
Investment in Mid-America Bethal
Limited Partnership:
Equity in earnings (722) (683)
Distributions received 1,150 750
Gain on sale of real estate (124) (1,329)
Increase in related liabilities 566 286
Increase in related assets (974) (136)
Other ---- (78)
----------- ---------------
Net Cash Flows From Operating Activities 6,245 5,544
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 174 4,549
Principal repayments of notes receivable 102 81
Interest in Twin Oaks Centre ---- (283)
Payments from Valley Park Centre ---- 122
Additions to property:
Purchase of new properties ---- (15,026)
Renovation and expansion projects (652) (1,622)
Tenant improvements (379) (280)
Payments from Yield Maintenance Agreement 984 106
Cash paid for leasing fees (217) (143)
-------------- ---------------
Net Cash Flows From Investing Activities 12 (12,496)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (payments) on short-term debt, net (1,944) 12,636
Proceeds of mortgages payable 14,500 ----
Scheduled principal payments on mortgages (13,128) (346)
Cash paid for loan fees (220) (51)
Dividends paid (5,465) (5,465)
-------------- ---------------
Net Cash Flows From Financing Activities (6,257) 6,774
-------------- ---------------
NET CHANGE IN CASH ---- (178)
CASH, BEGINNING OF PERIOD ---- 182
-------------- ---------------
CASH, END OF PERIOD $ ---- $ 4
-------------- ---------------
</TABLE>
See notes to consolidated financial statements.
5
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MID-AMERICA REALTY INVESTMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
(COLUMNAR DOLLARS 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 nine months ended
September 30, 1995 and 1994 are not necessarily indicative of the
operating results for the full year.
All material intercompany accounts and transactions 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>
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
BALANCE SHEETS:
Assets:
Cash $ 719 $ 829
Property, net of depreciation of
$6,010 and $5,188 30,171 30,918
Other assets 558 561
--------- ---------
$ 31,448 $ 32,308
--------- ---------
--------- ---------
Liabilities and Partners' Capital:
Accounts payable and other
liabilities $ 29 $ 33
Partners' capital 31,419 32,275
--------- ---------
$ 31,448 $ 32,308
--------- ---------
--------- ---------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1995 1994
--------- ---------
<S> <C> <C>
STATEMENTS OF OPERATIONS:
Total Revenues $ 3,236 $ 3,171
--------- ---------
--------- ---------
Net Income $ 1,445 $ 1,366
--------- ---------
--------- ---------
</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 September 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 September 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 $251,000 and $80,000, respectively.
A portion of previously recorded book losses associated with the
Company's interest in Twin Oaks Centre have not been utilized for
income tax purposes. As a result of the Settlement, these losses
are expected to affect 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>
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Mortgages Payable $ 50,935 $ 46,516
Working Capital Line of Credit
($5,000,000 available at 200 basis points above LIBOR
due July 1998) 602 138
Acquisitions Line of Credit
($10,000,000 available at 250 basis points above LIBOR
due July 1998) 8,574 4,056
Acquisitions Line of Credit
($15,000,000 available at prime plus 1/2% due July 1997) 5,824 12,750
Other 12 26
--------- --------
$ 65,947 $ 63,486
--------- --------
--------- --------
</TABLE>
7
<PAGE>
During the nine months ended September 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%; and
iv) 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
v) 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; and
vi) completed the extension of the Lakewood Mall mortgage loan. The
$7,500,000 loan has been extended for three years, with an interest
rate of 8.5%. As part of the extension, the Company paid down $193,000
on the loan and paid an extension fee of $37,500.
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
8
<PAGE>
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.
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.
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. In August 1995, a portion of this
collateral was sold by the formerly related parties and the proceeds
totaling $926,997 were remitted to the Company. These proceeds were
applied to reduce the obligations of the formerly related parties
under the YMA.
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 nine months ended September 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 September 30, 1995
and reduce the guaranteed limits described above.
As of September 30, 1995, cumulative amounts applied to the
$2,800,000 YMA maximum obligation were $1,259,000 for a net balance
remaining due of $1,541,000. At September 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 September 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 September 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 September 30, 1995 and 51% at December 31,
1994.
INVESTING ACTIVITIES
During the nine months ended September 30, 1995, net cash flows provided in
investing activities were $12,000 which related primarily to payments under
the YMA, proceeds from the sale of an outlot at the Fairacres Shopping
Center, and principal repayments on notes receivable. These proceeds were
offset by costs associated with the Moorland Square expansion, tenant
improvements and lease fees.
In August 1995, a portion of the collateral which was security under the YMA
was sold by the formerly related parties. Proceeds of $926,997 were remitted
to the Company and these proceeds were applied to reduce the obligations of
the formerly related parties under the YMA.
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 nine
months ended September 30, 1995 was $579,000.
During the nine months ended September 30, 1995, cash paid for tenant
improvements was $209,000, excluding tenant improvements related to the
Moorland Square expansion. Cash paid for lease fees was $217,000. New
leases for 78,000 square feet, excluding the Moorland Square expansion, were
executed during the nine months ended September 30, 1995.
FINANCING ACTIVITIES
During the nine months ended September 30, 1995, net cash flows used in
financing activities were $6,257,000 which related primarily to dividends
paid of $5,465,000 and a net decrease from December 31, 1994 in mortgages and
notes payable, excluding the TOC Loan, of $617,000.
10
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Cash dividends of $.22 per share were paid in each of the first three
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 financial statements, these losses are expected to
affect 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.
RESULTS OF OPERATIONS:
Net income for the three months ended September 30, 1995 was $823,000 or $.10
per share compared to $512,000 or $.06 per share for the three months ended
September 30, 1994. Net income for the nine months ended September 30, 1995
was $2,555,000 or $.31 per share compared to a net loss of $198,000 or $.02
per share for the nine months ended September 30, 1994. The increase in net
income for the three and nine months ended September 30, 1995 compared to the
same periods of 1994 related primarily to higher portfolio occupancy,
increased percentage rents and the impact of the Company's expense reduction
initiatives. In addition, the results for the nine months ended September
30, 1994 included a provision for loss of $3,150,000 related to the Company's
interest in Twin Oaks Centre.
REVENUES:
Total revenues for the Company for the three and nine months ended September
30, 1995 were $5,517,000 and $16,581,000, respectively, compared to total
revenues of $5,140,000 and $15,632,000, respectively for the three and nine
months ended September 30, 1994. The increase of $377,000 for the third
quarter of 1995 compared to the third quarter of 1994 and $949,000 for the
nine months ended September 30, 1995 compared to the nine months ended
September 30, 1994 is primarily attributable to the acquisitions of Fitchburg
Ridge on August 31, 1994 and Twin Oaks Centre on April 19, 1995. In
addition, the increase reflects the effect of new leases, rent increases and
percentage rent increases.
OTHER PROPERTY COSTS:
Other property costs for the nine months ended September 30, 1995 were
$2,573,000 compared to $2,681,000 for the nine months ended September 30,
1994, a decrease of $108,000 or 4%. Other property costs for the three
months ended September 30, 1995 were $633,000 compared to $916,000 for the
three months ended September 30, 1994, a decrease of $283,000 or 31%. The
decrease in both periods is primarily attributable to a reduction in weather
related costs (snow removal, utilities, etc.), and weather related repair and
maintenance delays.
INTEREST EXPENSE:
Interest expense for the nine and three months ended September 30, 1995 was
$4,485,000 and $1,518,000, respectively, compared to $3,954,000 and
$1,382,000, respectively, for the nine and three months ended September 30,
1994. The increase in both periods is due primarily to an increase in
average total debt and average cost of funds. The Company's average total
debt was $65,113,000 during the nine months ended September 30, 1995 compared
to $61,014,000 during the nine months ended September 30, 1994. In addition,
the Company's weighted average cost of funds was 9.2% during the first nine
months of 1995 compared to 8.01% during the same period of 1994.
11
<PAGE>
ADMINISTRATIVE EXPENSES:
Administrative expenses for the nine months ended September 30, 1995 were
$1,164,000 compared to $1,138,000 for the nine months ended September 30,
1994, an increase of $26,000 or 2%. Administrative expenses for the three
months ended September 30, 1995 were $497,000 compared to $400,000 for the
three months ended September 30, 1994, an increase of $97,000 or 24%. The
increase relates primarily to increased professional fees and general
compensation increases.
PROPERTY MANAGEMENT AND LEASING EXPENSES:
Property management and leasing expenses for the nine and three months ended
September 30, 1995 were $553,000 and $189,000, respectively, compared to
$1,024,000 and $234,000, respectively, for the nine and three months ended
September 30, 1994. The decrease is primarily attributable to a reduction in
the number of 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 $6,573,000 for the nine months ended September 30,
1995 compared to $6,030,000 for the nine months ended September 30, 1994, an
increase of $543,000 or 9%. The increase is primarily attributable to an
increase in net income which was partially offset by a reduction in the
equity in the Funds From Operations of 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>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
--------------------- ----------------------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
Net Income (Loss) $ 823 $ 512 $ 2,555 $ (198)
Accruals for "straight-line" rents (29) ---- (95) (6)
Depreciation and Amortization (1) 1,281 1,238 3,794 3,782
Provision for loss on interest in Twin Oaks Centre ---- ---- ---- 3,150
Gain on sale of real estate ---- (90) (124) (1,329)
Investment in Mid-America Bethal:
Equity in Earnings (262) (224) (722) (683)
Equity in Funds From Operations (2) 403 374 1,165 1,139
Investment in Valley Park Centre:
Equity in Loss ---- ---- ---- 53
Equity in Funds from Operations ---- ---- ---- 122
-------- ------- ------- --------
Funds From Operations $ 2,216 $ 1,810 $ 6,573 $ 6,030
-------- ------- ------- --------
-------- ------- ------- --------
</TABLE>
- ----------------------
12
<PAGE>
(1) Depreciation and Amortization for the nine months ended September 30,
1995 consisted of real property depreciation of $3,248,000, other
depreciation of $55,000, lease fee amortization of $247,000, loan fee
amortization of $168,000 and intangible amortization of $76,000.
Repairs and maintenance expensed as "Property Costs" during the nine
months ended September 30, 1995 totaled $470,000.
(2) Equity in Funds From Operations of Mid-America Bethal for the nine months
ended September 30, 1995 included real property depreciation of $803,000,
other depreciation of $19,000 and lease fee amortization of $39,000.
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 nine months ended September 30, 1995 and 1994 would
have been approximately $184,000 and $268,000 lower than reported,
respectively.
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 %
-------------------- -------------------------- ---------------------------
9/30/95 12/31/94 9/30/94 9/30/95 12/31/94 9/30/94 9/30/95 12/31/94 9/30/94
------- -------- ------- ------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-America Realty Investments, Inc.:
Neighborhood shopping centers 1,771 1,696 1,738 1,702 1,641 1,665 96% 97% 96%
Enclosed malls 845 863 845 779 796 780 92% 92% 90%
------- -------- ------- ------- -------- ------- ------- -------- -------
2,616 2,559 2,583 2,481 2,437 2,445 95% 95% 94%
Mid-America Bethal L.P. (2) 538 538 538 499 495 490 93% 92% 89%
------- -------- ------- ------- -------- ------- ------- -------- -------
3,154 3,097 3,121 2,980 2,932 2,935 95% 95% 94%
------- -------- ------- ------- -------- ------- ------- -------- -------
------- -------- ------- ------- -------- ------- ------- -------- -------
</TABLE>
- ----------------------
(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 nine months ended September 30, 1995
compared to 94% during the nine months ended September 30, 1994.
(2) The Company owns a 50% partnership interest in Mid-America Bethal Limited
Partnership. All information presented is for the entire partnership.
In April 1995, the Company completed a 10,000 square foot expansion at
Moorland Square. At September 30, 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 September 30, 1995.
Village Square, which was sold in December 1994, had 71,000 square feet of
leasable area of which 87% was leased.
13
<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 September 30, 1995.
14
<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: November 7, 1995
- ------------------------------------ --------------------
Jerome L. Heinrichs,
Chief Executive Officer
/s/ Dennis G. Gethmann Date: November 7, 1995
- ------------------------------------ --------------------
Dennis G. Gethmann
President and Principal Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE UNAUDITED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1995 AND
UNAUDITED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,804
<ALLOWANCES> 353
<INVENTORY> 0
<CURRENT-ASSETS> 3,277
<PP&E> 151,469
<DEPRECIATION> 23,103
<TOTAL-ASSETS> 151,716
<CURRENT-LIABILITIES> 1,860
<BONDS> 65,947
<COMMON> 83
0
0
<OTHER-SE> 83,826
<TOTAL-LIABILITY-AND-EQUITY> 151,716
<SALES> 0
<TOTAL-REVENUES> 16,581
<CGS> 0
<TOTAL-COSTS> 5,275
<OTHER-EXPENSES> 5,017
<LOSS-PROVISION> 95
<INTEREST-EXPENSE> 4,485
<INCOME-PRETAX> 2,555
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,555
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
