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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 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 1, 1996 was
8,281,007 shares. The aggregate market value of the 8,231,405 shares of common
stock held by non-affiliates on such date was $65,851,240.
The following documents are incorporated into this report by reference: a
portion of the Company's proxy statement for its 1996 Annual Meeting of
Shareholders ("1996 Proxy Statement") is incorporated by reference in Part III.
Total Pages: 54
Exhibit Index on Page: 50
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MID-AMERICA REALTY INVESTMENTS, INC.
1995 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Item 1. Business.................................................... 3
Item 2. Properties.................................................. 5
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........................................ 7
Item 6. Selected Financial Data..................................... 7
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 Registrant.......... 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
</TABLE>
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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, 1995 19 neighborhood
shopping centers and four enclosed malls located in Nebraska, Iowa, Illinois,
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 1995
PROPERTY TRANSACTIONS
TWIN OAKS CENTRE -- On April 19, 1995, the Company entered into a settlement
agreement 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, a 95,000 square foot neighborhood shopping
center in Silvis, Illinois and tax increment financing bonds payable from
incremental sales and real estate taxes generated by the shopping center and
adjacent properties. All litigation against the Company was dismissed as part of
the settlement.
MOORLAND SQUARE -- In April 1995, a 10,000 square foot expansion at Moorland
Square in New Berlin, Wisconsin was completed at a total cost of approximately
$785,000, including tenant improvements of $139,000. Cash paid for the twelve
months ended December 31, 1995 was approximately $600,000. The balance of the
project cost was paid in 1994.
LAKEWOOD MALL -- In September 1995, the Company contracted with G.R.
Herberger's, Inc. to expand its department store at Lakewood Mall in Aberdeen,
South Dakota by approximately 25,000 square feet. The expansion began in
September and Herberger's is expected to begin operating in the expanded area in
March 1996. Total project costs were $515,000, of which $187,000 was paid in
1995 and the remaining balance will be paid in 1996.
OUTLOT SALES -- During 1995, the Company sold two outlot parcels for total
proceeds of approximately $469,000, resulting in a gain of approximately
$189,000.
YIELD MAINTENANCE AGREEMENT -- During 1995, the Company received total
proceeds of $1,027,000 under its Yield Maintenance Agreement with the former
related parties. See Note M to the Company's Consolidated Financial Statements.
These funds were used to reduce the Company's bank line debt.
RECENT EVENTS
At the regular board of directors meeting held January 29, 1996, Gary R.
Hawkins was appointed as director to serve the remainder of the term vacated by
E. Stanley Kroenke's resignation in October 1995.
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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, Walgreens, Target and/or Shopko anchored a
total of 18 of the Company's properties either as tenants or as occupants of
buildings adjacent to the properties and lease in the aggregate approximately
34% of the total leasable space in the Company's properties.
Additionally, Kmart, Hy-Vee grocery stores, Walgreens, 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 41% 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, 1995 is Wal-Mart, whose five
stores at properties owned by the Company occupy approximately 14% 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.
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, the Company 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
4
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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. When considered prudent, the
Company insures against losses from earthquakes, which coverage has a 5%
deductible. The Company carries flood insurance for the properties that are in
designated 100-year flood plains.
EMPLOYEES
The Company and its subsidiary had 89 employees (62 full-time and 27
part-time) at December 31, 1995. The corporate office in Omaha had 21 employees
at December 31, 1995.
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.
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, 1995.
<TABLE>
<CAPTION>
DATE GROSS LEASED RATE AT YEAR
ACQUIRED LEASABLE END (1)
OR AREA (SQ. -------------------- 1996 BASE
COMPLETED FT.) 1995 1994 RENT (2)
---------- ----------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
(THOUSANDS)
COMPANY PROPERTIES:
ENCLOSED MALLS:
Delta Plaza -- Escanaba, Michigan.................... 12/30/86 188,000 93% 92% $ 760
Lakewood Mall -- Aberdeen, South Dakota.............. 08/28/92 227,000 83% 83% 1,300
Monument Mall -- Scottsbluff, Nebraska............... 12/30/86 192,000 93% 96% 1,119
Thunderbird Mall -- Virginia, Minnesota.............. 12/30/86 256,000 98% 98% 1,407
----------- --------- --------- --------------
863,000 92% 92% 4,586
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 91% 77% 429
Eastville Plaza -- Fremont, Nebraska................. 12/30/86 68,000 100% 100% 397
Edgewood Shopping Center -- Lincoln, Nebraska
Phase I............................................ 06/01/87 72,000 96% 98% 519
Phase II........................................... 06/26/91 100,000 99% 100% 749
Fairacres Shopping Center -- Oshkosh, Wisconsin...... 12/22/92 74,000 93% 93% 594
</TABLE>
5
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<TABLE>
<CAPTION>
DATE GROSS LEASED RATE AT YEAR
ACQUIRED LEASABLE END (1)
OR AREA (SQ. -------------------- 1996 BASE
COMPLETED FT.) 1995 1994 RENT (2)
---------- ----------- --------- --------- --------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Fitchburg Ridge Shopping Center -- Fitchburg,
Wisconsin........................................... 08/31/94 50,000 100% 100% 282
Germantown Shopping Center -- Jasper, Indiana........ 12/21/88 203,000 95% 97% 962
Ile de Grand -- Grand Island, Nebraska............... 04/09/87 82,000 98% 100% 475
Kimberly West Shopping Center -- Davenport, Iowa..... 12/14/92 97,000 85% 94% 567
Macon County Plaza -- Lafayette, Tennessee........... 12/21/88 87,000 79% 80% 227
Meadows Shopping Center -- Lincoln, Nebraska......... 06/01/88 68,000 100% 100% 481
Miracle Hills Park Shopping Center -- Omaha,
Nebraska............................................ 07/05/88 71,000 96% 100% 775
Moorland Square -- New Berlin, Wisconsin............. 11/23/92 81,000 100% 100% 614
Rivergate Shopping Center -- Shelbyville, Indiana.... 12/21/88 108,000 100% 100% 522
Shenandoah Plaza -- Newnan, Georgia.................. 12/21/88 141,000 100% 100% 689
Southport Centre -- Apple Valley, Minnesota.......... 01/01/94 125,000 100% 98% 1,460
Town West Center -- Paragould, Arkansas.............. 12/21/88 143,000 98% 99% 466
Twin Oaks Centre -- Silvis, Illinois................. 04/19/95 95,000 91% -- 612
Westview Plaza -- McCook, Nebraska................... 12/30/86 17,000 88% 94% 66
----------- --------- --------- --------------
96% 97% 11,040
--------- --------- --------------
Total Enclosed Malls and Neighborhood Centers........ 2,634,000 95% 95% $ 15,626
----------- --------- --------- --------------
----------- --------- --------- --------------
MID-AMERICA BETHAL LIMITED PARTNERSHIP PROPERTIES
(3):
ENCLOSED MALLS:
Imperial Mall -- Hastings, Nebraska.................. 12/01/87 324,000 81% 90% $ 1,513
NEIGHBORHOOD SHOPPING CENTERS:
Stockyards -- Omaha, Nebraska
Plaza (Phase I).................................... 06/01/89 103,000 98% 92% 677
Theaters (Phase II)................................ 07/17/90 26,000 100% 100% 232
Taylor Heights Shopping Center -- Sheboygan,
Wisconsin........................................... 07/30/90 85,000 100% 100% 817
----------- --------- --------- --------------
214,000 99% 96% 1,726
----------- --------- --------- --------------
Total Enclosed Malls and Neighborhood Centers........ 538,000 88% 92% $ 3,239
----------- --------- --------- --------------
----------- --------- --------- --------------
</TABLE>
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(1) Leased rate represents the percentage of gross leasable area which is leased
to third-party tenants.
(2) Amounts are based on the 1996 lease terms of existing tenants at December
31, 1995.
(3) The Company owns a 50% partnership interest in Mid-America Bethal Limited
Partnership. All information presented is for the entire center.
6
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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.
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 1995.
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 29, 1995 was $7.75.
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------- ------- ---------
<S> <C> <C> <C>
1994:
First Quarter......................... $10 5/8 $ 9 1/2 .2$2
Second Quarter........................ $10 1/8 $ 8 7/8 .2$2
Third Quarter......................... $ 9 7/8 $ 8 7/8 .2$2
Fourth Quarter........................ $ 9 3/8 $ 6 7/8 .2$2
1995:
First Quarter......................... $ 8 $ 6 1/2 .2$2
Second Quarter........................ $ 9 $ 7 1/8 .2$2
Third Quarter......................... $ 8 $ 7 3/4 .2$2
Fourth Quarter........................ $ 8 1/8 $ 7 1/4 .2$2
</TABLE>
At December 31, 1995, there were 8,280,524 shares of common shares issued
and outstanding which were held by approximately 2,090 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 1995.
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(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Revenues............................... $ 22,333 $ 21,152 $ 18,433 $ 16,510 $ 14,684
Net Income (Loss)............................ 3,384 $ (128) $ 2,196 $ 1,221 $ 1,952
Dividends Declared:
Ordinary Income............................ 414 $ 2,650 $ 3,222 $ 1,369 $ 5,265
Return of Capital.......................... 6,872 4,637 4,051 4,843 3,054
----------- ----------- ----------- ----------- -----------
$ 7,286 $ 7,287 $ 7,273 $ 6,212 $ 8,319
Per Share Amounts:
Net Income (Loss).......................... $ .41 $ (.02) $ .27 $ .23 $ .37
Dividends Declared:
Ordinary Income.......................... $ .05 $ .32 $ .39 $ .26 $ 1.00
Return of Capital........................ .83 .56 .49 .92 .58
----------- ----------- ----------- ----------- -----------
$ .88 $ .88 $ .88 $ 1.18 $ 1.58
Weighted Average Number of Shares
Outstanding................................. 8,280,051 8,280,052 8,092,024 5,264,627 5,264,786
OTHER DATA
Funds From Operations (1)(2)................. $ 8,824 $ 8,018 $ 7,629 $ 5,978 $ 5,548
</TABLE>
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(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.
(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.
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 NAREIT to standardize financial reporting by real estate
investment trusts. The FFO White Paper is suggested for reporting periods
beginning in 1996.
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Real Estate Investments:
Property, net.............................. $ 127,765 $ 127,261 $ 116,439 $ 119,866 $ 86,921
Investment in Mid-America Bethal........... 15,597 16,367 16,522 15,732 15,084
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
----------- ----------- ----------- ----------- -----------
$ 143,362 $ 146,581 $ 141,547 $ 144,372 $ 122,336
Total Assets................................. $ 150,339 $ 151,442 $ 147,178 $ 151,049 $ 126,789
Mortgages and Notes Payable.................. $ 65,592 $ 63,486 $ 51,868 $ 78,105 $ 48,278
Shareholders' Equity......................... $ 82,916 $ 86,813 $ 94,081 $ 72,381 $ 77,372
Shares Outstanding........................... 8,280,524 8,279,892 8,264,627 5,264,627 5,264,627
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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, 19 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 1995.
CAPITAL RESOURCES AND LIQUIDITY
The Company's primary sources 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, 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.
Net cash flows from investing activities were ($424,000). Net cash flows
provided during 1995 from the sales of real estate totaled $469,000. In
addition, net proceeds from the Company's Yield Maintenance Agreement with the
former related parties totaled approximately $1,027,000 for the year ended
December 31, 1995. Also during 1995, the Company invested approximately
$1,850,000 in expansion projects, tenant improvements and other capital
expenditures.
Net cash flows from financing activities were ($8,432,000). Dividends paid
for the year ended December 31, 1995 were $.88 per share or $7,286,000. 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, 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 ratio from
December 31, 1994 resulted primarily from the Company assuming the first
mortgage on the Twin Oaks Centre at the time the Company took ownership of the
property in April 1995. The Company's ratio of debt to total market
capitalization was 51% at both December 31, 1995 and December 31, 1994.
During 1996, principal payments of approximately $10,405,000 under mortgage
and revolving credit agreements will mature. The mortgages collateralized by the
Twin Oaks Centre ($3,692,000 at 8.25%) are expected to be extended for a period
of three years by the existing lender. The acquisition line of credit
collateralized by Thunderbird Mall, Delta Plaza, Macon County Plaza and Town
West Center matures in July 1996 ($5,559,000 at 9.00%). Management intends to
seek permanent financing on one or more of the Company's unencumbered properties
with the proceeds used to pay down the maturing acquisition line of credit.
9
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RESULTS OF OPERATIONS -- YEARS ENDED DECEMBER 31, 1995 AND 1994
Net income for the year ended December 31, 1995 was $3,384,000, or $.41 per
share, which included net gains on sales of real estate of $189,000, or $.02 per
share. These results compare to a net loss for the year ended December 31, 1994
of $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.
The increase in net income for the year ended December 31, 1995 compared to
the year ended December 31, 1994 was primarily due to increased base and
percentage rents and the impact of the Company's expense reduction initiatives.
In addition, as described above, the year ended December 31, 1994 included
$3,150,000 for the loss provision related to the Company's interest in Twin Oaks
Centre. The Company also experienced an increase of $1,181,000 in total revenues
and a $60,000 increase from the Company's equity in earnings of Mid-America
Bethal.
RENTAL INCOME
Rental income for the year ended December 31, 1995 was $16,564,000 compared
to $15,615,000 for the year ended December 31, 1994, an increase of $949,000 or
6%. Rental income recorded during the year ended December 31, 1995 from the Twin
Oaks Centre (acquired April 1995) was $368,000. Also impacting the 1995 increase
in rental income was the full year impact of Fitchburg Ridge Shopping Center
(acquired August 1994). Fitchburg rental income was $305,000 and $105,000 for
the years ended December 31, 1995 and 1994, 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, 1995 was $4,834,000
compared to $4,366,000 for the year ended December 31, 1994, an increase of
$468,000 or 11%. Reimbursement income recorded during the year ended December
31, 1995 from the Twin Oaks Centre was $23,000. Also impacting the increase in
reimbursement income was the full year effect of 1994 acquisitions.
Specifically, reimbursement income for Southport Centre (acquired January 1994)
and Fitchburg Ridge Shopping Center (acquired August 1994) together was $809,000
and $532,000, respectively, for the twelve months ended December 31, 1995 and
1994, respectively. The remainder of the increase reflects the effect of new
leases.
PROPERTY MANAGEMENT INCOME
Property management income, which primarily consists of lease and property
management fees from properties managed for Mid-America Bethal, was $200,000 for
the year ended December 31, 1995 compared to $211,000 for the year ended
December 31, 1994, a decrease of $11,000 or 5%. The decrease is attributable to
fewer new leases at properties owned by Mid-America Bethal during 1995 compared
to 1994.
OTHER INCOME
Other income for the year ended December 31, 1995 was $735,000 compared to
$960,000 for the year ended December 31, 1994, a decrease of $225,000 or 23%.
The decrease is primarily attributable to approximately $300,000 of interest
income in 1994 related to the Company's investment in Twin Oaks Centre. In April
1995, the Company entered into a Settlement Agreement with the Twin Oaks Centre
Limited Partnership resulting in the Company taking ownership of the Twin Oaks
Centre. See Note D to the Company's Consolidated Financial Statements.
REAL ESTATE TAXES
Real estate taxes for the year ended December 31, 1995 were $3,063,000
compared to $2,815,000 for the year ended December 31, 1994, an increase of
$248,000 or 9%. The increase is due primarily to the full year impact of prior
year acquisitions and the acquisition of the Twin Oaks Centre during
10
<PAGE>
1995. Real estate taxes related to the Southport Centre and Fitchburg Ridge
Shopping Center recorded during the year ended December 31, 1995 and 1994 were
$605,000 and $410,000, respectively. Real estate taxes related to the Twin Oaks
Centre recorded during the year ended December 31, 1995 were $33,000.
OTHER PROPERTY COSTS
Other property costs for the year ended December 31, 1995 were $3,674,000
compared to $3,651,000 for the year ended December 31, 1994, an increase of
$23,000 or 1%. Other property costs recorded during the year ended December 31,
1995 and 1994 related to the Southport Centre and Fitchburg Ridge Shopping
Center together were $201,000 and $132,000, respectively. Other property costs
recorded at Twin Oaks for the year ended December 31, 1995 were $40,000. These
increased costs were somewhat mitigated by a decrease in weather related costs
(i.e., snow removal, utilities, etc.).
INTEREST EXPENSE
Interest expense for the year ended December 31, 1995 was $5,965,000
compared to $5,389,000 for the year ended December 31, 1994, an increase of
$576,000 or 11%. The increase is due primarily to the increase in average total
debt in 1995 over 1994 and an increase in the average cost of funds. The
Company's average total debt was $65,113,000 for the twelve months ended
December 31, 1995 compared to $61,014,000 for the twelve months ended December
31, 1994. In addition, the average cost of funds for the twelve months ended
December 31, 1995 was 9.17% compared to 8.77% during the same period in 1994.
ADMINISTRATIVE EXPENSES
Administrative expenses for the year ended December 31, 1995 were $1,458,000
compared to $1,540,000 for the year ended December 31, 1994, a decrease of
$82,000 or 5%. This decrease reflects the full year impact of improved cost
control throughout the Company initiated during 1994.
PROPERTY MANAGEMENT EXPENSES
Property management expenses for the year ended December 31, 1995 were
$812,000 compared to $1,277,000 for the year ended December 31, 1994, a decrease
of $465,000 or 36%. This decrease reflects the full year impact of improved cost
control throughout the Company initiated during 1994. The most significant
impact of these cost controls was a reduction in the number of personnel.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense for the year ended December 31, 1995
was $5,125,000 compared to $5,047,000 for the year ended December 31, 1994, an
increase of $78,000 or 2%. Depreciation and amortization expense related to the
Twin Oaks Centre recorded during the year ended December 31, 1995 was $62,000.
The remainder of the increase related primarily to renovation and expansion
projects and tenant finish projects which were completed during 1995.
PROVISION FOR LOSS ON INTEREST IN TWIN OAKS CENTRE
The Company recorded a loss reserve relating to its interest in Twin Oaks
Centre for the year ended December 31, 1994 of $3,150,000. This amount reflected
charges to reduce the recorded value of the Company's loan to the Twin Oaks
Centre Limited Partnership ("the Partnership") (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
Partnership included 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 continued
to pay rent, 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. On April 19, 1995, the Company entered
into a settlement agreement with the Partnership. The Partnership was in default
on a mortgage loan to the Company. Pursuant to the settlement, the Company took
ownership of the
11
<PAGE>
underlying collateral which consisted of the Centre and the tax increment
financing bonds. All litigation against the Company was dismissed as part of the
settlement. See Note D to the Company's Consolidated Financial Statements.
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, 1995 was $959,000 compared to $899,000 for the
year ended December 31, 1994, an increase of $60,000 or 7%. The increase is the
result of the net impact of lease up of vacant space during 1995 and the full
year impact of 1994 leases. Also impacting this increase was a decrease in bad
debt expense during the twelve months ended December 31, 1995 as compared to the
same period of 1994.
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.
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 was 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 was primarily attributable to a $130,000 decrease in interest
income related to the Company's interest in Twin Oaks Centre and notes
receivable.
12
<PAGE>
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 related 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 related 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 related 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
See "Results of Operations -- Years Ended December 31, 1995 and 1994 --
Provision for Loss on Interest in Twin Oaks Centre".
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 was
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 Kmart. The store opened for business and commenced paying annual rent of
$461,000 in November 1993.
FUNDS FROM OPERATIONS
Management considers Funds From Operations to be an appropriate measure of
the performance of an equity REIT. The Company defines Funds From Operations as
net income before gains/losses
13
<PAGE>
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 $8,824,000 for the year ended December 31, 1995
compared to $8,018,000 for the year ended December 31, 1994. The increase of
$806,000 was attributable to the full year impact of the August 1994 acquisition
of Fitchburg Ridge Shopping Center, the April 1995 acquisition of Twin Oaks
Centre and, to a lesser degree, increased base and percentage rents and reduced
property management expenses resulting from the Company's cost reduction program
initiated in the fourth quarter of 1994.
Funds From Operations is computed as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Net Income (Loss)........................................................ $ 3,384 $ (128) $ 2,196
Accruals for "straight-line" rents....................................... (96) (139) (45)
Depreciation and Amortization (1)........................................ 5,125 5,047 4,522
Provision for loss on Interest in Twin Oaks Centre....................... -- 3,150 --
Gains on Sales of Real Estate, net (2)................................... (189) (690) (18)
Investment in Mid-America Bethal:
Equity in Earnings..................................................... (959) (899) (746)
Equity in Funds From Operations (3).................................... 1,559 1,493 1,303
Investment in Valley Park Centre:
Equity in Loss......................................................... -- 53 66
Equity in Funds From Operations........................................ -- 122 342
Other.................................................................... -- 9 9
--------- --------- ---------
Funds From Operations (4)................................................ $ 8,824 $ 8,018 $ 7,629
--------- --------- ---------
--------- --------- ---------
</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 in 1996), Funds From Operations for
the twelve months ended December 31, 1995 and 1994, respectively, would have
been approximately $193,000 and $172,000 lower than reported.
- ------------------------
(1) Depreciation and amortization for the year ended December 31, 1995 and 1994,
respectively, consisted of real property depreciation of $4,389,000 and
$4,299,000, other depreciation of $61,000 and $73,000, lease fee
amortization of $366,000 and $343,000, loan fee amortization of $207,000 and
$278,000, and intangible amortization of $102,000 and $54,000. Repairs and
maintenance expensed as "Property Costs" totaled $895,000 and $948,000 for
the years ended December 31, 1995 and 1994, respectively.
(2) Gains on sales of real estate for the year ended December 31, 1995 consisted
of a $189,000 gain from the sale of two outlot parcels. 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.
(3) Equity in Funds From Operations of Mid-America Bethal for the years ended
December 31, 1995 and 1994, respectively, included real property
depreciation of $542,000 and $548,000, other depreciation of $6,000 and
$13,000, and lease fee amortization of $39,000 and $25,000.
14
<PAGE>
(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.
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
35 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 1996 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 Grants in 1995", "Option Exercises in 1995 and Year-End Values
Table", and "Employment Agreements" in the 1996 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 1996 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.
15
<PAGE>
(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, 1995.
(C) EXHIBITS
See Item 14(a)(3) above.
(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 SCHEDULE
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):
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Management................................................................. 18
Independent Auditors' Report......................................................... 19
Consolidated Balance Sheets at December 31, 1995 and 1994............................ 20
Consolidated Statements of Operations for the Years Ended December 31, 1995, 1994 and
1993................................................................................ 21
Consolidated Statements of Shareholders' Equity for the Years Ended December 31,
1995, 1994 and 1993................................................................. 22
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and
1993................................................................................ 23
Notes to Consolidated Financial Statements........................................... 25
</TABLE>
The following Consolidated Financial Statement Schedule of Mid-America
Realty Investments, Inc. is included in Item 14(a)(2):
<TABLE>
<S> <C>
Schedule III -- Real Estate and Accumulated Depreciation............ 36
</TABLE>
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.
[SIG] [SIG]
<TABLE>
<S> <C>
Jerome L. Heinrichs Dennis G. Gethmann
CHAIRMAN AND CHIEF EXECUTIVE OFFICER PRESIDENT AND CHIEF OPERATING OFFICER
</TABLE>
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, 1995 and 1994, and
the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1995.
Our audits also included the financial statement schedule listed in the Index at
Item 14(a)(2). These financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on the financial statements and financial statement schedule 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, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
February 1, 1996
Omaha, Nebraska
19
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(COLUMNAR DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash.................................................................................... $ -- $ --
Accounts receivable, net of allowance of $175,000 and $161,000.......................... 1,497 1,345
Notes receivable, net of allowance of $160,000.......................................... 742 866
Property:
Land and land improvements............................................................ 37,567 36,812
Buildings............................................................................. 113,602 109,356
Equipment and fixtures................................................................ 559 559
Construction-in-progress.............................................................. 287 334
----------- -----------
152,015 147,061
Less: Accumulated depreciation........................................................ (24,250) (19,800)
----------- -----------
127,765 127,261
Interest in Twin Oaks Centre, net of allowances of $0 and $4,900,000.................... -- 2,953
Investment in Mid-America Bethal Limited Partnership.................................... 15,597 16,367
Intangible assets, less accumulated amortization of $2,948,000 and $3,503,000........... 2,042 2,463
Other assets............................................................................ 2,696 187
----------- -----------
$ 150,339 $ 151,442
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages and notes payable............................................................. $ 65,592 $ 63,486
Accrued liabilities..................................................................... 1,831 1,143
----------- -----------
Total Liabilities................................................................... 67,423 64,629
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.01 par value; authorized 25,000,000 shares; issued and outstanding
8,280,524 and 8,279,892 shares....................................................... 83 83
Capital in excess of par value........................................................ 119,682 119,677
Distributions in excess of net income................................................. (36,849) (32,947)
----------- -----------
Total Shareholders' Equity.......................................................... 82,916 86,813
----------- -----------
$ 150,339 $ 151,442
----------- -----------
----------- -----------
</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,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES
Rental income.......................................................... $ 16,564 $ 15,615 $ 13,336
Reimbursement income................................................... 4,834 4,366 3,694
Property management and leasing income................................. 200 211 222
Other income........................................................... 735 960 1,181
----------- ----------- -----------
Total Revenues....................................................... 22,333 21,152 18,433
EXPENSES
Real estate taxes...................................................... 3,063 2,815 2,424
Other property costs................................................... 3,674 3,651 3,245
Interest expense....................................................... 5,965 5,389 4,655
Administrative expenses................................................ 1,458 1,540 1,299
Property management and leasing expenses............................... 812 1,277 856
Depreciation and amortization.......................................... 5,125 5,047 4,522
Provision for loss on interest in Twin Oaks Centre..................... -- 3,150 --
----------- ----------- -----------
Total Expenses......................................................... 20,097 22,869 17,001
----------- ----------- -----------
Income (Loss) Before Equity in Earnings of Mid-America Bethal Limited
Partnership and Gains on Sales of Real Estate, net...................... 2,236 (1,717) 1,432
Equity in Earnings of Mid-America Bethal Limited Partnership............. 959 899 746
----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS............................................ 3,195 (818) 2,178
Gains on Sales of Real Estate, net....................................... 189 690 18
----------- ----------- -----------
NET INCOME (LOSS)........................................................ $ 3,384 $ (128) $ 2,196
----------- ----------- -----------
----------- ----------- -----------
Weighted Average Shares Outstanding During Period........................ 8,280,051 8,280,052 8,092,024
----------- ----------- -----------
----------- ----------- -----------
NET INCOME (LOSS) PER COMMON SHARE....................................... $ .41 $ (.02) $ .27
----------- ----------- -----------
----------- ----------- -----------
</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, 1993........................................ $ 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
Issuance of shares............................................ -- 5 -- 5
Net income.................................................... -- -- 3,384 3,384
Dividends declared and paid -- $.88 per share................. -- -- (7,286 ) (7,286)
--- ----------- ------------ ---------
BALANCE, DECEMBER 31, 1995...................................... $ 83 $ 119,682 $ (36,849 ) $ 82,916
--- ----------- ------------ ---------
--- ----------- ------------ ---------
</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,
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)......................................................... $ 3,384 $ (128) $ 2,196
Adjustments:
Depreciation and amortization........................................... 5,125 5,047 4,522
Provision for loss on interest in Twin Oaks Centre...................... -- 3,150 --
Investment in Mid-America Bethal Limited Partnership:
Equity in earnings.................................................... (959) (899) (746)
Distributions received................................................ 1,500 1,050 1,300
Gains on sales of real estate, net...................................... (189) (690) (18)
Increase (decrease) in related liabilities.............................. 537 (84) 40
(Increase) decrease in related assets................................... (549) 324 102
Other................................................................... 7 -- 292
---------- ---------- ----------
Net Cash Flows From Operating Activities.................................. 8,856 7,770 7,688
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of real estate........................................ 469 1,224 2,188
Principal repayments of notes receivable.................................. 123 131 235
Interest in Twin Oaks Centre.............................................. -- (406) (309)
Investment in Mid-America Bethal Limited Partnership...................... -- -- (1,300)
Payments from Valley Park Centre.......................................... -- 3,974 200
Additions to property:
Purchase of new properties.............................................. -- (14,636) --
Expansion projects & other capital expenditures......................... (1,184) (1,303) (1,739)
Tenant improvements..................................................... (667) (563) (1,105)
Cash paid for leasing fees................................................ (263) (237) (322)
Payments from Yield Maintenance Agreement................................. 1,027 106 95
Principal repayments of Tax Increment Financing Bonds..................... 71 -- --
Cash paid for intangibles and other assets................................ -- (442) (184)
---------- ---------- ----------
Net Cash Flows From Investing Activities.................................. (424) (12,152) (2,241)
CASH FLOWS FROM FINANCING ACTIVITIES
(Payments) proceeds on short-term debt, net............................... (2,147) 12,139 (8,350)
Proceeds of mortgages payable............................................. 14,500 -- --
Scheduled principal payments on mortgages................................. (13,279) (521) (16,966)
Cash paid for loan fees................................................... (220) (131) (143)
Proceeds from sale of common stock........................................ -- -- 28,500
Cash paid for costs of public offering.................................... -- -- (1,684)
Dividends paid............................................................ (7,286) (7,287) (7,273)
---------- ---------- ----------
Net Cash Flows From Financing Activities.................................. (8,432) 4,200 (5,916)
---------- ---------- ----------
NET CHANGE IN CASH.......................................................... -- (182) (469)
CASH, BEGINNING OF YEAR..................................................... -- 182 651
---------- ---------- ----------
CASH, END OF YEAR........................................................... $ -- $ -- $ 182
---------- ---------- ----------
---------- ---------- ----------
</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:
<TABLE>
<S> <C> <C>
1995: (A) Both of the Company's acquisition lines of credit were extended, one to July 1996
and the other to July 1997.
(B) The Company extended its working line of credit two years to July 1997.
(C) The Company extended the Lakewood Mall mortgage loan for three years to August
1998.
(D) The Company assumed the Twin Oaks Centre loan. See Note D to the Company's
Consolidated Financial Statements.
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
</TABLE>
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, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
A. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES:
NATURE OF OPERATIONS -- 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, 1995, the Company owned 19 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, Illinois,
Iowa, Michigan, South Dakota and Tennessee. Additionally, the Company is a 50%
partner in Mid-America Bethal Limited Partnership ("Mid-America Bethal") which
owns two neighborhood shopping centers in Nebraska and Wisconsin and one
enclosed mall in Nebraska.
USE OF ESTIMATES -- In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
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 1993 and 1994 financial statements to conform to those
classifications used in 1995.
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 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 -- shorter of the term of the lease or the estimated
useful life of the improvement; and equipment and fixtures -- 5 to 7 years. In
March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", effective for
fiscal years beginning after December 15, 1995. The adoption of the provisions
of this statement is not expected to have a material impact on the Company's
financial condition or results of operations.
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. Other intangible
assets, primarily from the acquisition of Mid-America Centers Corp., are being
amortized using the straight-line method over periods of 60-120 months.
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
25
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
A. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES: (CONTINUED)
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.
The dividends paid during 1995, 1994 and 1993 were allocated between
ordinary income and non-taxable return of capital as follows (amounts are per
share):
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Ordinary income.................................... $ .05 $ .32 $ .39
Return of capital.................................. .83 .56 .49
--- --- ---
$ .88 $ .88 $ .88
--- --- ---
--- --- ---
</TABLE>
A portion of previously recorded book losses associated with the Company's
interest in Twin Oaks Centre were utilized in 1995 for income tax purposes. As a
result of the settlement described in footnote B below, these losses affect the
taxation of dividends paid during 1995 by increasing the return of capital
portion and decreasing the ordinary income portion.
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
OUTLOT SALES -- During 1995, the Company sold two outlot parcels for total
proceeds of $469,000, resulting in a gain of $189,000.
TWIN OAKS CENTRE -- On April 19, 1995, the Company entered into a settlement
agreement 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, a 95,000 square foot neighborhood shopping
center in Silvis, Illinois and tax increment financing bonds payable from
incremental sales and real estate taxes generated by the shopping center and
adjacent properties. All litigation against the Company was dismissed as part of
the settlement. For the year ended December 31, 1995, the Company recorded total
revenues and expenses for the Twin Oaks Centre of $390,000 and $156,000,
respectively. See Note D to the Company's consolidated financial statements for
further discussion of the Twin Oaks property transaction.
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.
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
26
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
B. PROPERTY TRANSACTIONS (CONTINUED)
costs. 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, compared to $443,000 and $209,000, respectively, for
the twelve months ended December 31, 1995.
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, compared to $2,314,000 and $1,056,000, respectively, for
the year ended December 31, 1995.
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. TWIN OAKS CENTRE
In December 1989, the Company entered into a mortgage loan with Twin Oaks
Centre Limited Partnership (the "Partnership") for the construction of Twin Oaks
Centre ("TOC") in Silvis, Illinois. The loan was 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.
The Company considered the Partnership 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
continued to pay rent, 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 April 19, 1995, the Company entered into a settlement agreement (the
"Settlement") with the Twin Oaks Centre Limited 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 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. During 1995, the Company received approximately $310,000 from the
City of Silvis, Illinois related to the TIF Bonds; approximately $71,000 of this
payment was recorded by the Company as principal reduction.
The TOC is a 95,000 square foot neighborhood shopping center in Silvis,
Illinois. At April 19, 1995 the TOC was 86% leased and 73% occupied, and at
December 31, 1995 the TOC was 91% leased and 74% occupied. Walgreens vacated in
the second quarter of 1994 but continues to pay annual rent of $119,000.
27
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
D. TWIN OAKS CENTRE (CONTINUED)
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 December 31, 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
$390,000 and $156,000, respectively.
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 two neighborhood shopping centers and one enclosed
mall.
Summarized financial information on Mid-America Bethal is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
BALANCE SHEETS
Assets:
Cash and cash equivalents.............................................................. $ 817 $ 829
Property, net of accumulated depreciation of $6,278,000 and $5,188,000................. 29,940 30,918
Other assets........................................................................... 454 561
--------- ---------
$ 31,211 $ 32,308
--------- ---------
--------- ---------
Liabilities and Partners' Capital:
Accrued liabilities.................................................................... $ 18 $ 33
Partners' capital...................................................................... 31,193 32,275
--------- ---------
$ 31,211 $ 32,308
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS
Total Revenues............................................................... $ 4,330 $ 4,264 $ 3,904
--------- --------- ---------
--------- --------- ---------
Net Income................................................................... $ 1,918 $ 1,798 $ 1,492
--------- --------- ---------
--------- --------- ---------
EQUITY IN EARNINGS OF MID-AMERICA BETHAL RECORDED BY THE COMPANY............... $ 959 $ 899 $ 746
--------- --------- ---------
--------- --------- ---------
</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, 1995, 1994 and 1993, Mid-America Bethal paid property
management fees of $172,000, $172,000, and $158,000, respectively, and incurred
and capitalized leasing commissions of $28,000, $39,000, and $52,000,
28
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
E. INVESTMENT IN MID-AMERICA BETHAL LIMITED PARTNERSHIP (CONTINUED)
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, 1995, 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.
29
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(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 1995 1994
--------- --------- ----------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fixed-Rate Mortgage Debt:
Mortgages and Notes Payable:
Cornhusker Plaza......................... 9.75% $ 396 June 1995 $ -- $ 3,712
Twin Oaks Centre......................... 8.25% $ 84 Apr. 1996 718 743
Twin Oaks Centre (See Note D)............ 8.25% $ 342 Apr. 1996 2,974 --
Miracle Hills Park....................... 9.00% $ 352 Aug. 1997 3,355 3,403
Lakewood Mall............................ 8.50% $ 768 Aug. 1998 7,446 7,761
Meadows S.C.............................. 9.88% $ 346 Nov. 1998 3,048 3,091
Bishop Heights........................... 9.00% $ 98 Nov. 2000 679 714
Eastville Plaza.......................... 9.25% $ 292 Feb. 2001 2,945 2,966
Rivergate S.C............................ 10.00% $ 336 Jan. 2002 3,119 3,143
Shenandoah Plaza......................... 10.00% $ 456 Jan. 2002 4,191 4,223
Edgewood S.C............................. 9.08% $ 590 Feb. 2002 6,500 --
Southport Centre......................... 9.20% $ 736 Apr. 2002 8,000 --
Moorland Square.......................... 9.00% $ 384 Nov. 2002 3,656 3,707
Kimberly West............................ 8.00% $ 403 Dec. 2002 4,165 4,231
--------- ---------
50,796 37,694
Other Notes and Obligations................ 11.00% -- 26
--------- ---------
Total Fixed-Rate Mortgage Debt............. 50,796 37,720
Adjustable-Rate Debt:
Revolving Credit Agreements:
Working Line of Credit................... $ 5,000 7.875% July 1997 663 138
Lines of Credit for Acquisitions......... $ 10,000 8.375% July 1997 8,574 4,056
$ 15,000 9.00% July 1996 5,559 12,750
--------- ---------
14,796 16,944
Mortgage Loans:
Edgewood S.C. -- Phase II................ $ 5,000 9.00% July 1995 0 5,000
Fairacres S.C............................ $ 3,822 9.50% July 1995 0 3,822
--------- ---------
0 8,822
--------- ---------
Total Adjustable-Rate Debt................. 14,796 25,766
--------- ---------
Total Mortgages and Notes Payable............ $ 65,592 $ 63,486
--------- ---------
--------- ---------
</TABLE>
In July 1995, the Company renewed its revolving credit agreement with a
local bank, which consisted of the $5,000,000 working capital and $10,000,000
acquisitions line of credit. This agreement was extended to July 1997 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 the working capital line and the acquisitions line is fixed at
7.875% and 8.375% respectively, through
30
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
G. MORTGAGES AND NOTES PAYABLE (CONTINUED)
January 31, 1996. Both the $5,000,000 and $10,000,000 lines require an annual
unused commitment fee of 25 basis points. The revolving credit agreement is
collateralized by Monument Mall, Germantown Shopping Center and Ile de Grand.
The $15,000,000 acquisitions line of credit was extended until July 1996
with the interest rate remaining variable at 50 basis points over the national
prime and the non-use fee of 25 basis points was eliminated. The revolving
credit agreement is collateralized by Thunderbird Mall, Delta Plaza, Macon
County Plaza and Town West Center.
In March 1995, the Company 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.
As described in Note D to the Consolidated Financial Statements, the Company
assumed the TOC loan which 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. The Company intends to extend this loan for a period
of three years with the existing lender.
During 1995, the Company used the proceeds from the $10,000,000 acquisition
line to repay mortgage loans on Cornhusker Plaza and Fairacres Shopping Center
which had balances prior to being repaid of $3,697,000 and $3,783,000 and were
priced at 9.75% and 100 basis points over prime, respectively.
The Company also completed the extension of the Lakewood Mall mortgage loan
in 1995. The $7,500,000 loan has been extended for three years, to August 1998,
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.
Principal maturities of total mortgages and notes payable, after giving
effect to the commitments described above, for the next five years are as
follows: 1996 -- $10,405,000; 1997 -- $12,351,000; 1998 -- $10,403,000; 1999 --
$326,000; 2000 -- $917,000; 2001 and thereafter -- $31,191,000.
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, 1995 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%
31
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
H. COMMITMENTS AND CONTINGENCIES (CONTINUED)
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.
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. 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. Cumulative amounts received under this agreement
totaled $1,228,000 through December 31, 1995.
At December 31, 1995, 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.
I. SHAREHOLDERS' EQUITY
On January 22, 1993, the Company completed 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 PLANS
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% of their pre-tax base pay with the Company matching
contributions equal to 25% of the first 4% of participant contributions.
Participants vest in Company contributions over five years. Contribution expense
for the years ended December 31, 1995 and 1994 was $14,000 and $19,000,
respectively.
STOCK PLANS -- Pursuant to the Amended Stock Option Plan which was approved
by shareholders in 1992 and the 1995 Stock Plan approved by stockholders in 1995
(collectively, the "Plans"), the Compensation Committee of the Board of
Directors is authorized to issue options to purchase shares of common stock at
the then current market price of such shares and other stock awards to employees
of the Company and Mid-America Centers Corp. Stock options became exercisable
over discretionary periods not to exceed 10 years from the date of grant. At
December 31, 1995, approximately 200,000 shares remained available for issuance
under the Plans.
32
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
J. EMPLOYEE BENEFIT AND STOCK PLANS (CONTINUED)
Following is a summary of the option activity under the Plans:
<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
Granted.......................................................... 100,000 $8.00
Forfeited........................................................ (10,000) $10.75
-------------
Outstanding at December 31, 1995................................. 215,000 $8.00 to $10.75
-------------
-------------
</TABLE>
At December 31, 1995, 76,667 stock options were exercisable.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" (FAS 123), effective for fiscal years beginning after December 15,
1995. The statement encourages, but does not require, employers to adopt a fair
value method of accounting for employee stock based compensation and requires
increased stock based compensation disclosures in lieu of expense recognition.
The Company does not intend to elect expense recognition for stock options and,
therefore, FAS 123 will not have an impact on the Company.
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, 1995. 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.
CASH, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE:
The carrying amounts of these items are a reasonable estimate of their fair
value.
33
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
K. DISCLOSURE OF FAIR VALUE (CONTINUED)
NOTES RECEIVABLE:
The carrying amounts of these items represent the Company's reasonable
estimate of their fair value.
MORTGAGES AND NOTES PAYABLE -- FIXED RATE MORTGAGE DEBT:
At December 31, 1995, the carrying amount was $50,796,000 compared to an
estimated fair market value of approximately $50,351,000. 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, 1995, 1994 and 1993 was $536,000, $366,000, and $387,000,
respectively.
Wal-Mart, Herberger's, Hy-Vee grocery stores, Kmart, Walgreens, Target
and/or Shopko and J.C. Penney anchored a total of 18 of the Company's properties
either as tenants or as occupants of buildings adjacent to the properties and
lease in the aggregate approximately 34% 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 14% 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, 1995 is Wal-Mart, whose five
stores at properties owned by the Company occupy approximately 14% 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, 1995 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, WAL-MART OTHER TENANTS TOTAL
- -------------------------------------------- --------- ------------- -----------
<S> <C> <C> <C>
1996........................................ $ 1,225 $ 14,401 $ 15,626
1997........................................ 1,225 12,636 13,861
1998........................................ 1,225 11,283 12,508
1999........................................ 1,225 10,300 11,525
2000........................................ 1,225 9,302 10,527
Thereafter.................................. 6,884 66,984 73,868
--------- ------------- -----------
$ 13,009 $ 124,906 $ 137,915
--------- ------------- -----------
--------- ------------- -----------
</TABLE>
The Company had no tenant which in any of the three years ended December 31,
1995 provided 10% or more of the Company's rental income or total revenues.
34
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(COLUMNAR DOLLARS IN FOOTNOTES ARE IN THOUSANDS EXCEPT PER SHARE DATA)
M. QUARTERLY INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1995:
Total revenues............................. $ 5,593 $ 5,488 $ 5,517 $ 5,735 $ 22,333
Net income................................. $ 889 $ 844 $ 823 $ 828 $ 3,384
Net income per share....................... $ .11 $ .10 $ .10 $ .10 $ .41
Dividends declared per share............... $ .22 $ .22 $ .22 $ .22 $ .88
Weighted average number of shares
outstanding............................... 8,279,892 8,279,892 8,279,892 8,280,524 8,280,051
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
</TABLE>
- ------------------------
(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. to the fair value of the underlying collateral. During 1995, the
Company took ownership of the Twin Oaks Centre. See Note D to the Company's
Consolidated Financial Statements for further discussion.
N. SUBSEQUENT EVENT
On January 29, 1996, the Company declared a cash dividend of $.22 per common
share payable on February 26, 1996 to stockholders of record on February 12,
1996.
35
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
ADDITIONAL CARRIED AT DECEMBER 31,
INITIAL COST TO COMPANY COSTS REDUCTIONS 1995
------------------------ SUBSEQUENT FROM RECEIPTS ------------------------
BUILDINGS AND TO SUBSEQUENT TO BUILDINGS AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION ACQUISITION LAND IMPROVEMENTS
- --------------------- ------------------- --------- ------------- ----------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Monument Mall,
Scottsbluff, NE Line of Credit (2) $ 420 $ 9,691 $ 2,774 $ (1,612) $ 353 $ 10,920
Delta Plaza,
Escanaba, MI Line of Credit (2) 527 6,949 4,591 (311 ) 1,096 10,660
Thunderbird Mall,
Virginia, MN Line of Credit (2) 305 6,027 3,409 -- 305 9,436
Eastville Plaza,
Fremont, NE $ 2,945 706 3,529 621 (403 ) 633 3,820
Bishop Heights,
Lincoln, NE $ 679 710 723 151 -- 710 874
Westview Plaza,
McCook, NE None 90 1,010 24 (142 ) 78 904
Ile de Grand,
Grand Island, NE Line of Credit (2) 690 2,880 953 -- 690 3,833
Edgewood-Phase I, (
Lincoln, NE ( 1,396 1,993 1,353 -- 1,396 3,346
( $6,500
Edgewood-Phase II, (
Lincoln, NE ( 1,387 4,327 737 -- 1,387 5,064
The Meadows,
Lincoln, NE $ 3,048 1,179 3,121 19 -- 1,179 3,140
Miracle Hills Park,
Omaha, NE $ 3,355 2,250 4,972 426 (330 ) 2,147 5,171
Macon County,
Lafayette, TN Line of Credit (2) 228 3,021 51 (40 ) 225 3,035
Town West Center,
Paragould, AR Line of Credit (2) 366 4,263 48 -- 366 4,311
<CAPTION>
ACCUMULATED DATE OF
DEPRECIATION COMPLETION ACQUISITION
AT DECEMBER DATE FOR OR
DESCRIPTION TOTAL 31, 1995 CONSTRUCTION COMPLETION
- --------------------- --------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Monument Mall,
Scottsbluff, NE $ 11,273 $ (3,022) 08/1986 12/30/86
Delta Plaza,
Escanaba, MI 11,756 (2,426 ) 09/1971 12/30/86
Thunderbird Mall,
Virginia, MN 9,741 (2,077 ) 09/1971 12/30/86
Eastville Plaza,
Fremont, NE 4,453 (1,130 ) 08/1986 12/30/86
Bishop Heights,
Lincoln, NE 1,584 (268 ) 09/1971 12/30/86
Westview Plaza,
McCook, NE 982 (266 ) 12/1985 12/30/86
Ile de Grand,
Grand Island, NE 4,523 (982 ) 07/1977 04/09/87
Edgewood-Phase I,
Lincoln, NE 4,742 (993 ) 09/1980 06/01/87
Edgewood-Phase II,
Lincoln, NE 6,451 (754 ) 06/1991 06/26/91
The Meadows,
Lincoln, NE 4,319 (783 ) 12/1987 06/01/88
Miracle Hills Park,
Omaha, NE 7,318 (1,383 ) 03/1987 07/05/88
Macon County,
Lafayette, TN 3,260 (731 ) 12/1985 12/21/88
Town West Center,
Paragould, AR 4,677 (958 ) 04/1987 12/21/88
</TABLE>
36
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
ADDITIONAL CARRIED AT DECEMBER 31,
INITIAL COST TO COMPANY COSTS REDUCTIONS 1995
------------------------ SUBSEQUENT FROM RECEIPTS ------------------------
BUILDINGS AND TO SUBSEQUENT TO BUILDINGS AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION ACQUISITION LAND IMPROVEMENTS
- --------------------- ------------------- --------- ------------- ----------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rivergate,
Shelbyville, IN $ 3,119 163 4,058 281 (25) 162 4,315
Germantown,
Jasper, IN Line of Credit (2) 488 8,766 429 (15) 540 9,128
Shenandoah Plaza,
Newnan, GA $ 4,191 485 5,281 96 -- 485 5,377
Cornhusker Plaza,
South Sioux City, NE Line of Credit (2) 1,185 3,169 58 (26 ) 1,185 3,201
Lakewood Mall,
Aberdeen, SD $ 7,446 600 13,890 992 (784 ) 1,003 13,695
Kimberly West,
Davenport, IA $ 4,165 1,700 4,653 159 -- 1,790 4,722
Moorland Square,
New Berlin, WI $ 3,656 1,550 3,750 1,084 -- 1,725 4,659
Fairacres,
Oshkosh, WI Line of Credit (2) 1,500 3,310 341 -- 1,550 3,601
Southport Centre,
Apple Valley, MN $ 8,000 3,675 8,946 305 -- 3,675 9,251
Fitchburg Ridge,
Fitchburg, WI None 500 1,545 42 -- 500 1,587
Twin Oaks Centre
Silvis, IL $ 3,692 1,075 3,062 46 (244 ) 1,019 2,920
--------- ------------- ----------- ------------- --------- -------------
$ 23,175 $ 112,936 $ 18,990 $ (3,932 ) $ 24,199 $ 126,970
--------- ------------- ----------- ------------- --------- -------------
--------- ------------- ----------- ------------- --------- -------------
<CAPTION>
ACCUMULATED DATE OF
DEPRECIATION COMPLETION ACQUISITION
AT DECEMBER DATE FOR OR
DESCRIPTION TOTAL 31, 1995 CONSTRUCTION COMPLETION
- --------------------- --------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Rivergate,
Shelbyville, IN 4,477 (927) 03/1986 12/21/88
Germantown,
Jasper, IN 9,668 (1,879) 12/1985 12/21/88
Shenandoah Plaza,
Newnan, GA 5,862 (1,226) 02/1988 12/21/88
Cornhusker Plaza,
South Sioux City, NE 4,386 (468 ) 02/1990 06/27/91
Lakewood Mall,
Aberdeen, SD 14,698 (1,654 ) 08/1990 08/28/92
Kimberly West,
Davenport, IA 6,512 (511 ) 01/1989 12/14/92
Moorland Square,
New Berlin, WI 6,384 (373 ) 02/1990 11/23/92
Fairacres,
Oshkosh, WI 5,151 (409 ) 05/1992 12/22/92
Southport Centre,
Apple Valley, MN 12,926 (511 ) 01/1992 01/01/94
Fitchburg Ridge,
Fitchburg, WI 2,087 (52 ) 12/1980 08/31/94
Twin Oaks Centre
Silvis, IL 3,939 (61 ) 01/1992 04/19/95
--------- -------------
$ 151,169 $ 23,844
--------- -------------
--------- -------------
</TABLE>
- ------------------------------
(1) The aggregate cost for federal income tax purposes for these properties is
approximately $151,169,000.
(2) Revolving credit agreements totaled $14,796,000 at December 31, 1995.
37
<PAGE>
MID-AMERICA REALTY INVESTMENTS, INC. AND SUBSIDIARY
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
(COLUMNAR DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BUILDINGS AND
LAND AND TENANT EQUIPMENT AND CONSTRUCTION-
LAND IMPROVEMENTS IMPROVEMENTS FIXTURES IN-PROGRESS TOTAL
--------- ------------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
REAL ESTATE
Balance, January 31, 1993........ $ 18,555 $ 12,490 $ 96,567 $ 399 $ 491 $ 128,502
Additions at cost.............. 1 133 1,391 114 1,039 2,678
Retirements.................... (9) -- (115) (22) -- (146)
Transfer of assets when placed
into service.................. -- -- 1,224 -- (1,224) --
--------- ------------- ------------- ------------- ------------- ---------
Balance, December 31, 1993....... 18,547 12,623 99,067 491 306 131,034
Additions at cost.............. 4,175 891 11,219 76 523 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 placed
into service.................. -- -- 495 -- (495) --
--------- ------------- ------------- ------------- ------------- ---------
Balance, December 31, 1994....... 23,469 13,343 109,356 559 334 147,061
Additions at cost.............. 1,075 22 5,181 -- 599 6,877
Retirements.................... (250) -- -- -- -- (250)
Reductions for receipts under
Yield Maintenance Agreement... (92) -- (935) -- -- (1,027)
Transfer of assets when placed
into service.................. -- -- -- -- (646) (646)
--------- ------------- ------------- ------------- ------------- ---------
Balance, December 31, 1995....... $ 24,202 $ 13,365 $ 113,602 $ 559 $ 287 $ 152,015
--------- ------------- ------------- ------------- ------------- ---------
--------- ------------- ------------- ------------- ------------- ---------
ACCUMULATED DEPRECIATION
Balance, January 1, 1993......... $ -- $ 2,999 $ 8,879 $ 218 $ -- $ 12,096
Additions charged to costs and
expenses...................... -- 843 2,887 81 -- 3,811(A)
Retirements.................... -- -- -- (22) -- (22)
--------- ------------- ------------- ------------- ------------- ---------
Balance, December 31, 1993....... -- 3,842 11,766 277 -- 15,885
Additions charged to costs and
expenses...................... -- 894 3,327 73 -- 4,294(B)
Retirements.................... -- (89) (284) (6) -- (379)
--------- ------------- ------------- ------------- ------------- ---------
Balance, December 31, 1994....... -- 4,647 14,809 344 -- 19,800
Additions charged to costs and
expenses...................... -- 884 3,506 60 -- 4,450
--------- ------------- ------------- ------------- ------------- ---------
Balance, December 31, 1995....... $ -- $ 5,531 $ 18,315 $ 404 $ -- $ 24,250
--------- ------------- ------------- ------------- ------------- ---------
--------- ------------- ------------- ------------- ------------- ---------
</TABLE>
- ------------------------------
(A) 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.
(B) 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.
38
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
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:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report........................................................... 40
Balance Sheets at December 31, 1995 and 1994........................................... 41
Statements of Operations for the Years Ended December 31, 1995, 1994 and 1993.......... 42
Statements of Partners' Capital for the Years Ended December 31, 1995, 1994 and 1993... 43
Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993.......... 44
Notes to Financial Statements.......................................................... 45
</TABLE>
The following Financial Statement Schedule of Mid-America Bethal Limited
Partnership is furnished pursuant to Rule 3-09:
<TABLE>
<S> <C>
Schedule III -- Real Estate and Accumulated Amortization.............. 47
</TABLE>
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.
39
<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, 1995 and 1994, and the related statements
of operations, partners' capital and cash flows for each of the three years in
the period ended December 31, 1995. Our audits also included the financial
statement schedule listed in the Index on page 38. These financial statements
and financial statement schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule 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, 1995 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995 in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
February 1, 1996
Omaha, Nebraska
40
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Cash............................................................................. $ 817,304 $ 829,516
Accounts receivable, net of allowances of $57,000 and $101,000................... 236,810 294,156
Property:
Land and land improvements..................................................... 6,497,545 6,489,085
Buildings...................................................................... 29,488,830 29,384,934
Equipment and fixtures......................................................... 231,353 231,353
-------------- --------------
36,217,728 36,105,372
Less: Accumulated depreciation................................................. (6,278,088) (5,187,711)
-------------- --------------
29,939,640 30,917,661
Intangible assets, less accumulated amortization of $211,391 and $134,322........ 213,088 262,611
Other assets..................................................................... 4,236 4,233
-------------- --------------
$ 31,211,078 $ 32,308,177
-------------- --------------
-------------- --------------
LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities.............................................................. $ 18,000 $ 33,599
Partners' capital................................................................ 31,193,078 32,274,578
-------------- --------------
$ 31,211,078 $ 32,308,177
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements
41
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES
Rental income...................................................... $ 3,480,916 $ 3,451,278 $ 3,058,639
Reimbursement income............................................... 739,796 757,982 804,272
Other income....................................................... 109,233 54,363 40,986
------------- ------------- -------------
Total Revenues................................................... 4,329,945 4,263,623 3,903,897
EXPENSES
Real estate taxes.................................................. 319,972 337,674 336,376
Management fees.................................................... 172,086 172,609 157,583
Other property costs............................................... 708,426 767,845 787,713
Administrative expenses............................................ 42,394 15,418 32,339
Depreciation and amortization...................................... 1,168,567 1,172,243 1,098,353
------------- ------------- -------------
Total Expenses................................................... 2,411,445 2,465,789 2,412,364
------------- ------------- -------------
NET INCOME........................................................... $ 1,918,500 $ 1,797,834 $ 1,491,533
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See notes to financial statements
42
<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, 1993..................................... $ 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
Allocation of net income..................................... 959,250 959,250 1,918,500
Distributions paid........................................... (1,500,000) (1,500,000) (3,000,000)
------------------ -------------- --------------
BALANCE, DECEMBER 31, 1995................................... $ 15,596,539 $ 15,596,539 $ 31,193,078
------------------ -------------- --------------
------------------ -------------- --------------
</TABLE>
See notes to financial statements
43
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income...................................................... $ 1,918,500 $ 1,797,834 $ 1,491,533
Adjustments:
Depreciation and amortization................................. 1,168,567 1,172,243 1,098,353
(Decrease) increase in related liabilities.................... (15,599) 80 (1,239)
Decrease in related assets.................................... 57,255 112,429 112,986
-------------- -------------- --------------
Net Cash Flows From Operating Activities........................ 3,128,723 3,082,586 2,701,633
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property:
Renovation and expansion projects............................. -- -- (3,305,577)
Tenant improvements........................................... (27,227) (31,607) (136,989)
Other capital expenditures.................................... (85,129) (89,051) --
Cash paid for leasing fees...................................... (28,579) (37,808) (113,696)
Other receipts and payments..................................... -- -- 17,277
-------------- -------------- --------------
Net Cash Flows From Investing Activities........................ (140,935) (158,466) (3,538,985)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions made to partners.................................. (3,000,000) (2,100,000) (2,600,000)
Contributions by partners....................................... -- -- 2,600,000
-------------- -------------- --------------
Net Cash Flows From Financing Activities........................ (3,000,000) (2,100,000) --
-------------- -------------- --------------
NET CHANGE IN CASH................................................ (12,212) 824,120 (837,352)
CASH, BEGINNING OF YEAR........................................... 829,516 5,396 842,748
-------------- -------------- --------------
CASH, END OF YEAR................................................. $ 817,304 $ 829,516 $ 5,396
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See notes to financial statements
44
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS -- 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 and 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.
USE OF ESTIMATES -- In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
PROPERTY -- Property is stated at the lower of depreciated cost or the
amount estimated to be recoverable through future cash flows from the 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 -- shorter of the lease term or the estimated life of
the improvement; 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 on Mid-America Bethal's earnings as such taxes are the
responsibility of the individual partners.
ACCOUNTING STANDARDS -- In March 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of". This statement is effective for fiscal years beginning after December 15,
1995. The adoption of the provisions of this statement is not expected to have a
material impact on Mid-America Bethal's financial condition or results of
operations.
RECLASSIFICATIONS -- Certain reclassifications have been made to the 1993
and 1994 financial statements to conform to those classifications used in 1995.
45
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
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, 1995, 1994, and 1993,
Mid-America Bethal paid $20,000.
PROPERTY MANAGEMENT AND LEASING -- Mid-America Bethal has entered into
property management agreements with Mid-America Centers Corp. ("Mid-America
Centers"), 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, 1995, 1994 and
1993, $172,086, $172,609 and $157,583, respectively, was incurred for management
fees and $28,579, $39,222 and $52,373, respectively, was incurred and
capitalized as leasing fee commissions.
C. 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, 1995, 1994 and 1993 was $48,901, $122,619 and $102,878,
respectively.
Future base rents under non-cancelable operating leases at December 31, 1995
are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
- ------------------------------------------------------------------------------ --------------
<S> <C>
1996.......................................................................... $ 3,239,004
1997.......................................................................... 3,062,064
1998.......................................................................... 2,855,090
1999.......................................................................... 2,578,736
2000.......................................................................... 2,352,291
Thereafter.................................................................... 18,687,175
--------------
$ 32,774,360
--------------
--------------
</TABLE>
46
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
REDUCTIONS GROSS AMOUNT AT WHICH CARRIED AT
ADDITIONAL FROM MASTER
INITIAL COST TO COMPANY COSTS LEASE AND DECEMBER 31, 1995
-------------------------- SUBSEQUENT INCOME --------------------------------------
ENCUM- BUILDINGS AND TO GUARANTEE BUILDINGS AND
DESCRIPTION BRANCES LAND IMPROVEMENTS ACQUISITION PAYMENTS LAND IMPROVEMENTS TOTAL(1)
- -------------------- --------- ----------- ------------- ----------- ------------ ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Imperial Mall,
Hastings, NE None $ 677,826 $11,851,303 $ 6,682,779 $ -- $ 834,020 $18,377,888 $19,211,908
Stockyards Plaza,
Omaha, NE None 944,111 6,602,742 479,272 (372,877) 1,041,577 6,611,671 7,653,248
Stockyards Theatres,
Omaha, NE None 251,645 1,849,242 -- -- 251,645 1,849,242 2,100,887
Taylor Heights
Shopping Center,
Sheboygan, WI None 1,029,223 5,697,723 293,385 -- 1,034,231 5,986,100 7,020,331
----------- ------------- ----------- ------------ ---------- ------------- -----------
$ 2,902,805 $26,001,010 $ 7,455,436 $ (372,877) $3,161,473 $32,824,901 $35,986,374
----------- ------------- ----------- ------------ ---------- ------------- -----------
----------- ------------- ----------- ------------ ---------- ------------- -----------
<CAPTION>
ACCUMULATED DATE OF
DEPRECIATION COMPLETION ACQUISITION
AT DECEMBER DATE FOR OR
DESCRIPTION 31, 1995 CONSTRUCTION COMPLETION
- -------------------- ------------ ------------- -----------
<S> <C> <C> <C>
Imperial Mall,
Hastings, NE $(3,110,947) 09/1970 12/01/87
Stockyards Plaza,
Omaha, NE (1,491,769) 08/1988 06/01/89
Stockyards Theatres,
Omaha, NE (377,267) 06/1990 07/17/90
Taylor Heights
Shopping Center,
Sheboygan, WI (1,080,358) 02/1989 07/30/90
------------
$(6,060,341)
------------
------------
</TABLE>
- ------------------------------
(1) The aggregate cost for federal income tax purposes for these properties is
approximately $35,986,000.
47
<PAGE>
MID-AMERICA BETHAL LIMITED PARTNERSHIP
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
<TABLE>
<CAPTION>
BUILDINGS AND
LAND TENANT EQUIPMENT
LAND IMPROVEMENTS IMPROVEMENTS AND FIXTURES
---------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
REAL ESTATE
Balance, January 1, 1993 $3,161,473 $ 3,296,005 $25,036,391 $ 231,353
Additions at cost -- -- 170,270 --
Retirements -- -- -- --
Transfer of assets when placed into service -- -- 4,089,222 --
---------- ------------- ------------- ------------
Balance, December 31, 1993 3,161,473 3,296,005 29,295,883 231,353
Additions at cost -- 31,607 89,051 --
Retirements -- -- -- --
---------- ------------- ------------- ------------
Balance, December 31, 1994 3,161,473 3,327,612 29,384,934 231,353
Additions at cost -- 8,460 103,896 --
Retirements -- -- -- --
---------- ------------- ------------- ------------
Balance, December 31, 1995 $3,161,473 $ 3,336,072 $29,488,830 $ 231,353
---------- ------------- ------------- ------------
---------- ------------- ------------- ------------
ACCUMULATED DEPRECIATION
Balance, January 1, 1993 $ -- $ 704,268 $ 2,163,973 $ 132,799
Additions charged to costs and expenses -- 218,287 799,265 42,594
Retirements -- -- -- --
---------- ------------- ------------- ------------
Balance, December 31, 1993 -- 922,555 2,963,238 175,393
Additions charged to costs and expenses -- 221,949 874,382 30,194
Retirements -- -- -- --
---------- ------------- ------------- ------------
Balance, December 31, 1994 -- 1,144,504 3,837,620 205,587
Additions charged to costs and expenses -- 221,879 856,338 12,160
Retirements -- -- -- --
---------- ------------- ------------- ------------
Balance, December 31, 1995 $ -- $ 1,366,383 $ 4,693,958 $ 217,747
---------- ------------- ------------- ------------
---------- ------------- ------------- ------------
<CAPTION>
CONSTRUCTION-
IN-PROGRESS TOTAL
------------- -----------
<S> <C> <C>
REAL ESTATE
Balance, January 1, 1993 $ 816,927 $32,542,149
Additions at cost 3,272,295 3,442,565
Retirements -- --
Transfer of assets when placed into service (4,089,222) --
------------- -----------
Balance, December 31, 1993 -- 35,984,714
Additions at cost -- 120,658
Retirements -- --
------------- -----------
Balance, December 31, 1994 -- 36,105,372
Additions at cost -- 112,356
Retirements -- --
------------- -----------
Balance, December 31, 1995 $ -- $36,217,728
------------- -----------
------------- -----------
ACCUMULATED DEPRECIATION
Balance, January 1, 1993 $ -- $ 3,001,040
Additions charged to costs and expenses -- 1,060,146
Retirements -- --
------------- -----------
Balance, December 31, 1993 -- 4,061,186
Additions charged to costs and expenses -- 1,126,525
Retirements -- --
------------- -----------
Balance, December 31, 1994 -- 5,187,711
Additions charged to costs and expenses -- 1,090,377
Retirements -- --
------------- -----------
Balance, December 31, 1995 $ -- $ 6,278,088
------------- -----------
------------- -----------
</TABLE>
48
<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.
<TABLE>
<C> <S>
by: /s/ JEROME L. HEINRICHS
-----------------------------------------
Jerome L. Heinrichs, Chairman and March 1, 1996
Chief Executive Officer
</TABLE>
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.
<TABLE>
<C> <S>
/s/ JEROME L. HEINRICHS
- ---------------------------------------------
Jerome L. Heinrichs, Director and March 1, 1996
Chief Executive Officer
/s/ MICHAEL F. LAWLER
- --------------------------------------------- March 1, 1996
Michael F. Lawler, Director
/s/ DANIEL A. BURKHARDT
- --------------------------------------------- March 1, 1996
Daniel A. Burkhardt, Director
/s/ GARY R. HAWKINS
- --------------------------------------------- March 1, 1996
Gary R. Hawkins, Director
/s/ JOHN L. MAGINN
- --------------------------------------------- March 1, 1996
John L. Maginn, Director
/s/ DENNIS G. GETHMANN
- ---------------------------------------------
Dennis G. Gethmann, President and Chief March 1, 1996
Operating Officer (Principal Financial and
Accounting Officer)
</TABLE>
49
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ----------- -------------------------------------------------------------------------------------------------- ---------
<C> <C> <S> <C>
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 First Amendment to the Yield Maintenance Agreement dated April 19, 1995 incorporated by
reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995.
10.5 Settlement Agreement dated April 19, 1995 among inter alia Twin Oaks Centre Limited
Partnership and Mid-America Realty Investments, Inc. incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995.
10.6 Company Stock Option Plan (as amended and restated June 1994), incorporated by
reference to Exhibit 10.10 on the Company's Annual Report on Form 10-K for the year
ended December 31, 1994.
10.7 Company 1995 Stock Plan, incorporated by reference to Exhibit 10.3 of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995.
10.8 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.
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ----------- -------------------------------------------------------------------------------------------------- ---------
10.9 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.
<C> <C> <S> <C>
10.10 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.
10.11 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................................................................. 52
23. Consent of Experts and Counsel.
23.1 Consent of Deloitte & Touche LLP....................................................... 53
27. Financial Data Schedule........................................................................... 54
</TABLE>
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 10.6
through 10.11.
51
<PAGE>
EXHIBIT 21
<TABLE>
<CAPTION>
STATE OF
NAME OF SUBSIDIARY INCORPORATION
- --------------------------------------- --------------------
<S> <C>
Mid-America Centers Corp. Nebraska
(formerly Dial Enterprises Corp.)
</TABLE>
52
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-87066 and Registration Statement No. 33-58987 of Mid-America Realty
Investments, Inc. on Form S-8 of our report dated February 1, 1996 appearing in
this Annual Report on Form 10-K of Mid-America Realty Investments, Inc. for the
year ended December 31, 1995.
Deloitte & Touche LLP
February 1, 1996
Omaha, Nebraska
53
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,574
<ALLOWANCES> 335
<INVENTORY> 0
<CURRENT-ASSETS> 2,239
<PP&E> 152,015
<DEPRECIATION> 24,250
<TOTAL-ASSETS> 150,339
<CURRENT-LIABILITIES> 1,831
<BONDS> 65,592
0
0
<COMMON> 83
<OTHER-SE> 82,833
<TOTAL-LIABILITY-AND-EQUITY> 150,339
<SALES> 0
<TOTAL-REVENUES> 22,333
<CGS> 0
<TOTAL-COSTS> 7,417
<OTHER-EXPENSES> 5,436
<LOSS-PROVISION> 131
<INTEREST-EXPENSE> 5,965
<INCOME-PRETAX> 3,384
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,384
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,384
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
