SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
-----------
(MARK ONE)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
---------- ----------
Commission file number: 33-11863
--------
HARBOR AMERICAN HEALTH CARE TRUST, INC.
---------------------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 86-0576027
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2990 N. SWAN ROAD, SUITE 228, TUCSON, ARIZONA 85712
----------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number: (520) 326-2000
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 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 outstanding of the Issuer's common stock as
of November 9, 1995 is 397,600.
----------------------------
<PAGE>
FORM 10-Q
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
ASSETS (Unaudited) (Audited)
- ------ ----------- ---------
<S> <C> <C>
Real Estate Properties:
Land $ 466,301 $ 466,301
Building and improvements, net
of accumulated depreciation
of $3,813,606 and $3,697,274
at September 30, 1995 and
December 31, 1994,
respectively 4,543,494 4,659,826
Loan costs, net 12,111 11,184
Rent and other receivables 143,811 202,465
Cash and cash equivalents 115,204 106,979
---------- ----------
TOTAL ASSETS $5,280,921 $5,446,755
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Mortgage notes payable 5,140,012 5,297,096
Accounts payable and accrued
expenses 261,356 318,460
---------- ----------
TOTAL LIABILITIES 5,401,368 5,615,556
---------- ----------
Stockholders' Equity:
Common stock, $.01 par value;
10,000,000 shares authorized;
issued and outstanding,
397,600 shares 3,976 3,976
Paid in capital 3,652,823 3,652,823
Distributions in excess of
net earnings (3,777,246) (3,825,600)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (120,447) (168,801)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,280,921 $5,446,755
========== ==========
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
FORM 10-Q
PART I: FINANCIAL INFORMATION
STATEMENTS OF EARNINGS AND DISTRIBUTIONS
IN EXCESS OF NET EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1995 1994
(Unaudited) (Unaudited)
----------- -----------
REVENUES:
- ---------
<S> <C> <C>
Rental income $ 224,019 $ 202,766
Miscellaneous income 0 13,187
Interest Income 2,672 3,098
---------- ----------
226,691 219,051
---------- ----------
EXPENSES:
- ---------
Depreciation and amortization 36,368 64,463
Interest expense 118,390 79,662
Advisory fees 7,770 14,925
Directors fees and expenses 12,895 11,800
Other operating expenses 6,896 27,358
---------- ----------
182,319 198,208
---------- ----------
INCOME/(LOSS) BEFORE INCOME
TAXES (BENEFIT) 44,372 20,843
---------- ----------
NET INCOME (LOSS) $ 44,372 $ 20,843
========== ==========
NET INCOME (LOSS) PER SHARE $0.11 $0.05
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 397,600 397,600
========== ==========
Distributions in excess of
earnings - beginning of period ($3,821,618) ($4,028,020)
Net income/(loss) 44,372 20,843
Distributions during the period 0 0
----------- -----------
Distributions in excess of
earnings - end of period ($3,777,246) ($4,007,177)
=========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
FORM 10-Q
PART I: FINANCIAL INFORMATION
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1995 1994
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS FROM OPERATIONS:
- ---------------------------
<S> <C> <C>
Net income/(loss) $ 44,372 $ 20,843
Adjustments to reconcile net income
to net cash provided by (used
in) operating activities:
Depreciation and amortization 36,368 64,463
(Increase)/decrease in:
Rent and other receivables 17,945 31,969
Accounts payable and accrued expenses (7,011) (30,497)
---------- ----------
Net cash provided by (used in)
operating activities 91,674 86,778
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Capital expenditures
Disposition of real property through
foreclosure
---------- ----------
Net cash provided by (used in)
investing activities 0 0
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Payments on long-term borrowings (55,002) (58,394)
Distributions to stockholders 0 0
---------- ----------
Net cash provided by (used in)
financing activities (55,002) (58,394)
---------- ----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 36,672 28,384
CASH AND CASH EQUIVALENTS -
Beginning of period 78,532 41,070
---------- ----------
CASH AND CASH EQUIVALENTS -
End of period $115,204 $69,454
========== ==========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
FORM 10-Q
PART I: FINANCIAL INFORMATION
STATEMENTS OF EARNINGS AND DISTRIBUTIONS
IN EXCESS OF NET EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1995 1994
(Unaudited) (Unaudited)
----------- -----------
REVENUES:
- ---------
<S> <C> <C>
Rental income $ 663,205 $ 682,721
Miscellaneous income 0 20,377
Interest Income 9,287 3,098
---------- ----------
672,492 706,196
---------- ----------
EXPENSES:
- ---------
Depreciation and amortization 133,572 167,845
Loss on sale of real property 0 22,575
Interest expense 374,071 315,337
Advisory fees 23,312 46,574
Directors fees and expenses 37,511 35,887
Other operating expenses 55,672 100,726
---------- ----------
624,138 688,944
---------- ----------
INCOME/(LOSS) BEFORE INCOME
TAXES (BENEFIT) 48,354 17,252
---------- ----------
NET INCOME (LOSS) $ 48,354 $ 17,252
========== ==========
NET INCOME (LOSS) PER SHARE $0.12 $0.04
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 397,600 397,600
========== ==========
Distributions in excess of
earnings - beginning of period ($3,825,600) ($4,024,429)
Net income 48,354 17,252
Distributions during the period 0 0
----------- -----------
Distributions in excess of
earnings - end of period ($3,777,246) ($4,007,177)
=========== ===========
</TABLE>
See Notes to Financial Statements
5
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
FORM 10-Q
PART I: FINANCIAL INFORMATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1995 1994
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS FROM OPERATIONS:
- ---------------------------
<S> <C> <C>
Net income $ 48,354 $ 17,252
Adjustments to reconcile net income
to net cash provided by (used
in) operating activities:
Depreciation and amortization 133,572 167,845
Changes in assets and liabilities:
Rent and other receivables 58,654 (53,624)
Accounts payable and
accrued expenses (57,104) (172,524)
---------- ----------
Net cash provided by (used in)
operating activities 183,476 (41,051)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Increase in loan costs (18,167) (2,500)
Disposition of real property 0 1,683,153
---------- ----------
Net cash provided by (used in)
investing activities (18,167) 1,680,653
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Payments on long-term borrowings (157,084) (167,676)
Long-term borrowings relieved
through sale of property 0 (1,417,131)
Distributions to stockholders 0 0
---------- ----------
Net cash provided by (used in)
financing activities (157,084) (1,584,807)
---------- ----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 8,225 54,795
CASH AND CASH EQUIVALENTS --
Beginning of period 106,979 14,659
---------- ----------
CASH AND CASH EQUIVALENTS --
End of period $ 115,204 $ 69,454
========== ==========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND
THE YEAR ENDED DECEMBER 31, 1994
NOTE 1: ORGANIZATION
- ----------------------
Harbor American Health Care Trust, Inc. (the "Trust") is a Real
Estate Investment Trust ("REIT"). The affairs of the Trust are
managed by its Advisor, Harbor American Capital Group, a
California Limited Partnership (the "Advisor"). The Trust
engages in acquiring and leasing health care facilities (nursing
homes and intermediate care mental retardation developmental
disabled nursing facilities) under long-term leases.
The Trust's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course
of business. During 1993, the Trust incurred a net loss of
$1,293,450. During 1994 and 1993, the Trust was unable to pay
certain expenses as they became due. The Trust has a deficiency
in assets of $120,447 at September 30, 1995. On March 9, 1994,
the Michigan Property was sold. The Trust has three properties
remaining under lease, thus limiting cash flows available to pay
operating expenses. As discussed in Note 4 to the financial
statements, a mortgage note on the Florida Property was
originally due on March 31, 1994; however, the mortgage holder
has extended the due date of the mortgage note until October 31,
1996. The Trust may be required to sell or refinance the Florida
Property by the new maturity date. These factors, among others,
indicate that the Trust may be unable to continue as a going
concern for a reasonable period of time.
Management's plans include continuing to seek sources to
refinance the loan on the Florida Property and/or to sell the
Florida Property, developing alternative uses to retain the
economic viability of the Colorado Properties, and minimizing
operating costs.
The financial statements do not include any adjustments relating
to the recoverability of recorded asset amounts or the amount of
liabilities that might be necessary should the Trust be unable to
continue as a going concern.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------
a. Buildings and Improvements - Depreciation of these assets is
--------------------------
computed by the straight-line method over the useful lives
of the assets which have been estimated to be 20 to 40
years. The Trust periodically evaluates the net realizable
value of its properties and provides a valuation allowance
when it becomes probable there has been a permanent
impairment of value.
b. Loan Costs - Loan costs have been deferred and are being
----------
amortized using the straight-line method over the term of
the related borrowing.
c. Revenue Recognition - Rental income from operating leases is
-------------------
recognized as earned over the life of the lease agreements.
d. Income Taxes - The Trust qualifies as a REIT under the
------------
provisions of the Internal Revenue Code. As such, the Trust
is not subject to federal income taxes on amounts
distributed to stockholders provided distributions to
stockholders are at least 95% of the Trust's real estate
investment trust taxable income and the Trust meets certain
other conditions.
7
<PAGE>
NOTE 3: REAL ESTATE PROPERTIES AND LEASES
- -------------------------------------------
At September 30, 1995, the Trust owned three nursing homes (the
"Properties"), two of which are located in Colorado (the
"Colorado Properties"), and one in Florida (the "Florida
Property").
THE MICHIGAN PROPERTY
On March 9, 1994, the Trust sold the Marshall Manor property.
The sale resulted in a loss of $150,280.
Included in the caption "Rent and other receivables" is the
discounted contract balance of $92,064 at September 30, 1995 and
$123,210 at December 31, 1994 resulting from the sale of the
Marshall Manor facility. The contract, requiring quarterly
payments of $12,500, has been discounted using an implicit
interest rate of 7.5% and results in principal maturities of
$41,920, $45,153, and $36,137 in 1995, 1996, and 1997,
respectively. The contract is subordinated to other debt secured
by the Marshall Manor property.
THE COLORADO PROPERTIES
Effective October 1, 1992, the Trust entered into three year
operating leases on the two Colorado Properties (the Country View
and New Life facilities) with Res-Care, Inc. ("Res-Care"). The
lessee had the option to renew the leases for three, one-year
terms. Res-Care did not elect to renew the lease for the Country
View facility. Therefore, that lease expired on September 30,
1995. Rather than exercising the first of three one-year options
to extend the lease term for the New Life facility, Res-Care
negotiated with the Trust for an additional thirty month term
expiring March 31, 1998.
The leases provide for a basic rent equal to 115% of the annual
fair rental allowance as determined by the State of Colorado, to
be adjusted by the percentage decrease or increase in the "client
base" at each facility, resulting in an "adjusted monthly rent."
The annual base rents at the inception of the leases were
$300,396 ($25,033 per month). Beginning October 1, 1995, the
base monthly rent for the New Life facility only will approximate
$10,000 per month. The base monthly rent will be adjusted
annually upon the issuance of a new annual fair rental allowance
by the State of Colorado.
The State of Colorado is interpreting certain federal guidelines
pertaining to active treatment of mentally retarded,
developmentally disabled ("MRDD") patients, such as those
receiving care at the Colorado Properties. The State's
interpretation of said guidelines is requiring these patients to
be moved into private housing which has resulted in all patients
being moved out of the Country View facility. It is Res-Care's
intent to likewise move the New Life patients into private
housing by March 31, 1998. The client base for the purposes of
determining rental payments includes patients who have been moved
into private housing.
Previously, it was management's belief that the Colorado
Properties would have to be used for purposes other than the
present MRDD use after the expiration of the initial three year
lease terms. Accordingly, the carrying value of the Colorado
Properties was reduced to the undiscounted cash flows expected to
be realized from the properties by a charge to operations in 1992
of $1,721,000 ($4.33 per share) and an additional $770,000 in
1993 ($1.94 per share).
8
<PAGE>
THE FLORIDA PROPERTY
Effective May 1, 1993, the Trust entered into a five year lease
with a Successor Lessee. The Successor Lessee has the option to
renew for five, five year terms. The lease provides for monthly
rentals consisting of an equity component of $7,000 and a debt
component equal to the amount of the Trust's mortgage payment.
Minimum annual lease payments expected to be received by the
Trust on all leased properties during the lease terms are as
follows:
<TABLE>
YEAR ENDED DECEMBER 31 FLORIDA COLORADO
PROPERTY PROPERTIES TOTAL
-------- ---------- -----
<S> <C> <C> <C>
1995 $ 547,915 $ 255,297 $ 803,212
1996 547,915 120,000 667,915
1997 547,915 120,000 667,915
1998 182,600 30,000 212,600
---------- ---------- ----------
Total $1,826,345 $ 525,297 $2,351,642
========== ========== ==========
</TABLE>
The Colorado Properties' rentals are based on the adjusted
monthly rent at the inception of the Lease. The Florida Property
rental includes a debt component equal to the debt service on the
Trust's existing mortgage loan.
The Trust is contingently liable for unpaid property taxes which
are the obligation of the lessees.
NOTE 4: MORTGAGE NOTES PAYABLE
- --------------------------------
<TABLE>
9/30/95 12/31/94
------- --------
<S> <C> <C>
Bank mortgage note - Florida Property,
payable in monthly installments of
$38,660, including interest at 10.25%,
through October 1996, at which date
the unpaid balance is due. $3,418,402 $3,499,840
Bank mortgage note - Colorado
Properties, interest at 7%; payable
in monthly installments of $18,111,
including interest, through
September 30, 1995, at which date
the unpaid balance is due in full.
Management is currently negotiating
an extension of the loan. 1,680,945 1,756,592
Note payable to bank, interest at
prime (8.75% at September 30, 1995,
due December 20, 1995). 40,665 40,665
---------- ----------
Total mortgage notes payable $5,140,012 $5,297,097
========== ==========
</TABLE>
9
<PAGE>
The bank mortgage notes on the Colorado and Florida Properties
are secured by first mortgages and assignments of the leases and
rents thereunder. The bank mortgage note on the Colorado
Properties is also secured, to the extent of $800,000, by a
second mortgage on the Florida Property. The bank mortgage note
on the Florida Property, payable on March 31, 1994, was extended
to October 31, 1996.
The remaining annual principal payment requirements on all loans
are as follows:
<TABLE>
YEAR ENDED DECEMBER 31,
- -----------------------
<S> <C>
1995 (three months remaining) $1,750,437
1996 3,389,575
----------
Total $5,140,012
==========
</TABLE>
NOTE 5: RELATED PARTY TRANSACTIONS
- ------------------------------------
The Trust has entered into agreements with the Advisor, and
affiliates of the Advisor, to provide various services to the
Trust in exchange for fees, as follows:
a. Advisory fees at an annual rate of .3% of average invested
assets, as defined; additional fees may be paid based on
earnings.
b. Property management, acquisition and disposition fees to be
paid based upon contractual agreements between the parties.
c. Incentive advisory service fees, payable annually in an
amount equal to 5% of the cash available for distribution to
stockholders for the fiscal year. The Advisor has agreed to
subordinate its incentive advisory fee to a cumulative
noncompounding return to the stockholders of 12% on average
adjusted invested capital beginning November 3, 1990, one
year after the termination of the initial public offering.
The Trust has paid no incentive advisory fees to date.
d. Mortgage servicing fees, at varying rates dependent upon the
types of loans serviced. The Trust has paid no mortgage
servicing fees to date. In June 1995, the Trust paid an
affiliate of the Advisor $8,817 as a fee for services
rendered in connection with the extension of the Bayshore
loan.
Leasing transactions with related parties are described in Notes
3 and 4.
In 1993, the Successor Lessee of the Florida Property made a
$47,921 payment of interest which had been accrued on the related
mortgage loan. This amount is being amortized over the term of
the lease. The unamortized portion ($19,957 at September 30,
1995 and $31,942 at December 31, 1994) has been included in the
balance sheet in the caption "Accounts payable and accrued
expenses."
NOTE 6: CASH RESERVES AND DISTRIBUTIONS TO STOCKHOLDERS
- ---------------------------------------------------------
Under the terms of the public offering, at least 5% of paid-in
capital is required to be set aside to pay for normal repairs,
replacements, working capital and contingencies. At September
30, 1995, the Trust has not met this requirement.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
-----------------------------------------------
OPERATION
---------
(a) Not Applicable
--------------
(b) Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
- -----------------------------------
RESULTS OF OPERATIONS - QUARTER ENDED SEPTEMBER 30, 1995
--------------------------------------------------------
Operations for the fiscal quarter ended September 30, 1995
reflect rental income and interest income. The rental income is
a result of the lease of the three long term care facilities
owned by the Trust. Each of these facilities is leased on long
term leases and one of the leases is leased to an affiliate of
the Advisor, Harbor American Capital Group, a California Limited
Partnership. Such affiliation results from common ownership by
James R. Sellers of Heritage Advisory Corporation (the Managing
General Partner of the Advisor) and the lessee of the Florida
Property. This lessee is Bayshore Healthcare Services, Inc.
("BHS"). Two of the nursing homes are located in Colorado (the
"Colorado Properties"), and one is located in Florida (the
"Florida Property").
The Colorado Properties are leased to Res-Care, Inc. of
Louisville, Kentucky ("Res-Care"). Res-Care has kept its lease
payments current since inception of the leases (the "Colorado
Leases") on October 1, 1992. The mortgage payments on the
Colorado Properties are current. The loan on the Colorado
Properties matured on September 30, 1995. To date, no
arrangements for payment of this loan have been made. Meetings
have been held with the lender, PNC Bank, Kentucky, Inc. ("PNC
Bank"), of Louisville, Kentucky, and management feels the
relationship with this lender is such that adequate arrangements
will be made to extend said loan. If the Trust is unable to
complete such extension arrangements, the Trust could lose its
equity in the Colorado Properties. (See the item referenced
below under the Florida Property regarding cross
collateralization with the loan on the Colorado Properties).
The lease of the Country View Nursing Home ("Country View")
in Longmont, Colorado, with Res-Care, terminated on September 30,
1995. The lease of the New Life Nursing Home in Greeley,
Colorado, with Res-Care, has been extended to March 31, 1998.
The Trust has been making every effort to develop an alternative
use for Country View for the past two years. To date, its
efforts have been unsuccessful. These efforts will continue and
the property will be adequately maintained, insured and occupied
by caretakers until the property is either leased or sold.
The Florida Property is leased to BHS and all lease payments
are current. The Trust is obligated to PNC Bank under a first
mortgage loan on the Florida Property which is current in its
mortgage payments. The Trust has entered into a modification of
the Bayshore loan with PNC Bank that provides for extension of
said loan to October 31, 1996. By said date the Trust must
either secure other financing or sell the property. No assurance
can be given that either option will
Page 11
<PAGE>
protect the equity of the Trust. If such a sale or refinancing
is not able to be successfully completed, the Trust could lose
its equity in the Bayshore property, which could result in a net
worth reduction that would increase the negative net worth of the
Trust.
Further, the loan on the Colorado Properties is cross
collateralized with the loan on the Florida Property as evidenced
by a second lien in the amount of $800,000 on the Florida
Property securing the Colorado Properties debt. Current efforts
are being made to sell the Florida Property so that the mortgage
on the Florida Property (current balance: $3,400,000) can be
paid in full and the loan on the Colorado Properties can be paid
down by $800,000. The remaining debt on the Colorado Properties
would then be approximately $930,000 which debt could then be
serviced by the lease payments to be received from the New Life
Nursing Home. Negotiations have been ongoing with the lender to
secure an extension of this debt. Crucial to these negotiations
is the closing of the sale of the Florida Property. No assurance
can be given that this closing will occur and that the $800,000
reduction on the Colorado Properties debt will be made.
The efforts to sell the Florida Property have resulted in a
letter of intent dated October 31, 1995, being executed with
Salem Housing Corporation of Fairhope, Alabama, ("Salem") as
purchaser. Salem has agreed to enter into negotiations to
develop a definitive contract for a purchase price of $6,000,000.
If such contract is agreed on, the joint sellers will be the
Trust as the seller of the fee title interest, and BHS as the
seller of the leasehold interest and of the personal property.
If said contract is agreed on and performed, it could close as
soon as December 31, 1995 and as late as March 31, 1996. No
assurance can be given that a definitive contract will be
finalized and closed and the equities in the Florida and Colorado
properties thus protected.
The Trust has received preliminary indications from a
nursing home manager with whom it currently has a business
relationship that the New Life Nursing Home can be converted to
skilled or intermediate nursing home use if Res-Care does not
enter into further lease extension negotiations at the expiration
of its lease in 1998.
A previously owned Michigan property, Marshall Manor Nursing
Home, was sold effective March 4, 1994. Terms of the sale
provided for the purchaser, Marshall Healthcare Investors, L.P.,
a Georgia limited partnership, to pay $50,000 to the Trust during
the first year payable at the rate of $12,500 per quarter
beginning June 30, 1994. All payments due to date have been made
in a timely manner. Quarterly payments totaling $50,000 per year
are also due in the second year, beginning June 10, 1995 and
quarterly payments totaling $75,000 are due in the third year,
beginning June 30, 1996.
For the three months ended September 30, 1995, rental income
in the amount of $224,019 was received as compared with the
period ending September 30, 1994, for which $202,766 was
received, an increase of 9.5%.
Page 12
<PAGE>
For the nine months ended September 30, 1995, rental income
in the amount of $663,205 was received. For the nine month
period ending September 30, 1994, $682,721 of rental income was
received representing a 3% decrease from 1994 to 1995. The 1994
period included rental income from Marshall Manor, a property
that was sold effective March 4, 1994.
Interest income results from the Trust's funds being
temporarily invested in such short term investments as savings
accounts and certificates of deposits issued by the Trust's
banks, PNC Bank of Louisville, Kentucky and BankOne Arizona of
Tucson, Arizona. Also, the Trust currently has $40,000 invested
in three month Treasury Bills yielding in excess of 5%. Income
from these sources has been increased but is still less than 1.5%
of total income.
Gross revenues of $226,691 for the quarter ended and
$672,492 for the nine months ended September 30, 1995, were
primarily derived from the net lease rentals received from the
three Properties. Gross revenues were $219,051 for the quarter
ended and $706,196 for the nine months ended September 30, 1994,
which represented changes of 5% or less.
Net income of $44,372 for the quarter ended and $48,354 for
the nine months ended September 30, 1995 resulted after reduction
of operating expenses, which included $36,368 and $133,572 of
depreciation and amortization for the quarter and nine months
ended September 30, 1995, respectively. Net income was $20,843
for the quarter ended and $17,252 for the nine months ended
September 30, 1994 representing increases from 1994 to 1995.
These increases in net income from quarter to quarter and nine
months to nine months in 1995 were due primarily to reduction of
Other Operating Expenses.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash flows from operations were $91,674 in the third quarter
of 1995 compared with $86,778 in the third quarter of 1994. This
quarterly increase is minimal.
Since the future of Country View is in question and since
the potential sale of the Florida Property is also in question,
this impacts the liquidity and indeed the ability of the Trust to
proceed as an ongoing business concern. Trust management intends
to continue to do everything in its power to protect shareholder
equity. Trust management feels the chances of completing a sale
of Florida Property at the current price indicated by the Letter
of Credit are good. However, it currently has no strong
indications of successfully leasing or selling the Country View
property.
PART II OTHER INFORMATION
ITEMS 1, 2, 3, 4 AND 6. NOT APPLICABLE
--------------
Page 13
<PAGE>
ITEM 5. OTHER INFORMATION
-----------------
A sale of the Florida Property is contemplated by a Letter
of Intent dated October 31, 1995. This Letter of Intent was
executed by the Trust as seller of the fee title interest and by
BHS as seller of the leasehold interest with Salem Housing
Corporation of Fairhope, Alabama as purchaser. The Trust, BHS
and Salem will enter into negotiations to develop a definitive
contract for a purchase price of $6,000,000. If such a contract
is agreed on and performed, it could close as soon as December
31, 1995 and as late as March 31, 1996. No assurance can be
given that a definitive contract will be finalized and closed and
the equities in the Florida and Colorado properties thus
protected.
Page 13A
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: November 9, 1995
HARBOR AMERICAN HEALTH CARE TRUST, INC.
By: /s/ F. Dale Markham
------------------------------------
F. Dale Markham
President and Treasurer
(Principal Financial Officer)
Page 14
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