SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
-----------
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
- -------
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDING JUNE 30, 1996 OR
-------------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
- -------
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------- ----------
COMMISSION FILE NUMBER: 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, STE. 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 JULY 26, 1996 IS 397,600.
------------- -------
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: YES NO X
----- -----
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
FORM 10-QSB
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited) (Audited)
----------- ---------
ASSETS:
- -------
<S> <C> <C>
Real Estate Properties:
Land $ 466,301 $ 466,301
Building and improvements, net
of accumulated depreciation
of $3,922,366 and $3,847,408
at June 30, 1996 and
December 31, 1995, respectively 4,434,737 4,509,693
Loan costs, net 2,344 5,860
Prepaid expenses 6,572 16,432
Rent and other receivables 68,139 77,796
Cash and Cash equivalents 154,220 198,061
---------- ----------
TOTAL ASSETS $5,132,312 $5,274,143
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
- -------------------------------------
Mortgage notes payable $5,009,454 $5,068,685
Accounts payable and accrued
expenses 163,155 191,238
---------- ----------
TOTAL LIABILITIES 5,172,609 5,259,923
========== ==========
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 (3,697,096) (3,642,579)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (40,297) 14,220
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,132,312 $5,274,143
========== ==========
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
FORM 10-QSB
PART I: FINANCIAL INFORMATION
STATEMENTS OF EARNINGS AND DISTRIBUTIONS
IN EXCESS OF NET EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
REVENUES:
- ---------
<S> <C> <C>
Rental income $ 178,823 $ 217,979
Interest income 2,503 2,924
---------- ----------
181,326 220,903
---------- ----------
EXPENSES:
- ---------
Depreciation and amortization 39,182 48,602
Interest expense 122,988 128,412
Advisory and other fees 9,870 7,771
Directors fees and expenses 10,900 12,312
Other operating expenses 33,435 12,375
---------- ----------
Total expenses 216,375 209,472
---------- ----------
INCOME/(LOSS) BEFORE INCOME
TAXES (BENEFIT) (35,049) 11,431
Income taxes (benefit)
---------- ----------
NET INCOME (LOSS) ($35,049) $11,431
========== ==========
NET INCOME (LOSS) PER SHARE ($0.09) $0.03
========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 397,600 397,600
========== ==========
Distributions in excess of
earnings - beginning of period ($3,662,047) ($3,833,049)
Net income/(loss) (35,049) 11,431
Distributions during the period 0 0
---------- ----------
Distributions in excess of
earnings - end of period ($3,697,096) ($3,821,618)
=========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
FORM 10-QSB
PART I: FINANCIAL INFORMATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS FROM OPERATIONS:
- ---------------------------
<S> <C> <C>
Net income/(loss) ($35,049) $11,431
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 39,182 48,602
Changes in assets and liabilities:
Rent and other receivables (1,319) 8,852
Prepaid expenses 4,928
Accounts payable and accrued
expenses 6,526 (4,314)
---------- ----------
Net cash provided by (used in)
operating activities 14,269 64,571
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Capital expenditures
Deposits on real estate
---------- ----------
Net cash provided by (used in)
investing activities 0 0
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Payments on long-term borrowings (25,514) (51,221)
Increase in loan costs 0 (12,667)
---------- ----------
Net cash provided by (used in)
financing activities (25,514) (63,888)
---------- ----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (11,245) 683
CASH AND CASH EQUIVALENTS -
Beginning of period 165,465 77,849
---------- ----------
CASH AND CASH EQUIVALENTS -
End of period $154,220 $78,532
========== ==========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
FORM 10-QSB
PART I: FINANCIAL INFORMATION
STATEMENTS OF EARNINGS AND DISTRIBUTIONS
IN EXCESS OF NET EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
REVENUES:
- ---------
<S> <C> <C>
Rental income $ 356,377 $ 439,186
Miscellaneous income 1,000 0
Interest income 4,990 6,615
---------- ----------
362,367 445,801
---------- ----------
EXPENSES:
- ---------
Depreciation and amortization 78,474 97,204
Interest expense 238,324 255,681
Advisory and other fees 19,740 15,541
Directors fees and expenses 18,200 24,616
Other operating expenses 62,147 48,777
---------- ----------
Total expenses 416,885 441,819
---------- ----------
INCOME/(LOSS) BEFORE INCOME
TAXES (BENEFIT) (54,518) 3,982
Income taxes (benefit)
---------- ----------
NET INCOME (LOSS) ($54,518) $3,982
========== ==========
NET INCOME (LOSS) PER SHARE ($0.14) $0.01
========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 397,600 397,600
========== ==========
Distributions in excess of
earnings - beginning of period ($3,642,579) ($3,825,600)
Net income/(loss) (54,518) 3,982
Distributions during the period 0 0
---------- ----------
Distributions in excess of
earnings - end of period ($3,697,097) ($3,821,618)
=========== ===========
</TABLE>
See Notes to Financial Statements
5
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
FORM 10-QSB
PART I: FINANCIAL INFORMATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS FROM OPERATIONS:
- ---------------------------
<S> <C> <C>
Net income/(loss) ($54,518) $3,982
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 78,474 97,204
Changes in assets and liabilities:
Rent and other receivables 9,657 40,709
Prepaid expenses 9,860
Accounts payable and accrued
expenses (28,083) (50,093)
---------- ----------
Net cash provided by (used in)
operating activities 15,390 91,802
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Increase in loan costs (18,167)
---------- ----------
Net cash provided by (used in)
investing activities 0 (18,167)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Payments on long-term borrowings (59,231) (102,082)
Distributions to stockholders 0 0
---------- ----------
Net cash provided by (used in)
financing activities (59,231) (102,082)
---------- ----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (43,841) (28,447)
CASH AND CASH EQUIVALENTS -
Beginning of period 198,061 106,979
---------- ----------
CASH AND CASH EQUIVALENTS -
End of period $154,220 $78,532
========== ==========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
HARBOR AMERICAN HEALTH CARE TRUST, INC.
Notes to Financial Statements
For the Six Months Ended June 30, 1996
and the Year Ended December 31, 1995
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. The Trust has three properties, one in Florida and
two in Colorado. The Florida Property and one Colorado Property
are leased. Therefore, the cash flow available to pay operating
expenses is limited.
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.
e. USE OF ESTIMATES - Management has made certain estimates
----------------
and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from
those estimates.
7
<PAGE>
NOTE 3: REAL ESTATE PROPERTIES AND LEASES
- -------------------------------------------
At June 30, 1996 and December 31, 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 $70,314 at June 30, 1996 and
$81,290 at December 31, 1995 resulting from the sale of the
Marshall Manor facility. The contract, requiring quarterly
payments of $12,500 through June 30, 1996 and $18,750 thereafter,
has been discounted using an implicit interest rate of 7.5% and
results in principal maturities of $45,153 and $36,137 in 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 lease provides 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 the facility, resulting in an "adjusted monthly rent."
Beginning October 1, 1995, the base monthly rent for the New Life
facility approximates $12,439 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 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.
Commencing January 1, 1995, additional rents may be earned,
equal to 5% of the incremental net patient revenue increase over
the 1994 base year. No additional rent has been earned or paid
to date.
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>
1996 $ 547,915 $149,275 $ 697,190
1997 547,915 149,275 697,190
1998 182,600 37,319 219,929
---------- -------- ----------
Total $1,278,430 $335,869 $1,614,299
========== ======== ==========
</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 contracted obligation of the lessees. Unpaid property
taxes approximated $70,000 at June 30, 1996.
NOTE 4: MORTGAGE NOTES PAYABLE
- --------------------------------
<TABLE>
6/30/96 12/31/95
------- --------
<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 $3,335,477 $3,394,708
Bank mortgage note - Colorado
Properties, interest at 8.50%;
payable in monthly installments
of $18,111, including interest,
through October 31, 1996, at
which date the unpaid balance is
due in full. 1,673,977 1,673,977
---------- ----------
Total mortgage notes payable $5,009,454 $5,068,685
========== ==========
</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 is due and payable on October 31, 1996
and the bank mortgage note on the Colorado Properties is due and
payable on October 31, 1996.
In the event the bank elects not to extend the terms of the loans
beyond their due dates and exercises its right to call the loan,
the Trust would seek alternative sources of financing or
liquidate the properties to satisfy the debt. There is no
assurance that the Trust, if required to liquidate the property,
would be able to realize the carrying value of the property. No
provision for loss, if any, that may result upon the resolution
of the status of the mortgage loans has been made in the
accompanying financial statements.
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 to October 31, 1996.
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 ($14,367 at June 30, 1996
and $22,357 at December 31, 1995) 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 June 30,
1996, 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 JUNE 30, 1996
----------------------------------------------------
Operations for the fiscal quarter ended June 30, 1996
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. Two of these facilities are 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 New Life Care Center in Greeley,
Colorado ("New Life") and Country View Care Center in Longmont,
Colorado ("Country View"). New Life is 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.
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. 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 Trust has been seeking alternate uses for the Country
View Property but has not yet finalized any arrangement. If it
is unable to do so, the value of the property could be impaired.
The Trust has reached an extension agreement with PNC Bank,
Kentucky, Inc. of Louisville, Kentucky ("PNC"), its lender on the
Colorado Properties. Under the agreement, the loan was extended to
October 20, 1996 and monthly payments of interest only at the rate of
8.25% per annum are payable on the 20th of each month. The monthly
lease payment from New Life to the Trust is approximately equivalent
to the modified extended monthly mortgage payment due from the Trust
to PNC. Efforts are being made to sell or refinance the Colorado
Properties. However, no assurance can be given that such efforts
will be successful. If the Trust is unable to sell, refinance or
arrange additional extensions, the Trust could lose the
properties under a foreclosure proceeding.
<PAGE>
The Florida Property is leased to BHS and all lease payments
are current. The Trust is obligated to PNC under a first
mortgage loan on the Florida Property which is current in its
mortgage payments. Effective March 24, 1996, the Trust entered
into a modification of the Bayshore loan with PNC that
provided for extension of said loan to October 20, 1996. By said
date the Trust intends to either secure other financing or sell
the property.
If such a sale or refinance 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 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
$900,000.
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. Quarterly payments totaling $50,000 per
year were also due in the second year beginning June 30, 1995,
and quarterly payments totaling $75,000 are due in the third year
beginning June 30, 1996. All payments due to date have been made
in a timely manner.
For the three months ending June 30, 1996, rental income in
the amount of $178,823 was received as compared with the period
ending June 30, 1995, for which $217,979 was received, a
decrease of 18%.
For the six months ended June 30, 1996, rental income in the
amount of $356,377 was received. For the six month period ending
June 30, 1995, $439,186 of rental income was received
representing a 19% decrease from 1995 to 1996. This decrease for
both the three month and the six month periods ended June 30, 1996
was caused by the cessation of rental income from the Country
View Property.
The rental amounts received for the current quarter result
from the leases which became effective on October 1, 1992 for the
New Life Property and on May 1, 1993 for the Florida Property.
<PAGE>
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 and BankOne Arizona of
Tucson, Arizona. Also, the Trust currently has $40,000 invested
in three month Treasury Bills yielding approximately 5%.
Gross revenues of $181,326 for the quarter ended and
$362,367 for the six months ended June 30, 1996 were primarily
derived from the net lease rentals received from the two
Properties. Gross revenues were $220,903 for the quarter ended
and $445,801 for the six months ended June 30, 1995 which
represented decreases of 18% and 19%, respectively.
Net losses of $35,049 for the quarter ended and $54,518 for
the six months ended June 30, 1996 resulted after reduction of
operating expenses, which included $39,182 and $78,474 of
depreciation and amortization for the quarter and six months
ended June 30, 1996, respectively. Net income was $11,431 for
the quarter ended and $3,982 for the six months ended June 30,
1995, representing decreases from 1995 to 1996. These decreases
in net income from quarter to quarter and half year to half year
in 1996 were due primarily to the cessation of rental income from
the Country View Property.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash flows from operations were $14,269 in the second
quarter of 1996 compared with $64,571 in the second quarter of
1995. The quarterly decrease results primarily from the
cessation of rental income from the Country View Property and
from the ongoing Country View maintenance and insurance costs
that must now be borne by the Trust.
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 that chances for selling the
Florida Property at a market price 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 5. NOT APPLICABLE
--------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) The following exhibits are filed as part of this report:
27 -- Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
ended June 30, 1996.
<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: July 26, 1996
HARBOR AMERICAN HEALTH CARE TRUST, INC.
BY: /s/ F. Dale Markham
--------------------------------
F. Dale Markham
President and Treasurer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000810836
<NAME> HARBOR AMERICAN HEALTH CARE TRUST
<S> <C>
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