<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
May 1, 1998
-----------------------------------------------
Date of Report (Date of Earliest Event Reported)
AMERICAN REALTY TRUST, INC.
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Georgia 1-9948 54-0697989
- -------------------------------------------------------------------------------
(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
--------------
Not Applicable
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective May 1, 1998, American Realty Trust, Inc. (the "Company") purchased, in
a single transaction, twenty-nine apartment complexes from entities affiliated
with Investors General, Inc., an unrelated party, in Florida and Georgia
(collectively the "IGI Properties") for a total of $55.8 million (12.9% of the
Company's assets at December 31, 1997). The properties contain a total of 2,441
units and were constructed between 1968 and 1985.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December 31,
1997 and three months ended March 31, 1998. A pro forma balance sheet as of
March 31, 1998 is also presented.
A summary of the pro forma transaction follows:
Effective May 1, 1998, the Company purchased, in a single transaction,
twenty-nine apartment complexes totaling 2,441 units in Florida and Georgia for
$55.8 million. The Company acquired the properties through three wholly-owned
subsidiaries, ART Florida Portfolio I, Ltd., ART Florida Portfolio II, Ltd. and
ART Florida Portfolio III, Ltd., each a newly-formed Texas limited partnership
(collectively, the "Partnerships"). The Company paid $6.1 million in cash,
assumed $43.4 million in existing mortgage debt and issued a total of $6.6
million in Class A limited partner units in the acquiring entities, having the
Company as the Class B Limited Partner and a newly-formed wholly-owned
subsidiary of the Company, as the Managing General Partner. The Class A
unitholders are entitled to a $.08 per Class A unit preferred return in 1998,
$.09 in 1999 and $.10 thereafter. The mortgages bear interest at rates ranging
between 7.86% and 11.22% per annum, require monthly principal and interest
payments of $384,000 and mature between July 1, 1998 and September 1, 2017.
The pro forma statements of operations present the Company's operations as if
the transaction described above had occurred at the beginning of each of the
periods presented. The Company's management is not aware of any material factors
relating to the purchased properties that would cause the reported financial
information not to be necessarily indicative of future operating results.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
2
<PAGE> 3
AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
ART ART ART
Portfolio Portfolio Portfolio Pro Forma
Actual I, Ltd. II, Ltd. III, Ltd. Combined
--------- --------- --------- --------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Assets
------
Notes and interest receivable
Performing .......................... $ 268 $ -- $ -- $ -- $ 268
Nonperforming ....................... 18,779 -- -- -- 18,779
--------- --------- --------- --------- ---------
19,047 -- -- -- 19,047
Less - allowance for estimated
losses .............................. (2,398) -- -- -- (2,398)
--------- --------- --------- --------- ---------
16,649 -- -- -- 16,649
Real estate held for sale, net of
accumulated depreciation ............ 200,910 -- -- -- 200,910
Real estate held for investment,
net of accumulated depreciation ..... 132,692 10,800 13,800 31,200 188,492
Pizza parlor equipment, net of
accumulated depreciation ............ 7,183 -- -- -- 7,183
Marketable equity securities, at
market value ........................ 5,018 -- -- -- 5,018
Cash and cash equivalents .............. 974 (2,000) (1,400) (2,700) (5,126)
Investments in equity investees ........ 48,598 -- -- -- 48,598
Intangibles, net of accumulated
amortization ........................ 15,152 -- -- -- 15,152
Other assets ........................... 24,019 -- 200 100 24,319
--------- --------- --------- --------- ---------
$ 451,195 $ 8,800 $ 12,600 $ 28,600 $ 501,195
========= ========= ========= ========= =========
</TABLE>
3
<PAGE> 4
AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
BALANCE SHEET - Continued
MARCH 31, 1998
<TABLE>
<CAPTION>
ART ART ART
Portfolio Portfolio Portfolio Pro Forma
Actual I, Ltd. II, Ltd. III, Ltd. Combined
--------- --------- --------- --------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities
Notes and interest payable ............. $ 292,301 $ 7,300 $ 11,600 $ 24,500 $ 335,701
Margin borrowings ...................... 53,775 -- -- -- 53,775
Accounts payable and other
liabilities ......................... 30,825 -- -- -- 30,825
--------- --------- --------- --------- ---------
376,901 7,300 11,600 24,500 420,301
Minority interest ...................... 20,542 1,500 1,000 4,100 27,142
Commitments and contingencies
Stockholders' equity
Preferred Stock, $2.00 par value,
authorized 20,000,000 shares
issued and outstanding
Series B, 4,000 shares ............ 8 -- -- -- 8
Series C, 16,681 shares ........... 33 -- -- -- 33
Series F, 2,000,000 shares ........ 4,000 -- -- -- 4,000
Common Stock, $.01 par value;
authorized 100,000,000 shares,
issued 13,479,348 shares ............ 135 -- -- -- 135
Paid-in capital ........................ 84,943 -- -- -- 84,943
Accumulated (deficit) .................. (35,339) -- -- -- (35,339)
Treasury stock at cost, 2,767,427
shares .............................. (28) -- -- -- (28)
--------- --------- --------- --------- ---------
53,752 -- -- -- 53,752
--------- --------- --------- --------- ---------
$ 451,195 $ 8,800 $ 12,600 $ 28,600 $ 501,195
========= ========= ========= ========= =========
</TABLE>
4
<PAGE> 5
AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ART ART ART
Portfolio Portfolio Portfolio Pro Forma Pro Forma
Actual I, Ltd. II Ltd. III, Ltd. Adjustments Combined
--------- --------- --------- --------- ----------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income
Sales ................................ $ 17,926 $ -- $ -- $ -- $ -- $ 17,926
Rents ................................ 29,075 2,023 2,993 6,068 -- 40,159
Interest ............................. 2,835 -- -- -- -- 2,835
Other ................................ 135 119 121 340 -- 715
--------- --------- --------- --------- --------- ---------
49,971 2,142 3,114 6,408 -- 61,635
Expenses
Cost of sales ........................ 14,492 -- -- -- -- 14,492
Property operations .................. 24,195 1,043 1,542 3,126 -- 29,906
Interest ............................. 30,231 -- -- -- 3,778 34,009
Advisory and
servicing fees to
affiliates ....................... 2,657 -- -- -- -- 2,657
General and
administrative ................... 6,997 -- -- -- -- 6,997
Depreciation ......................... 3,338 -- -- -- 1,255 4,593
Minority interest .................... 1,445 -- -- -- 528 1,973
--------- --------- --------- --------- --------- ---------
83,355 1,043 1,542 3,126 5,561 94,627
--------- --------- --------- --------- --------- ---------
(Loss) from operations ................. (33,384) 1,099 1,572 3,282 (5,561) (32,992)
Equity in income of
investees ............................ 10,660 -- -- -- -- 10,660
Gain on sale of real
estate ............................... 20,296 -- -- -- -- 20,296
--------- --------- --------- --------- --------- ---------
Net income (loss) ...................... (2,428) 1,099 1,572 3,282 (5,561) (2,036)
Preferred dividend
requirement .......................... (206) -- -- -- -- (206)
--------- --------- --------- --------- --------- ---------
Net income (loss)
applicable to Common
shares ............................... $ (2,634) $ 1,099 $ 1,572 $ 3,282 $ (5,561) $ (2,242)
========= ========= ========= ========= ========= =========
</TABLE>
5
<PAGE> 6
AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ART ART ART
Portfolio Portfolio Portfolio Pro Forma Pro Forma
Actual I, Ltd. II Ltd. III, Ltd. Adjustments Combined
--------- --------- --------- --------- ----------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Earnings per share
Net (loss) ......................... $ (.22) $ (.19)
========== ==========
Weighted average
Common shares used
in computing
earnings per share.................. 11,710,013 11,710,013
========== ===========
</TABLE>
The accompanying footnotes are an integral part of this
Pro Forma Combined Statement of Operations.
6
<PAGE> 7
AMERICAN REALTY TRUST, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
1. The Pro Forma Combined Statement of Operations assumes the properties were
purchased on January 1, 1997.
2. The pro forma interest adjustment is based on the mortgages assumed for
each property portfolio at the date of purchase. The pro forma depreciation
adjustment is based on the purchase price of each portfolio depreciated
under the Company's established depreciation policies.
<TABLE>
<S> <C>
Interest:
ART Portfolio I, Ltd. $ 709
ART Portfolio II, Ltd. 1,053
ART Portfolio III, Ltd. 2,016
------
Total $3,778
======
Depreciation:
ART Portfolio I, Ltd. $ 243
ART Portfolio II, Ltd. 310
ART Portfolio III, Ltd. 702
------
Total $1,255
======
</TABLE>
3. The pro forma minority interest adjustment is based on the number of Class
A limited partner units issued on the date of purchase at the 1998 stated
preferred return rate.
<TABLE>
<S> <C>
ART Portfolio I, Ltd. $ 120
ART Portfolio II, Ltd. 80
ART Portfolio III, Ltd. 328
------
Total $ 528
======
</TABLE>
7
<PAGE> 8
AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
ART ART ART
Portfolio Portfolio Portfolio Pro Forma Pro Forma
Actual I, Ltd. II Ltd. III, Ltd. Adjustments Combined
--------- --------- --------- --------- ----------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income
Sales ................................. $ 6,753 $ -- $ -- $ -- $ -- $ 6,753
Rents ................................. 11,567 504 750 1,532 -- 14,353
Interest .............................. 138 -- -- -- -- 138
Other ................................. (209) 21 20 66 -- (102)
--------- --------- --------- --------- --------- ---------
18,249 525 770 1,598 -- 21,142
Expenses
Cost of sales ......................... 5,780 -- -- -- -- 5,780
Property operations ................... 9,663 192 294 597 -- 10,746
Interest .............................. 9,536 -- -- -- 796 10,332
Advisory and servicing fees to
affiliates ........................ 760 -- -- -- -- 760
General and administrative ............ 2,285 -- -- -- -- 2,285
Depreciation .......................... 1,232 -- -- -- 333 1,565
Minority interest ..................... 488 -- -- -- 132 620
--------- --------- --------- --------- --------- ---------
29,744 192 294 597 1,261 32,088
--------- --------- --------- --------- --------- ---------
(Loss) from operations ................. (11,495) 333 476 1,001 (1,261) (10,946)
Equity in income of investees .......... 2,387 -- -- -- -- 2,387
Gain on sale of real estate ............ -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net income (loss) ...................... (9,108) 333 476 1,001 (1,261) (8,559)
Preferred dividend requirement ......... (51) -- -- -- -- (51)
--------- --------- --------- --------- --------- ---------
Net income (loss) applicable to Common
shares ................................ $ (9,159) $ 333 $ 476 $ 1,001 $ (1,261) $ (8,610)
========= ========= ========= ========= ========= =========
</TABLE>
8
<PAGE> 9
AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
ART ART ART
Portfolio Portfolio Portfolio Pro Forma Pro Forma
Actual I, Ltd. II Ltd. III, Ltd. Adjustments Combined
---------- --------- --------- --------- ----------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Earnings per share
Net (loss).......................... $ (.86) $ (.80)
========== ===========
Weighted average
Common shares used in computing
earnings per share................... 10,711,921 10,711,921
========== ===========
</TABLE>
The accompanying footnotes are an integral part of this
Pro Forma Combined Statement of Operations.
9
<PAGE> 10
AMERICAN REALTY TRUST, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
1. The Pro Forma Combined Statement of Operations assumes the properties were
purchased on January 1, 1998.
2. The pro forma interest adjustment is based on the mortgages assumed for
each property portfolio at the date of purchase. The pro forma depreciation
adjustment is based on the purchase price of each portfolio depreciated
under the Company's established depreciation policies.
<TABLE>
<S> <C>
Interest:
ART Portfolio I, Ltd. $178
ART Portfolio II, Ltd. 261
ART Portfolio III, Ltd. 357
----
Total $796
====
Depreciation:
ART Portfolio I, Ltd. $ 61
ART Portfolio II, Ltd. 96
ART Portfolio III, Ltd. 176
----
Total $333
====
</TABLE>
3. The pro forma minority interest adjustment is based on the number of Class
A limited partner units issued on the date of purchase at the 1998 stated
preferred return rate.
<TABLE>
<S> <C>
ART Portfolio I, Ltd. $ 30
ART Portfolio II, Ltd. 20
ART Portfolio III, Ltd. 82
----
Total $132
====
</TABLE>
10
<PAGE> 11
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
(c) Exhibits: The following exhibits are filed herewith or incorporated by
reference as indicated below.
Exhibit
Number Description
- ------- -----------
3.2 Articles of Amendment to the Articles of Incorporation of American
Realty Trust, Inc. setting forth the Certificate of Designations,
Preferences and Relative Participating or Optional or Other Special
Rights, and Qualifications, Limitations or Restrictions thereof of
Series H Cumulative Convertible Preferred Stock, dated June 26, 1998,
filed herewith.
99.0 Audited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio I, Ltd., for the year ended December 31,
1997, filed herewith.
99.1 Audited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio II, Ltd., for the year ended December 31,
1997, filed herewith.
99.2 Audited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio III, Ltd., for the year ended December 31,
1997, filed herewith.
99.3 Unaudited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio I, Ltd., for the three months ended March 31,
1998, filed herewith.
99.4 Unaudited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio II, Ltd., for the three months ended March
31, 1998, filed herewith.
99.5 Unaudited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio III, Ltd., for the three months ended March
31, 1998, filed herewith.
11
<PAGE> 12
SIGNATURE PAGE
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 hereto duly authorized.
AMERICAN REALTY TRUST, INC.
Date: July 16, 1998 By: /s/ Thomas A. Holland
---------------- ----------------------
Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
12
<PAGE> 13
AMERICAN REALTY TRUST, INC.
EXHIBIT TO ITS
AMENDMENT TO ITS
CURRENT REPORT ON FORM 8-K/A
Dated May 1, 1998
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------- ----------- ------
<S> <C> <C>
3.2 Articles of Amendment to the Articles of Incorporation of American 14
Realty Trust, Inc. setting forth the Certificate of Designations,
Preferences and Relative Participating or Optional or Other Special
Rights, and Qualifications, Limitations or Restrictions thereof of
Series H Cumulative Convertible Preferred Stock, dated June 26, 1998,
filed herewith.
99.0 Audited Combined Statement of Revenues and Direct Operating Expenses 27
of ART Florida Portfolio I, Ltd., for the year ended December 31,
1997, filed herewith.
99.1 Audited Combined Statement of Revenues and Direct Operating Expenses 32
of ART Florida Portfolio II, Ltd., for the year ended December 31,
1997, filed herewith.
99.2 Audited Combined Statement of Revenues and Direct Operating Expenses 37
of ART Florida Portfolio III, Ltd., for the year ended December 31,
1997, filed herewith.
99.3 Unaudited Combined Statement of Revenues and Direct Operating Expenses 42
of ART Florida Portfolio I, Ltd., for the three months ended March 31,
1998, filed herewith.
99.4 Unaudited Combined Statement of Revenues and Direct Operating Expenses 43
of ART Florida Portfolio II, Ltd., for the three months ended March
31, 1998, filed herewith.
99.5 Unaudited Combined Statement of Revenues and Direct Operating Expenses 44
of ART Florida Portfolio III, Ltd., for the three months ended March
31, 1998, filed herewith.
</TABLE>
13
<PAGE> 1
EXHIBIT 3.2
ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION OF
AMERICAN REALTY TRUST, INC.
setting forth the
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING
OR OPTIONAL OR OTHER SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS THEREOF
of
SERIES H CUMULATIVE CONVERTIBLE PREFERRED STOCK
of
AMERICAN REALTY TRUST, INC.
(Pursuant to Section 14-2-602(d) of the
Georgia Business Corporation Code)
--------------------------
American Realty Trust, Inc., a corporation organized and existing under the
Georgia Business Corporation Code (hereinafter called the "Corporation"), hereby
certifies:
THAT, pursuant to the authority conferred upon the board of directors (the
"Board of Directors") by the articles of incorporation, as amended ("Articles of
Incorporation") of the Corporation, and pursuant to Section 14-2-602(d) of the
Georgia Business Corporation Code (which Section provides that no shareholder
action is required in order to effect these articles of amendment), the Board of
Directors, at a meeting held on May 29, 1998, duly adopted certain recitals and
resolutions providing for the designations, preferences and relative
participating, optional or other special rights and qualifications, limitations
or other restrictions thereof, of a series of special stock of the Corporation,
specifically the Series H Cumulative Convertible Preferred Stock, which recitals
and resolutions are as follows:
WHEREAS, Article Five of the Articles of Incorporation authorizes the
Corporation to issue not more than 100,000,000 shares of common voting stock,
$0.01 par value per share (the "Common Stock"), and 20,000,000 shares of a
special class of stock, $2.00 par value per share (the "Special Stock"), which
Special Stock may be issued from time to time in one or more series and shall be
designated as the Board of Directors may determine to have such voting powers,
preferences, limitations and relative rights with respect to the shares of each
series of the class of Special Stock
<PAGE> 2
of the Corporation as expressly provided in a resolution or resolutions
providing for the issuance of such series adopted by the Board of Directors
which is vested with the authority in respect thereof;
WHEREAS, 16,681 shares of such Special Stock have been previously
designated as the Series C 10% Cumulative Preferred Stock prior to the date
hereof, all of which have been issued and are outstanding;
WHEREAS, 91,000 shares of such Special Stock have been previously
designated as the Series D Cumulative Preferred Stock prior to the date hereof,
none of which has been issued or is outstanding;
WHEREAS, 80,000 shares of such Special Stock have been previously
designated as the Series E Cumulative Convertible Preferred Stock prior to the
date hereof, none of which has been issued or is outstanding;
WHEREAS, 7,500,000 shares of such Special Stock have been previously
designated as the Series F Cumulative Convertible Preferred Stock prior to the
date hereof, 2,800,000 shares of which have been issued and are outstanding;
WHEREAS, 12,000 shares of such Special Stock have been previously
designated as the Series G Cumulative Convertible Preferred Stock prior to the
date hereof, 1,000 shares of which have been issued and are outstanding; and
WHEREAS, the Board of Directors now desires to further amend the Articles
of Incorporation to designate an additional series of the Special Stock.
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority granted to
the Board of Directors by Article Five of the Articles of Incorporation, the
Board of Directors hereby further amends the Articles of Incorporation to
provide for the issuance of a single series of Special Stock consisting of the
number of shares in such series as set forth below and, subject to the
provisions of Article Five of the Articles of Incorporation, hereby fixes and
determines with respect to such series the following designations, preferences
and relative participating, optional or other special rights, if any, and
qualifications, limitations and restrictions thereof:
1. Designation and Amount. The shares of such series shall be designated as
"Series H Cumulative Convertible Preferred Stock" (the "Series H Preferred
Stock") and each share of the Series H Preferred Stock shall have a par
value of $2.00 per share and a preference on liquidation as specified in
Section 6 below. The number of shares constituting the Series H Preferred
Stock shall be 231,750. Such number of shares may be increased or decreased
by the Board of Directors by filing articles of amendment as provided in
the Georgia Business Corporation Code; provided, however, that no increase
shall be allowed without the express written consent of all of the holders
of shares of Series H Preferred Stock then issued and outstanding, and that
no decrease shall reduce the number of shares of Series H Preferred
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<PAGE> 3
Stock to a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants.
2. Dividends and Distributions.
(A) The holders of shares of Series H Preferred Stock shall be entitled to
receive, when, as, and if declared by the Board of Directors and to
the extent permitted under the Georgia Business Corporation Code, out
of funds legally available for the purpose and in preference to and
with priority over dividends upon all Junior Securities, quarterly
cumulative dividends payable in arrears in cash on the first day of
each calendar quarter, unless such day is a Saturday, Sunday or
holiday, in which case such dividends shall be payable on the next
succeeding business day (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction
of a share of Series H Preferred Stock, in an amount per share
(rounded to the next highest cent) equal to (i) 7% per annum during
the period from issuance to June 30, 1999; (ii) 8% per annum during
the period from July 1, 1999 to June 30, 2000; (iii) 9% per annum
during the period from July 1, 2000 to June 30, 2001; and (iv) 10% per
annum from July 1, 2001 and thereafter of the Adjusted Liquidation
Value, as determined immediately prior to the beginning of such
calendar quarter assuming each year consists of 360 days and each
quarter consists of 90 days. The term "Adjusted Liquidation Value"
shall mean Liquidation Value (as defined in Section 6) plus all
accrued and unpaid dividends thereon through the applicable date.
(B) Dividends shall commence accruing cumulatively on outstanding shares
of the Series H Preferred Stock from the date of issuance of such
shares to and including the date on which the Redemption Price (as
defined in Section 9(A) below) of such shares is paid, whether or not
such dividends have been declared and whether or not there are
profits, surplus or other funds of the Corporation legally available
for the payment of such dividends. For purposes of this Section 2, the
date on which the Corporation has issued any share of Series H
Preferred Stock is its date of issuance, regardless of the number of
times a transfer of such share is made on the stock records maintained
by or for the Corporation and regardless of the number of certificates
that may be issued to evidence such share (whether by reason of
transfer of such share or for any other reason). Dividends paid on the
shares of Series H Preferred Stock in an amount less than the total
amount of dividends at the time accrued and payable on such shares
shall be allocated among the holders of such shares in proportion to
their respective Unpaid Accrual Amounts, where for this purpose the
"Unpaid Accrual Amount" of a holder of shares of Series H Preferred
Stock at any time equals the total of accrued unpaid dividends on all
such shares held by such holder. The Board of Directors may fix a
record date for the determination of holders of shares of Series H
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon other than
-3-
<PAGE> 4
a quarterly dividend paid on the Quarterly Dividend Payment Date
immediately after such dividend accrued; which record date shall be
not more than 50 days prior to the date fixed for the payment thereof.
(C) So long as any shares of the Series H Preferred Stock are outstanding,
the Corporation will not make, directly or indirectly, any
distribution (as such term is defined in the Georgia Business
Corporation Code) in respect of Junior Securities unless on the date
specified for measuring distributions in Section 14-2-640(e) of the
Georgia Business Corporation Code (i) all accrued dividends on the
Series H Preferred Stock for all past quarterly dividend periods have
been paid in full and the full amount of accrued dividends for the
then current quarterly dividend period has been paid or declared and a
sum sufficient for the payment thereof set apart and (ii) after giving
effect to such distribution (a) the Corporation would not be rendered
unable to pay its debts as they become due in the usual course of
business and (b) the Corporation's total assets would not be less than
the sum of its total liabilities plus the amount that would be needed,
if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
the holders of the Series H Preferred Stock as provided in these
Articles of Amendment. Dividends shall not be paid (in full or in
part) or declared and set apart for payment (in full or in part) on
any series of Special Stock (including the Series H Preferred Stock)
for any dividend period unless all dividends, in the case dividends
are being paid in full on the Series H Preferred Stock, or a ratable
portion of all dividends (i.e., so that the amount paid on each share
of each series of Special Stock as a percentage of total accrued and
unpaid dividends for all periods with respect to each such share is
equal), in the case dividends are not being paid in full on the Series
H Preferred Stock, have been or are, contemporaneously, paid and
declared and set apart for payment on all outstanding series of
Special Stock (including the Series H Preferred Stock) entitled
thereto for each dividend period terminating on the same or earlier
date. If at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Series H Preferred
Stock, such payment will be distributed ratably among the then holders
of Series H Preferred Stock so that an equal amount is paid with
respect to each outstanding share.
3. Conversion Rights.
(A) The Series H Preferred Stock may be converted in such amounts and at
such times as are set forth below, at the option of the holders
thereof, in accordance with subsection (D) below at the Conversion
Price (as defined in subsection (B) below) into fully paid and
nonassessable Common Stock of the Corporation by dividing (i) the
Adjusted Liquidation Value for such shares of Series H Preferred Stock
as of the date of conversion by (ii) the Conversion Price; provided,
however, that as to any shares of Series H Preferred Stock which shall
have been called for redemption pursuant to Section 9, the right of
conversion shall terminate upon receipt by the holder of the notice of
redemption from the Corporation; and provided further, however, that
on the
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<PAGE> 5
earlier of (a) the commencement of any liquidation, dissolution or
winding up of the Corporation by the filing with the Secretary of
State of the State of Georgia or with a federal bankruptcy court, (b)
the adoption by the shareholders of the Corporation of any resolution
authorizing the commencement thereof, (c) the dividends on the Series
H Preferred Stock have not been declared in the amount of the dividend
preference as of the first business day of any calendar quarter, or,
if declared, have not been paid by the fifth business day of such
quarter, or (d) the Corporation is acquired in a merger or similar
transaction, the right of conversion shall be immediately accelerated
for all shares of Series H Preferred Stock issued and then
outstanding, irrespective of the conversion schedule set forth below.
Notwithstanding anything to the contrary herein provided, the
Corporation may elect to redeem the shares of Series H Preferred Stock
sought to be converted, pursuant to Section 9 hereunder, instead of
issuing shares of Common Stock in replacement thereof in accordance
with the provisions of Section 3(D) below. Unless otherwise provided,
the term "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in Dallas, Texas are
authorized or obligated by law or executive order to remain closed.
The Series H Preferred Stock may be converted in the following
amounts, at any time on or after the respective dates (each, a
"Conversion Date"): (i) 25,000 shares on or after December 31, 2000;
(ii) 25,000 shares on or after June 30, 2002; (iii) 25,000 shares on
or after June 30, 2003; (iv) 25,000 shares on or after December 31,
2005; and (v) all remaining outstanding shares on or after December
31, 2006. The number of shares of Series H Preferred Stock each holder
thereof shall be entitled to convert on or after each Conversion Date
shall be determined by (a) dividing the total number of shares of
Series H Preferred Stock held by such holder on such Conversion Date
by the total number of shares of Series H Preferred Stock outstanding
on such Conversion Date, and (b) multiplying such amount obtained in
(a) by the number of shares of Series H Preferred Stock convertible on
or after such Conversion Date pursuant to the schedule set forth above
less the total number of shares of Series H Preferred Stock previously
converted pursuant to this paragraph 3(A).
(B) For purposes of this Section 3, the term "Conversion Price" shall be
and mean the amount obtained (rounded upward to the next highest cent)
by multiplying (i) 0.9 by (ii) the simple average of the daily closing
price of the Common Stock for the twenty Business Days ending on the
last Business Day of the calender week immediately preceding the date
of conversion on the New York Stock Exchange or, if the shares of
Common Stock are not then being traded on the New York Stock Exchange,
then on the principal stock exchange (including, without limitation
NASDAQ NMS or NASDAQ Small Cap) on which such Common Stock is then
listed or admitted to trading as determined by the Corporation (the
"Principal Stock Exchange") or, if the Common Stock is not then listed
or admitted to trading on a Principal Stock Exchange, the average of
the last reported closing bid and asked prices on such days in the
-5-
<PAGE> 6
over-the-counter market or, if no such prices are available, the fair
market value per share of the Common Stock, as determined by the Board
of Directors of the Corporation in its sole discretion. The Conversion
Price shall not be subject to any adjustment as a result of the
issuance of any additional shares of Common Stock by the Corporation
for any purpose, except for stock splits (whether accomplished by
stock dividends or otherwise) or reverse stock splits occurring during
the 20 Business Days referenced in the calculation of the Conversion
Price. For purposes of calculating the Conversion Price, the term
"Business Day" shall mean a day on which the exchange looked to for
purposes of determining the Conversion Price is open for business or,
if no such exchange, the term "Business Day" shall have the meaning
given such term in Section 3(A) above.
(C) Upon any conversion, fractional shares of Common Stock shall not be
issued but any fractions shall be adjusted by the delivery of one
additional share of Common Stock in lieu of any cash. Any accrued but
unpaid dividends shall be convertible into shares of Common Stock as
provided for in this Section. The Corporation shall pay all issue
taxes, if any, incurred in respect to the issuance of Common Stock on
conversion, provided, however, that the Corporation shall not be
required to pay any transfer or other taxes incurred by reason of the
issuance of such Common Stock in names other than those in which the
Series H Preferred Stock surrendered for conversion may stand.
(D) Any conversion of Series H Preferred Stock into Common Stock shall be
made by the surrender to the Corporation, at the office of the
Corporation set forth in Section 12 hereof or at the office of the
transfer agent for such shares, of the certificate or certificates
representing the Series H Preferred Stock to be converted, duly
endorsed or assigned (unless such endorsement or assignment be waived
by the Corporation), together with a written request for conversion.
The Corporation shall either (i) issue, as of the date of receipt by
the Corporation of such surrender, shares of Common Stock calculated
as provided above and evidenced by a stock certificate delivered to
the holder as soon as practicable after the date of such surrender or
(ii) within two Business Days (unless otherwise provided, "Business
Day" herein shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in Dallas, Texas are authorized or
obligated by law or executive order to remain closed) after the date
of such surrender advise the holder of the Series H Preferred Stock
that the Corporation is exercising its option to redeem the Series H
Preferred Stock pursuant to Section 9, in which case the Corporation
shall have thirty (30) days from the date of such surrender to pay to
the holder cash in an amount equal to the Redemption Price for each
share of Series H Preferred Stock so redeemed. The date of surrender
of any Series H Preferred Stock shall be the date of receipt by the
Corporation or its agent of such surrendered shares of Series H
Preferred Stock.
-6-
<PAGE> 7
(E) A number of authorized shares of Common Stock sufficient to provide
for the conversion of the Series H Preferred Stock outstanding upon
the basis hereinbefore provided shall at all times be reserved for
such conversion. If the Corporation shall propose to issue any
securities or to make any change in its capital structure which would
change the number of shares of Common Stock into which each share of
Series H Preferred Stock shall be convertible as herein provided, the
Corporation shall at the same time also make proper provision so that
thereafter there shall be a sufficient number of shares of Common
Stock authorized and reserved for conversion of the outstanding Series
H Preferred Stock on the new basis.
(F) The term "Common Stock" shall mean stock of the class designated as
Common Stock of the Corporation on the date the Series H Preferred
Stock is created or stock of any class or classes resulting from any
reclassification or reclassifications thereof, the right of which to
share in distributions of both earnings and assets is without
limitation in the Articles of Incorporation of the Corporation as to
any fixed amount or percentage and which are not subject to
redemption; provided, that if at any time there shall be more than one
such resulting class, the shares of each such class then issuable on
conversion of the Series H Preferred Stock shall be substantially in
the proportion which the total number of shares of stock of each such
class resulting from all such reclassifications bears to the total
number of shares of stock of all such classes resulting from all such
reclassifications.
(G) In case the Corporation shall propose at any time before all shares of
the Series H Preferred Stock have been redeemed by or converted into
Common Stock of the Corporation:
(i) to pay any dividend on the Common Stock outstanding payable
in Common Stock or to make any other distribution, other than cash
dividends to the holders of the Common Stock outstanding; or
(ii) to offer for subscription to the holders of the Common Stock
outstanding any additional shares of any class or any other rights or
option; or
(iii) to effect any re-classification or recapitalization of the
Common Stock outstanding involving a change in the Common Stock, other
than a subdivision or combination of the Common Stock outstanding; or
(iv) to merge or consolidate with or into any other corporation
(unless the Corporation is the surviving entity and holders of Common
Stock continue to hold such Common Stock without modification and
without receipt of any additional consideration), or to sell, lease,
or convey all or substantially all its property or business, or to
liquidate, dissolve or wind up;
-7-
<PAGE> 8
then, in each such case, the Corporation shall mail to the holders of
record of each of the shares of Series H Preferred Stock at their last
known addresses as shown by the Corporation's records a statement, signed
by an officer of the Corporation, with respect to the proposed action, such
statement to be so mailed at least thirty (30) days prior to the date of
the taking of such action or the record date for holders of the Common
Stock for the purposes thereof, whichever is earlier. If such statement
relates to any proposed action referred to in clauses (iii) or (iv) of this
subsection (G), it shall set forth such facts with respect thereto as shall
reasonably be necessary to inform the holders of the Series H Preferred
Stock as to the effect of such action upon the conversion rights of such
holders.
4. Voting Rights and Powers. The holders of shares of Series H Preferred Stock
shall have only the following voting rights:
(A) Except as may otherwise be specifically required by law under Section
14-2-1004 of the Georgia Business Corporation Code or otherwise
provided herein, the holders of the shares of Series H Preferred Stock
shall not have the right to vote such stock, directly or indirectly,
at any meeting of the shareholders of the Corporation, and such shares
of stock shall not be counted in determining the total number of
outstanding shares to constitute a quorum at any meeting of
shareholders;
(B) In the event that, under the circumstances, the holders of the Series
H Preferred Stock are required by law to vote upon any matter, the
approval of such series shall be deemed to have been obtained only
upon the affirmative vote of the holders of a majority of the shares
of the Series H Preferred Stock then outstanding;
(C) Except as set forth herein, or as otherwise provided by the Articles
of Incorporation or by law, holders of the Series H Preferred Stock
shall have no special voting rights and their consent shall not be
required for the taking of any corporate action.
5. Reacquired Shares. Any shares of Series H Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever or
surrendered for conversion hereunder shall no longer be deemed to be
outstanding and all rights with respect to such shares of stock, including
the right, if any, to receive notices and to vote, shall forthwith cease
except, in the case of stock surrendered for conversion hereunder, rights
of the holders thereof to receive Common Stock in exchange therefor. All
shares of Series H Preferred Stock obtained by the Corporation shall be
retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares
of Special Stock and may be reissued as part of a new series of Special
Stock subject to the conditions and restrictions on issuance set forth
herein, in the Articles of Incorporation, or in any other Certificates of
Designations creating a series of Special Stock or any similar stock or as
otherwise required by law.
-8-
<PAGE> 9
6. Liquidation, Dissolution or Winding Up. The Liquidation Value of the Series
H Preferred Stock shall be $100.00 per share. Upon any liquidation,
dissolution or winding up of the Corporation, and after paying and
providing for the payment of all creditors of the Corporation, the holders
of shares of the Series H Preferred Stock then outstanding shall be
entitled, before any distribution or payment is made upon any Junior
Securities (defined to be and mean the Common Stock and any other equity
security of any kind which the Corporation at any time has issued, issues
or is authorized to issue if the Series H Preferred Stock has priority over
such securities as to dividends or upon liquidation, dissolution or winding
up), to receive a liquidation preference in an amount in cash equal to the
Adjusted Liquidation Value as of the date of such payment, whether such
liquidation is voluntary or involuntary, and the holders of the Series H
Preferred Stock shall not be entitled to any other or further distributions
of the assets. If, upon any liquidation, dissolution or winding up of the
affairs of the Corporation, the net assets available for distribution shall
be insufficient to permit payment to the holders of all outstanding shares
of all series of Special Stock of the amount to which they respectively
shall be entitled, then the assets of the Corporation to be distributed to
such holders will be distributed ratably among them based upon the amounts
payable on the shares of each such series of Special Stock in the event of
voluntary or involuntary liquidation, dissolution or winding up, as the
case may be, in proportion to the full preferential amounts, together with
any and all arrearages to which they are respectively entitled. Upon any
such liquidation, dissolution or winding up of the Corporation, after the
holders of Special Stock have been paid in full the amounts to which they
are entitled, the remaining assets of the Corporation may be distributed to
holders of Junior Securities, including Common Stock, of the Corporation.
The Corporation will mail written notice of such liquidation, dissolution
or winding up, not less than twenty (20) nor more than fifty (50) days
prior to the payment date stated therein to each record holder of Series H
Preferred Stock. Neither the consolidation nor merger of the Corporation
into or with any other corporation or corporations, nor the sale or
transfer by the Corporation of less than all or substantially all of its
assets, nor a reduction in the capital stock of the Corporation, nor the
purchase or redemption by the Corporation of any shares of its Special
Stock or Common Stock or any other class of its stock will be deemed to be
a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.
7. Ranking. Except as provided in the following sentence, the Series H
Preferred Stock shall rank on a parity as to dividends and upon
liquidation, dissolution or winding up with all other shares of Special
Stock issued by the Corporation. The Corporation shall not issue any shares
of Special Stock of any series which are superior to the Series H Preferred
Stock as to dividends or rights upon liquidation, dissolution or winding up
of the Corporation as long as any shares of the Series H Preferred Stock
are issued and outstanding, without the prior written consent of the
holders of a majority of such shares of Series H Preferred Stock then
outstanding voting separately as a class.
8. Redemption at the Option of the Holder. The shares of Series H Preferred
Stock shall not be redeemable at the option of a holder of Series H
Preferred Stock.
-9-
<PAGE> 10
9. Redemption at the Option of the Corporation.
(A) In addition to the redemption right of the Corporation set forth in
Section 3(A) above, the Corporation shall have the right to redeem all
or a portion of the Series H Preferred Stock issued and outstanding at
any time after January 1, 1999 and from time to time, at its option,
for cash. The redemption price of the Series H Preferred Stock
pursuant to this Section 9 shall be an amount per share equal to the
sum of (i) (a) 105% of Liquidation Value during the period from
issuance through December 31, 1999; (b) 104% of Liquidation Value
during the period from January 1, 2000 through December 31, 2000; (c)
103% of the Liquidation Value during the period from January 1, 2001
through December 31, 2001; (d) 102% of Liquidation Value during the
period from January 1, 2002 through December 31, 2002; (e) 101% of
Liquidation Value during the period from January 1, 2003 through
December 31, 2003; and (f) 100% of Liquidation Value from January 1,
2004 and thereafter, and (ii) all accrued and unpaid dividends thereon
through the date of such redemption (the "Redemption Price").
(B) The Corporation may redeem all or a portion of any holder's shares of
Series H Preferred Stock by giving such holder not less than twenty
(20) days nor more than thirty (30) days notice thereof prior to the
date on which the Corporation desires such shares to be redeemed,
which date shall be a Business Day (the "Redemption Date"). Such
notice shall be written and shall be hand delivered or mailed, postage
prepaid, to the holder (the "Redemption Notice"). If mailed, such
notice shall be deemed to be delivered when deposited in the United
States Mail, postage prepaid, addressed to the holder of shares of
Series H Preferred Stock at his address as it appears on the stock
transfer records of the Corporation. The right of the Corporation to
redeem shares of Series H Preferred Stock shall remain effective
notwithstanding prior receipt by the Corporation of notice by any
holder of Series H Preferred Stock of such holder's intent to convert
shares of Series H Preferred Stock in accordance with Section 3 above,
provided that the Redemption Notice is given on or prior to the second
Business Day following the date of surrender of shares made to convert
said shares to Common Stock. The Redemption Notice shall state (i) the
total number of shares of Series H Preferred Stock held by such
holder; (ii) the total number of shares of the holder's Series H
Preferred Stock that the Corporation intends to redeem; (iii) the
Redemption Date and the Redemption Price; and (iv) the place at which
the holder(s) may obtain payment of the applicable Redemption Price
upon surrender of the share certificate(s).
-10-
<PAGE> 11
(C) If fewer than all shares of the Series H Preferred Stock at any time
outstanding shall be called for redemption, such shares shall be
redeemed pro rata, by lot drawn or other manner deemed fair in the
sole discretion of the Board of Directors to redeem one or more such
shares without redeeming all such shares of Series H Preferred Stock.
If a Redemption Notice shall have been so mailed, at least two
Business Days prior to the Redemption Date the Corporation shall
provide for payment of a sum sufficient to redeem the applicable
number of shares of Series H Preferred Stock subject to redemption
either by (i) setting aside the sum required to be paid as the
Redemption Price by the Corporation, separate and apart from its other
funds, in trust for the account of the holder(s) of the shares of
Series H Preferred Stock to be redeemed or (ii) depositing such sum in
a bank or trust company (either located in the state where the
principal executive office of the Corporation is maintained, such bank
or trust company having a combined surplus of at least $20,000,000
according to its latest statement of condition, or such other bank or
trust company as may be permitted by the Articles of Incorporation, or
by law) as a trust fund, with irrevocable instructions and authority
to the bank or trust company to give or complete the notice of
redemption and to pay, on or after the Redemption Date, the applicable
Redemption Price on surrender of certificates evidencing the share(s)
of Series H Preferred Stock so called for redemption and, in either
event, from and after the Redemption Date (a) the share(s) of Series H
Preferred Stock shall be deemed to be redeemed, (b) such setting aside
or deposit shall be deemed to constitute full payment for such
shares(s), (c) such share(s) so redeemed shall no longer be deemed to
be outstanding, (d) the holder(s) thereof shall cease to be a
shareholder of the Corporation with respect to such share(s), and (e)
such holder(s) shall have no rights with respect thereto except the
right to receive the Redemption Price for the applicable shares. Any
interest on the funds so deposited shall be paid to the Corporation.
Any and all such redemption deposits shall be irrevocable except to
the following extent: any funds so deposited which shall not be
required for the redemption of any shares of Series H Preferred Stock
because of any prior sale or purchase by the Corporation other than
through the redemption process, subsequent to the date of deposit but
prior to the Redemption Date, shall be repaid to the Corporation
forthwith and any balance of the funds so deposited and unclaimed by
the holder(s) of any shares of Series H Preferred Stock entitled
thereto at the expiration of one calendar year from the Redemption
Date shall be repaid to the Corporation upon its request or demand
therefor, and after any such repayment of the holder(s) of the
share(s) so called for redemption shall look only to the Corporation
for payment of the Redemption Price thereof. All shares of Series H
Preferred Stock redeemed shall be canceled and retired and no shares
shall be issued in place thereof, but such shares shall be restored to
the status of authorized but unissued shares of Special Stock.
-11-
<PAGE> 12
(D) Holders whose shares have been redeemed hereunder shall surrender the
certificate or certificates representing such shares, duly endorsed or
assigned (unless such endorsement or assignment be waived by the
Corporation), to the Corporation by mail, courier or personal delivery
at the Corporation's principal executive office or other location so
designated in the Redemption Notice, and upon the Redemption Date the
Redemption Price shall be payable to the order of the person whose
name appears on such certificate or certificates as the owner thereof,
and each surrendered certificate shall be canceled and retired. In the
event fewer than all of the shares represented by such certificates
are redeemed, a new certificate shall be issued representing the
unredeemed shares.
10. Sinking Fund. The Corporation shall not be required to maintain any
so-called "sinking fund" for the retirement on any basis of the Series H
Preferred Stock.
11. Fractional Shares. The Series H Preferred Stock may be issued in fractions
of a share which shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of shares of Series H Preferred Stock.
12. Notice. Any notice or request made to the Corporation in connection with
the Series H Preferred Stock shall be given, and shall conclusively be
deemed to have been given and received three Business Days following
deposit thereof in writing, in the U.S. mails, certified mail, return
receipt requested, duly stamped and addressed to the Corporation, to the
attention of its General Counsel, at its principal executive offices (which
shall be deemed to be the address most recently provided to the Securities
and Exchange Commission ("SEC") as its principal executive offices for so
long as the Corporation is required to file reports with the SEC).
-12-
<PAGE> 13
IN WITNESS WHEREOF, these Articles of Amendment are executed on behalf of
the Corporation by its President and attested by its Secretary as of the 24th
day of June, 1998.
/s/ Karl L. Blaha
-----------------
Karl L. Blaha
President
Attest:
/s/ Robert A. Waldman
- ---------------------
Robert A. Waldman
Secretary
-13-
<PAGE> 1
EXHIBIT 99
ART FLORIDA PORTFOLIO I, LTD.
(PROPERTIES FORMERLY OWNED BY INVESTORS GENERAL ENTITIES)
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
<TABLE>
Page No.
--------
<S> <C>
INDEPENDENT AUDITOR'S REPORT ......................................... 1
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES ......... 2
NOTES TO COMBINED FINANCIAL STATEMENT ................................ 3
</TABLE>
<PAGE> 2
[WAGNER NOBLE & COMPANY LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
American Realty Trust, Inc.
Dallas, Texas
We have audited the accompanying combined statement of revenues and direct
operating expenses of Art Florida Portfolio I, Ltd. (properties formerly owned
by Investors General entities) for the year ended December 31, 1997. This
combined statement of revenues and direct operating expenses is the
responsibility of the entities' management. Our responsibility is to express an
opinion on this statement of revenues and direct operating expenses based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and direct
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of revenues and direct operating expenses. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall statement of revenues and
direct operating expenses presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of American Realty Trust, Inc.) and, as described in Note
1, is not intended to be a complete presentation of the results of operations.
In our opinion, the combined statement of revenues and direct operating
expenses referred to above present fairly, in all material respects, the
combined revenues and direct operating expenses, as defined in Note 1, of Art
Florida Portfolio I, Ltd. (properties formerly owned by Investors General
entities) for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Charlotte, North Carolina
June 1, 1998.
/s/ WAGNER NOBLE & COMPANY
--------------------------
Wagner Noble & Company
1
<PAGE> 3
ART FLORIDA PORTFOLIO I, LTD.
(Properties Formerly Owned By Investors General Entities)
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Properties
---------------------------------------------------------------
Governor's
Square Oak Hill Stonegate Villager White Pines Total
---------- -------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Net rental revenues .................... $ 956,463 $492,095 $268,382 $187,216 $118,559 $2,002,715
Other revenues ......................... 54,065 28,718 19,055 9,229 8,381 119,448
---------- -------- -------- -------- -------- ----------
Total revenues ...................... 1,010,528 520,813 287,437 196,445 126,940 2,142,163
DIRECT OPERATING EXPENSES:
Personnel expense ...................... 113,070 81,381 40,272 28,793 21,080 284,596
Property management fee ................ 40,420 20,942 11,456 7,860 5,077 85,755
Administrative expense ................. 13,896 10,713 7,159 4,774 3,747 40,289
Leasing expense ........................ 23,340 15,934 9,049 1,437 4,959 54,719
Utility expense ........................ 69,116 40,628 11,279 18,565 12,172 151,760
Service expense ........................ 32,610 22,378 16,986 3,463 7,637 83,074
Cleaning and decorating expense ........ 24,356 15,603 7,745 3,046 5,506 56,256
Repairs and maintenance expense ........ 21,987 16,345 14,467 5,680 4,968 63,447
Property taxes ......................... 74,472 51,569 17,875 11,096 8,855 163,867
Property insurance ..................... 24,464 18,434 4,639 7,163 4,460 59,160
---------- -------- -------- -------- -------- ----------
Total direct operating expenses ..... 437,731 293,927 140,927 91,877 78,461 1,042,923
REVENUES IN EXCESS OF ---------- -------- -------- -------- -------- ----------
DIRECT OPERATING EXPENSES .............. $ 572,797 $226,886 $146,510 $104,568 $ 48,479 $1,099,240
========== ======== ======== ======== ======== ==========
</TABLE>
The accompanying notes to financial statement are an integral part of
this statement.
2
<PAGE> 4
ART FLORIDA PORTFOLIO I, LTD.
(FORMERLY PROPERTIES OWNED BY INVESTORS GENERAL ENTITIES)
NOTES TO COMBINED STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION:
The following properties were owned as of December 31, 1997, by various
entities affiliated with Investors General, Inc. and related companies.
Subsequent to January 1, 1998, the individual properties or the effective
economic interest in the properties were acquired by Art Florida Portfolio I,
Ltd.
<TABLE>
<CAPTION>
Property Name Description Location Former Owner
- ------------- ----------- -------- ------------
<S> <C> <C> <C>
Governor's Square 168 Residential Units Tallahassee, FL Florida Public Fund I
Oak Hill 92 Residential Units Tallahassee, FL Cap. City High Return
Stonegate 69 Residential Units Tallahassee, FL IG Capital Holdings
Villager 33 Residential Units Ft. Walton Bch, FL IG Capital Holdings
White Pines 33 Residential Units Tallahassee, FL IG Capital Holdings
</TABLE>
The accompanying combined statement of revenues and direct operating
expenses combines the accounts of properties which were previously owned by
various entities. There were no material intercompany transactions between the
properties.
Management of the properties defines direct operating expenses to include
the specific expense items shown on the accompanying combined statement of
revenues and direct operating expenses. In accordance with this definition, the
statement does not include interest expense, replacements, professional fees,
certain administrative expenses, additional management fees, or provisions for
depreciation and amortization. The statement also excludes interest income
other than that earned directly in property accounts and any provision for
income taxes. Accordingly, this statement is not intended to be a complete
presentation of the results of operations.
2. ACCOUNTING ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenditures
during the reporting period. Actual results could differ from those estimates.
3
<PAGE> 5
3. RELATED PARTY TRANSACTIONS:
The combined entities paid Investors General, Inc. approximately $8,000
for property management fees which are included in this financial
statement. As of December 31, 1997, Investors General, Inc. or its
affiliates owned directly or indirectly the controlling interest in
each entity.
4
<PAGE> 1
EXHIBIT 99.1
ART FLORIDA PORTFOLIO II, LTD.
(PROPERTIES FORMERLY OWNED BY INVESTORS GENERAL ENTITIES)
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
INDEPENDENT AUDITOR'S REPORT ...................................... 1
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES ...... 2
NOTES TO COMBINED FINANCIAL STATEMENT ............................. 3
</TABLE>
<PAGE> 2
[WAGNER NOBLE & COMPANY LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
American Realty Trust, Inc.
Dallas, Texas
We have audited the accompanying combined statement of revenues and direct
operating expenses of Art Florida Portfolio II, Ltd. (properties formerly owned
by Investors General entities) for the year ended December 31, 1997. This
combined statement of revenues and direct operating expenses is the
responsibility of the entities' management. Our responsibility is to express an
opinion on this statement of revenues and direct operating expenses based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and direct
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of revenues and direct operating expenses. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall statement of revenues and direct
operating expenses presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of American Realty Trust, Inc.) and, as described in
Note 1, is not intended to be a complete presentation of the results of
operations.
In our opinion, the combined statement of revenues and direct operating
expenses referred to above present fairly, in all material respects, the
combined revenues and direct operating expenses, as defined in Note 1, of Art
Florida Portfolio II, Ltd. (properties formerly owned by Investors General
entities) for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Charlotte, North Carolina
June 1, 1998.
/s/ WAGNER NOBLE & COMPANY
---------------------------------
Wagner Noble & Company
1
<PAGE> 3
ART FLORIDA PORTFOLIO II, LTD.
PROPERTIES FORMERLY OWNED BY INVESTORS GENERAL ENTITIES)
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Properties
--------------------------------------------------------------------------------
Conradi Grand Morning Park Avenue
Bay Anchor House Daluce Lagoon Lee Hills Star Villas
---------- -------- -------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Net rental revenues $54,421 $327,856 $582,803 $365,779 $64,133 $321,337 $690,004
Other revenues 1,564 11,918 27,712 15,393 4,102 17,059 21,529
------- -------- -------- -------- ------- -------- --------
Total revenues 55,985 339,774 610,515 381,172 68,235 338,396 711,533
DIRECT OPERATING EXPENSES:
Personnel expense 10,395 74,013 97,448 38,424 10,987 50,872 62,993
Property management fee 2,242 13,579 24,401 15,249 2,728 13,537 28,436
Administrative expense 1,831 10,491 10,221 7,404 3,565 8,567 11,760
Leasing expense 1,758 18,513 12,547 3,688 2,907 10,597 14,910
Utility expense 2,757 23,001 51,741 22,021 1,577 18,630 10,583
Service expense 2,845 17,971 27,794 21,942 3,666 23,540 24,223
Cleaning and decorating expense 955 4,868 13,097 8,204 2,469 10,260 9,627
Repairs and maintenance expense 1,108 6,277 10,804 9,690 3,281 14,376 9,274
Property taxes 4,859 25,368 61,201 23,336 8,144 22,038 95,921
Property insurance 5,836 3,277 7,759 28,234 1,358 5,482 13,889
------- -------- -------- -------- ------- -------- --------
Total direct operating expenses 34,586 197,358 317,013 178,192 40,682 177,899 281,616
------- -------- -------- -------- ------- -------- --------
REVENUES IN EXCESS OF DIRECT OPERATING
EXPENSES $21,399 $142,416 $293,502 $202,980 $27,553 $160,497 $429,917
======= ======== ======== ======== ======= ======== ========
<CAPTION>
Properties
--------------------
Pinecrest Windsor
West Towers Total
--------- -------- ----------
<S> <C> <C> <C>
REVENUES:
Net rental revenues $260,671 $326,447 $2,993,451
Other revenues 7,683 13,608 120,568
-------- -------- ----------
Total revenues 268,354 340,055 3,114,019
DIRECT OPERATING EXPENSES:
Personnel expense 42,079 58,847 446,058
Property management fee 10,732 13,601 124,505
Administrative expense 6,759 7,868 68,466
Leasing expense 6,809 1,121 72,850
Utility expense 19,656 15,701 165,667
Service expense 16,142 12,702 150,825
Cleaning and decorating expense 9,405 4,123 63,008
Repairs and maintenance expense 8,600 9,795 73,205
Property taxes 23,080 26,177 290,124
Property insurance 5,909 15,703 87,447
-------- -------- ----------
Total direct operating expenses 149,171 165,638 1,542,155
-------- -------- ----------
REVENUES IN EXCESS OF DIRECT OPERATING
EXPENSES $119,183 $174,417 $1,571,864
======== ======== ==========
</TABLE>
The accompanying notes to financial statement are an integral part of this
statement.
2
<PAGE> 4
ART FLORIDA PORTFOLIO II, LTD.
(PROPERTIES FORMERLY OWNED BY INVESTORS GENERAL ENTITIES)
NOTES TO COMBINED STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION:
The following properties were owned as of December 31, 1997, by various
entities affiliated with Investors General, Inc. and related companies.
Subsequent to January 1, 1998, the individual properties or the effective
economic interest in the properties were acquired by Art Florida
Portfolio II, Ltd.
<TABLE>
<CAPTION>
Property Name Description Location Former Owner
------------- ----------- -------- ------------
<C> <S> <S> <S>
Bay Anchor 12 Residential Units Panama City, FL Investors Synd. Ltd. IV
Conradi House 98 Residential Units Tallahassee, FL Opportunity Fund
Daluce 112 Residential Units Tallahassee, FL Investors Synd. Ltd. IV
Grand Lagoon 54 Residential Units Panama City, FL Investors Synd. Ltd. VI
Lee Hills 16 Residential Units Tallahassee, FL Investors Synd. Ltd. IV
Morning Star 82 Residential Units Tallahassee, FL Investors Synd. Ltd. IV
Park Avenue Villas 121 Residential Units Tallahassee, FL Investors Synd. Ltd. VI
Pinecrest West 48 Residential Units Tallahassee, FL Investors Synd. Ltd. IV
Windsor Towers 64 Residential Units Ocala, FL IG Capital Holdings
</TABLE>
The accompanying combined statement of revenues and direct operating
expenses combines the accounts of properties which were previously owned
by various entities. There were no material intercompany transactions
between the properties.
Management of the properties defines direct operating expenses to include
the specific expense items shown on the accompanying combined statement
of revenues and direct operating expenses. In accordance with this
definition, the statement does not include interest expense,
replacements, professional fees, certain administrative expenses,
additional management fees, loss on disposition of property, or
provisions for depreciation and amortization. The statement also excludes
interest income other than that earned directly in property accounts and
any provision for income taxes. Accordingly, this statement is not
intended to be a complete presentation of the results of operations.
3
<PAGE> 5
2. ACCOUNTING ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenditures
during the reporting period. Actual results could differ from those
estimates.
3. RELATED PARTY TRANSACTIONS:
The combined entities paid Investors General, Inc. approximately $20,000
for property management fee which are included in this financial statement.
As of December 31, 1997, Investors General, Inc. or its affiliates owned
directly or indirectly the controlling interest in each entity.
4
<PAGE> 1
EXHIBIT 99.2
ART FLORIDA PORTFOLIO III, LTD.
(PROPERTIES FORMERLY OWNED BY INVESTORS GENERAL ENTITIES)
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
INDEPENDENT AUDITOR'S REPORT..................................... 1
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES..... 2
NOTES TO COMBINED FINANCIAL STATEMENT............................ 3
</TABLE>
<PAGE> 2
[WAGNER NOBLE & COMPANY LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
American Realty Trust, Inc.
Dallas, Texas
We have audited the accompanying combined statement of revenues and direct
operating expenses of Art Florida Portfolio III, Ltd. (properties formerly
owned by Investors General entities) for the year ended December 31, 1997. This
combined statement of revenues and direct operating expenses is the
responsibility of the entities' management. Our responsibility is to express an
opinion on this statement of revenues and direct operating expenses based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and direct
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of revenues and direct operating expenses. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall statement of revenues and direct
operating expenses presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of American Realty Trust, Inc.) and, as described in Note
1, is not intended to be a complete presentation of the results of operations.
In our opinion, the combined statement of revenues and direct operating
expenses referred to above present fairly, in all material respects, the
combined revenues and direct operating expenses, as defined in Note 1, of Art
Florida Portfolio III, Ltd. (properties formerly owned by Investors General
entities) for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Charlotte, North Carolina
June 1, 1998
/s/ WAGNER NOBLE & COMPANY
--------------------------
Wagner Noble & Company
1
<PAGE> 3
ART FLORIDA PORTFOLIO III, LTD.
(Properties Formerly Owned By Investors General Entities)
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Properties
---------------------------------------------------------------------------------------------
Carriage Crossings Falcon Lake
Ashford Park At Church House Georgetown Greenbriar Chateau Landing
-------- -------- --------- -------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Net rental revenues............... $314,607 $298,700 $294,367 $484,015 $232,930 $244,137 $337,306 $247,848
Other revenues.................... 13,204 5,677 14,396 22,959 17,502 6,607 19,474 43,788
-------- -------- -------- -------- -------- -------- -------- --------
Total revenues.................. 327,811 304,377 308,763 506,974 250,432 250,744 356,780 291,636
DIRECT OPERATING EXPENSES:
Personnel expense................. 29,897 33,899 34,807 60,163 33,167 38,581 50,505 51,354
Property management fee........... 13,113 12,175 12,349 20,279 10,011 10,030 14,065 11,651
Administrative expense............ 5,787 4,755 6,567 8,036 6,959 5,033 9,122 5,899
Leasing expense................... 4,333 4,183 3,938 3,438 4,749 6,617 2,741 1,930
Utility expense................... 19,895 21,542 23,863 39,543 15,916 7,580 26,851 18,088
Service expense................... 14,517 14,643 14,980 22,078 15,494 20,061 20,082 8,214
Cleaning and decorating expense... 8,158 5,404 9,249 9,565 4,794 17,238 17,627 2,885
Repairs and maintenance expense... 7,069 7,825 7,345 18,861 6,749 12,831 17,167 5,264
Property taxes.................... 32,970 23,189 26,683 25,758 16,659 18,371 15,337 11,718
Property insurance................ 10,627 4,508 4,188 15,369 5,813 3,277 9,958 8,273
-------- -------- -------- -------- -------- -------- -------- --------
Total direct operating expenses. 146,366 132,123 143,969 223,090 120,311 139,619 183,455 125,276
-------- -------- -------- -------- -------- -------- -------- --------
REVENUES IN EXCESS OF
DIRECT OPERATING EXPENSES......... $181,445 $172,254 $164,794 $283,884 $130,121 $111,125 $173,325 $166,360
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Properties
---------------------------------------------------------------------------------
Northside Rolling Valley Westwood
Villas Regency Hills Seville Hi Westwood Parc Total
--------- -------- --------- -------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Net rental revenues............... $758,342 $481,512 $727,075 $367,729 $186,558 $703,328 $389,391 $6,067,845
Other revenues.................... 29,610 28,265 37,881 13,136 16,067 55,305 16,635 340,506
-------- -------- -------- -------- -------- -------- -------- ----------
Total revenues.................. 787,952 509,777 764,956 380,865 202,625 758,633 406,026 6,408,351
DIRECT OPERATING EXPENSES:
Personnel expense................. 116,609 49,904 113,135 59,833 28,756 96,305 79,814 876,729
Property management fee........... 31,495 20,393 30,587 15,217 8,105 30,347 16,240 256,057
Administrative expense............ 18,020 10,493 18,448 10,476 5,428 17,755 10,136 142,914
Leasing expense................... 24,126 5,314 22,896 9,489 6,933 7,596 11,745 120,028
Utility expense................... 59,047 27,318 61,734 27,527 10,724 57,469 28,615 445,712
Service expense................... 28,229 25,707 26,507 8,941 13,057 40,909 17,618 291,037
Cleaning and decorating expense... 15,709 9,816 19,301 8,614 7,929 19,272 14,631 170,192
Repairs and maintenance expense... 26,907 9,391 19,018 9,548 7,351 17,501 15,330 188,157
Property taxes.................... 64,221 46,660 65,093 26,953 17,947 37,005 30,654 459,218
Property insurance................ 18,531 12,033 14,811 11,061 2,384 46,440 8,500 175,773
-------- -------- -------- -------- -------- -------- -------- ----------
Total direct operating expenses. 402,894 217,029 391,530 187,659 108,614 370,599 233,283 3,125,817
-------- -------- -------- -------- -------- -------- -------- ----------
REVENUES IN EXCESS OF
DIRECT OPERATING EXPENSES......... $385,058 $292,748 $373,426 $193,206 $ 94,011 $388,034 $172,743 $3,282,534
======== ======== ======== ======== ======== ======== ======== ==========
</TABLE>
<PAGE> 4
ART FLORIDA PORTFOLIO III, LTD.
(PROPERTIES FORMERLY OWNED BY INVESTORS GENERAL ENTITIES)
NOTES TO COMBINED STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION:
The following properties were owned as of December 31, 1997, by various
entities affiliated with Investors General, Inc. and related companies.
Subsequent to January 1, 1998, the individual properties or the effective
economic interest in the properties were acquired by Art Florida
Portfolio III, Ltd.
<TABLE>
<CAPTION>
Property Name Description Location Former Owner
------------- ----------- -------- ------------
<S> <C> <C> <C>
Ashford 56 Residential Units Tampa, FL IG Capital Holdings
Carriage Park 46 Residential Units Tampa, FL Florida Income Fund I
Crossings at Church 52 Residential Units Tampa, FL Florida Income Fund II
Falcon House 82 Residential Units Ft. Walton Bch., FL Investors Synd. Ltd. VII
Georgetown 44 Residential Units Panama City, FL Investors Synd. Ltd. II
Greenbriar 50 Residential Units Tallahassee, FL Investors Synd. Ltd. V
Lake Chateau 98 Residential Units Thomasville, GA Investors Synd. Ltd.
Landing 52 Residential Units Pensacola, FL Investors Synd. Ltd. II
Northside Villas 160 Residential Units Tallahassee, FL IG Capital Holdings
Regency 78 Residential Units Tampa, FL IG Capital Holdings
Rolling Hills 134 Residential Units Tallahassee, FL Investors Synd. Ltd. II
Seville 62 Residential Units Tallahassee, FL Investors Synd. Ltd. II
Valley Hi 54 Residential Units Tallahassee, FL Investors Synd. Ltd. II
Westwood 120 Residential Units Panama City, FL Investors Synd. Ltd. V
& Commercial Prop.
Westwood Parc 94 Residential Units Tallahassee, FL Investors Synd. Ltd. VII
</TABLE>
The accompanying combined statement of revenues and direct operating
expenses combines the accounts of properties which were previously owned
by various entities. There were no material intercompany transactions
between the properties.
Management of the properties defines direct operating expenses to include
the specific expense items shown on the accompanying combined statement of
revenues and direct operating expenses. In accordance with this
definition, the statement does not include interest expense, replacements,
professional fees, certain administrative expenses, additional management
fees, loss on disposition of property, or provisions for depreciation and
amortization. The statement also excludes interest income other than that
earned directly in property accounts and any provision for income taxes.
Accordingly, this statement is not intended to be a complete presentation
of the results of operations.
3
<PAGE> 5
2. ACCOUNTING ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenditures
during the reporting period. Actual results could differ from those
estimates.
3. RELATED PARTY TRANSACTIONS:
The combined entities paid Investors General, Inc. approximately $22,000
for property management fees which are included in this financial
statement. As of December 31, 1997, Investors General, Inc. or its
affiliates owned directly or indirectly the controlling interest in each
entity.
4
<PAGE> 1
EXHIBIT 99.3
ART FLORIDA PORTFOLIO I, LTD.
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE QUARTER ENDED MARCH, 1998
<TABLE>
PROPERTIES
------------------------------------------------------------------------------------
Governor's
Square Oak Hill Stonegate Villager White Pines Total
---------- -------- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Net Rental Revenues ............ $244,793 $132,639 $57,660 $43,921 $24,855 $503,868
Other Revenues ................. 10,598 4,179 3,504 1,188 1,961 21,430
--------- -------- ------- ------- ------- --------
Total Revenues .............. 255,391 136,818 61,164 45,109 26,816 525,298
DIRECT OPERATING EXPENSES:
Personnel Expense .............. 20,850 12,227 7,550 4,158 4,156 48,941
Property Management Fee ........ 10,215 5,473 2,451 1,796 1,073 21,008
Administrative Expense ......... 3,065 1,467 1,535 936 789 7,792
Leasing Expense ................ 2,541 1,840 889 438 459 6,167
Utility Expense ................ 11,544 3,926 2,198 3,204 1,690 22,562
Service Expense ................ 8,127 5,061 3,535 962 2,069 19,754
Cleaning and Decorating
Expense ....................... 2,690 2,145 1,600 445 996 7,876
Repairs and Maintenance
Expense ....................... 2,998 1,492 1,040 1,017 (38) 6,509
Property Taxes ................. 18,618 12,891 4,470 2,775 2,214 40,968
Property Insurance ............. 3,789 4,213 1,075 741 674 10,492
--------- -------- ------- ------- ------- --------
Total Direct
Operating Expenses ......... 84,437 50,735 26,343 16,472 14,082 192,069
--------- -------- ------- ------- ------- --------
REVENUES IN EXCESS OF
DIRECT OPERATING EXPENSES $ 170,954 $ 86,083 $34,821 $28,637 $12,734 $333,229
========= ======== ======= ======= ======= ========
</TABLE>
<PAGE> 1
EXHIBIT 99.4
ART FLORIDA PORTFOLIO II, LTD.
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE QUARTER ENDED MARCH, 1998
<TABLE>
<CAPTION>
PROPERTIES
-----------------------------------------------------------------------------
GRAND
CONRADI LAGOON MORNING PARK AVENUE
BAY ANCHOR HOUSE DALUCE COVE LEE HILLS STAR VILLAS
---------- ------- -------- ------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Net Rental Revenues $14,118 $84,283 $131,464 $97,432 $21,425 $71,466 $177,054
Other Revenues 426 1,897 4,633 1,648 666 3,348 2,371
------- ------- -------- ------- ------- ------- --------
Total Revenues 14,544 86,180 136,097 99,080 22,091 74,814 179,425
DIRECT OPERATING EXPENSES:
Personnel Expense 2,005 13,907 18,906 7,409 2,365 8,887 11,194
Property Management Fee 581 3,448 5,336 3,960 883 2,949 8,164
Administrative Expense 355 2,707 2,428 1,721 546 1,940 1,621
Leasing Expense 282 2,002 1,458 948 218 1,179 1,529
Utility Expense 445 4,111 6,174 1,155 258 2,830 1,218
Service Expense 495 4,471 5,193 4,055 507 4,624 5,429
Cleaning and Decorating Expense 234 994 1,816 1,413 0 1,753 899
Repairs and Maintenance Expense 111 690 1,793 1,610 345 1,277 1,260
Property Taxes 1,215 6,345 15,300 5,835 2,187 5,511 23,160
Property Insurance 262 1,664 2,691 2,166 369 1,289 2,302
------- ------- -------- ------- ------- ------- --------
Total Direct Operating Expenses 5,985 40,339 61,095 30,272 7,678 32,239 56,776
------- ------- -------- ------- ------- ------- --------
REVENUES IN EXCESS OF DIRECT OPERATING
EXPENSES $ 8,559 $45,841 $ 75,002 $68,808 $14,413 $42,575 $122,649
======= ======= ======== ======= ======= ======= ========
<CAPTION>
PROPERTIES
-------------------
PINECREST WINDSOR
WEST TOWERS TOTAL
--------- ------- --------
<S> <C> <C> <C>
REVENUES:
Net Rental Revenues $ 67,358 $85,630 $750,230
Other Revenues 1,620 3,241 $ 19,850
-------- ------- --------
Total Revenues 68,978 88,871 770,080
DIRECT OPERATING EXPENSES:
Personnel Expense 7,424 11,012 83,109
Property Management Fee 2,759 3,536 31,616
Administrative Expense 1,970 1,412 14,700
Leasing Expense 922 155 8,693
Utility Expense 3,164 2,610 21,965
Service Expense 4,014 2,824 31,612
Cleaning and Decorating Expense 651 358 8,118
Repairs and Maintenance Expense 1,557 1,320 9,963
Property Taxes 5,772 6,162 71,487
Property Insurance 759 1,513 13,015
-------- ------- --------
Total Direct Operating Expenses 28,992 30,902 294,278
-------- ------- --------
REVENUES IN EXCESS OF DIRECT OPERATING
EXPENSES $ 39,986 $57,969 $475,802
======== ======= ========
</TABLE>
<PAGE> 1
EXHIBIT 99.5
ART FLORIDA PORTFOLIO III, LTD.
COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE QUARTER ENDED MARCH, 1998
<TABLE>
<CAPTION>
PROPERTIES
----------------------------------------------------------------------------------------
CARRIAGE CROSSINGS FALCON LAKE
ASHFORD PARK AT CHURCH HOUSE GEORGETOWN GREENBRIAR CHATEAU LANDING
------- -------- --------- ------ ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Net Rental Revenues $81,045 $75,615 $75,219 $117,109 $55,889 $63,754 $93,392 $59,801
Other Revenues 2,424 1,223 1,847 2,818 1,648 1,574 2,133 10,496
------- ------- ------- -------- ------- ------- ------- -------
Total Revenues 83,469 76,838 77,066 119,927 57,537 65,328 95,525 70,297
DIRECT OPERATING EXPENSES:
Personnel Expense 4,808 6,490 6,603 11,419 6,462 6,722 10,254 9,981
Property Management Fee 3,336 3,073 3,083 4,793 2,301 2,611 3,821 2,812
Administrative Expense 1,297 868 1,273 1,809 1,671 872 1,746 1,017
Leasing Expense 986 648 874 785 797 1,145 383 463
Utility Expense 3,087 4,673 3,133 4,299 2,266 835 3,849 2,714
Service Expense 3,762 3,469 3,372 3,910 3,093 3,834 3,905 2,848
Cleaning and Decorating Expense 1,318 1,077 2,082 1,406 1,098 1,849 1,462 568
Repairs and Maintenance Expense 1,040 710 922 2,560 972 2,430 1,514 526
Property Taxes 8,529 6,420 6,912 6,441 4,164 4,593 2,847 2,931
Property Insurance 2,254 993 1,121 1,851 1,436 930 1,664 1,639
------- ------- ------- -------- ------- ------- ------- -------
Total Direct Operating Expense 30,417 28,421 29,375 39,273 24,260 25,821 31,445 25,499
------- ------- ------- -------- ------- ------- ------- -------
REVENUES IN EXCESS OF
DIRECT OPERATING EXPENSES $53,052 $448,417 $47,691 $ 80,654 $33,277 $39,507 $64,080 $44,798
======= ======== ======= ======== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
PROPERTIES
-------------------------------------------------------------------------------------
NORTHSIDE ROLLING WESTWOOD
VILLAS REGENCY HILLS SEVILLE VALLEY HI WESTWOOD PARC TOTAL
--------- ------- ------- ------- --------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Net Rental Revenues $194,682 $119,306 $192,625 $94,054 $45,711 $153,700 $110,075 $1,531,977
Other Revenues 10,395 5,248 5,439 2,218 4,042 11,476 3,401 66,382
-------- -------- -------- ------- ------- -------- -------- ---------
Total Revenues 205,077 124,554 198,064 96,272 49,753 165,176 113,476 1,598,359
DIRECT OPERATING EXPENSES:
Personnel Expense 24,628 10,514 14,458 11,989 5,323 19,058 13,796 162,505
Property Management Fee 8,114 4,978 7,905 3,851 1,981 6,593 4,540 63,792
Administrative Expense 3,356 2,892 2,565 2,270 1,008 2,724 1,899 27,267
Leasing Expense 2,064 1,032 1,909 979 693 1,311 930 14,999
Utility Expense 12,742 4,774 9,124 4,092 1,898 9,583 4,197 71,266
Service Expense 6,928 5,591 5,646 1,889 4,442 6,668 3,435 62,792
Cleaning and Decorating Expense 2,531 2,700 1,396 317 1,518 3,818 963 24,103
Repairs and Maintenance Expense 3,806 1,343 2,144 1,200 390 3,128 1,852 24,537
Property Taxes 16,056 12,162 16,275 6,738 4,488 9,777 7,665 115,998
Property Insurance 3,748 2,401 4,100 1,624 952 3,073 1,718 29,504
-------- -------- -------- ------- ------- ------- ------- ----------
Total Direct Operating Expense 83,973 48,387 65,522 34,949 22,693 65,733 40,995 596,763
-------- -------- -------- ------- ------- ------- ------- ----------
REVENUES IN EXCESS OF
DIRECT OPERATING EXPENSES $121,104 $76,167 $132,542 $61,323 $27,060 $99,443 $72,481 $1,001,596
======== ======= ======== ======= ======= ======= ======= ==========
</TABLE>
