SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 1-9997
KOGER EQUITY, INC.
(Exact name of registrant as specified in its charter
FLORIDA 59-2898045
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization)
Identification No.)
3986 BOULEVARD CENTER DRIVE, SUITE 101
JACKSONVILLE, FLORIDA 32207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 398-3403
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the close of the
latest practicable date.
Class Outstanding at August 9, 1994
Common Stock, $.01 par value 17,597,780
shares
<PAGE>
KOGER EQUITY, INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Independent Accountants' Report . . . . . . . . . . . . 2
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
June 30, 1994 and December 31, 1993. . . . . . . . . . 3
Condensed Consolidated Statements of Operations
for the Three Month and Six Month Periods Ended
June 30, 1994 and 1993 . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statement of Changes in
Shareholders' Equity for the Six Month Period
Ended June 30, 1994. . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows
for the Six Month Periods Ended June 30, 1994
and 1993 . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial
Statements for the Three and Six Month Periods
Ended June 30, 1994 and 1993 . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . 13
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . 15
Item 5. Other Information. . . . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 20
Signatures. . . . . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
Koger Equity, Inc.
Jacksonville, Florida
We have reviewed the accompanying condensed consolidated
balance sheet of Koger Equity, Inc. and subsidiaries (the
"Company") as of June 30, 1994, and the related condensed
consolidated statements of operations for the three and
six month periods ended June 30, 1994 and 1993, the
condensed consolidated statement of changes in
shareholders' equity for the six month period ended June
30, 1994 and the condensed consolidated statements of cash
flows for the six month periods ended June 30, 1994 and
1993. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and of making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such condensed
consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
As discussed in Note 7 to the condensed consolidated
financial statements and Note 9 to the annual financial
statements for the year ended December 31, 1993 (not
presented herein), the Company is a defendant in a class
action proceeding.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance
sheet of the Company as of December 31, 1993, and the
related consolidated statements of operations, changes in
shareholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated
March 4, 1994, we expressed an unqualified opinion on
those consolidated financial statements and included an
explanatory paragraph as to an uncertainty regarding the
outcome of a class action proceeding in which the Company
is a defendant. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet
as of December 31, 1993 is fairly stated, in all material
respects, in relation to the consolidated balance sheet
from which it has been derived.
DELOITTE & TOUCHE
Jacksonville, Florida
August 3, 1994
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - See Independent Accountants' Report)
(In thousands)
June 30, December 31,
1994 1993
ASSETS
Real Estate Investments:
Operating properties $570,261 $565,957
Furniture and equipment 1,018 813
Accumulated depreciation (37,872) (30,706)
Operating properties - net 533,407 536,064
Undeveloped land held for investment 33,054 33,054
Undeveloped land held for sale, at
lower of cost or market value 6,136 6,982
Cash and temporary investments 25,160 18,566
Accounts receivable, net 3,531 3,030
Management fees and other receivables from
The Koger Partnership, Ltd. 1,335 634
Cost in excess of fair value of net assets
acquired from KPI, net of accumulated
amortization of $377 and $23 10,245 11,623
Other assets 6,005 5,136
TOTAL ASSETS $618,873 $615,089
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages and loans payable $328,244 $330,625
Accounts payable 1,939 3,945
Accrued interest 815 294
Accrued real estate taxes payable 4,721 1,201
Accrued liabilities - litigation
settlement 2,000
Other liabilities 4,084 3,574
Total Liabilities 341,803 339,639
Contingency (Note 7) - -
Shareholders' Equity
Common stock 205 205
Capital in excess of par value 318,577 318,574
Warrants 1,368 1,368
Accumulated dividends in excess of
net income (18,255) (19,872)
Treasury stock (2,874,400 shares,
at cost) (24,825) (24,825)
Total Shareholders' Equity 277,070 275,450
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $618,873 $615,089
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - See Independent Accountants' Report)
(In thousands, except per share data)
Three Month Period Six Month Period
Ended June 30, Ended June 30,
1994 1993 1994 1993
REVENUES
Rental $23,407 $10,982 $46,961 $21,952
Management fees
($810 and $1,595 from TKPL) 1,038 2,244
Interest 233 55 381 115
Total 24,678 11,037 49,586 22,067
EXPENSES
Property operations 9,836 4,255 19,214 8,400
Koger Management, Inc.
management fees 552 1,106
Mortgage and loan interest 6,502 2,825 12,800 5,587
Depreciation and
amortization 3,897 2,124 7,778 4,276
Settlement of litigation and
related attorneys fees 2,120 2,120
General and administrative 1,492 537 3,208 953
Provision for loss on land
held for sale 846 846
Provision for uncollectible
rents 54 134 54 184
Direct cost of management
contracts 728 1,462
Undeveloped land costs 225 426
Loss on sale of assets 53 61
Total 25,753 10,427 47,969 20,506
NET INCOME (LOSS) $ (1,075) $ 610 $ 1,617 $ 1,561
EARNINGS (LOSS) PER
COMMON SHARE $ (0.06 $ 0.05 $ 0.09 $ 0.12
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 17,597 13,220 17,597 13,220
KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited - See Independent Accountants' Report)
(In thousands)
<TABLE>
Accumulated
Capital in Dividends in Total
Common Stock Treasury Stock Excess of Excess Of Net Shareholders'
Shares Par Value Shares Cost Par Value Warrants Income Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 20,472 $ 205 2,874 $(24,825) $ 318,574 $ 1,368 $ (19,872) $ 275,450
Exercise of Warrants 3 3
Net Income 1,617 1,617
Balance, June 30, 1994 20,472 $ 205 2,874 $(24,825) $ 318,577 $ 1,368 $ (18,255) $ 277,070
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - See Independent Accountants' Report)
(In thousands)
Six Month Period
Ended June 30,
1994 1993
OPERATING ACTIVITIES
Net income $ 1,617 $1,561
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,778 4,276
Provision for litigation settlement 2,000
Provision for loss on land held for sale 846
Amortization of mortgage discounts 120 162
Loss on sale of assets 61
Provision for uncollectible rents 54 184
Accrued interest added to principal 685
Increase in accounts payable, accrued
liabilities and other liabilities 2,337 357
Increase in receivables and other assets (1,930) (172)
Increase in receivable from TKPL (701)
Net cash provided by operating activities 12,867 6,368
INVESTING ACTIVITIES
Tenant improvements to existing properties (2,869) (1,972)
Building improvements to existing properties (1,435) (485)
Deferred tenant costs (230) (328)
Merger costs (129) (1,840)
Additions to furniture and equipment (204)
Proceeds from sale of assets 459
Cash acquired in purchase of assets from KPI 1,528
Payments received on loans to Koger
Properties, Inc. - Cash Collateral Order 612
Net cash used in investing activities (2,880) (4,013)
FINANCING ACTIVITIES
Proceeds from exercise of warrants and stock options 3 1
Principal payments on mortgages and loans (3,353) (3,971)
Financing costs (43) (50)
Net cash used in financing activities (3,393) (4,020)
Net increase (decrease) in cash and cash equivalents 6,594 (1,665)
Cash and cash equivalents - beginning of period 18,566 9,283
Cash and cash equivalents - end of period $25,160 $7,618
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest $11,465 $6,060
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
KOGER EQUITY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS
ENDED JUNE 30, 1994 AND 1993
(Unaudited - See Independent Accountants' Report)
1. BASIS OF PRESENTATION. The condensed consolidated financial
statements include the accounts of Koger Equity, Inc. and its wholly-owned
subsidiaries (the "Company"). All significant intercompany transactions have
been eliminated. The financial statements have been prepared in accordance
with the rules and regulations of the Securities and Exchange Commission
related to interim financial statements.
The financial statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31, 1993,
included in the Company's Form 10-K Annual Report for the year ended December
31, 1993. The balance sheet at December 31, 1993, has been derived from the
audited financial statements at that date and is condensed.
All adjustments of a normal recurring nature which, in the opinion of
management, are necessary to present a fair statement of the results for the
interim periods have been made. Results of operations for the six month
period ended June 30, 1994, are not necessarily indicative of the results to
be expected for the full year.
2. ORGANIZATION. The Company, a Florida corporation, was incorporated
in 1988, for the purpose of investing in the ownership of income producing
properties, primarily commercial office buildings developed by Koger
Properties, Inc. ("KPI"). On December 21, 1993, KPI was merged with and into
the Company (the "Merger"). Pursuant to the Merger, Southeast Properties
Holding Corporation, Inc. ("Southeast"), a wholly owned subsidiary of the
Company, became the managing general partner of The Koger Partnership, Ltd.
("TKPL").
3. FEDERAL INCOME TAXES. The Company is operated in a manner so as to
qualify and has elected tax treatment as a real estate investment trust under
the Internal Revenue Code (a "REIT"). As a REIT, the Company is required to
distribute annually at least 95 percent of its REIT taxable income to its
shareholders. Since the Company had no REIT taxable income during 1993 and
does not expect to have REIT taxable income during 1994, no provision has
been made for Federal income taxes. To the extent that the Company pays
dividends equal to 100 percent of REIT taxable income, the earnings of the
Company are not taxed at the corporate level; however, under existing loan
covenants the Company may be prohibited from paying dividends in excess of
amounts necessary to maintain its status as a REIT. See Note 8, Dividends.
4. STATEMENTS OF CASH FLOWS. Cash in excess of daily requirements is
invested in short-term monetary securities. Such temporary cash investments
have an original maturity date of less than three months and are deemed to be
cash equivalents for purposes of the statements of cash flows. There
were no material non-cash investing or financing transactions for the six
month periods ended June 30, 1994 and 1993.
5. EARNINGS (LOSS) PER COMMON SHARE. Earnings (loss) per common share
have been computed based on the weighted average number of shares of common
stock outstanding. There were no dilutive common equivalent shares
outstanding during any of the interim periods presented.
6. MORTGAGES AND LOANS PAYABLE. At June 30, 1994, the Company had
$327,802,000 of loans outstanding, which are collateralized by mortgages on
certain operating properties, and $442,000 of unsecured notes outstanding.
Annual maturities for mortgages and loans payable, which are gross of
$1,171,000 of discounts, are as follows (in thousands):
Year Ending December 31,
1994 $ 2,259
1995 5,305
1996 8,749
1997 15,056
1998 19,330
Thereafter 278,716
$329,415
In addition to reporting and other requirements, the Company's debt agreements
contain provisions limiting the amount of annual dividends, limiting
additional borrowings, and limiting general and administrative expenses.
The Company is also required to maintain certain financial ratios.
7. LEGAL PROCEEDINGS. The Company, certain of its present and former
officers and directors, and KPI and certain of its subsidiaries are parties
to a class action filed in October, 1990 (the "Securities Action"). On
July 21, 1994, the Company entered into a Stipulation and Agreement of
Compromise and Settlement (the "Settlement") relating to the Securities
Action, which Settlement is subject to the approval of the United States
District Court for the Middle District of Florida (the "District
Court") at a hearing to be held on a date which has not yet been determined
(the "Hearing Date"). Under the Settlement, the Company has agreed to pay,
in settlement of all claims against all defendants therein, the sum of
$800,000 in cash plus 372,414 Warrants (the "Warrants") to purchase 372,414
shares of the Company's common stock. The Warrants are exercisable until
June 30, 1999 at $8.00 per share and are subject to redemption at prices
ranging from $2.21 to $5.24 per Warrant. The number of Warrants to be
delivered pursuant to the Settlement is subject to increase, or decrease,
within specified parameters, depending on the aggregate market value of the
Warrants (adjustment in the number of Warrants will occur if the aggregate
market value of the Warrants falls below $1,200,000 or exceeds $1,500,000)
during a specified period prior to the Hearing Date. As of June 30, 1994,
the Company has recorded a provision of $2,000,000 relating to the Settlement
of the Securities Action. While there can be no assurance that the District
Court will approve the Settlement, the Company believes that the outcome of
this litigation will not materially adversely affect its operations or
financial position. Under the terms of the Settlement, the Company has
maintained its position that the claims in the Securities Action are
without merit and, if the Settlement is not approved, the Company will
vigorously contest the Securities Action.
A derivative action in the District Court was commenced on October 29,
1990, by certain shareholders of the Company, against the Company, KPI, and
all of the then current directors of the Company. All counts against the
Company have been dismissed.
8. DIVIDENDS. The Company intends that the quarterly dividend payout
in the last quarter of each year will be adjusted if necessary to reflect
the distribution of at least 95 percent of the Company's REIT taxable income
as required by the Federal income tax laws. The terms of the secured debt of
the Company provide that the Company will be subject to certain dividend
limitations which, however, will not restrict the Company from paying the
dividends required to maintain its qualification as a REIT.
9. KPI MERGER. Upon a motion made by the Company during March, 1994,
the United States Bankruptcy Court for the Middle District of Florida, Tampa
Division, entered an order permitting the release of excess funds from the
KPI Administrative Claims Reserve which was established to provide
funds for the payment of various administrative claims in the KPI Chapter 11
Case. Pursuant to this order, approximately $1,463,000 was released to the
Company from the KPI Administrative Claims Reserve and was received on
April 6, 1994.
10. STOCK OPTIONS. Pursuant to the Company's Amended and Restated 1988
Stock Option Plan (the "1988 Plan") which provides for the grant of options
to purchase up to 500,000 shares of its common stock, the Compensation
Committee of the Company's Board of Directors (the "Compensation Committee")
granted options to purchase 213,750 shares on January 27, 1994 to certain
employees at an exercise price of $7.625 per share. These options expire
seven years from the date of grant and are exercisable beginning one year
from the date of the grant at the rate of 20 percent per annum of the
shares covered by each option on a cumulative basis being fully exercisable
five years after the date of grant. The grant of certain of these options
were conditioned upon the surrender of previously granted and outstanding
options to purchase 173,246 shares at an exercise price of $20.00 per share.
At June 30, 1994, options to purchase 499,900 shares pursuant to the 1988
Plan were outstanding, 286,150 shares of which were at an exercise price of
$5.125 per share and 213,750 shares of which were at an exercise price of
$7.625 per share.
Pursuant to the Company's 1993 Stock Option Plan (the "1993 Plan")
which provides for the granting of options to purchase up to 1,000,000 shares
of its common stock, the Compensation Committee granted options to purchase
552,200 shares on January 27, 1994 to certain key employees at an exercise
price of $7.625 per share. These options expire ten years from the date of
grant and are exercisable beginning one year from the date of the grant at
the rate of 20 percent per annum of the shares covered by each option on a
cumulative basis being fully exercisable five years after the date of
grant. In addition, the Compensation Committee granted options to purchase
207,332 shares on May 9, 1994 to certain key employees at an exercise price
of $7.625 per share. These options expire ten years from the date of grant
with 115,000 shares fully exercisable six months from the date of the grant
and 92,332 shares exercisable beginning one year from the date of the grant
at the rate of 20 percent per annum of the shares covered by each option on
a cumulative basis being fully exercisable five years from the date of grant.
At June 30, 1994, options to purchase 759,532 shares pursuant to the 1993 Plan
were outstanding which were at an exercise price of $7.625 per share.
11. PROVISION FOR LOSS ON LAND HELD FOR SALE. During the quarter ended
June 30, 1994, the Company recorded a provision for loss on land held for
sale which totalled $846,000. This provision for loss is based upon signed
contracts for the sale of two land parcels (53 acres), which sales
had not closed as of June 30, 1994.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the condensed
consolidated financial statements and related notes appearing elsewhere in
this Form 10-Q, and the Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the Company's December 31,
1993, Annual Report on Form 10-K.
RESULTS OF OPERATIONS. Rental revenues totalled $23,407,000 for the
quarter ended June 30, 1994, compared to $10,982,000 for the quarter ended
June 30, 1993. The increase in rental revenues resulted primarily from
(i) the rental revenues from the 93 buildings acquired pursuant to the
Merger on December 21, 1993 (totalling approximately $11,611,000) and
(ii) increased miscellaneous rental revenues. At June 30, 1994, the
Company's 219 buildings were on average 89 percent leased with an average
effective rental rate of $13.26. Rental revenues increased to $46,961,000
during the six month period ended June 30, 1994, compared to $21,952,000
during the same period last year, primarily for the same reasons mentioned
above.
During the three and six month periods ended June 30, 1994, the Company
earned $1,038,000 and $2,244,000 of management fees from TKPL and third
party management contracts. The Company had no management fees for the same
periods in 1993, as it assumed the management contracts from KPI on the
date of the Merger. On May 5, 1994, third party management contracts on two
buildings terminated due to a change of ownership for these buildings.
Management fee revenue related to the management of these two buildings was
approximately $79,000 for the six month period ended June 30, 1994.
Property operating expenses include such charges as utilities, taxes,
janitorial, and maintenance. The amounts of property operating expenses,
management costs incurred during 1994, and management fees incurred
during 1993 and their percentages of rental revenues for the applicable
periods are as follows:
% of Rental
Period Amount Revenues
June 30, 1994 - Quarter $9,836,000 42.0%
June 30, 1993 - Quarter $4,807,000 43.8%
June 30, 1994 - Six Months $19,214,000 40.9%
June 30, 1993 - Six Months $9,506,000 43.3%
Property operating expenses in 1994 were larger than 1993 primarily due to
the operating expenses on the 93 buildings acquired pursuant to the Merger
on December 21, 1993 (totalling approximately $4,724,000 and $8,946,000,
respectively, for the three and six month periods ended June 30, 1994).
For the three and six month periods ended June 30, 1994, the reduction in
the percent of operating expenses to rental revenues was due primarily to the
fact that the 93 buildings acquired pursuant to the Merger are generally
newer and, therefore, had a lower percentage of operating expenses to rental
revenues than the 126 buildings which the Company owned prior to the Merger.
Interest expense increased by $3,677,000 and $7,213,000, respectively,
during the three and six month periods ended June 30, 1994, compared to the
same periods last year, primarily due to the interest expense on the KPI
restructured debt assumed pursuant to the Merger.
Depreciation expense has been calculated on the straight line method based
upon the useful lives of the Company's depreciable assets, generally 5 to 40
years. Depreciation expense increased $1,598,000 and $3,196,000,
respectively, for the three and six month periods ended June 30, 1994,
compared to the same periods last year, due to (i) improvements made to the
Company's existing properties during 1993 and (ii) the acquisition of 93
buildings during 1993 pursuant to the Merger. Amortization expense increased
$175,000 and $306,000, respectively, for the three and six month periods
ended June 30, 1994, compared to the same periods last year, due to amounts
incurred for goodwill related to the Merger during 1993.
General and administrative expenses for the three month periods ended
June 30, 1994 and 1993, totaled $1,492,000 and $537,000, respectively, which
is 1.0 percent and 0.5 percent (annualized) of average invested assets.
General and administrative expenses for the six month periods ended June
30, 1994 and 1993, totaled $3,208,000 and $953,000, respectively, which is
1.1 percent and 0.5 percent of average invested assets. General and
administrative expenses increased primarily due to the increased general
and administrative functions performed by the Company following the Merger.
Following the Merger, the Company became fully self-advised and self-managed.
During the quarter ended June 30, 1994, the Company recorded a provision for
loss on land held for sale which totalled $846,000. This provision for loss
is based upon signed contracts for the sale of two land parcels (53 acres),
which sales had not closed as of June 30, 1994.
During the three and six month periods ended June 30, 1994, the Company
incurred $728,000 and $1,462,000 in direct costs to generate management fees
from TKPL and third party management contracts which it assumed from KPI
pursuant to the Merger.
During the three and six month periods ended June 30, 1994, real estate
taxes and other costs related to the unimproved land acquired from KPI
pursuant to the Merger totalled $225,000 and $426,000, respectively.
Net loss totalled $1,075,000 for the quarter ended June 30, 1994, compared
to net income of $610,000 for the corresponding period of 1993. The
reduction is due to the fact that the positive effect on the current quarter
of the acquisition of the 93 buildings, during 1993 pursuant to the Merger,
was more than offset by a $2,000,000 expense provision recorded for the
settlement of the Securities Action (described in Note 7 to the Condensed
Consolidated Financial Statements) and the provision recorded for the loss
on two land parcels held for sale. Net income increased $56,000 during
the six month period ended June 30, 1994, compared to the same period last
year. This small increase is due to the fact that the positive
effect on this period of the acquisition of the 93 buildings, pursuant to
the Merger, was largely offset by the provision recorded for the litigation
settlement and the provision recorded for the loss on two land parcels held
for sale.
LIQUIDITY AND CAPITAL RESOURCES.
Operating Activities - The Company's primary internal sources of
cash are the collection of rents and income from management fees with respect
to properties managed for TKPL, Centoff Realty Company, Inc., and others.
As a real estate investment trust (a "REIT") for Federal income tax purposes,
the Company is required to pay out annually, as dividends, 95 percent of its
REIT taxable income (which, due to non-cash charges, including provision for
losses and depreciation, may be substantially less than cash flow). In the
past, the Company has paid out dividends in amounts at least equal to its
taxable income. However, the Company currently expects that it will not be
required to pay any dividends during 1994 to maintain its REIT status. The
Company believes that its cash provided by operating activities will be
sufficient to cover debt service payments through 1994.
The level of cash flow generated by rents depends primarily on the occupancy
rates of the Company's buildings and increases in effective rental rates on
new and renewed leases and under escalation provisions in existing leases.
During the six months ended June 30, 1994, the Company generated
approximately $12.9 million in net cash from operating activities. From
December 31, 1993 to June 30, 1994, the Company has increased its balance of
cash and cash equivalents by $6,594,000 to $25,160,000.
At June 30, 1994, leases representing approximately 12 percent of the gross
annual rent from the Company's properties, without regard to the exercise of
options to renew, were due to expire during the remainder of 1994. This
represents 554 leases for space in buildings located in 19 of the 21 centers
in which the Company owns buildings. Certain of these tenants may not renew
their leases or may reduce their demand for space. During the six months
ended June 30, 1994, leases were renewed on approximately 64 percent of the
Company's net rentable square feet which expired during the six month period.
For those leases which renewed during the six months ended June 30, 1994, the
average effective rental rate increased from $12.71 to $12.91. However,
current market conditions in certain markets may require that rental rates at
which leases are renewed or at which vacated space is leased be lower than
rental rates under existing leases. Based upon the significant number of
leases which will expire during 1994 and 1995 and the competition for tenants
in the markets in which the Company operates, the Company has and expects to
continue to offer incentives to new and renewal tenants. These incentives
may include the payment of tenant improvements costs and in certain markets
reduced rents during initial lease periods. The Company expects capital
expenditures to be greater in 1994 than in 1993 due to the fact that the
Company acquired 93 buildings pursuant to the Merger. The Company's
occupancy rate has increased from 88% on December 31, 1993 to 89% on June 30,
1994. During 1994, the Company has benefitted from improving economic
conditions and reduced vacancy levels for office buildings in many of the
metropolitan areas in which the Company owns buildings. The Company believes
that the southeastern and southwestern regions of the United States provide
significant economic growth potential due to their diverse regional economies,
expanding metropolitan areas, skilled work force and moderate labor costs.
However, the Company cannot predict whether such economic growth will
continue. If economic growth was not to continue in the Company's markets
and if this resulted in lower occupancy rates for the Company's buildings,
cash flow from operations could be reduced.
Governmental tenants (including 19 departments or agencies of the State of
Florida and 26 departments or agencies of the United States Government)
which account for approximately 23 percent of the Company's leased space at
June 30, 1994, may be subject to budget reductions in times of recession and
governmental austerity; therefore, there can be no assurance that
governmental appropriations for rents may not be reduced. Additionally,
certain of the private sector tenants which have contributed to the
Company's rent stream may reduce their current demands or curtail their
need for additional office space.
Investing Activities - At June 30, 1994, all of the Company's invested
assets were in properties. Improvements to the Company's existing properties
have been financed through internal operations. During the six month period
ended June 30, 1994, the Company's expenditures for improvements to
existing properties increased by $1,847,000 over the corresponding period of
the prior year primarily due to the acquisition of 93 buildings pursuant to
the Merger on December 21, 1993.
During the six month period ended June 30, 1994, the Company sold various
items of furnishings and equipment which it had acquired pursuant to the
Merger for approximately $459,000, net of selling costs.
The terms of the Company's existing indebtedness require that a substantial
portion of any debt or equity financing achieved by the Company during the
foreseeable future be applied to the reduction of the current secured
indebtedness of the Company and contain limitations on incurrence of
additional debt and other restrictions.
Financing Activities - The Company has no open lines of credit, but has
a cash balance at June 30, 1994 of $25,160,000. During the six month period
ended June 30, 1994, the Company fully repaid 10 mortgages which were
collateralized by 10 buildings which contain 178,880 net rentable square feet.
At June 30, 1994, the Company had 47 buildings which contain 1,254,950 net
rentable square feet which are unencumbered.
Loan maturities and normal amortization of mortgages and loans payable are
expected to total approximately $4.9 million over the next 12 months. The
Company believes that these obligations will be paid from cash provided by
operations or from current cash balances. Significant maturities of the
Company's mortgages and loans payable do not begin to occur until 1998.
Depending on market conditions, the Company may seek to raise additional
equity capital, the proceeds of which would be used to reduce existing
indebtedness.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
An action in the U. S. District Court, Middle District of Florida
(the "District Court") was filed on October 11, 1990, by Gerald and Althea
Best and Jerome Wilem, shareholders of the Company, against KPI, the Company,
two subsidiaries of KPI (Koger Advisors, Inc. and KMI), Messrs. Allen R.
Ransom (a former director of the Company), Ira M. Koger (a former director
of the Company), S. D. Stoneburner, and W.F.E. Kienast (a former director of
the Company), alleging that various press releases, shareholder reports,
and/or securities filings failed to disclose and/or misrepresented the
Company's business policies, thereby inflating the market price of the
Company's stock, and seeking damages therefore (the "Securities Action").
William L. Coalson, a shareholder of the Company, was subsequently added as
an additional plaintiff. On July 21, 1994, the Company entered into a
Stipulation and Agreement of Compromise and Settlement (the "Settlement")
relating to the Securities Action, which Settlement is subject to the
approval of the District Court at a hearing to be held on a date which has
not yet been determined (the "Hearing Date"). Under the Settlement, the
Company has agreed to pay, in settlement of all claims against all defendants
therein, the sum of $800,000 in cash plus 372,414 Warrants (the "Warrants")
to purchase 372,414 shares of the Company's common stock. The Warrants are
exercisable until June 30, 1999 at $8.00 per share and are subject to
redemption at prices ranging from $2.21 to $5.24 per Warrant. The number of
Warrants to be delivered pursuant to the Settlement is subject to increase,
or decrease, within specified parameters, depending on the aggregate market
value of the Warrants during a specified period prior to the Hearing Date.
As of June 30, 1994, the Company has recorded a provision of $2,000,000
relating to the Settlement of the Securities Action. While there can be no
assurance that the District Court will approve the Settlement, the Company
believes that the outcome of this litigation will not materially adversely
affect its operations or financial position. Under the terms of the
Settlement, the Company has maintained its position that the claims in the
Securities Action are without merit and, if the Settlement is not approved,
the Company will vigorously contest the Securities Action.
A derivative action in the District Court was commenced on October 29,
1990, by Howard Greenwald and Albert and Phyllis Schlesinger, shareholders of
the Company, against the Company, KPI, all of the then current directors of
the Company, including: Ira M. Koger, James B. Holderman, Allen R. Ransom,
Wallace F. E. Kienast, S. D. Stoneburner, Yank D. Coble, Jr., G. Christian
Lantzsch, A. Paul Funkhouser and Stephen D. Lobrano, alleging breach of
fiduciary duty by favoring KPI over the interest of the Company and failing
to disclose or intentionally misleading the public as to the Company's cash
flow, dividend and financing policies and status, and seeking damages
therefor (the "Derivative Action"). During the pendency of the litigation a
Special Litigation Committee, which was composed of outside independent
members of the Company's Board of Directors, was appointed to conduct an
extensive investigation of the facts and circumstances surrounding the
Derivative Action. Upon completion of its investigation, it was the
conclusion of this committee that the ultimate best interests of the Company
and its shareholders would not be served in prosecuting this litigation.
Subsequently, the Company moved that the Derivative Action be dismissed under
the provisions of Florida law. Thereafter, the plaintiffs filed a Second
Amended and Supplemental Complaint which realleged the original cause of
action ("Count I"); and alleged a new cause of action against Stephen D.
Lobrano for legal malpractice ("Count II"); and a new cause of action against
the members of the Special Litigation Committee for alleged violation of
fiduciary duties in conducting their investigation ("Count III"). During
1993, the Company filed further motions seeking dismissal of the Second
Amended and Supplemental Complaint. On January 27, 1994, the United States
Magistrate issued his Report and Recommendation concerning the Second Amended
and Supplemental Complaint and Derivative Action, which recommended that (1)
Count I should be dismissed pursuant to the Special Litigation Committee
Report, (2) Count III against the Special Litigation Committee members should
be dismissed, and (3) Count II against Mr. Lobrano should not be dismissed.
The District Court adopted the Report and Recommendations of the United
States Magistrate by order entered March 8, 1994. Subsequently, Mr.
Lobrano has filed his answer denying all of the material allegations of the
Second Amended and Supplemental Complaint, and raising affirmative defenses,
including, without limitation, the defense that Mr. Lobrano was at all times
acting under the direction of the officers and directors of KPI. Mr. Lobrano
and his law firm (the "Lobrano Defendants") have also filed a counter claim
against the Company (the "Counter-Claim"), asserting that, in connection with
the matters complained of in the Second Amended and Supplemental Complaint,
Mr. Lobrano and his law firm acted under the direction and control of the
officers and directors of KPI, that they have suffered out-of-pocket expenses
and reputation damage to their business due to the directions of the officers
and directors of KPI, and that they are entitled to contribution or indemnity
from the Company, as the successor of KPI under the Merger consummated
pursuant to the KPI Plan of Reorganization in its Chapter 11 Bankruptcy Case,
in respect of such damages. They have brought similar cross claims against
Ira M. Koger, Allen R. Ransom and Wallace F. E. Kienast, former officers
and directors of KPI. The Company has moved to dismiss the Counter-Claim,
and moved in the United States Bankruptcy Court for the Middle District (the
"Bankruptcy Court") of Florida for an order holding Mr. Lobrano, the other
members of his firm and his lawyers in contempt on the grounds that any such
claims against KPI were discharged in its Chapter 11 Case and that the filing
of the Counter-Claim against the Company is a violation of the confirmation
order in the Chapter 11 Case (the "Confirmation Order"). On July 22, 1994,
the Bankruptcy Court entered its order finding that the filing of the Counter-
Claim was a violation of the Confirmation Order and in contempt of the
Bankruptcy Court. The Counter-Claim has been dismissed. The Lobrano
Defendants have filed an amended counter-claim (the "Amended Counter-Claim")
against the Company which asserts, among other things, that the Company,
through its officers and directors, improperly shaped and influenced the
Special Litigation Committee Report so that it contains inaccurate and false
statements about the Lobrano Defendants which have, in turn, caused damage
to the Lobrano Defendants. The Company has moved to dismiss the Amended
Counter-Claim on various grounds. The Company believes that the allegations
of the Amended Counter-Claim are without merit and will contest vigorously
the Amended Counter-Claim. The Company does not believe that the outcome of
this litigation will materially affect its operations or financial position.
On March 23, 1993, the Securities and Exchange Commission ("the
Commission") entered an Order directing a private investigation with respect
to KPI's accounting practices, including the accuracy of financial
information included in certain reports filed with the Commission, possible
insider trading in KPI's stock, and possible misleading statements concerning
the financial condition of KPI and its ability to pay dividends to its
shareholders. Prior to March 23, 1993, the Commission had been engaged
in a confidential investigation without a formal order. As a result of the
Merger of KPI with and into the Company, the Company has assumed
responsibility for responding to the requests and subpoenas of the
Commission staff in connection with this private investigation. Although
the staff of the Commission had subpoenaed KPI documents and former employees
of KPI, who are presently employees of the Company, for testimony, on
February 8, 1994, the Commission staff advised the Company, through its
counsel, that the scheduled depositions of former KPI employees and the
review of documents of KPI had been suspended. The Company has received no
communication from the Commission staff since the above notice of suspension.
Based on the information currently available to the Company, it is
unable to determine whether or not the private investigation will lead to
formal legal proceedings or administrative actions or whether or not such
legal proceedings or administrative actions will involve the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company held its 1994 Annual Meeting of Shareholders on
May 10, 1994.
(b) Not Applicable.
(c) At the Company's 1994 Annual Meeting of Shareholders in addition to
the election of directors, the following matter was considered,
voted upon and approved:
1. To amend Article V of the Company's Articles of Incorporation
to authorize the issuance of up to 50,000,000 shares of
preferred stock, including convertible preferred stock in such
series with such preferences and rights as the Company's
Board of Directors may determine and to remove the restriction
which prohibits the issuance of non-voting capital stock:
SHARES VOTED FOR: 7,721,334
SHARES VOTED AGAINST: 1,539,120
SHARES ABSTAINED: 119,244
<PAGE>
Item 5. Other Information
(a) The following table sets forth, with respect to the Company's centers
at June 30, 1994, number of buildings, net rentable square feet,
net square feet leased (based upon signed leases), weighted average
percent leased, and current average effective rent per net rentable
square foot leased.
<TABLE>
Avg Eff.
Net Net Wtg Avg Rent Per
Number Rentable Square Percent Net
of Square Feet Leased Rentable
Center Buildings Feet Leased (1) Sq Ft (2)
<S> <C> <C> <C> <C> <C>
Atlanta Chamblee 22 947,920 845,991 89% $14.02
Austin 12 370,860 39,924 92% 13.09
Charlotte Carmel 1 109,600 108,405 99% 15.51
Charlotte East 11 468,820 365,593 78% 12.48
El Paso 14 251,930 232,166 92% 12.43
Greensboro South 13 610,470 569,981 93% 13.24
Greenville 8 290,560 201,121 69% 13.37
Jacksonville Baymeadows 4 468,000 464,021 99% 14.51
Jacksonville Central 32 677,540 563,147 83% 11.41
Memphis Germantown 3 258,400 253,372 98% 16.84
Miami 1 96,800 91,159 94% 18.77
Norfolk West 1 59,680 50,359 84% 15.89
Orlando Central 22 565,220 497,544 88% 13.34
Orlando University 2 159,600 137,671 86% 16.14
Raleigh Crossroads 1 77,500 76,815 99% 15.39
San Antonio 26 788,670 729,921 93% 10.52
St. Petersburg 15 519,320 432,288 83% 12.86
Tall. Apal. Pkwy 14 408,500 379,365 93% 14.94
Tall. Cap. Circle 4 300,700 300,700 100% 17.04
Tulsa North 2 103,520 92,464 89% 9.86
Tulsa South 11 372,760 316,017 85% 9.06
TOTAL 219 7,906,370 7,048,024 89% $13.26
(1) The percent leased rates have been calculated by dividing total
net rentable square feet leased in an office building by net rentable
square feet in such building, which excludes public or common areas.
(2) Rental rates are computed by dividing annual gross rental revenues for
a center by the net rentable square feet applicable to such gross
rental revenues.
<PAGE>
(b) The following schedule sets forth for each of the Company's centers (i)
the number of leases which will expire during the remainder of calendar year
1994 and calendar years 1995 through 2002, (ii) the total net rentable area in
square feet covered by such leases, (iii) the current annual rental
represented by such leases, and (iv) the percentage of gross annual rental for
such center contributed by such leases. This information is based on the
buildings owned by the Company on June 30, 1994 and on the terms of leases in
effect as of June 30, 1994, on the basis of then existing base rentals, and
without regard to the exercise of options to renew. This table does not
include tenants in possession where leases were in the process of execution
but were not delivered to the Company at June 30, 1994.
</TABLE>
<TABLE>
Leases in Effect June 30, 1994, Expiring During the Calendar Years
1994 1995 1996 1997 1998 1999 2000 2001 2002 OTHER
ATLANTA CHAMBLEE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Leases 47 43 31 24 15 12 2 1 1 5
Number of Sq. Ft. 63,162 96,309 128,287 87,944 126,951 85,164 32,964 28,285 39,490 175,845
Annual Rental $ 837,429 1,312,239 2,010,127 1,104,500 1,774,514 1,085,001 647,733 289,976 516,547 2,475,646
% Gross Annual Rent 6.9% 10.9% 16.7% 9.2% 14.7% 9.0% 5.4% 2.4% 4.3% 20.5%
AUSTIN
Number of Leases 32 55 58 22 6 6
Number of Sq. Ft. 37,289 116,233 113,682 35,812 9,565 27,343
Annual Rental $ 457,986 1,404,465 1,541,910 485,007 128,594 431,630
% Gross Annual Rent 10.3% 31.6% 34.7% 10.9% 2.9% 9.7% 0.0% 0.0% 0.0% 0.0%
CHARLOTTE EAST
Number of Leases 46 59 32 20 8 3
Number of Sq. Ft. 102,291 107,776 69,104 34,029 37,008 15,385
Annual Rental $ 1,267,659 1,550,911 785,275 385,023 385,986 182,915
% Gross Annual Rent 27.8% 34.0% 17.3% 8.4% 8.5% 4.0% 0.0% 0.0% 0.0% 0.0%
CHARLOTTE CARMEL
Number of Leases 2 1 3 6 1
Number of Sq. Ft. 6,530 1,042 60,930 38,849 1,054
Annual Rental $ 99,643 18,738 828,419 713,751 21,065
% Gross Annual Rent 0.0% 5.9% 1.1% 49.3% 42.4% 0.0% 1.3% 0.0% 0.0% 0.0%
EL PASO
Number of Leases 38 47 60 38 9 2 1
Number of Sq. Ft. 29,399 49,592 70,191 59,528 16,625 2,025 4,806
Annual Rental $ 338,192 594,859 823,201 765,671 216,394 25,008 101,400
% Gross Annual Rent 11.8% 20.8% 28.7% 26.7% 7.6% 0.9% 3.5% 0.0% 0.0% 0.0%
GREENSBORO SOUTH
Number of Leases 32 69 43 20 10 3 2 1 1
Number of Sq. Ft. 30,877 101,124 99,359 127,395 144,007 4,078 15,254 17,366 30,521
Annual Rental $ 424,159 1,478,707 1,332,671 1,776,084 1,705,510 60,809 181,628 201,183 380,743
% Gross Annual Rent 5.6% 19.6% 17.7% 23.6% 22.6% 0.8% 2.4% 2.7% 5.0% 0.0%
GREENVILLE
Number of Leases 40 54 28 15 7 1 2
Number of Sq. Ft. 44,149 59,094 29,382 41,326 13,093 2,139 11,938
Annual Rental $ 571,188 791,404 365,888 590,617 151,941 26,459 190,797
% Gross Annual Rent 21.2% 29.4% 13.6% 22.0% 5.7% 1.0% 0.0% 0.0% 0.0% 7.1%
JACKSONVILLE BAYMEADOWS
Number of Leases 1 14 5 6 5 2 1
Number of Sq. Ft. 3,484 381,641 21,175 6,055 23,706 4,060 23,900
Annual Rental $ 64,039 5,419,227 353,150 87,722 370,568 59,050 378,160
% Gross Annual Rent 1.0% 80.5% 5.2% 1.3% 5.5% 0.9% 5.6% 0.0% 0.0% 0.0%
</TABLE>
<PAGE>
<TABLE>
Leases in Effect June 30, 1994, Expiring During the Calendar Years
1994 1995 1996 1997 1998 1999 2000 2001 2002 OTHER
JACKSONVILLE CENTRAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Leases 48 73 53 38 32 13 1 4
Number of Sq.Ft. 29,764 135,806 135,657 73,007 96,220 68,025 1,262 23,406
Annual Rental $ 380,639 1,671,339 1,267,402 845,100 1,109,771 709,038 11,661 286,589
% Gross Annual Rent 6.0% 26.6% 20.2% 13.4% 17.7% 11.3% 0.2% 0.0% 0.0% 4.6%
MEMPHIS GERMANTOWN
Number of Leases 10 11 18 15 5 1
Number of Sq.Ft. 85,425 15,521 76,955 56,874 16,597 2,000
Annual Rental $ 1,471,450 257,187 1,261,648 968,060 240,849 31,360
% Gross Annual Rent 34.8% 6.1% 29.8% 22.9% 5.7% 0.7% 0.0% 0.0% 0.0% 0.0%
MIAMI
Number of Leases 2 10 5 1 1
Number of Sq.Ft. 21,799 49,403 11,391 820 7,746
Annual Rental $ 368,469 962,854 219,154 15,375 145,380
% Gross Annual Rent 21.5% 56.3% 12.8% 0.9% 0.0% 8.5% 0.0% 0.0% 0.0% 0.0%
NORFOLK WEST
Number of Leases 3 4 3 2 4 1 1
Number of Sq.Ft. 14,278 11,492 5,183 4,822 6,540 3,014 5,030
Annual Rental $ 239,800 215,029 75,224 70,868 90,907 39,182 69,414
% Gross Annual Rent 29.9% 26.9% 9.4% 0.0% 8.8% 11.4% 0.0% 4.9% 0.0% 8.7%
ORLANDO CENTRAL
Number of Leases 46 50 41 30 10 3 1 1
Number of Sq.Ft. 94,843 96,300 119,407 117,409 41,612 8,314 12,606 7,053
Annual Rental $ 1,276,252 1,326,562 1,617,242 1,509,912 531,303 102,242 170,522 92,535
% Gross Annual Rent 19.3% 20.0% 24.4% 22.8% 8.0% 1.5% 2.6% 0.0% 0.0% 1.4%
ORLANDO UNIVERSITY
Number of Leases 5 11 11 11 2 3 1
Number of Sq.Ft. 10,651 35,776 16,794 30,753 7,834 32,692 3,171
Annual Rental $ 191,754 596,570 272,539 446,487 140,596 508,794 60,439
% Gross Annual Rent 8.7% 26.9% 12.3% 20.1% 6.3% 23.0% 0.0% 0.0% 0.0% 2.7%
RALEIGH CROSSROADS
Number of Leases 3 1 2 1
Number of Sq.Ft. 3,244 1,525 43,794 28,252
Annual Rental $ 50,872 23,646 670,073 437,681
% Gross Annual Rent 4.3% 2.0% 56.7% 0.0% 0.0% 0.0% 37.0% 0.0% 0.0% 0.0%
SAN ANTONIO
Number of Leases 78 99 61 33 21 12 1 2
Number of Sq.Ft. 115,751 229,492 102,792 63,521 136,244 61,287 2,616 18,218
Annual Rental $ 1,215,609 2,408,372 1,029,048 648,715 1,399,675 701,179 27,715 207,166
% Gross Annual Rent 15.9% 31.5% 13.5% 8.5% 18.3% 9.2% 0.4% 0.0% 0.0% 2.7%
ST. PETERSBURG
Number of Leases 33 53 33 23 16 9 1 2
Number of Sq.Ft. 63,948 86,167 47,104 110,695 56,064 38,436 2,504 27,370
Annual Rental $ 876,899 1,241,171 628,867 1,056,927 742,745 502,875 33,627 348,557
% Gross Annual Rent 16.1% 22.8% 11.6% 19.5% 13.7% 9.3% 0.6% 0.0% 0.0% 6.4%
TALLAHASSEE APALACHEE PKWY
Number of Leases 24 37 11 11 8 2 1
Number of Sq.Ft. 41,497 169,079 27,693 78,548 57,519 9,990 2,346
Annual Rental $ 571,716 2,589,301 367,452 1,242,961 825,896 147,036 31,593
% Gross Annual Rent 9.9% 44.8% 6.4% 21.5% 14.3% 2.5% 0.0% 0.0% 0.6% 0.0%
</TABLE>
<PAGE>
Leases in Effect June 30, 1994, Expiring During the Calendar Years
<TABLE>
1994 1995 1996 1997 1998 1999 2000 2001 2002 OTHER
TALLAHASSEE CAPITAL CIRCLE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Leases 7 2
Number of Sq.Ft. 219,700 81,000
Annual Rental $ 3,652,601 1,471,208
% Gross Annual Rent 0.0% 71.3% 0.0% 28.7% 0.0% 0.0% 0.0% 0.0% 0.0%
TULSA NORTH
Number of Leases 11 6 8 1 4
Number of Sq.Ft. 20,207 7,713 45,885 2,000 16,659
Annual Rental $ 179,447 71,231 451,518 16,000 193,940
% Gross Annual Rent 19.7% 7.8% 49.4% 1.8% 21.3% 0.0% 0.0% 0.0% 0.0% 0.0%
TULSA SOUTH
Number of Leases 55 68 32 11 1 1
Number of Sq.Ft. 42,029 104,892 119,648 20,754 6,051 22,643
Annual Rental $ 392,127 919,124 1,074,520 198,200 51,536 229,165
% Gross Annual Rent 13.7% 32.1% 37.5% 6.9% 1.8% 8.0% 0.0% 0.0% 0.0% 0.0%
TOTAL OFFICE BUILDINGS
Number of Leases 554 773 536 324 167 78 12 3 3 18
Number of Sq.Ft. 854,087 2,081,165 1,284,525 1,088,400 849,426 397,867 125,218 48,665 72,357 272,031
Annual Rental $ 11,175,686 28,586,442 16,165,647 14,441,988 10,754,437 5,038,848 2,011,192 530,341 928,883 3,731,143
% Gross Annual Rent 12.0% 30.6% 17.3% 15.4% 11.5% 5.4% 2.2% 0.6% 1.0% 4.0%
</TABLE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
10 Material Contracts
None.
(b) Reports on Form 8-K
On May 10, 1994, the Company filed a Form 8-K reporting under
Item 5, Other Events, that the Company had filed a copy of
the Articles of Amendment and Restatement of the Articles of
Incorporation of the Company with the Secretary of State of
the State of Florida and providing under Item 7, Financial
Statements and Exhibits, a copy of the Articles of Amendment
and Restatement of the Articles of Incorporation of Koger
Equity, Inc, dated May 10, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KOGER EQUITY, INC.
Registrant
[VICTOR A. HUGHES]
VICTOR A. HUGHES
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Dated: August 12, 1994
[JAMES L. STEPHENS]
JAMES L. STEPHENS
TREASURER AND
CHIEF ACCOUNTING OFFICER
