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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 September 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 November 7, 1994
Common Stock, $.01 par value 17,601,582 shares
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TABLE OF CONTENTS
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Page
Number
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PART I. FINANCIAL INFORMATION
Independent Accountants' Report . . . . . . . . . . . . . . . . . . . . . . . 2
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
September 30, 1994 and December 31, 1993 . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations
for the Three and Nine Month Periods Ended
September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statement of Changes in
Shareholders' Equity for the Nine Month Period
Ended September 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 5
Condensed Consolidated Statements of Cash Flows
for the Nine Month Periods Ended September 30, 1994
and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Condensed Consolidated Financial
Statements for the Three and Nine Month Periods
Ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . 21
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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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 September 30, 1994, and the
related condensed consolidated statements of operations for the three and nine
month periods ended September 30, 1994 and 1993, the condensed consolidated
statement of changes in shareholders' equity for the nine month period ended
September 30, 1994 and the condensed consolidated statements of cash flows for
the nine month periods ended September 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 LLP
Jacksonville, Florida
November 4, 1994
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - See Independent Accountants' Report)
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
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<S> <C> <C>
ASSETS
Real Estate Investments:
Operating properties $573,744 $565,957
Furniture and equipment 1,125 813
Accumulated depreciation (41,761) (30,706)
-------- --------
Operating properties - net 533,108 536,064
Undeveloped land held for investment 33,054 33,054
Undeveloped land held for sale, at lower of cost or
market value 5,986 6,982
Cash and temporary investments 23,174 18,566
Accounts receivable, net 3,626 3,030
Management fees and other receivables from
The Koger Partnership, Ltd. 1,464 634
Cost in excess of fair value of net assets acquired from KPI,
net of accumulated amortization of $532 and $23 9,856 11,623
Other assets 7,680 5,136
-------- --------
TOTAL ASSETS $617,948 $615,089
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages and loans payable $324,862 $330,625
Accounts payable 2,276 3,945
Accrued interest 1,135 294
Accrued real estate taxes payable 5,514 1,201
Accrued liabilities - litigation settlement 2,000
Other liabilities 3,654 3,574
-------- --------
Total Liabilities 339,441 339,639
-------- --------
Contingency (Note 7) - -
Shareholders' Equity
Common stock 205 205
Capital in excess of par value 318,584 318,574
Warrants 1,366 1,368
Accumulated dividends in excess of net income (16,823) (19,872)
Treasury stock (2,874,400 shares, at cost) (24,825) (24,825)
-------- --------
Total Shareholders' Equity 278,507 275,450
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $617,948 $615,089
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - See Independent Accountants' Report)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Month Period Nine Month Period
Ended September 30, Ended September 30,
-------------------- -------------------
1994 1993 1994 1993
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<S> <C> <C> <C> <C>
REVENUES
Rental $23,781 $ 11,212 $70,742 $33,164
Management fees ($836 and $2,431 from TKPL) 1,368 3,612
Interest 345 53 726 168
------- -------- ------- -------
Total 25,494 11,265 75,080 33,332
------- -------- ------- -------
EXPENSES
Property operations 10,828 5,115 30,042 13,515
Koger Management, Inc. management fees 565 1,671
Mortgage and loan interest 6,548 2,753 19,348 8,340
Depreciation and amortization 4,201 2,306 11,979 6,582
Settlement of litigation and related attorneys fees 24 2,144
General and administrative 850 460 4,058 1,413
Provision for loss on land held for sale 150 996
Provision for uncollectible rents 55 92 109 276
Direct cost of management contracts 1,087 2,549
Undeveloped land costs 125 551
Loss on sale of assets 6 67
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Total 23,874 11,291 71,843 31,797
------- -------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES 1,620 (26) 3,237 1,535
Income taxes 188 188
------- -------- ------- -------
NET INCOME (LOSS) $ 1,432 $ (26) $ 3,049 $ 1,535
======= ======== ======= =======
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE $ 0.08 $ - $ 0.17 $ 0.12
======= ======== ======= =======
WEIGHTED AVERAGE COMMON SHARES
AND COMMON EQUIVALENT SHARES
OUTSTANDING 17,978 13,220 17,726 13,220
======= ======== ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT
OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited - See Independent Accountants' Report)
(In thousands)
<TABLE>
<CAPTION>
Accumulated
Common Stock Capital Dividends Treasury Stock Total
------------ in Excess in Excess ---------------- Share-
Par of Par Of Net holders'
Shares Value Value Warrants Income Shares Cost Equity
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1994 20,472 $ 205 $318,574 $1,368 $(19,872) 2,874 $(24,825) $275,450
Exercise of Warrants 1 10 (2) 8
Net Income 3,049 3,049
------ ----- -------- ------ -------- ----- --------- --------
Balance, September
30, 1994 20,473 $ 205 $318,584 $1,366 $(16,823) 2,874 $(24,825) $278,507
====== ===== ======== ====== ======== ===== ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - See Independent Accountants' Report)
(In thousands)
<TABLE>
<CAPTION>
Nine Month Period
Ended September 30,
-----------------------
1994 1993
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OPERATING ACTIVITIES
Net income $ 3,049 $ 1,535
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,979 6,582
Provision for litigation settlement 2,000
Provision for loss on land held for sale 996
Amortization of mortgage discounts 169 215
Loss on sale of assets 67
Provision for uncollectible rents 109 276
Accrued interest added to principal 1,005
Increase in accounts payable, accrued
liabilities and other liabilities 3,192 1,643
Increase in receivables and other assets (3,658) (525)
Increase in receivable from TKPL (830)
------- -------
Net cash provided by operating activities 18,078 9,726
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INVESTING ACTIVITIES
Tenant improvements to existing properties (4,861) (3,274)
Building improvements to existing properties (2,926) (928)
Deferred tenant costs (489) (432)
Merger costs (338) (2,837)
Additions to furniture and equipment (311)
Proceeds from sale of assets 520
Cash acquired in purchase of assets from KPI 2,135
Payments received on loans to Koger
Properties, Inc. - Cash Collateral Order 1,039
------- -------
Net cash used in investing activities (6,270) (6,432)
------- -------
FINANCING ACTIVITIES
Proceeds from exercise of warrants and stock options 8 1
Principal payments on mortgages and loans (7,104) (4,779)
Financing costs (104) (152)
------- -------
Net cash used in financing activities (7,200) (4,930)
------- -------
Net increase (decrease) in cash and cash equivalents 4,608 (1,636)
Cash and cash equivalents - beginning of period 18,566 9,283
------- -------
Cash and cash equivalents - end of period $23,174 $ 7,647
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest $17,295 $ 8,798
======= =======
Cash paid during the period for income taxes $ 188 $ -
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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KOGER EQUITY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS
ENDED SEPTEMBER 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 nine month
period ended September 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. The Company utilized on its 1993 Federal income tax return
approximately $5,094,000 of its 1992 net operating loss carryforward to
eliminate any REIT taxable income for 1993. The Company's net operating loss
carryforward available to offset REIT taxable income for 1994 totals
approximately $8,449,000, which can be used to offset REIT taxable income
through 2007. Pursuant to the Merger, the Company succeeded to KPI's net
operating loss carryforward which, based upon KPI's final Federal income tax
return, totals approximately $98,000,000. However, the portion of KPI's net
operating loss carryforward which is usable each year by the Company is limited
to approximately $7,900,000. The use of net operating loss carryforwards are
limited for alternative minimum tax purposes. The Company paid approximately
$104,000 of alternative minimum tax when it filed its 1993 Federal income tax
return. In addition, the Company recorded a provision for alternative minimum
taxes of approximately $76,000 in the quarter ended September 30, 1994. To the
extent that the Company pays dividends equal to 100 percent of REIT taxable
income, the earnings of the Company are not taxed
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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, i.e., 95 percent of REIT taxable income. 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 nine month
periods ended September 30, 1994 and 1993.
5. EARNINGS PER COMMON SHARE. Earnings per common share have been
computed based on the weighted average number of shares of common stock and
common stock equivalents outstanding during the applicable periods.
6. MORTGAGES AND LOANS PAYABLE. At September 30, 1994, the Company
had $324,862,000 of loans outstanding, which are collateralized by mortgages on
certain operating properties. During the quarter ended September 30, 1994, the
Company paid the outstanding balances of its two unsecured notes.
Annual maturities for mortgages and loans payable, which are gross of
$1,121,000 of discounts, are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ending December 31
-----------------------
<S> <C>
1994 $ 1,135
1995 5,228
1996 8,667
1997 14,949
1998 19,115
Thereafter 276,889
--------
$325,983
========
</TABLE>
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 directors
and certain of its 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"). A hearing was held in the District Court on November 3, 1994 and the
District Court has the approval of the Settlement under advisement. There were
no objections to the Settlement. 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 472,131 Warrants (the "Warrants") to purchase 472,131
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 $2.31 to $5.24 per Warrant. Through September 30, 1994, the Company has
8
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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.
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. PROVISION FOR LOSS ON LAND HELD FOR SALE. During the three and
nine month periods ended September 30, 1994, the Company has recorded a
provision for loss on land held for sale which totals $150,000 and $996,000,
respectively. This provision for loss is based upon signed contracts for the
sale of two land parcels (approximately 53 acres), which sales had not closed
as of September 30, 1994. On October 21, 1994, the Company completed the sale
of one of these land parcels (approximately 22.7 acres) at a sales price of
$2,982,500.
10. COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED FROM KPI.
The United States Bankruptcy Court for the Middle District of Florida, Tampa
Division, has entered several orders permitting the release of excess funds
from the KPI Administrative Claims Reserve which was established to provided
funds for the payment of various administrative claims in the KPI Chapter 11
Case. Through September 30, 1994, approximately $2.1 million of excess funds
have been released to the Company from the Administrative Claims Reserve.
These amounts have been recorded as reductions to cost in excess of fair value
of net assets acquired from KPI.
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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 $23,781,000 for the quarter
ended September 30, 1994, compared to $11,212,000 for the quarter ended
September 30, 1993. The increase in rental revenues resulted primarily from
the rental revenues from the 93 buildings acquired pursuant to the Merger on
December 21, 1993 (totalling approximately $12,880,000). At September 30,
1994, the Company's 219 buildings were on average 89 percent leased with an
average effective rental rate of $13.35. Rental revenues increased to
$70,742,000 during the nine month period ended September 30, 1994, compared to
$33,164,000 during the same period last year, primarily for the same reason
mentioned above.
During the three and nine month periods ended September 30, 1994, the Company
earned $1,368,000 and $3,612,000 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.
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
------ ------ -----------
[S] [C] [C]
September 30, 1994 - Quarter $10,828,000 45.5%
September 30, 1993 - Quarter $ 5,680,000 50.7%
September 30, 1994 - Nine Months $30,042,000 42.5%
September 30, 1993 - Nine Months $15,186,000 45.8%
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 $5,282,000 and $14,228,000,
respectively, for the three and nine month periods ended September 30, 1994).
For the three and nine month periods ended September 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 $3,795,000 and $11,008,000, respectively, during
the three and nine month periods ended September 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.
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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 $1,722,000 and $4,917,000, respectively, for the
three and nine month periods ended September 30, 1994, compared to the same
periods last year, due to (i) improvements made to the Company's existing
properties during 1993 and 1994 and (ii) the acquisition of 93 buildings during
December 1993 pursuant to the Merger. Amortization expense increased $173,000
and $480,000, respectively, for the three and nine month periods ended
September 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 September
30, 1994 and 1993, totalled $850,000 and $460,000, respectively, which is 0.6
percent and 0.5 percent (annualized) of average invested assets. General and
administrative expenses for the nine month periods ended September 30, 1994 and
1993, totaled $4,058,000 and $1,413,000, respectively, which is 0.9 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 three and nine month periods ended September 30, 1994, the Company
recorded a provision for loss on land held for sale which totalled $150,000 and
$996,000, respectively. This provision for loss is based upon signed contracts
for the sale of two land parcels (approximately 53 acres), which sales had not
closed as of September 30, 1994.
During the three and nine month periods ended September 30, 1994, the Company
incurred $1,087,000 and $2,549,000 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 nine month periods ended September 30, 1994, real estate
taxes and other costs related to the unimproved land acquired from KPI pursuant
to the Merger totalled $125,000 and $551,000, respectively. On October 21,
1994, the Company sold a parcel of unimproved land (approximately 22.7 acres).
Through September 30, 1994, the Company had accrued $72,000 for real estate
taxes on this land parcel.
Net income totalled $1,432,000 for the quarter ended September 30, 1994,
compared to net loss of $26,000 for the corresponding period of 1993. The
increase is due to the positive effect on the current quarter of the
acquisition of the 93 buildings, during 1993 pursuant to the Merger. Net
income increased $1,514,000 during the nine month period ended September 30,
1994, compared to the same period last year. This 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 partially 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
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"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 nine months ended September 30, 1994, the Company generated approximately
$18.1 million in net cash from operating activities. From December 31, 1993 to
September 30, 1994, the Company has increased its balance of cash and cash
equivalents by $4,608,000 to $23,174,000.
At September 30, 1994, leases representing approximately 7.4 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 336 leases for space in buildings located in 18 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 nine months ended
September 30, 1994, leases were renewed on approximately 65 percent of the
Company's net rentable square feet which were scheduled to expire during the
nine month period. For those leases which renewed during the nine months ended
September 30, 1994, the average effective rental rate increased from $12.76 to
$12.83. 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 September
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 23 departments or agencies of the State of
Florida and 36 departments or agencies of the United States Government) which
account for approximately 22 percent of the Company's leased space at September
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
12
<PAGE> 14
rent stream may reduce their current demands or curtail their need for
additional office space.
INVESTING ACTIVITIES - At September 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 nine
month period ended September 30, 1994, the Company's expenditures for
improvements to existing properties increased by $3,585,000 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 nine month period ended September 30, 1994, the Company sold various
items of furnishings and equipment which it had acquired pursuant to the Merger
for approximately $520,000, 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 September 30, 1994 of $23,174,000. During the nine month
period ended September 30, 1994, the Company fully repaid 17 mortgages which
were collateralized by 17 buildings which contain 357,280 net rentable square
feet. At September 30, 1994, the Company had 51 buildings which contain
1,387,130 net rentable square feet which are unencumbered.
Loan maturities and normal amortization of mortgages and loans payable are
expected to total approximately $5.1 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.
On August 22, 1994, the Company filed a shelf registration statement with
respect to the possible issuance of up to $100,000,000 of its common and or
preferred stock.
13
<PAGE> 15
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 the Company, two
subsidiaries of KPI (Koger Advisors, Inc. and Koger Management Inc.), 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. A hearing was held in the District Court on November 3, 1994 and the
District Court has the approval of the Settlement under advisement. There were
no objections to the Settlement. 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 472,131 Warrants (the "Warrants") to purchase 472,131
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 $2.31 to $5.24 per Warrant. Through September 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
14
<PAGE> 16
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 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") 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
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 was then subsequently
dismissed. The Lobrano Defendants then 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 and has renewed its motion
that Mr. Lobrano, certain other members of his firm and their lawyers be held
in contempt of the Confirmation Order by reason of the filing of the Amended
Counter-Claim. A hearing on this renewed motion was held in the Bankruptcy
Court on September 14, 1994, and the Bankruptcy Court has this matter under
advisement. 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
15
<PAGE> 17
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 the 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.
16
<PAGE> 18
Item 5. Other Information
(a) The following table sets forth, with respect to the Company's
centers at September 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>
<CAPTION>
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 22 947,920 856,250 90% $14.06
Austin 12 370,860 342,955 92% 13.34
Charlotte Carmel 1 109,600 108,405 99% 15.50
Charlotte East 11 468,820 381,518 81% 12.51
El Paso 14 251,930 236,068 94% 12.60
Greensboro South 13 610,470 573,517 94% 13.30
Greenville 8 290,560 200,465 69% 13.42
Jacksonville Baymeadows 4 468,000 466,358 100% 14.47
Jacksonville Central 32 677,540 572,128 84% 11.43
Memphis Germantown 3 258,400 235,695 91% 16.23
Miami 1 96,800 95,630 99% 18.59
Norfolk West 1 59,680 43,396 73% 15.97
Orlando Central 22 565,220 490,395 87% 13.34
Orlando University 2 159,600 129,116 81% 16.12
Raleigh Crossroads 1 77,500 76,815 99% 15.43
San Antonio 26 788,670 646,056 82% 10.75
St. Petersburg 15 519,320 455,408 88% 12.84
Tall. Apal. Pkwy 14 408,500 384,155 94% 15.14
Tall. Cap. Circle 4 300,700 300,700 100% 17.40
Tulsa North 2 103,520 92,514 89% 9.84
Tulsa South 11 372,760 311,999 84% 9.11
--- --------- --------- --- ------
TOTAL 219 7,906,370 6,999,543 89% $13.35
=== ========= ========= === ======
</TABLE>
(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.
17
<PAGE> 19
(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 September 30, 1994 and on the terms of leases in effect as of
September 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 September 30, 1994.
<TABLE>
<CAPTION>
Leases in Effect September 30, 1994, Expiring During the Calendar Years
-----------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 OTHER
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ATLANTA CHAMBLEE
Number of Leases 24 51 32 27 16 13 2 1 1 5
Number of Sq. Ft. 17,457 114,460 130,165 86,717 127,735 103,132 32,964 28,285 39,490 175,845
Annual Rental $ 227,074 1,539,567 2,050,413 1,105,115 1,785,869 1,337,136 647,733 289,976 516,547 2,475,646
% Gross Annual Rent 1.9% 12.9% 17.1% 9.2% 14.9% 11.2% 5.4% 2.4% 4.3% 20.7%
AUSTIN
Number of Leases 20 63 62 26 6 6
Number of Sq. Ft. 22,500 122,735 116,810 44,002 9,565 27,343
Annual Rental $ 284,961 1,508,531 1,599,148 620,821 130,263 431,630
% Gross Annual Rent 6.2% 33.0% 35.0% 13.6% 2.8% 9.4% 0.0% 0.0% 0.0% 0.0%
CHARLOTTE EAST
Number of Leases 30 74 34 21 9 6 1
Number of Sq. Ft. 39,667 156,384 74,529 35,975 38,005 28,392 8,566
Annual Rental $ 471,515 2,126,501 928,443 412,237 402,528 311,106 112,896
% Gross Annual Rent 9.9% 44.6% 19.5% 8.7% 8.4% 6.5% 2.4% 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 18,738 826,328 714,958 21,065
% Gross Annual Rent 0.0% 5.9% 1.1% 49.2% 42.5% 0.0% 1.3% 0.0% 0.0% 0.0%
EL PASO
Number of Leases 22 50 56 46 11 2 1 1
Number of Sq. Ft. 18,250 50,751 67,691 70,221 20,275 2,025 4,806 2,049
Annual Rental $ 206,354 610,052 811,567 907,431 264,027 25,928 101,400 34,732
% Gross Annual Rent 7.0% 20.6% 27.4% 30.6% 8.9% 0.9% 3.4% 1.2% 0.0% 0.0%
GREENSBORO SOUTH
Number of Leases 17 84 43 20 10 3 2 1 1
Number of Sq. Ft. 18,621 114,101 99,679 129,890 144,007 4,078 15,254 17,366 30,521
Annual Rental $ 268,802 1,659,228 1,326,653 1,813,015 1,708,382 60,985 181,935 201,183 380,743
% Gross Annual Rent 3.5% 21.8% 17.5% 23.9% 22.5% 0.8% 2.4% 2.6% 5.0% 0.0%
GREENVILLE
Number of Leases 22 71 31 17 8 1 2
Number of Sq. Ft. 24,567 68,536 30,921 45,125 14,287 5,091 11,938
Annual Rental $ 321,872 919,741 388,874 638,794 167,233 62,976 190,797
% Gross Annual Rent 12.0% 34.2% 14.5% 23.7% 6.2% 2.3% 0.0% 0.0% 0.0% 7.1%
JACKSONVILLE BAYMEADOWS
Number of Leases 0 14 4 6 4 4 1
Number of Sq. Ft. 0 380,621 18,627 8,505 23,681 11,024 23,900
Annual Rental $ 0 5,405,873 318,752 111,811 364,858 165,645 378,160
% Gross Annual Rent 0.0% 80.1% 4.7% 1.7% 5.4% 2.5% 5.6% 0.0% 0.0% 0.0%
</TABLE>
18
<PAGE> 20
<TABLE>
<CAPTION>
Leases in Effect September 30, 1994, Expiring During the Calendar Years
-------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 OTHER
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JACKSONVILLE CENTRAL
Number of Leases 31 85 53 45 33 14 2 4
Number of Sq. Ft. 21,472 141,713 135,657 78,833 97,705 70,519 2,912 23,317
Annual Rental $ 272,968 1,746,886 1,270,980 916,047 1,133,090 729,637 35,916 289,134
% Gross Annual Rent 4.3% 27.3% 19.9% 14.3% 17.7% 11.4% 0.6% 0.0% 0.0% 4.5%
MEMPHIS GERMANTOWN
Number of Leases 8 10 16 16 5 2 1
Number of Sq. Ft. 66,295 14,991 75,552 57,374 16,597 5,416 42,213
Annual Rental $ 1,180,684 250,824 1,255,215 987,346 244,273 81.100 436,368
% Gross Annual Rent 26.6% 5.7% 28.3% 22.3% 5.5% 1.8% 9.8% 0.0% 0.0% 0.0%
MIAMI
Number of Leases 2 10 5 1 1
Number of Sq. Ft. 21,799 53,874 11,391 820 7,746
Annual Rental $ 368,469 1,029,390 219,154 15,375 145,380
% Gross Annual Rent 20.7% 57.9% 12.3% 0.9% 0.0% 8.2% 0.0% 0.0% 0.0% 0.0%
NORFOLK WEST
Number of Leases 2 4 3 2 4 1 1
Number of Sq. Ft. 7,315 11,492 5,183 4,822 6,540 3,014 5,030
Annual Rental $ 127,988 216,563 75,224 70,868 90,907 39,182 72,185
% Gross Annual Rent 18.4% 31.3% 10.9% 0.0% 10.2% 13.1% 0.0% 5.7% 0.0% 10.4%
ORLANDO CENTRAL
Number of Leases 35 53 43 33 13 3 1 1
Number of Sq. Ft. 67,157 86,992 125,396 122,768 60,109 8,314 12,606 7,053
Annual Rental $ 873,108 1,209,570 1,699,510 1,603,956 775,090 102,242 170,522 92,535
% Gross Annual Rent 13.4% 18.5% 26.0% 24.6% 11.9% 1.6% 2.6% 0.0% 0.0% 1.4%
ORLANDO UNIVERSITY
Number of Leases 3 9 11 11 2 4 1
Number of Sq. Ft. 3,722 30,798 16,794 30,753 7,834 36,044 3,171
Annual Rental $ 64,205 536,327 272,721 448,836 140,596 554,548 60,439
% Gross Annual Rent 3.1% 25.8% 13.1% 21.6% 6.8% 26.7% 0.0% 0.0% 0.0% 2.9%
RALEIGH CROSSROADS
Number of Leases 2 2 2 1
Number of Sq. Ft. 2,079 2,690 43,794 28,252
Annual Rental $ 33,397 42,203 671,997 437,681
% Gross Annual Rent 2.8% 3.6% 56.7% 0.0% 0.0% 0.0% 36.9% 0.0% 0.0% 0.0%
SAN ANTONIO
Number of Leases 45 112 61 42 21 16 1 3
Number of Sq. Ft. 90,688 152,603 101,410 73,410 139,353 67,175 2,616 18,801
Annual Rental $ 962,669 1,680,690 1,022,806 780,172 1,443,259 772,070 27,715 213,526
% Gross Annual Rent 13.9% 24.4% 14.8% 11.3% 20.9% 11.2% 0.4% 0.0% 0.0% 3.1%
ST. PETERSBURG
Number of Leases 19 64 34 27 16 11 2 1 2
Number of Sq. Ft. 53,461 92,400 39,931 114,092 56,064 45,025 17,370 9,695 27,370
Annual Rental $ 726,809 1,329,669 507,297 1,103,728 750,429 584,887 200,870 160,517 348,557
% Gross Annual Rent 12.7% 23.3% 8.9% 19.3% 13.1% 10.3% 3.5% 2.8% 0.0% 6.1%
TALLAHASSEE APALACHEE
PKWY
Number of Leases 14 45 12 10 8 3 1
Number of Sq. Ft. 12,816 190,781 30,692 73,076 59,539 14,905 2,346
Annual Rental $ 181,493 2,942,582 421,357 1,158,983 871,516 212,513 31,593
% Gross Annual Rent 3.1% 50.6% 7.2% 19.9% 15.0% 3.7% 0.0% 0.0% 0.5% 0.0%
</TABLE>
19
<PAGE> 21
<TABLE>
<CAPTION>
Leases in Effect September 30, 1994, Expiring During the Calendar Years
-----------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 OTHER
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TALLAHASSEE CAPITAL
CIRCLE
Number of Leases 8 2
Number of Sq. Ft. 219,700 81,000
Annual Rental $ 3,761,533 1,471,208
% Gross Annual Rent 0.0% 71.9% 0.0% 28.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
TULSA NORTH
Number of Leases 5 8 8 3 4 1
Number of Sq. Ft. 11,985 11,847 45,885 4,724 16,659 1,414
Annual Rental $ 95,190 111,054 453,060 43,589 193,940 13,433
% Gross Annual Rent 10.5% 12.2% 49.7% 4.8% 21.3% 1.5% 0.0% 0.0% 0.0% 0.0%
TULSA SOUTH
Number of Leases 35 77 31 15 1 1
Number of Sq. Ft. 24,544 116,229 117,648 24,884 6,051 22,643
Annual Rental $ 227,068 1,036,548 1,062,618 236,623 51,536 229,165
% Gross Annual Rent 8.0% 36.4% 37.4% 8.3% 1.8% 8.1% 0.0% 0.0% 0.0% 0.0%
TOTAL OFFICE
BUILDINGS
Number of Leases 336 896 542 371 175 95 16 5 3 19
Number of Sq. Ft. 524,395 2,140,228 1,288,797 1,143,099 881,137 466,826 192,513 60,409 72,357 272,525
Annual Rental $ 6,894,626 29,762,975 16,374,527 15,201,415 11,212,715 5,911,288 2,752,261 725,590 928,883 3,743,499
% Gross Annual Rent 7.4% 31.8% 17.5% 16.3% 12.0% 6.3% 2.9% 0.8% 1.0% 4.0%
</TABLE>
20
<PAGE> 22
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
27 Financial Data Schedule (for the SEC use only).
</TABLE>
(b) Reports on Form 8-K
On August 19, 1994, the Company filed a Form 8-K reporting
under Item 5, Other Events, that the Company and TCW Special
Credits had signed a letter agreement and providing under
Item 7, Financial Statements and Exhibits, a copy of the
letter agreement between Koger Equity, Inc. and TCW Special
Credits, a California General Partnership, dated August 5,
1994.
21
<PAGE> 23
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: November 10, 1994
[JAMES L. STEPHENS]
-----------------------------
JAMES L. STEPHENS
TREASURER AND
CHIEF ACCOUNTING OFFICER
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE KOGER EQUITY, INC. FOR THE PERIOD ENDED SEPTEMBER
30, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 23,174
<SECURITIES> 0
<RECEIVABLES> 5,386
<ALLOWANCES> 296
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 613,909
<DEPRECIATION> 41,761
<TOTAL-ASSETS> 617,948
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 324,862
<COMMON> 205
0
0
<OTHER-SE> 278,302
<TOTAL-LIABILITY-AND-EQUITY> 617,948
<SALES> 0
<TOTAL-REVENUES> 75,080
<CGS> 0
<TOTAL-COSTS> 32,591
<OTHER-EXPENSES> 19,795
<LOSS-PROVISION> 109
<INTEREST-EXPENSE> 19,348
<INCOME-PRETAX> 3,237
<INCOME-TAX> 188
<INCOME-CONTINUING> 3,049
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,049
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
<FN>
<F1> The Company does not file a classified balance sheet, therefore these
items are not provided.
</FN>
</TABLE>
