<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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, 1998 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.)
8880 FREEDOM CROSSING TRAIL
JACKSONVILLE, FLORIDA 32256
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 732-1000
3986 BOULEVARD CENTER DRIVE JACKSONVILLE, FLORIDA 32207
(Former address, if changed since last report)
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 latest practicable date.
Class Outstanding at July 31, 1998
Common Stock, $.01 par value 26,571,979 shares
<PAGE> 2
KOGER EQUITY, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Independent Accountants' Report............................................................. 3
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
June 30, 1998 and December 31, 1997...................................................... 4
Condensed Consolidated Statements of Operations
for the Three and Six Month Periods Ended
June 30, 1998 and 1997................................................................... 5
Condensed Consolidated Statement of Changes in
Shareholders' Equity for the Six Month Period
Ended June 30, 1998...................................................................... 6
Condensed Consolidated Statements of Cash Flows
for the Six Month Periods Ended June 30, 1998
and 1997................................................................................. 7
Notes to Condensed Consolidated Financial
Statements for the Three and Six Month Periods
Ended June 30, 1998 and 1997............................................................. 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........................................ 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................................... 12
Item 4. Submission of Matters to a Vote of Security Holders.................................. 12
Item 5. Other Information.................................................................... 13
Item 6. Exhibits and Reports on Form 8-K..................................................... 16
Signatures.................................................................................... 17
</TABLE>
2
<PAGE> 3
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, 1998, and the
related condensed consolidated statements of operations for the three and six
month periods ended June 30, 1998 and 1997, the condensed consolidated
statement of changes in shareholders' equity for the six month period ended
June 30, 1998 and the condensed consolidated statements of cash flows for the
six month periods ended June 30, 1998 and 1997. 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.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of December 31,
1997, 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 February 23, 1998, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1997 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
July 30, 1998
3
<PAGE> 4
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>
JUNE 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Real Estate Investments:
Operating properties:
Land $ 128,740 $ 111,697
Buildings 652,989 567,332
Furniture and equipment 2,451 2,220
Accumulated depreciation (117,110) (104,700)
---------- ----------
Operating properties - net 667,070 576,549
Properties under construction:
Land 6,999 8,978
Buildings 24,454 18,608
Undeveloped land held for investment 23,728 13,249
Undeveloped land held for sale 1,263 1,512
Cash and temporary investments 1,640 16,955
Accounts receivable, net of allowance for
uncollectible accounts of $263 and $250 5,469 5,646
Investment in Koger Realty Services, Inc. 1,099 472
Cost in excess of fair value of net assets acquired,
net of accumulated amortization of $770 and $685 1,785 1,870
Other assets 12,966 12,258
----------- ----------
TOTAL ASSETS $ 746,473 $ 656,097
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgages and loans payable $ 248,901 $ 181,963
Accounts payable 6,571 8,802
Accrued real estate taxes payable 6,105 3,294
Accrued liabilities - other 5,710 6,623
Dividends payable 7,958 6,352
Advance rents and security deposits 5,620 4,801
------------ ----------
Total Liabilities 280,865 211,835
------------ ----------
Commitments and Contingencies
Shareholders' Equity:
Common stock 285 284
Capital in excess of par value 454,369 441,451
Retained earnings 30,988 30,947
Treasury stock, at cost (20,034) (28,420)
------------ ----------
Total Shareholders' Equity 465,608 444,262
------------ ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 746,473 $ 656,097
============ ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
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 SIX MONTH PERIOD
ENDED JUNE 30, ENDED JUNE 30,
----------------------- ---------------------
1998 1997 1998 1997
-------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES
Rental and other rental services $32,384 $26,508 $62,719 $52,020
Management fees 706 929 1,191 1,570
Interest 124 372 307 906
Income from Koger Realty Services, Inc. 441 183 855 393
Gain on sale of assets 3 3
Gain on TKPL Note to Southeast (55) (9)
--------- --------- --------- --------
Total revenues 33,658 27,937 65,075 54,880
--------- --------- --------- --------
EXPENSES
Property operations 13,213 10,819 24,827 20,787
Depreciation and amortization 6,970 5,621 13,650 11,114
Mortgage and loan interest 3,985 4,068 7,267 8,227
General and administrative 1,756 1,526 3,257 2,889
Direct cost of management fees 347 567 646 1,084
Undeveloped land costs 99 120 193 234
Provision for (recovery of) loss on land held for sale 2 (379)
Loss on early retirement of debt 42 42
--------- -------- --------- --------
Total expenses 26,370 22,765 49,840 43,998
--------- -------- --------- --------
INCOME BEFORE INCOME TAXES 7,288 5,172 15,235 10,882
Income taxes 327 164 610 181
--------- -------- --------- --------
NET INCOME $ 6,961 $ 5,008 $14,625 $10,701
========= ======== ========= ========
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE:
Basic $ 0.26 $ 0.24 $ 0.56 $ 0.51
========= ======== ========= ========
Diluted $ 0.26 $ 0.23 $ 0.55 $ 0.48
========= ======== ========= ========
WEIGHTED AVERAGE COMMON SHARES AND
COMMON EQUIVALENT SHARES OUTSTANDING:
Basic 26,515 20,831 26,012 20,896
======== ======== ======= ========
Diluted 27,203 22,053 26,744 22,205
======== ======== ======= ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY
(UNAUDITED - SEE INDEPENDENT ACCOUNTANTS' REPORT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
--------------------- CAPITAL IN TREASURY STOCK SHARE-
PAR EXCESS OF RETAINED ------------------- HOLDERS'
SHARES VALUE PAR VALUE EARNINGS SHARES COST EQUITY
--------- ------ ---------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 28,389 $ 284 $441,451 $ 30,947 2,982 $(28,420) $444,262
Common stock sold 11,989 (1,010) 8,329 20,318
401(k) Plan contribution 126 (9) 76 202
Stock options exercised 102 1 803 1 (19) 785
Dividends declared (14,584) (14,584)
Net income 14,625 14,625
-------- ---- -------- -------- ------- -------- --------
Balance, June 30, 1998 28,491 $285 $454,369 $ 30,988 1,964 $(20,034) $465,608
======== ==== ======== ======== ======= ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
<PAGE> 7
KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - SEE INDEPENDENT ACCOUNTANTS' REPORT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTH PERIOD
ENDED JUNE 30,
----------------------------
1998 1997
---------- ----------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 14,625 $ 10,701
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,650 11,114
Recovery of loss on land held for sale (379)
Income from Koger Realty Services, Inc. (855) (393)
Provision for uncollectible accounts 38 119
Gain on sale or disposition of assets (3)
Loss on early debt repayment 42
Amortization of mortgage discounts 48
Increase in accounts payable, accrued
liabilities and other liabilities 785 732
(Increase) decrease in receivables and other assets (645) 1,133
---------- ----------
Net cash provided by operating activities 27,595 23,117
---------- ----------
INVESTING ACTIVITIES
Property acquisitions (73,783) (32,896)
Building construction expenditures (26,676) (5,566)
Tenant improvements to first generation space (1,833)
Tenant improvements to existing properties (4,643) (4,206)
Building improvements to existing properties (1,361) (1,400)
Energy management improvements (538)
Deferred tenant costs (957) (395)
Additions to furniture and equipment (231) (224)
Proceeds from sales of assets 3 2,908
Dividends received from Koger Realty Services, Inc. 228 151
---------- ----------
Net cash used in investing activities (109,253) (42,166)
---------- ----------
FINANCING ACTIVITIES
Proceeds from sale of common stock 20,318 163
Proceeds from exercise of warrants and stock options 688 1,039
Proceeds from mortgages and loans 81,800
Dividends paid (12,978) (2,096)
Principal payments on mortgages and loans (23,363) (3,496)
Treasury stock purchase (5,750)
Financing costs (122) (700)
---------- ----------
Net cash provided by (used in) financing activities 66,343 (10,840)
---------- ----------
Net decrease in cash and cash equivalents (15,315) (29,889)
Cash and cash equivalents - beginning of period 16,955 35,715
---------- ----------
Cash and cash equivalents - end of period $ 1,640 $ 5,826
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest, net of capitalized interest $ 7,187 $ 8,179
========== ==========
Cash paid during the period for income taxes $ 887 $ 181
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
7
<PAGE> 8
KOGER EQUITY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS
ENDED JUNE 30, 1998 AND 1997
(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 material 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, 1997,
included in the Company's Form 10-K Annual Report for the year ended December
31, 1997. The balance sheet at December 31, 1997, 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, 1998, are not necessarily indicative of the results to be
expected for the full year.
Certain 1997 amounts have been reclassified to conform with 1998 presentations.
2. ORGANIZATION. Koger Equity, Inc. ("KE"), a Florida corporation, was
incorporated in 1988 for the purpose of investing in the ownership of income
producing properties, primarily commercial office buildings.
KE is totally self-administered and self-managed.
In addition to managing its own properties, KE, through certain related
entities, provides property management services to third parties. In
conjunction with Koger Real Estate Services, Inc. ("KRES"), a Florida
corporation and a wholly-owned subsidiary of KE, KE manages 21 office buildings
owned by Centoff Realty Company, Inc.
("Centoff"), a subsidiary of Morgan Guaranty Trust Company of New York.
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 1997 and does
not expect to have REIT taxable income during 1998, no provision has been made
for Federal income taxes. However, the Company has recorded a provision of
$230,000 for alternative minimum tax for the six month period ended June 30,
1998. 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, the use of net operating loss carryforwards, which may reduce
REIT taxable income to zero, are limited for alternative minimum tax purposes.
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. During the six
month period ended June 30, 1998, the Company contributed 9,197 shares of
common stock to the Company's 401(k) Plan. These shares had a value of
approximately $202,000 based on the closing price of the Company's common stock
on the American Stock Exchange on December 31, 1997. During January 1998, the
Company assumed a mortgage loan with an outstanding balance of approximately
$8,501,000 in conjunction with the acquisition of an office building. During
the six month period ended June 30, 1997, the Company contributed 23,657 shares
of common stock to the Company's 401(k) Plan. These shares had a value of
approximately $444,000 based on the closing price of the Company's stock on the
American Stock Exchange on December 31, 1996. In addition, the Company issued
15,455 shares of common stock as payment for certain 1996 bonuses for senior
management. These shares had a value of approximately $278,000 based on the
closing price of the Company's common stock on the American Stock Exchange on
January 6, 1997.
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.
8
<PAGE> 9
6. MORTGAGES AND LOANS PAYABLE. At June 30, 1998, the Company had
$248,901,000 of loans outstanding, which are collateralized by mortgages on
certain operating properties. Annual maturities for mortgages and loans payable
are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
<S> <C>
1998 $ 1,326
1999 56,957
2000 3,208
2001 3,485
2002 11,486
Subsequent Years 172,439
---------
Total $ 248,901
=========
</TABLE>
7. DIVIDENDS. The Company paid a quarterly dividend of $0.25 per share on
February 14, 1998, to shareholders of record on December 31, 1997. The Company
paid a quarterly dividend of $0.25 per share on May 6, 1998, to shareholders of
record on March 31, 1998. During the quarter ended June 30, 1998, the Company's
Board of Directors declared a quarterly dividend of $0.30 per share payable on
August 6, 1998, to shareholders of record on June 30, 1998. The Company
currently expects that all dividends paid during 1998 will be treated as
ordinary income for income tax purposes.
8. SUBSEQUENT EVENTS. On July 20, 1998, the Company signed an agreement
for the acquisition of a property which will be made by a newly formed so
called "down-REIT" limited partnership with the Company as general partner.
This property consists of an approximately 35 acre office park with buildings
containing in excess of 570,000 gross square feet. The purchase price of $52.3
million is payable by assumption of approximately $22.2 million of debt and the
issuance of down-REIT limited partnership units having a value of approximately
$22.9 million with the balance in cash. The partnership units will be
convertible into approximately one million shares of the Company's Common Stock
(or at the option of the Company such units may be redeemed for cash). In
addition, the Company has agreed to purchase 16 acres of land contiguous to
this office park.
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 Annual Report on Form 10-K
for the period ended December 31, 1997.
RESULTS OF OPERATIONS.
Rental and other rental services revenues totaled $32,384,000 for the quarter
ended June 30, 1998, compared to $26,508,000 for the quarter ended June 30,
1997. This increase in rental revenues resulted primarily from (i) increases in
the Company's average rental rate and (ii) rental revenues from the properties
acquired and construction completed during 1997 and 1998 ($4,990,000). At June
30, 1998, the Company's buildings were on average 91 percent leased with an
average rental rate of $15.40. Rental and other rental services revenues
increased to $62,719,000 during the six month period ended June 30, 1998,
compared to $52,020,000 during the same period last year. This increase
resulted primarily from (i) increases in the Company's average rental rate and
(ii) rental revenues from the properties acquired and construction completed
during 1997 and 1998 ($8,011,000).
Management fee revenues totaled $706,000 for the quarter ended June 30, 1998,
compared to $929,000 for the quarter ended June 30, 1997. This decrease was due
primarily to the reduction in leasing fees earned under the management contract
with Centoff. Management fee revenues decreased to $1,191,000 during the six
month period ended June 30, 1998, compared to $1,570,000 during the same period
last year, primarily for the same reason mentioned above.
9
<PAGE> 10
Interest revenues decreased $248,000 for the three month period ended June 30,
1998, compared to the same period last year, due to the lower average balance
of cash to invest. Compared to the same period last year, interest revenues
decreased $599,000 during the six month period ended June 30, 1998, due to the
lower average balance of cash to invest.
Property operations expense includes such charges as utilities, real estate
taxes, janitorial, maintenance, property insurance, provision for uncollectible
rents and management costs. The amount of property operations expense and its
percentage of total rental revenues for the applicable periods are as follows:
<TABLE>
<CAPTION>
PERCENT OF
TOTAL RENTAL
PERIOD AMOUNT REVENUES
-------------------------- -------------- ------------
<S> <C> <C>
June 30, 1998 - Quarter $13,213,000 40.8%
June 30, 1997 - Quarter 10,819,000 40.8%
June 30, 1998 - Six Months 24,827,000 39.6%
June 30, 1997 - Six Months 20,787,000 40.0%
</TABLE>
Property operations expense increased primarily due to (i) increased accruals
for real estate taxes, (ii) increased utilities costs, (iii) increased property
management costs and (iv) operating expenses for the properties acquired and
construction completed during 1997 and 1998 ($1,961,000 and $3,423,000,
respectively, for the three month and six month periods ended June 30,1998) .
Depreciation expense has been calculated on the straight line method based upon
the useful lives of the Company's depreciable assets, generally 3 to 40 years.
Depreciation expense increased $1,174,000 and $2,126,000, respectively, for the
three and six month periods ended June 30, 1998, compared to the same periods
last year, due to (i) improvements made to the Company's existing properties
during 1997 and (ii) the properties acquired and construction completed during
1997 and 1998 ($825,000 and $1,452,000, respectively, for the three and six
month periods ended June 30, 1998). Amortization expense increased $175,000 and
$410,000, respectively, for the three and six month periods ended June 30,
1998, compared to the same periods last year, due to (i) financing costs which
were incurred during 1997 for the secured revolving credit facility and (ii)
deferred tenant costs incurred after June 30, 1997.
Interest expense decreased by $83,000 and $960,000, respectively, during the
three and six month periods ended June 30, 1998, compared to the same periods
last year, primarily due to the increase in interest capitalized due to the
Company's construction of office buildings. At June 30, 1998, the weighted
average interest rate on the Company's outstanding debt was approximately 8.0
percent.
General and administrative expenses for the three month periods ended June 30,
1998 and 1997, totaled $1,756,000 and $1,526,000, respectively, which is 0.9
percent and 1.0 percent (annualized) of average invested assets. This increase
in general and administrative expenses was primarily due to (i) increases in
group insurance costs and (ii) increased accruals related to a bonus plan.
General and administrative expenses for the six month periods ended June 30,
1998 and 1997, totaled $3,257,000 and $2,889,000, respectively, which is 0.8
percent and 0.9 percent (annualized) of average invested assets.
Direct costs of management contracts decreased $220,000 and $438,000,
respectively, for the three and six month periods ended June 30, 1998, compared
to the same periods last year, due to decreased costs associated with providing
property management services for all management contracts.
Based on the proceeds received from the sale of the Miami land parcel and the
Company's analysis of the fair value of the remaining land parcels held for
sale, the Company reversed $379,000 of the provision for loss on land held for
sale, which had been previously recorded.
Net income totaled $6,961,000 for the quarter ended June 30, 1998, compared to
net income of $5,008,000 for the corresponding period of 1997. This improvement
is due primarily to the increase in rental revenues and the reduction in
interest expense. These items were partially offset by the increases in (i)
property operations expense, (ii) depreciation and amortization expense, and
(iii) general and administrative expense and by the reduction in interest
revenue. Net income increased $3,924,000 during the six month period ended June
30, 1998, compared to the same period last year, due to the same items detailed
above.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES.
OPERATING ACTIVITIES - During the six months ended June 30, 1998, the
Company generated approximately $27.6 million in net cash from operating
activities. The Company's primary internal sources of cash are (i) the
collection of rents from buildings owned by the Company and (ii) the receipt of
management fees paid to the Company in respect of properties managed on behalf
of Centoff and others. As 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 depreciation and net
operating loss carryforwards, may be substantially less than cash flow). In the
past, the Company has paid out dividends in amounts at least equal to its REIT
taxable income. The Company believes that its cash provided by operating
activities will be sufficient to cover debt service payments and to pay the
dividends required to maintain REIT status through 1998.
The level of cash flow generated by rents depends primarily on the occupancy
rates of the Company's buildings and changes in rental rates on new and renewed
leases and under escalation provisions in existing leases.
At June 30, 1998, leases representing approximately 13.2 percent of the gross
annualized rent from the Company's properties, without regard to the exercise
of options to renew, were due to expire during the remainder of 1998. This
represents 596 leases for space in buildings located in 20 of the 23 centers or
locations 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, 1998, leases were renewed on approximately 60 percent of the
Company's net rentable square feet which were scheduled to expire during the
six month period. For those leases which renewed during the six months ended
June 30, 1998, the average rental rate increased from $15.12 to $16.16. Based
upon the significant number of leases which will expire during 1998 and the
competition for tenants in the markets in which the Company operates, the
Company has and expects to continue to offer incentives to certain 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 continues to benefit 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. Cash flow from operations
could be reduced if economic growth were not to continue in the Company's
markets and if this resulted in lower occupancy rates for the Company's
buildings.
Governmental tenants (including the State of Florida and the United States
Government) which account for approximately 21.6 percent of the Company's
leased space at June 30, 1998, may be subject to budget reductions in times of
recession and governmental austerity measures. Consequently, 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
future need, for additional office space.
INVESTING ACTIVITIES - At June 30, 1998, substantially all of the
Company's invested assets were in real properties. Improvements to the
Company's existing properties have been financed through internal operations.
During the six month period ended June 30, 1998, the Company's expenditures for
improvements to existing properties decreased $140,000 from the corresponding
period of the prior year primarily due to the reduction in expenditures for
energy management improvements.
During the quarter ended March 31, 1997, the Company sold 8.1 acres of
unimproved land located in Miami, Florida for approximately $2,908,000, net of
selling costs.
On January 30, 1998, the Company acquired a building, containing 127,700 net
rentable square feet, located in Richmond, Virginia for a purchase price of
$16.5 million. On February 1, 1998, the Company acquired a building, containing
19,000 net rentable square feet, located in Jacksonville, Florida for a
purchase price of $2.0 million. On March 6, 1998, the Company acquired 14.41
acres of land located in Jacksonville, Florida for a purchase price of $2.3
11
<PAGE> 12
million. On April 22, 1998, the Company acquired an office and retail complex
consisting of (i) four office buildings containing 279,300 net rentable square
feet, (ii) a retail development containing 112,600 net rentable square feet and
(iii) approximately 22 acres of developable land. These properties were
acquired for a purchase price of approximately $58.2 million and are located in
Birmingham, Alabama. On May 18, 1998, the Company acquired 15.3 acres of land
located in Jacksonville, Florida for a purchase price of $2.68 million.
The Company has six buildings under construction which will contain
approximately 478,000 net rentable square feet. Expenditures for construction
of these six buildings are expected to total approximately $39.3 million,
excluding land and tenant improvement costs.
FINANCING ACTIVITIES - The Company has a $100 million secured revolving
credit facility ($54 million of which was outstanding on June 30, 1998)
provided by First Union National Bank of Florida, Morgan Guaranty Trust Company
of New York, AmSouth Bank, N.A. and Guaranty Federal Bank. At June 30, 1998,
the Company had 71 office buildings, containing 2,770,300 net rentable square
feet, which were unencumbered.
On March 27, 1998, the Company issued 1,000,000 shares of its common stock to
Wheat First Securities, Inc. at a price per share of $20.246875.
Loan maturities and normal amortization of mortgages and loans payable are
expected to total approximately $56.8 million over the next 12 months. This
assumes that the secured revolving credit facility will be repaid at its
original maturity date of April 7, 1999. However, this credit facility may be
extended annually by the lender for one year periods. Significant maturities of
the Company's remaining mortgages and loans payable do not begin to occur until
2006. The Company has filed shelf registration statements with respect to the
possible issuance of up to $300 million of its common and/or preferred stock.
The Company has issued $91.6 million of its common stock under such
registration statements.
The foregoing discussion contains forward-looking statements concerning 1998.
The actual results of operations for 1998 could differ materially from those
projected because of factors affecting the financial markets, reactions of the
Company's existing and prospective investors, the ability of the Company to
identify and execute development projects and acquisition opportunities, the
ability of the Company to renew and enter into new leases on favorable terms,
and other risk factors. See Item 7. "Management's Discussion and Analysis of
Financial Condition and Results of Operations - - Cautionary Statement Relevant
to Forward-Looking Information for Purpose of the 'Safe Harbor' Provisions of
the Private Securities Litigation Reform Act of 1995" in the Company's Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 1997.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its 1998 Annual Meeting of Shareholders on May 19,
1998.
(b) Not Applicable.
(c) At the Company's 1998 Annual Meeting of Shareholders in addition to
the election of directors, the following matter was considered, voted
upon and approved:
To approve the Koger Equity, Inc. 1998 Equity and Cash Incentive Plan:
<TABLE>
<S> <C>
SHARES VOTED FOR: 19,096,990
SHARES VOTED AGAINST: 3,692,215
SHARES ABSTAINED: 42,774
</TABLE>
12
<PAGE> 13
ITEM 5. OTHER INFORMATION
(a) The following table sets forth, with respect to the Company's centers at
June 30, 1998, gross square feet, net rentable square feet, percentage
leased, and the average annual rent per net rentable square foot leased.
<TABLE>
<CAPTION>
AVERAGE
NET ANNUAL
GROSS RENTABLE RENT PER
SQUARE SQUARE PERCENT SQUARE
KOGER CENTER/LOCATION FEET FEET LEASED (1) FOOT (2)
- ---------------------- ------------ ------------- ---------- -----------
<S> <C> <C> <C> <C>
Atlanta Chamblee 1,158,200 948,100 96% $15.93
Atlanta Gwinnett 97,300 79,800 100% 16.62
Atlanta Perimeter 181,100 154,100 97% 17.18
Austin 458,400 370,900 99% 18.79
Birmingham Colonnade 326,300 279,300 99% 15.79
Birmingham Colonnade-Retail 112,600 112,600 90% 11.50
Charlotte Carmel (3) 339,200 283,300 64% 17.58
Charlotte East 574,800 468,900 83% 13.62
El Paso 364,100 298,300 93% 15.43
Greensboro South 749,200 610,700 94% 14.74
Greenville Park Central 161,700 134,000 92% 16.81
Greenville Roper Mt. 357,400 290,500 91% 15.89
Jacksonville Baymeadows 793,400 664,200 92% 15.90
Jacksonville Central 828,200 666,000 89% 12.39
Jacksonville JTB 29,600 23,000 100% 16.48
Memphis Germantown 366,400 299,100 99% 18.03
Orlando Central 713,800 565,400 87% 15.11
Orlando University 194,600 159,600 98% 17.85
Richmond Paragon 154,300 127,700 96% 18.08
San Antonio Airport 258,800 200,100 95% 16.52
San Antonio West 960,700 788,900 85% 13.93
St. Petersburg 640,100 519,400 93% 14.27
Tallahassee 960,300 789,600 94% 17.37
Tulsa 581,100 476,400 83% 11.81
------------ ----------
TOTAL 11,361,600 9,309,900 91% $15.40
============ ========== ===== ======
</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 (a) total annualized rents for a
center as of June 30, 1998 by (b) the net rentable square feet applicable
to such total annualized rents.
(3) Includes two buildings, containing 173,700 net rentable square feet, for
which construction has been completed. These buildings are currently in
the lease-up period.
13
<PAGE> 14
(b) The following schedule sets forth for all of the Company's office
buildings (i) the number of leases which will expire during the remainder
of calender year 1998 and calendar years 1999 through 2006, (ii) the
total net rentable area in square feet covered by such leases, (iii) the
percentage of total net rentable square feet represented by such leases,
(iv) the average annual rent per square foot for such leases, (v) the
current annualized rents represented by such leases, and (vi) the
percentage of gross annualized rents contributed by such leases. This
information is based on the buildings owned by the Company on June 30,
1998 and on the terms of leases in effect as of June 30, 1998, on the
basis of then existing base rentals, and without regard to the exercise
of options to renew. Furthermore, the information below does not reflect
that some leases have provisions for early termination for various
reasons, including, in the case of government entities, lack of budget
appropriations. Leases were renewed on approximately 60 percent of the
Company's net rentable square feet which were scheduled to expire during
the six month period ended June 30, 1998.
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE PERCENTAGE
TOTAL SQUARE ANNUAL RENT TOTAL OF TOTAL
NUMBER OF NUMBER OF FEET LEASED PER SQUARE ANNUALIZED ANNUAL. RENTS
LEASES SQUARE FEET REPRESENTED BY FOOT UNDER RENTS UNDER REPRESENTED BY
PERIOD EXPIRING EXPIRING EXPIRING LEASES EXPIRING LEASES EXPIRING LEASES EXPIRING LEASES
- ------ ------------ -------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1998 596 1,168,452 13.8% $14.70 $ 17,170,886 13.2%
1999 820 1,543,260 18.2% 15.02 23,179,583 17.8%
2000 485 1,435,694 17.0% 15.84 22,744,269 17.4%
2001 323 1,391,894 16.5% 15.62 21,740,442 16.7%
2002 141 789,491 9.3% 15.79 12,462,977 9.6%
2003 118 864,483 10.2% 15.83 13,688,103 10.5%
2004 79 434,233 5.1% 11.38 4,942,689 3.8%
2005 13 63,410 0.8% 13.85 878,325 0.7%
2006 11 220,035 2.6% 18.68 4,110,000 3.1%
OTHER 20 552,274 6.5% 17.09 9,441,007 7.2%
----- --------- ------ ------------ ------
TOTAL 2,606 8,463,226 100.0% $15.40 $130,358,281 100.0%
===== ========= ====== ====== ============ ======
</TABLE>
14
<PAGE> 15
(c) The Company believes that Funds from Operations is one measure of the
performance of an equity real estate investment trust. Funds from
Operations should not be considered as an alternative to net income as
an indication of the Company's financial performance or to cash flow
from operating activities (determined in accordance with generally
accepted accounting principles) as a measure of the Company's liquidity,
nor is it necessarily indicative of sufficient cash flow to fund all of
the Company's needs. Funds from Operations is calculated as follows (in
thousands):
<TABLE>
<CAPTION>
THREE MONTH PERIOD SIX MONTH PERIOD
ENDED JUNE 30, ENDED JUNE 30,
------------------------- ------------------------
1998 1997 1998 1997
-------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net Income $ 6,961 $ 5,008 $14,625 $10,701
Depreciation - real estate 6,254 5,081 12,260 10,132
Amortization - deferred tenant costs 363 252 695 487
Amortization - goodwill 43 43 85 85
Gain on sale or disposition of assets (3) (3)
Loss on early retirement of debt 42 42
Recovery of loss on land held for sale 2 (379)
Gain on TKPL note to Southeast 55 9
------- ------- ---------- -------
Funds from Operations $13,618 $10,483 $27,662 $21,077
======= ======= ========== =======
</TABLE>
(d) The Company by-laws provide that at a meeting of the shareholders,
business must be properly brought before the meeting. For business to be
properly brought before a meeting of shareholders by a shareholder, the
shareholder must have given timely notice in writing to the Secretary of
the Company and the shareholder must be a shareholder of record at the
time such notice is given. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of
the Company not less than 70 days nor more than 90 days prior to the
meeting. However, if the date of the meeting is not publicly announced by
the Company by mail, press release or otherwise more than 70 days prior to
the meeting, notice by the shareholder to be timely must be delivered to
the Secretary of the Company not later than the close of business on the
10th day following the day on which such announcement of the date of the
meeting was made. A shareholder's notice to the Secretary shall set forth
as to each matter the shareholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the
meeting, (b) the name and address, as it appears on the Company's books,
of the shareholder proposing such business, (c) the number of shares of
the Company's common stock which are beneficially owned by the
shareholder, and (d) any material financial interest of the shareholder in
such business. A shareholder shall also comply with all applicable
requirements of the Security Exchange Act of 1934, as amended, and the
rules and regulations thereunder with respect to the matters set forth
above.
The Company's by-laws also provide that any shareholder entitled to vote
for the election of Directors at a meeting may nominate persons for
election as Directors by giving timely notice thereof in proper written
form to the Secretary of the Company accompanied by a petition signed by
at least 100 record holders of the Company's common stock which shows the
number of shares held by each person and which represent in the aggregate
one percent of the outstanding shares entitled to vote in the election of
Directors. To be timely, notice shall be delivered to or mailed and
received at the principal executive offices not less than 70 days nor more
than 90 days prior to the meeting. However, if less than 70 days notice or
prior public disclosure of the date of the meeting is given or made to the
shareholders, to be timely, notice by the shareholder must be received at
the Company's principal executive offices not later than the close of
business on the 10th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. To be
in proper written form, a shareholder's notice shall set forth in writing
(i) as to each person whom the shareholder proposes to nominate for
election as a Director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended, including, such
person's written consent to being named in the proxy statement as a
nominee and to serving as a Director if elected and (ii) as to the
shareholder giving the notice (x) the name and address, as they appear on
the Company's books, of such shareholder and (y) the number of shares of
the Company which are beneficially owned by such shareholder.
15
<PAGE> 16
Although the Company's 1999 Annual Meeting of Shareholders has not been
set by its Board of Directors, it is contemplated that it will be held on
May 18, 1999. Assuming May 18, 1999, is to be the date of the Company's
1999 Annual Meeting of Shareholders and notice of that date is made by the
Company more than 70 days prior thereto, in order for a notice by a
shareholder to the Company's Secretary to be timely in regard to (i) a
matter which a shareholder desires to be considered at the meeting or (ii)
the nomination at the meeting of a person to the Company's Board of
Directors by a shareholder, the notice must be received not later than
March 9, 1999 nor prior to February 17, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
11 Earnings Per Share
Computations.
15 Letter re: Unaudited interim
financial information.
27 Financial Data Schedule.
(for SEC use only)
27.1 Restated Financial Data Schedule.
(for SEC use only)
27.2 Restated Financial Data Schedule.
(for SEC use only)
27.3 Restated Financial Data Schedule.
(for SEC use only)
27.4 Restated Financial Data Schedule.
(for SEC use only)
27.5 Restated Financial Data Schedule.
(for SEC use only)
27.6 Restated Financial Data Schedule.
(for SEC use only)
27.7 Restated Financial Data Schedule.
(for SEC use only)
27.8 Restated Financial Data Schedule.
(for SEC use only)
</TABLE>
(b) Reports on Form 8-K
On April 22, 1998, the Company filed a Form 8-K reporting
under Item 5, Other Events, that the Company had purchased
an office and retail complex located in Birmingham,
Alabama.
16
<PAGE> 17
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
/s/ DAVID B. HILEY
----------------------------
DAVID B. HILEY
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Dated: August 10, 1998
/s/ JAMES L. STEPHENS
----------------------------
JAMES L. STEPHENS
VICE PRESIDENT AND
CHIEF ACCOUNTING OFFICER
17
<PAGE> 1
EXHIBIT 11
EARNINGS PER SHARE COMPUTATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Month Period Six Month Period
Ended June 30, Ended June 30,
------------------ -----------------
1998 1997 1998 1997
-------- -------- ------- -------
<S> <C> <C> <C> <C>
EARNINGS PER COMMON AND DILUTIVE
COMMON EQUIVALENT SHARE:
Net Income $ 6,961 $ 5,008 $ 14,625 $ 10,701
======= ======== ======== ========
Shares:
Weighted average number of common
shares outstanding 26,515 20,831 26,012 20,896
Weighted average number of additional shares
issuable for common stock equivalents (a) 688 1,222 732 1,309
------- -------- -------- --------
Adjusted common shares 27,203 22,053 26,744 22,205
======= ======== ======== ========
EARNINGS PER SHARE -DILUTED $ 0.26 $ 0.23 $ 0.55 $ 0.48
======= ======== ======== ========
</TABLE>
(a) Shares issuable were derived using the "Treasury Stock Method" for all
dilutive common stock equivalents.
<PAGE> 1
EXHIBIT 15
August 10, 1998
Koger Equity, Inc.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Koger Equity, Inc. and subsidiaries for the periods ended June
30, 1998 and 1997, as indicated in our report dated July 30, 1998; because we
did not perform an audit, we expressed no opinion on such financial
information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, is
incorporated by reference in Registration Statement No. 33-55179 of Koger
Equity, Inc. on Form S-3, Registration Statement No. 33-54617 of Koger Equity,
Inc. on Form S-8, Registration Statement No. 333-20975 of Koger Equity, Inc. on
Form S-3, Registration Statement No. 333-23429 of Koger Equity, Inc. on Form
S-8 and Registration Statement No. 333-37919 of Koger Equity, Inc. on Form S-3.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statements prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Company does not file a classified balance sheet, therefore these not
provided. 5-02(9), 5-02(21)
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 1,640
<SECURITIES> 0
<RECEIVABLES> 5,732
<ALLOWANCES> 263
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 840,624
<DEPRECIATION> 117,110
<TOTAL-ASSETS> 746,473
<CURRENT-LIABILITIES> 0
<BONDS> 248,901
0
0
<COMMON> 285
<OTHER-SE> 465,323
<TOTAL-LIABILITY-AND-EQUITY> 746,473
<SALES> 0
<TOTAL-REVENUES> 65,075
<CGS> 0
<TOTAL-COSTS> 25,435
<OTHER-EXPENSES> 17,100
<LOSS-PROVISION> 38
<INTEREST-EXPENSE> 7,267
<INCOME-PRETAX> 15,235
<INCOME-TAX> 610
<INCOME-CONTINUING> 14,625
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,625
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.55
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
KOGER EQUITY DOES NOT FILE A CLASSIFIED BALANCE SHEET, THEREFORE THESE NOT
PROVIDED. 5-02 (9), 5-02 (21)
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 41,849
<SECURITIES> 0
<RECEIVABLES> 4,929
<ALLOWANCES> 247
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 615,324
<DEPRECIATION> 87,605
<TOTAL-ASSETS> 586,812
<CURRENT-LIABILITIES> 0
<BONDS> 202,250
0
0
<COMMON> 236
<OTHER-SE> 369,774
<TOTAL-LIABILITY-AND-EQUITY> 586,812
<SALES> 0
<TOTAL-REVENUES> 26,943
<CGS> 0
<TOTAL-COSTS> 10,448
<OTHER-EXPENSES> 6,589
<LOSS-PROVISION> 37
<INTEREST-EXPENSE> 4,159
<INCOME-PRETAX> 5,710
<INCOME-TAX> 17
<INCOME-CONTINUING> 5,693
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,693
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.25
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
KOGER EQUITY DOES NOT FILE A CLASSIFIED BALANCE SHEET, THEREFORE THESE NOT
PROVIDED. 5-02 (9) 5-02 (21)
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 5,826
<SECURITIES> 0
<RECEIVABLES> 4,966
<ALLOWANCES> 280
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 655,394
<DEPRECIATION> 92,762
<TOTAL-ASSETS> 586,049
<CURRENT-LIABILITIES> 0
<BONDS> 199,598
0
0
<COMMON> 237
<OTHER-SE> 367,756
<TOTAL-LIABILITY-AND-EQUITY> 586,049
<SALES> 0
<TOTAL-REVENUES> 54,880
<CGS> 0
<TOTAL-COSTS> 21,752
<OTHER-EXPENSES> 13,900
<LOSS-PROVISION> 119
<INTEREST-EXPENSE> 8,227
<INCOME-PRETAX> 10,882
<INCOME-TAX> 181
<INCOME-CONTINUING> 10,701
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,701
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.48
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
KOGER EQUITY DOES NOT FILE A CLASSIFIED BALANCE SHEET, THEREFORE THESE NOT
PROVIDED. 5-02 (9), 5-02 (21)
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 9,293
<SECURITIES> 0
<RECEIVABLES> 5,192
<ALLOWANCES> 231
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 675,676
<DEPRECIATION> 98,395
<TOTAL-ASSETS> 605,319
<CURRENT-LIABILITIES> 0
<BONDS> 202,091
0
0
<COMMON> 249
<OTHER-SE> 380,275
<TOTAL-LIABILITY-AND-EQUITY> 605,319
<SALES> 0
<TOTAL-REVENUES> 84,023
<CGS> 0
<TOTAL-COSTS> 34,221
<OTHER-EXPENSES> 21,600
<LOSS-PROVISION> 156
<INTEREST-EXPENSE> 12,264
<INCOME-PRETAX> 17,839
<INCOME-TAX> 189
<INCOME-CONTINUING> 17,650
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,650
<EPS-PRIMARY> 0.84
<EPS-DILUTED> 0.79
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
KOGER EQUITY DOES NOT FILE A CLASSIFIED BALANCE SHEET, THEREFORE THESE NOT
PROVIDED. 5-02 (9), 5-02 (21)
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 29,701
<SECURITIES> 0
<RECEIVABLES> 4,885
<ALLOWANCES> 361
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 604,062
<DEPRECIATION> 67,623
<TOTAL-ASSETS> 580,812
<CURRENT-LIABILITIES> 0
<BONDS> 253,993
0
0
<COMMON> 205
<OTHER-SE> 314,298
<TOTAL-LIABILITY-AND-EQUITY> 580,812
<SALES> 0
<TOTAL-REVENUES> 26,175
<CGS> 0
<TOTAL-COSTS> 11,215
<OTHER-EXPENSES> 6,905
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,962
<INCOME-PRETAX> 3,093
<INCOME-TAX> 77
<INCOME-CONTINUING> 3,016
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,016
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
KOGER EQUITY DOES NOT FILE A CLASSIFIED BALANCE SHEET, THEREFORE THESE NOT
PROVIDED. 5-02 (9), 5-02 (21)
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 35,563
<SECURITIES> 0
<RECEIVABLES> 4,463
<ALLOWANCES> 286
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 606,708
<DEPRECIATION> 72,220
<TOTAL-ASSETS> 585,053
<CURRENT-LIABILITIES> 0
<BONDS> 253,053
0
0
<COMMON> 205
<OTHER-SE> 316,738
<TOTAL-LIABILITY-AND-EQUITY> 585,053
<SALES> 0
<TOTAL-REVENUES> 52,835
<CGS> 0
<TOTAL-COSTS> 23,040
<OTHER-EXPENSES> 14,261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,897
<INCOME-PRETAX> 5,637
<INCOME-TAX> 407
<INCOME-CONTINUING> 5,230
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.28
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
KOGER EQUITY DOES NOT FILE A CLASSIFIED BALANCE SHEET, THEREFORE THESE NOT
PROVIDED. 5-02 (9), 5-02 (21)
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 34,102
<SECURITIES> 0
<RECEIVABLES> 4,306
<ALLOWANCES> 245
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 608,375
<DEPRECIATION> 77,446
<TOTAL-ASSETS> 587,766
<CURRENT-LIABILITIES> 0
<BONDS> 249,925
0
0
<COMMON> 206
<OTHER-SE> 319,265
<TOTAL-LIABILITY-AND-EQUITY> 587,766
<SALES> 0
<TOTAL-REVENUES> 80,150
<CGS> 0
<TOTAL-COSTS> 35,620
<OTHER-EXPENSES> 21,035
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,865
<INCOME-PRETAX> 8,630
<INCOME-TAX> 1,139
<INCOME-CONTINUING> 7,491
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,491
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.40
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
KOGER EQUITY DOES NOT FILE A CLASSIFIED BALANCE SHEET, THEREFORE THESE NOT
PROVIDED. 5-02 (9), 5-02 (21)
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 35,715
<SECURITIES> 0
<RECEIVABLES> 5,831
<ALLOWANCES> 231
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 613,093
<DEPRECIATION> 82,478
<TOTAL-ASSETS> 584,666
<CURRENT-LIABILITIES> 0
<BONDS> 203,044
0
0
<COMMON> 236
<OTHER-SE> 363,899
<TOTAL-LIABILITY-AND-EQUITY> 584,666
<SALES> 0
<TOTAL-REVENUES> 104,072
<CGS> 0
<TOTAL-COSTS> 43,431
<OTHER-EXPENSES> 29,188
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 18,701
<INCOME-PRETAX> 12,702
<INCOME-TAX> 815
<INCOME-CONTINUING> 11,887
<DISCONTINUED> 0
<EXTRAORDINARY> 1,386
<CHANGES> 0
<NET-INCOME> 10,501
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.54
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
KOGER EQUITY DOES NOT FILE A CLASSIFIED BALANCE SHEET, THEREFORE THESE NOT
PROVIDED. 5-02 (9), 5-02 (21)
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 25,650
<SECURITIES> 0
<RECEIVABLES> 5,651
<ALLOWANCES> 391
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 601,719
<DEPRECIATION> 62,885
<TOTAL-ASSETS> 579,382
<CURRENT-LIABILITIES> 0
<BONDS> 254,909
0
0
<COMMON> 205
<OTHER-SE> 310,492
<TOTAL-LIABILITY-AND-EQUITY> 579,382
<SALES> 0
<TOTAL-REVENUES> 127,698
<CGS> 0
<TOTAL-COSTS> 45,181
<OTHER-EXPENSES> 29,327
<LOSS-PROVISION> 172
<INTEREST-EXPENSE> 23,708
<INCOME-PRETAX> 29,310
<INCOME-TAX> 320
<INCOME-CONTINUING> 28,990
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,990
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.61
</TABLE>
