SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
OR
[ X ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from______to______
Commission File Number 33-22976-NY
INTERVEST CORPORATION OF NEW YORK
(Exact name of Registrant as specified in its charter)
New York 13-3415815
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Rockefeller Plaza, New York, New York 10020-1903
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 757-7300
--------------
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 Registrant's classes of
Common Stock as of the latest practicable date.
Class of Common Stock Outstanding at March 31, 1998
--------------------- -----------------------------
No Par Value 31.84 Shares
1
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. Financial Statements
Results for the three months ended March 31, 1998 and 1997 include, in the
opinion of management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the results for such interim
periods. Results for the three months ended March 31, 1998 and 1997 are not
necessarily indicative of the results for the full years.
2
<PAGE>
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, DECEMBER 31,
1998 1997
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 4,717,000 $ 15,596,000
Mortgages receivable, including due from
affiliates of $8,250,000 and $6,250,000 86,822,000 74,316,000
(Notes 2, 4 and 5)
Deferred debenture offering costs,
net of accumulated amortization
of $2,899,000 and $2,675,000 (Note 2) . 4,046,000 4,270,000
Other assets (Note 7) 1,446,000 1,389,000
------------ -------------
$ 97,031,000 $ 95,571,000
TOTAL ASSETS ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 118,000 $ 114,000
Mortgage escrow deposits 2,257,000 1,617,000
Subordinated debentures payable (Note 3) 78,000,000 78,000,000
Debenture interest payable at maturity (Note 3) 5,525,000 496,000
Deferred mortgage interest and fees 399,000 353,000
------------ ------------
TOTAL LIABILITIES 86,299,000 85,050,000
------------ ------------
Commitments and other matters (Note 6)
STOCKHOLDERS' EQUITY
Common stock, no par value;
authorized 200 shares; issued
and outstanding 32 shares 2,000,000 2,000,000
Additional paid-in capital 3,509,000 3,509,000
Retained earnings 5,223,000 5,012,000
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 10,732,000 10,521,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 97,031,000 $ 95,571,000
============ ============
See notes to financial statements
3
<PAGE>
INTERVEST CORPORATION OF NEW YORK
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
Three Months Ended
March 31,
--------------------------
1998 1997
----------- -----------
(Unaudited)
REVENUE
Interest income
Affiliates $ 173,000 $ 173,000
Others 2,610,000 2,425,000
---------- ----------
Total 2,783,000 2,598,000
Other income (Note 5) 136,000 123,000
Gain on early repayment of discounted
mortgages receivable (Note 4) 7,000 104,000
---------- ----------
2,926,000 2,825,000
---------- ----------
Interest 2,130,000 1,992,000
General and administrative (Note 5) 181,000 177,000
Amortization of deferred debenture
offering costs (Note 2) 224,000 305,000
---------- ----------
2,535,000 2,474,000
---------- ----------
Income before income taxes 391,000 351,000
Provision for income taxes (Note 7) 180,000 159,000
---------- ----------
NET INCOME 211,000 192,000
Retained earnings - beginning of period 5,012,000 4,566,000
---------- ----------
RETAINED EARNINGS - END OF PERIOD $5,223,000 $4,758,000
========== ==========
See notes to financial statements
4
<PAGE>
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 211,000 $ 192,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of discount on mortgages receivable (154,000) (113,000)
Amortization of deferred debenture offering costs 224,000 305,000
Gain on early repayment of discounted mortgages (7,000) (104,000)
Changes in operating assets and liabilities:
Other assets (57,000) (93,000)
Accounts payable and accrued liabilities 4,000 (239,00)
Mortgage escrow deposits 640,000 266,000
Debenture interest payable at maturity 559,000 1,078,000
Deferred mortgage interest and fees 46,000 32,000
------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,466,000 1,324,000
------------- -------------
INVESTING ACTIVITIES
Collection of mortgages receivable 4,642,000 10,442,000
Mortgages receivable acquired
Properties owned by affiliates (2,000,000)
Properties owned by others (14,987,000) (11,058,000)
------------- -------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (12,345,000) (616,000)
------------- -------------
FINANCING ACTIVITIES
Payment of debenture offering costs (50,000)
Principal payments of subordinated debentures (6,000,000)
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 0 (6,050,000)
------------- -------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (10,879,000) (5,342,000)
Cash and cash equivalents at beginning of period 15,596,000 16,911,000
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,717,000 $ 11,569,000
============= =============
</TABLE>
See notes to financial statements
5
<PAGE>
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited with Respect to the Three Month Periods Ended
March 31, 1998 and 1997)
(NOTE 1) - The Company:
- -----------------------
Intervest Corporation of New York (the "Company") was formed by Lowell S.
Dansker, Lawrence G. Bergman and Helene D. Bergman for the purpose of engaging
in the real estate business, including the acquisition and purchase of real
estate mortgage loans.
(NOTE 2) - Significant Accounting Policies:
(a) Consolidation Policy:
---------------------
The financial statements include the accounts of all subsidiaries. Material
intercompany items are eliminated in consolidation.
(b) Mortgage Loans:
---------------
Loans are stated at their outstanding principal balances, net of any
deferred fees or costs on originated loans and unamortized discounts on
purchased loans. Interest income is accrued on the unpaid principal balance.
Discounts are amortized to income over the life of the related receivables using
the constant interest method. Loan origination fees net of certain direct
origination costs are deferred and recognized as an adjustment of the yield of
the related loans.
(c) Allowance for losses:
---------------------
An allowance for loss related to loans that are impaired is based on
discounted cash flows using the loan's initial effective interest rate or the
fair value of the collateral. Management's periodic evaluation of the need for,
or adequacy of the allowance is based on the Company's past loan loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay (including the timing of future
payments), the estimated value of the underlying collateral and other relevant
factors. This evaluation is inherently subjective as it requires material
estimates including the amounts and timing of future cash flows expected to be
received on any impaired loans that may be susceptible to significant change.
For financial reporting purposes mortgages are deemed to be delinquent when
payment of either principal or interest is more than 90 days past due.
(d) Deferred debenture offering costs:
----------------------------------
Costs relating to offerings of debentures are amortized over the terms
of the debentures based on serial maturities. Deferred debenture offering costs
consist primarily of underwriters commissions.
6
<PAGE>
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited with Respect to the Three Month Periods Ended
March 31, 1998 and 1997)
(NOTE 2) - Significant Accounting Policies: (continued)
- -------------------------------------------------------
(e) Statement of cash flows:
For purposes of the statement of cash flows, the Company considers all
highly liquid instruments purchased with an original maturity of three months or
less to be cash equivalents. Interest and income taxes were paid as follows:
Three Months Ended March 31, Interest Income Taxes
---------------------------- ------------ ------------
1998................. $1,572,000 $ 22,000
1997................. 915,000 395,000
(f) Estimated fair value of financial instruments:
----------------------------------------------
The Company considers the carrying amounts presented for mortgages receivable
and subordinated debentures payable on the consolidated balance sheets to be
reasonable approximations of fair value. The Company's variable or floating
interest rates on large portions of its receivables and payables approximate
those which would prevail in current market transactions. Considerable judgement
is necessarily required in interpreting market data to develop the estimates of
fair value, and accordingly, the estimates are not necessarily indicative of the
amounts that the Company could realize in a current market transaction.
(g) Use of estimates:
-----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(h) Concentration of credit risk:
-----------------------------
(1) The Company places its temporary cash investments with higher
credit-quality financial institutions, including a bank which is an affiliate of
the shareholders of the Company and in governmental obligations. Such
investments are generally in excess of the FDIC insurance limit. The Company has
not experienced any losses from such investments.
7
<PAGE>
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited with Respect to the Three Month Periods Ended
March 31, 1998 and 1997)
(NOTE 2) - Significant Accounting Policies: (continued)
- -------------------------------------------
(2) The Company's mortgage portfolio is composed predominantly of mortgages on
multi-family residential properties in the New York City area, most of which are
subject to applicable rent control and rent stabilization statutes and
regulations. In both cases, any increases in rent are subject to specific
limitations. As such, properties of the nature of those constituting the most
significant portion of the Company's mortgage portfolio are not affected by the
general movement of real estate values in the same manner as other
income-producing properties. The rental housing market in New York City remains
stable and the Company expects that such properties will continue to appreciate
in value with little or no reduction in occupancy rates.
(NOTE 3) - Subordinated Debentures Payable:
- -------------------------------------------
The Company's Registered Floating Rate Redeemable Debentures consist of the
following:
March 31, December 31,
1998 1997
--------- ------------
Series 5/13/91, interest at 2% above prime ..... $ 6,000,000 $ 6,000,000
Series 2/20/92, interest at 2% above prime ..... 4,500,000 4,500,000
Series 6/29/92, interest at 2% above prime ..... 7,000,000 7,000,000
Series 9/13/93, interest at 2% above prime ..... 8,000,000 8,000,000
Series 1/28/94, interest at 2% above prime ..... 4,500,000 4,500,000
Series 10/28/94, interest at 2% above prime .... 4,500,000 4,500,000
Series 5/12/95, interest at 2% above prime ..... 9,000,000 9,000,000
Series 10/19/95, interest at 2% above prime .... 9,000,000 9,000,000
Series 5/10/96, interest at 1% above prime ..... 1,000,000 1,000,000
Series 5/10/96, interest at 2% above prime ..... 10,000,000 10,000,000
Series 10/15/96, interest at 1% above prime .... 500,000 500,000
Series 10/15/96, interest at 2% above prime .... 5,500,000 5,500,000
Series 4/30/97, interest at 9% ................. 500,000 500,000
Series 4/30/97, interest at 1% above prime ..... 8,000,000 8,000,000
--------- ---------
$78,000,000 $78,000,000
=========== ===========
"Prime" refers to the prime rate of Chase Manhattan Bank.
8
<PAGE>
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited with Respect to the Three Month Periods Ended
March 31, 1998 and 1997)
(NOTE 3) - Subordinated Debentures Payable (continued):
- ------------------------------------------
Prime was 81/2% on March 31, 1998 and on December 31, 1997. Minimum interest is
91/2% and maximum interest is 15% on Series 5/13/91. Series 2/20/92 has minimum
interest of 8% and maximum interest of 14%, Series 6/29/92 has maximum interest
of 14% and Series 9/13/93, 1/28/94, 10/28/94, 5/12/95, 10/19/95, 5/10/96,
10/15/96 and 4/30/97 due October 1, 2005 have maximum interest of 12%.
Payment of interest on an aggregate of $13,770,000 of debentures is deferred
until maturity and such deferred earns interest at prime. Any debenture holder
who has deferred receipt of interest may at any time elect to receive the
deferred interest and subsequently receive regular payments of interest.
The debentures may be redeemed, in whole or in part, at any time at the option
of the Company. For debentures issued after 1995, redemption would generally be
at a premium of 1% or 2% if the redemption is prior to 1999.
The debentures are unsecured and subordinated to all present and future senior
indebtedness, as defined.
Maturities of debentures are summarized as follows:
Year Ending December 31, March 31, 1998
------------------------ --------------
1998................................ $ 1,000,000
1999................................ 11,500,000
2000................................ 7,000,000
2001................................ 8,000,000
2002................................ 4,500,000
Thereafter until 2005............... 46,000,000
Total................................ $78,000,000
(NOTE 4) - Mortgages Receivable:
- --------------------------------
Information as to mortgages receivable is summarized as follows:
March 31, 1998 December 31, 1997
-------------- -----------------
First Mortgages ........................$79,173,000 $68,668,000
Junior Mortgages ........................ 8,534,000 6,534,000
----------- -----------
$87,707,000 $75,202,000
Less Unearned Discount ......................... 885,000 886,000
Total .......................................... $86,822,000 $74,316,000
=========== ===========
9
<PAGE>
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited with Respect to the Three Month Periods Ended
March 31, 1998 and 1997)
(NOTE 4) - Mortgages Receivable: (continued)
- -------------------------------
Interest rates on mortgages range from 6% to 23%. Certain mortgages have been
discounted utilizing rates ranging from 12% to 17%.
During the first quarter of 1998 and 1997, certain mortgages were paid in full
prior to their maturity date. This resulted in the recognition of a gain, which
represents the balance of the unamortized discount applicable to these
mortgages.
Annual maturities of mortgages receivable during the next five years are
summarized as follows:
Year Ending December 31, March 31, 1998
------------------------ --------------
1998................................ $29,110,000
1999................................ 35,789,000
2000................................ 2,400,000
2001................................ 790,000
2002................................ 951,000
Thereafter until 2015............... 18,667,000
----------
Total............................... $87,707,000
===========
The Company evaluates its portfolio of mortgage loans on an individual basis,
comparing the amount at which the investment is carried to its estimated net
realizable value. At the respective balance sheet dates, no allowances were
required, although one mortgage with a carrying value of $1,584,000 is
delinquent and the Company is in the process of foreclosing on the related
property, the fair value of which exceeds the carrying value of the loan.
(NOTE 5) - Related Party Transactions:
- --------------------------------------
During the first quarter of 1998, the Company made additional loans of
$2,000,000 on properties owned by affiliated companies.
Other income includes fees of $1,000 and $2,000 from affiliates for the three
months ended March 31, 1998 and 1997, respectively.
10
<PAGE>
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited with Respect to the Three Month Periods Ended
March 31, 1998 and 1997)
(NOTE 5) - Related Party Transactions: (continued)
- --------------------------------------
The Company utilizes personnel and other facilities of affiliated entities and
is charged service fees for general and administrative expenses for placing
mortgages, servicing mortgages and distributing debentrure interest checks. Such
fees amounted to $72,000 and $66,000 for the three months ended March 31, 1998
and 1997, respectively. Management believes these service fees are reasonable.
The Company participates with Intervest Bank in three mortgages. The balance of
the Company's participation in these mortgages was $3,364,000 and $1,310,000 at
March 31, 1998 and December 31, 1997, respectively. The shareholders of the
Company are officers, directors and shareholders of the parent of Intervest
Bank.
(NOTE 6) - Commitments:
- -----------------------
(a) Office lease:
-----------------
The Company occupies its office space under a lease which terminates on
September 30, 2004. In addition to minimum rents the Company is required to pay
its proportionate share of increases in the building's real estate taxes and
costs of operation and maintenance as additional rent. Rent expense amounted to
$27,000 and $29,000 for the three months ended March 31, 1998 and 1997,
respectively.
Future minimum rents under the lease are as follows:
Year Ending December 31, March 31, 1998
------------------------ --------------
1998................................ $ 131,177
1999................................ 174,902
2000................................ 179,133
2001................................ 191,828
2002................................ 191,828
Thereafter.......................... 335,699
----------
Total................................ $1,204,567
==========
The Company shares this space with affiliates who were charged rent of $18,000
and $16,000 for the three months ended March 31, 1998 and 1997, respectively.
(b) Employment agreement:
-------------------------
Effective as of July 1, 1995, the Company entered into an employment agreement
with its Executive Vice President for a term of ten years at an annual salary in
the present amount of $140,450, which is subject to increase annually by six
percent or by the percentage increase in the consumer price index, if higher. In
the event of the executive's death or disability, one-half of this amount will
continue to be paid for a term as defined in the agreement.
11
<PAGE>
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited with Respect to the Three Month Periods Ended
March 31, 1998 and 1997)
(NOTE 7) - Income Taxes:
- ------------------------
The Company has provided for income taxes in the periods presented based on the
federal, state and city tax rates in effect for these periods.
The provision for income taxes consists of the following components:
Three Months Ended
March 31,
------------------
1998 1997
---- ----
Current taxes:
Federal ............................... $ 106,000 $ 122,000
State and local ....................... 72,000 83,000
Deferred taxes:
Federal ............................... 1,500
State and local ....................... 500 (18,000)
--------- ---------
Total tax provision ................... $ 180,000 $ 159,000
========= =========
Temporary differences exist between financial accounting and tax reporting,
which result in a net deferred asset, included in other assets, as follows:
March 31, 1998 December 31, 1997
-------------- -----------------
Debenture underwriting commissions ............. $ 8,000 $ 9,000
Deferred fees and interest ..................... 48,500 49,500
Discount on mortgages receivable ............... (18,500) (18,500)
Total .......................................... $ 38,000 $ 40,000
The amounts of income taxes provided varied from the amounts which would be
"expected" to be provided at the statutory federal income tax rates in effect
for the following reasons:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Tax computed based upon the statutory federal tax rate ...... $ 133,000 $ 119,000
State and local income tax, net of federal income tax benefit 48,000 43,000
Non-taxable income .......................................... (1,000) (3,000)
--------- ---------
Total ....................................................... $ 180,000 $ 159,000
========= =========
</TABLE>
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
Liquidity and Capital Resources:
The Company is engaged in the real estate business, including the originating
and purchase of real estate mortgage loans, consisting of first mortgage, junior
mortgage and wraparound mortgage loans. The Company's current investment policy
emphasizes the investment in mortgage loans on income producing properties. The
majority of the Company's loans are expected to mature within approximately five
years.
The Company's liquidity is managed to ensure that sufficient funds are available
to meet maturities of borrowings or to make other investments, taking into
account anticipated cash flows and available sources of funds. The Company's
principal sources of funds have consisted of borrowings (principally through the
issuance of its subordinated debentures), mortgage repayments and cash flow from
ongoing operations. Total stockholder's equity at March 31, 1998 was
$10,732,000, compared with $10,521,000 at December 31, 1997. The Company
considers its current liquidity and additional sources of funds sufficient to
satisfy its outstanding commitments and its maturing liabilities.
Results of Operations:
Three Months Ended March 31, 1998 and 1997
For the three months ended March 31, 1998 interest income was $2,783,000 as
compared to $2,598,000 for the same period a year ago. The increase of $185,000
resulted primarily from an increase in mortgages receivable from $70,532,000 at
March 31, 1997 to $86,822,000 at March 31, 1998, offset in part by lower
interest rates on certain mortgages.
Interest expense for the 1998 period was $2,130,000 as compared to $1,992,000
for the 1997 period. The increase of $138,000 resulted mainly from an increase
in long-term obligations.
The provision for income taxes are $180,000 and $159,000 for three months ended
March 31, 1998 and 1997, respectively. These provisions represent 46% and 45% of
pretax income for each period.
Since the Company intends to continue to expand its asset base, including its
mortgage portfolio, it is anticipated that its interest income will continue to
grow. To the extent that such growth is funded in reliance upon long-term
obligations, such as the Debentures, interest expense will likewise increase.
Such increase will depend upon the principal amounts of the additional assets or
liabilities, as well as interest rates.
The Company is engaged in the real estate business and its results of operations
are affected by general economic trends in real estate markets, as well as by
trends in the general economy and the movement of interest rates. Since the
properties underlying the Company's mortgages are concentrated in the New York
City area, the economic condition in that area can also have an impact on the
Company's operations.
13
<PAGE>
The number of instances of prepayment of mortgage loans tends to increase during
periods of declining interest rates and tends to decrease during periods of
increasing interest rates. Certain of the Company's mortgages include prepayment
provisions, and others prohibit prepayment of indebtedness entirely. In any
event, the Company believes that it would be able to reinvest the proceeds of
any prepayments of mortgage loans in comparable mortgages so that prepayments
would not have any materially adverse effect on the Company's business.
The rental housing market in New York City remains stable and the Company
expects that such properties will continue to appreciate in value with little or
no reduction in occupancy rates. The Company's mortgage portfolio is composed
predominantly of mortgages on multi-family residential properties, most of which
are subject to applicable rent control and rent stabilization statutes and
regulations. In both cases, any increases in rent are subject to specific
limitations. As such, properties of the nature of those constituting the most
significant portion of the Company's mortgage portfolio are not affected by the
general movement of real estate values in the same manner as other
income-producing properties.
Business:
The Company is engaged in the real estate business and has historically invested
primarily in real estate mortgage loans secured by income producing real
property. It is anticipated that a substantial portion of the loans to be made
by the Company will be loans with terms of approximately five years. Such
transactions typically require an understanding of the underlying real estate
transaction and rapid processing and funding as a principal basis for competing
in the making of these loans. The Company does not finance new construction.
At March 31, 1998, 54% of the outstanding principal amount of the Company's
loans (net of discounts) were secured by properties located in the greater New
York metropolitan area. The balance of the Company's loans are secured by
properties located in Florida, Georgia, New Jersey, suburbs of New York City,
Pennsylvania and Virginia.
Certain of the Company's real estate mortgage loans bear interest at a fixed
rate. The balance of such loans bear interest at fluctuating rates. Interest on
the loans is usually payable monthly.
The Company may also, from time to time, acquire interests in real property,
including fee interests.
Investment Policy-Operations:
The Company's current investment policy related to mortgages emphasizes
investments in short-term real estate mortgages secured by income producing real
property, located primarily in the greater New York metropolitan area.
The properties to be mortgaged are personally inspected by management and
mortgage loans are made only on those properties where management is
knowledgeable as to operating income and expense. The Company generally relies
upon its management in connection with the valuation of properties. From time to
time, however, it may engage independent appraisers and other agents to assist
in determining the value of income-producing properties underlying mortgages, in
which case the costs associated with such services are generally paid by the
mortgagor.
14
<PAGE>
Current Loan Status:
At March 31, 1998, the Company had 49 real estate mortgage loans in its
portfolio, totaling $87,707,000 (face amount) in aggregate principal amount.
Interest rates on the mortgage portfolio range between 6% and 23% per annum.
Certain mortgages have been discounted utilizing rates between 12% and 17% per
annum.
Through March 31, 1998, the Company has experienced only one delinquency in its
mortgage portfolio. It is pursuing foreclosure proceedings with respect to this
mortgage, the principal balance of which mortgage is approximately $1,584,000.
Certain information concerning the Company's mortgage loans outstanding at March
31, 1998 is set forth below:
Carrying
Amount of
Mortgage No. of
Loans Prior Liens Loans
----------- ----------- ------
First Mortgage Loans..... $78,288,000 $ 0 44
Junior Mortgages ........ 8,534,000 14,501,000 5
--------- ---------- ----
........................ $86,822,000 $14,501,000 49
=========== =========== ====
The historical cost of the mortgage loans which originated in connection with
the sale of real estate includes a discount to reflect an appropriate market
interest rate at the date of origination.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
At March 31, 1998, the Company was involved in one legal proceeding. On
or about December 12, 1996, in the Circuit Court for Osceola County,
Florida, the Company commenced mortgage foreclosure proceedings relating
to real property located in Osceola County, Florida. The principal
amount of such mortgage is approximately $1,584,000. The mortgagor has
filed for Bankruptcy protection which has delayed the foreclosure
proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - the following exhibit is filed herewith
Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during this quarter
16
<PAGE>
SIGNATURES
PURSUANT to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERVEST CORPORATION OF NEW YORK
(Registrant)
Dated: May 6, 1998 /S/ Lowell S. Dansker
-------------------------------------------------
Lowell S. Dansker, President (Principal Executive
Officer), Treasurer (Principal Financial Officer
and Principal Accounting Officer) and Director
Dated: May 6, 1998 /S/ Lawrence G. Bergman
--------------------------------------------------
Lawrence G. Bergman, Vice President, Secretary and
Director
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,717
<SECURITIES> 0
<RECEIVABLES> 86,822
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 97,031
<CURRENT-LIABILITIES> 0
<BONDS> 78,000
0
0
<COMMON> 2,000
<OTHER-SE> 8,732
<TOTAL-LIABILITY-AND-EQUITY> 97,031
<SALES> 0
<TOTAL-REVENUES> 2,926
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 405
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,130
<INCOME-PRETAX> 391
<INCOME-TAX> 180
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 211
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
