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 1-12708
-------------------------------------------------------
FRANKLIN SELECT REALTY TRUST
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-3095938
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P. O. BOX 7777, SAN MATEO, CALIFORNIA 94403-7777
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 312-2000
--------------------------
N/A
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Former name, former address and former fiscal year, 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 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
Common Stock Shares Outstanding as of June 30, 1998, Series A: 12,250,373
Common Stock Shares Outstanding as of June 30, 1998, Series B: 745,584
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FRANKLIN SELECT REALTY TRUST
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
Unaudited
(In thousands, except per share amounts) 1998 1997
- -------------------------------------------------------------------------------
ASSETS
Real Estate
Rental property:
Land $38,787 $38,787
Buildings and improvements 111,841 110,733
--------------------
150,628 149,520
Less: accumulated depreciation 22,568 20,817
--------------------
128,060 128,703
Rental property held for sale, net of accumulated 8,045 12,395
depreciation --------------------
Real estate, net 136,105 141,098
Cash and cash equivalents 2,193 3,821
Mortgage-backed securities, available for sale 451 501
Deferred rent receivable 1,895 1,863
Deferred costs and other assets 2,493 2,814
====================
Total assets $143,137 $150,097
====================
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes and bonds payable $36,338 $42,487
Tenant deposits, accounts payable and accrued expenses 1,258 1,391
Distributions payable 1,595 1.645
---------------------
Total liabilities 39,191 45,523
---------------------
Minority interest 9,220 9,258
---------------------
Commitments and contingencies - -
Stockholders' equity:
Common stock, Series A, without par value; stated
value $10 per
share; 50,000 shares authorized; 12,250
issued and outstanding 103,161 103,161
Common stock, Series B, without par value; stated
value $10 per
share; 1,000 shares authorized; 746 issued and
outstanding 6,294 6,294
Accumulated other comprehensive income (30) (28)
Accumulated distributions in excess of net income (14,699) (14,111)
---------------------
Total stockholders' equity 94,726 95,316
=====================
Total liabilities and stockholders' equity $143,137 $150,097
=====================
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
<CAPTION>
FRANKLIN SELECT REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, June 30, JUNE 30, June 30,
(In thousands, except per share amounts) 1998 1997 1998 1997
- ---------------------------------------------- ------------ ------------ ----------- -----------
REVENUE:
<S> <C> <C> <C> <C>
Rent $4,788 $4,450 $9,321 $8,546
Interest, dividends and other 44 52 104 88
------------ ------------ ----------- -----------
Total revenue 4,832 4,502 9,425 8,634
------------ ------------ ----------- -----------
EXPENSES:
Property operating 1,016 1,019 1,925 1,848
Interest 824 733 1,677 1,325
Related party 388 372 764 709
General and administrative 254 140 525 302
Depreciation and amortization 1,021 982 2,014 1,954
------------ ------------ ----------- -----------
Total expenses 3,503 3,246 6,905 6,138
------------ ------------ ----------- -----------
Operating income before gain on sale
of property and minority interest 1,329 1,256 2,520 2,496
Gain on sale of property - - 170 -
------------ ------------ ----------- -----------
Operating income before minority interest 1,329 1,256 2,690 2,496
Minority interest 177 161 338 322
============ ============ =========== ===========
NET INCOME $1,152 $1,095 $2,352 $2,174
============ ============ =========== ===========
Unrealized gain (loss) on mortgage-backed
securities - 10 (2) 8
============ ============ =========== ===========
Total comprehensive income $1,152 $1,105 $2,350 $2,182
============ ============ =========== ===========
Net income per share, based on the weighted
average shares outstanding of Series A common
stock of 12,250 for the three- and six-month
periods ended June 30, 1998, and 1997,
respectively $ .09 $ .09 $ .19 $ .18
============ ============ =========== ===========
Distributions per share, based on the weighted
average shares outstanding of Series A common
stock of 12,250 for the three- and six-month
periods ended June 30, 1998 and 1997,
respectively $.12 $ .11 $ .24 $ .22
============ ============ =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN SELECT REALTY TRUST
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Unaudited
(In thousands) 1998 1997
- ----------------------------------------------------------------- -------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
NET INCOME $2,352 $2,174
-------- ----------
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 2,108 2,036
Gain on sale of property (170) -
Minority interest 338 322
(Increase) decrease in deferred rent receivable (32) 17
Decrease (increase) in other assets 218 (143)
(Decrease) increase in accounts payable, accrued expenses
and other liabilities (171) 45
-------- ----------
2,291 2,277
-------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,643 4,451
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 4,471 -
Acquisition of rental property - (12,613)
Improvements to real estate (1,135) (121)
Leasing commissions paid (178) (190)
Disposition of mortgage-backed securities 48 29
-------- ----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 3,206 (12,895)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under notes and bonds payable - 15,178
Repayment of notes and bonds payable (6,149) (2,470)
Payment of loan costs - (3)
Distributions paid to limited partners (338) (298)
Distributions paid to stockholders (2,990) (2,657)
-------- ----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (9,477) 9,750
-------- ----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,628) 1,306
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,821 2,558
-------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,193 $3,864
======== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
FRANKLIN SELECT REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
Unaudited
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of
Franklin Select Realty Trust (the "Company") included herein have been
prepared in accordance with the instructions to Form 10-Q pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all appropriate adjustments
necessary to a fair presentation of the results of operations have been made
for the periods shown. All adjustments are of a normal recurring nature.
Certain prior year amounts have been reclassified to conform to current year
presentations. These financial statements should be read in conjunction with
the Company's audited financial statements as of, and for the year ended,
December 31, 1997.
NOTE 2 - NET INCOME PER SHARE
In October 1997, 1,625,000 limited partnership units (the "FSRT Units")
became eligible for exchange into a like number of Series A common shares in
the Company in accordance with the partnership agreement of FSRT. None of
the partnership units have been exchanged for common stock. The convertible
partnership units are deemed anti-dilutive and consequently there is no
difference between basic and diluted net income per share.
NOTE 3 - SALE OF REAL ESTATE
On January 21, 1998, the Company sold a 12.5-acre parcel of undeveloped land
that was acquired in June 1997. Net proceeds of $4,471,000 were received
and of that amount approximately $4,100,000 was applied to the outstanding
balance of the Company's Notes and bonds payable and the remainder was
retained by the Company.
NOTE 4 - LITIGATION
The Company is currently defending the former directors of Franklin Advantage
Real Estate Income Fund ("Advantage") against a purported class action
complaint filed in the California Superior Court for San Mateo County on
December 2, 1996 by two stockholders for themselves and purportedly on behalf
of certain other minority stockholders of Advantage. Other defendants to the
complaint currently include Franklin Resources, Inc. and the Company's
advisor, Franklin Properties, Inc. The complaint alleges that defendants
breached fiduciary duties to plaintiffs and other minority stockholders in
connection with the purchase by Franklin Resources, Inc. in August 1994 of a
46.6% interest in Advantage and in connection with the Merger of Advantage
into the Company in May 1996, which was approved by a majority of the
outstanding shares of each of the three companies. Plaintiffs also allege
that defendants misstated certain material facts or omitted to state material
facts in connection with these transactions.
The complaint includes a variety of additional claims, including claims
relating to the investment of Advantage assets, the suspension of the
dividend reinvestment program, the allocation of merger-related expenses,
revisions to the investment policies of Advantage, and the restructuring of
the contractual relationship with the Advisor. Plaintiffs seek damages in an
unspecified amount and certain equitable relief. The defendants deny any
wrongdoing in these matters and intend to vigorously defend the action. As a
result of the pleadings filed by the various defendants, the plaintiffs have
filed an amended complaint to address the court's response to such filings.
Defendants are challenging the legal sufficiency of certain aspects of the
complaint. Document production by the defendants is currently in progress.
FRANKLIN SELECT REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
Unaudited
NOTE 4 - LITIGATION (CONTINUED)
On June 3, 1997, Herbert S. Hodge, Jr., on behalf of himself and certain
other shareholders of Franklin Real Estate Income Fund ("FREIF"), filed an
alleged class action complaint in the California Superior Court for San Mateo
County against the Company, certain of its directors, the Company's advisor,
Franklin Properties, Inc., Franklin Resources, Inc., and Bear Stearns Co.,
Inc. The complaint alleges that defendants breached fiduciary duties to
plaintiff and certain other shareholders in connection with the merger of
FREIF into Franklin Select Realty Trust in May 1996. Plaintiff also alleges
that defendants misstated certain material facts or omitted to state material
facts in connection with this transaction. Plaintiff seeks damages in an
unspecified amount. The defendants deny any wrongdoing in these matters and
intend to vigorously defend the action. Plaintiff has filed an amended
complaint. Defendants are challenging the legal sufficiency of certain
aspects of the complaint. Document production by the defendants is currently
in progress.
Management does not believe that the outcome of these matters will have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
NOTE 5 - STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
During fiscal 1998, the Company has adopted Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income" ("FAS 130"). FAS 130
establishes the disclosure requirements for reporting comprehensive income in
an entity's annual and interim financial statements and became effective for
the Company in the current fiscal year. Comprehensive income includes
unrealized gains and losses on securities previously reported by the Company
as a component of stockholders' equity. The Company is now required to show
comprehensive income in a financial statement and display the accumulated
balance of other comprehensive income separately in the equity section of the
consolidated balance sheet.
NOTE 6 - SUBSEQUENT EVENT
On July 1, 1998, the Company sold Carmel Mountain Gateway Plaza, a rental
property classified as held for sale in the balance sheet as of June 30,
1998. Sales proceeds of $8,900,000 were received and of that amount
approximately $8,600,000 was applied to the outstanding balance of the
Company's Notes and bonds payable and the remainder was retained by the
Company. Gain from sale of the property amounted to approximately $382,000.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
When used in the following discussion, the words "believes," "anticipates"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those projected, including,
but not limited to, those set forth in the section entitled "Potential
Factors Affecting Future Operating Results," below. Readers are cautioned
not to place undue reliance on these forward-looking statements that speak
only as of the date hereof. The Company undertakes no obligation to publicly
release any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
Total revenue for the three- and six-month periods ended March 31, 1998
increased $330,000, or 7%, and $791,000, or 9%, respectively, when compared
to the same periods in 1997. These increases were primarily due to rental
revenue provided by the Hathaway and Tanon Buildings acquired in 1997.
Total expenses for the three- and six-month period ended March 31, 1998
increased $257,000, or 8%, and $767,000, or 12%, respectively, when compared
to the same periods in 1997. The increase for both periods reported was a
result of additional operating expenses primarily related to the acquisition
of the Hathaway and Tanon Buildings.
General and administrative expenses for the three-month and six-month periods
ended June 30, 1998, increased $114,000, or 81%, and $223,000, or 74%,
respectively, when compared to the same periods in 1997. The increases were
primarily the result of legal fees incurred with respect to the pending legal
actions that are described in Note 3 to the accompanying financial statements
and with respect to a comprehensive review of the alternatives available to
the Company to maximize shareholder value.
The increase in net income for the three- and six-month periods under review
was primarily due to changes in revenues and expenses described above and
also the gain recorded on the sale of a parcel of undeveloped land in January
1998.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, cash and cash equivalents aggregated $2,193,000. The
Company believes this amount is adequate to meet its short-term operating
cash requirements. The Company also holds $451,000 in mortgage-backed
securities and has access to a revolving line of credit in the amount of $25
million, of which $17.9 remains available as of June 30, 1998. At June 30,
1998, the outstanding balance under the Company's line of credit was $7.1
million. Borrowings under the line of credit bear interest at the London
Interbank Offered Rate (LIBOR) plus 1.90%, or at Bank of America's Reference
Rate at the Company's option. At June 30, 1998, the weighted average
interest rate of borrowings under the line of credit was 7.8%. During the
period, the Company paid off the Glen Cove loan in the amount of $1.8 million
using cash reserves. In July 1998, the Company paid down $6,300,000 of the
outstanding balance on its line of credit and $2,300,000 on other debt
secured by the property from the proceeds received from the sale of Carmel
Mountain Gateway Plaza as described in Note 6 to the accompanying financial
statements.
Net cash provided by operating activities for the six-month period ended June
30, 1998 was $4,643,000. The increase in this cash flow when compared to the
same period in the prior year was primarily attributable to the changes in
revenues and expenses discussed above.
The changes in net cash provided by investing and financing activities during
the six-month period ended June 30, 1998 primarily resulted from the sale of
a parcel of undeveloped land in January 1998 and repayment of Company notes
and bonds payable.
Management continues to evaluate properties for acquisition by the Company.
The Company expects to fund the cost of acquisitions, capital expenditures,
costs associated with lease renewals and reletting of space, repayment of
indebtedness, and development of properties from (i) cash flow from
operations, (ii) borrowings under its line of credit and, if available, other
indebtedness (which may include indebtedness assumed in acquisitions), and
(iii) the issuance of partnership interests in connection with acquisitions.
The Company's operating cash flow has been its principal source of capital
for minor property improvements, leasing costs and the payment of quarterly
distributions.
The Special Committee of the Board of Directors is continuing its review of
the strategic alternatives available to the Company.
Management does not believe that the outcome of the litigation described in
Note 4 to the accompanying financial statements will have a materially
adverse effect on the Company's financial condition, results of operations,
or cash flows.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
Management believes that the Company's sources of capital as described under
Liquidity and Capital Resources are adequate to meet its liquidity needs in
the foreseeable future.
IMPACT OF INFLATION
The Company's policy of negotiating leases which incorporate operating
expense "pass-through" provisions is intended to protect the Company against
increased operating costs resulting from inflation.
CASH DISTRIBUTION POLICY
Distributions are declared quarterly at the discretion of the Board of
Directors. The Company's present distribution policy is to at least annually
evaluate the current distribution rate in light of anticipated tenant
turnover over the next two or three years, the estimated level of associated
improvements and leasing commissions, planned capital expenditures, any debt
service requirements and the Company's other working capital requirements.
After balancing these considerations, and considering the Company's earnings
and cash flow, the level of its liquid reserves and other relevant factors,
the Company seeks to establish a distribution rate which:
i) provides a stable distribution which is sustainable
despite short-term fluctuations in property cash
flows;
ii) maximizes the amount of cash flow paid out as
distributions consistent with the above listed
objective; and
iii) complies with the Internal Revenue Code requirement
that a REIT annually pay out as distributions not less
than 95% of its taxable income.
During the six month period ended June 30, 1998, the Company declared
distributions related to the Series A common stock totaling $2,940,000.
FUNDS FROM OPERATIONS
The Company considers funds from operations to be a useful measure of the
operating performance of an equity REIT because, together with net income and
cash flows, funds from operations provides investors with an additional basis
to evaluate the ability of a REIT to support general operating expense and
interest expense before the impact of certain activities, such as gains and
losses from property sales and changes in the accounts receivable and
accounts payable. However, it does not measure whether income is sufficient
to fund all of the Company's cash needs including principal amortization,
capital improvements and distributions to stockholders. Funds from
operations should not be considered an alternative to net income or any other
GAAP measurement of performance, as an indicator of the Company's operating
performance or as an alternative to cash flows from operating, investing or
financing activities as a measure of liquidity. As defined by the National
Association of Real Estate Investment Trusts, funds from operations is net
income (computed in accordance with GAAP), excluding gains or losses from
debt restructuring and sales of property, plus depreciation and amortization,
and after adjustment for unconsolidated joint ventures. The Company reports
funds from operations in accordance with the revised NAREIT definition. The
measure of funds from operations as reported by the Company may not be
comparable to similarly titled measures of other companies that follow
different definitions.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
FUNDS FROM OPERATIONS (Continued)
For the Six Months Ended
June 30,
(In thousands) 1998 1997
- ----------------------------------------------------------------
Net income $2,352 $2,174
Add: Depreciation and amortization 2,014 1,954
Less: Gain on sale of property (170) -
- ----------------------------------------------------------------
Funds from Operations $4,196 $4,128
================================================================
The primary difference between the periods reflects the changes in net income
as discussed under "Results of Operations".
POTENTIAL FACTORS AFFECTING FUTURE OPERATING RESULTS
LEASING TURNOVER
In connection with any lease renewal or new lease, the Company typically
incurs costs for tenant improvements and leasing commissions which will be
funded first from operating cash flow and, if necessary, from cash reserves
or the line of credit. In addition, while the Company has historically been
successful in renewing and releasing space, the Company will be subject to
the risk that leases expiring in the future may be renewed or released at
terms that are less favorable than current lease terms.
LEASING TURNOVER - DATA GENERAL BUILDING
Over the next twelve months, the Company's greatest leasing exposure consists
of one lease at the Data General Building covering approximately 34,000
square feet, which expires in January 1999. The tenant has announced its
intention to vacate the property at that time. The lease carries a triple
net rental rate that is equivalent to approximately $34.50 per square foot on
a full service basis. Compared to the estimated current market rate of
approximately $22.80 per square foot, this lease provides over-market rent of
approximately $397,000 annually, or 2% of the Company's current annual
revenue based on annualizing the total revenue for the six months ended June
30, 1998. It is not possible to predict the market rental rate in 1999;
however, the Company expects that when this lease expires, the rental income
related to this space will be less than $34.50 per square foot. The Company
will also incur costs for tenant improvements and leasing commissions related
to the re-leasing of the space, however, the amounts are unknown at this time.
YEAR 2000
The Company is in the process of assessing the impact of Year 2000 issues on
its computer systems and applications. At this time, management believes
that the costs associated with resolving these issues will not have a
material effect on the Company's financial statements.
<TABLE>
<CAPTION>
FRANKLIN SELECT REALTY TRUST
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
NO. LIST OF EXHIBITS FOOTNOTE
--------- ---------------- --------
<S> <C> <C>
3.1 Articles of Incorporation (1)
3.2 First Amendment to Articles of Incorporation (2)
3.2a Second Amended and Restated Bylaws of Franklin Select Realty Trust (2)
10.1 Amended and Restated Advisory Agreement
10.2 Property Management Agreement (3)
10.3 Agreement of Limited Partnership of FSRT, L.P. between the Company and (4)
Northport Associates No. 18, a California limited liability company, dated as
October 30, 1996.
10.4 Contribution Agreement, dated as of October 30, 1996, between FSRT, L.P., (4)
the Company, Northport Associates No. 18, a California limited liability company,
and the members of Northport Associates No. 18.
10.5 Exchange Rights Agreement, dated as of October 30, 1996, among the Company, (4)
FSRT L.P., and Northport Associates No. 18, a California limited liability company.
10.6 Registration Rights Agreement, dated as of October 30, 1996, among the (4)
Company and Northport Associates No. 18, a California limited liability company.
10.7 Secured line of credit loan agreement, dated December 10, 1996, by and
between the Company and Bank of America.
FOOTNOTES
---------
(1) Documents were filed in the Company's Form S-11 Registration Statement, dated March 30, 1989
(Registration No. 033-26562) and are incorporated herein by reference.
(2) Documents were filed in the Company's Form S-4 Registration Statement, dated November 13, 1995,
(Registration No. 033-64131), and are incorporated herein by reference.
(3) Documents were filed in the Company's Form 10-K for the year ended December 31, 1994, and are
incorporated herein by reference.
(4) Documents were filed in the Company's Form 8-K, dated October 31, 1996, and are incorporated herein
by reference.
(b) Reports on Form 8-K - None
</TABLE>
SIGNATURE
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.
FRANKLIN SELECT REALTY TRUST
By: /S/ DAVID P. GOSS
-----------------------
David P. Goss
Chief Executive Officer
Date: AUGUST 6, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S
FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,193
<SECURITIES> 451
<RECEIVABLES> 4,388
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,032
<PP&E> 158,673
<DEPRECIATION> 22,568
<TOTAL-ASSETS> 143,147
<CURRENT-LIABILITIES> 2,853
<BONDS> 36,338
0
0
<COMMON> 103,161
<OTHER-SE> (8,435)
<TOTAL-LIABILITY-AND-EQUITY> 143,147
<SALES> 0
<TOTAL-REVENUES> 9,595
<CGS> 0
<TOTAL-COSTS> 5,566
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,677
<INCOME-PRETAX> 2,352
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,352
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
