T. Rowe Price
Renaissance
Fund, Ltd.
A
Sales-Commission-Free
Real Estate Investment
For information on your
Renaissance Fund account, call:
1-800-962-8300 toll free
For information on your
mutual fund account, call:
1-800-225-5132 toll free
410-625-6500 Baltimore area
T. Rowe Price Real Estate Group
100 East Pratt Street
Baltimore, Maryland 21202
Quarterly Report
For The Period Ended
March 31, 1997
FELLOW STOCKHOLDER:
As you know from our letter dated April 15, 1997, we signed a
purchase and sale agreement on April 11 with Glenborough Realty
Trust Incorporated for the sale of all Fund properties at a
contract sales price of $27.2 million before selling expenses.
Glenborough is a real estate investment trust whose shares are
publicly traded on the New York Stock Exchange. The pending sale
to Glenborough, if consummated, will liquidate the Fund's real
estate portfolio.
These developments are in keeping with our previously
announced strategic positioning of Fund properties to maximize
potential sales proceeds. In order for the Fund to complete the
sale of its properties to Glenborough, a two-thirds majority in
interest of stockholders must vote in favor of the transaction
through a proxy vote, which we expect to take place in late June
or sometime in July. As we cautioned in our letter of April 15,
this sale is subject to further due diligence by Glenborough,
which could result in changes to the properties in the
transaction, the sales proceeds to be received, or the
cancellation of the sale. It is possible that the Fund may not
be liquidated this year if the transaction falls through.
It is worth mentioning again some of our reasons for
accepting Glenborough's offer:
o The offer represents more than 100% of the property
valuations used in our last estimated unit value of $12.45.
o Selling the properties in bulk will reduce transaction and
operating expenses and allow for an accelerated return of
principal to investors.
o There is no financing contingency, and Glenborough's
financial resources appear adequate to consummate the
transaction.
Real Estate Investments (Dollars in thousands)
__________________________________________________
Average Contri-
Leased bution to
Leased Status Status Net Income
_________ _______ _______
Three Three
Gross Months Months
Leasable Ended Ended
Property Area March 31, March 31, March 31,
Name (Sq. Ft.) 1997 1996 1997 1996 1997
________ ________ ____ ____ ____ ____ ____
Valley
Business
Center 202,500 96% 94% 93% $ 51 $ 58
Post Oak
Place 56,400 80 75 79 37 24
Gatehall I 113,600 87 71 79 (101) 75
Buschwood
III 76,900 100 100 100 13 146
________ ____ ____ ____ _____ _____
449,400 92 87 89 0 303
Property Sold - - - - 141 -
Fund Expenses
Less
Interest
Income - - - - (12) (19)
________ ____ ____ ____ _____ _____
Total 449,400 92% 87% 89% $ 129 $ 284
As we stated in our letter of April 15, we suspended the
repurchase and reinvestment programs for the Fund after
accepting the Glenborough offer. If you recently presented your
units for repurchase, please call one of our representatives at
1-800-962-8300 to confirm your request; otherwise, we will
assume that you want to remain invested in the Fund.
Dividend
Pending the completion of the sale to Glenborough, the Fund has
suspended cash dividends. Assuming the properties are sold
during the next few months, the Fund plans to pay a liquidating
dividend, which we expect to be substantially above the Fund's
most recent estimated value based on the negotiated sale price
and other information currently available.
Results of Operations
The Fund's net income for the first quarter of 1997 was
$284,000, an increase of $155,000 from the same period in 1996.
Decreased expenses at Gatehall I amounting to $181,000, and at
Buschwood III totaling $123,000, more than offset a $141,000
decrease in income due to the absence of Buckley Square, which
was sold in November 1996. Expenses at Gatehall I declined
mainly because of lower repair, maintenance, and utilities
costs, as well as lower legal fees during the quarter. Lower bad
debt expenses and a tax refund for 1996 also helped results at
the property. At Buschwood III, reduced expenses were largely
attributable to lower interest expense in the quarter, as the
outstanding loan on the property was fully paid off in February.
At the property level, we signed new and renewal leases
covering 12% of the Fund's total square footage during the first
three months of the year, resulting in an increase in the Fund's
leased status from 87% at the end of December to 92% at the end
of March, while average leased status remained the same.
The decline in the Fund's cash position compared with the
same 1996 period resulted from a higher dividend payment in the
first three months of this year. On May 2, 1997, we used about
$900,000 to further pay down the Fund's outstanding debt.
Outlook
Our reasons for wanting to liquidate the Fund's portfolio while
the real estate market is strengthening are unchanged. As
mentioned previously, our primary goal is to take advantage of
rising property values as the Fund nears the end of its planned
lifespan. Real estate markets have been improving during the
past few years, and we have used this opportunity to capture
higher prices for our investors. Rising real estate values could
eventually lead to an increased supply of new properties,
resulting in softer prices some time later. This is a normal
pattern as the real estate cycle runs its course.
No one can forecast precisely when prices will reach their
peak, and it is possible that by selling Fund properties now we
might miss further advances later on. However, demand from
tenants and investors is currently very strong, causing the
supply of properties to grow in many markets. We believe it is
prudent to sell into strength while prices are still advancing.
It is critical that you promptly read the proxy materials
and return the card as soon as you receive them, so that we can
minimize Fund expenses and implement the orderly liquidation of
your investment.
Thank you in advance for your cooperation in this matter.
Sincerely,
James S. Riepe
Chairman
May 7, 1997
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands except share data)
March 31, December 31,
1997 1996
___________ ___________
Assets
Real Estate Property
Investments
Land . . . . . . . . . . $ 5,438 $ 5,438
Buildings and
Improvements . . . . . 16,415 16,245
_______ _______
21,853 21,683
Less: Accumulated
Depreciation and
Amortization . . . . . (2,064) (1,866)
_______ _______
19,789 19,817
Cash and Cash
Equivalents. . . . . . . 1,784 2,738
Accounts Receivable (less
allowances of $10
and $10) . . . . . . . . 222 277
Other Assets. . . . . . . . 118 148
_______ _______
$ 21,913 $ 22,980
_______ _______
_______ _______
Liabilities and
Stockholders' Equity
Liabilities
Mortgage Loans
Payable. . . . . . . . $ 3,462 $ 4,106
Security Deposits and
Prepaid Rents. . . . . 226 268
Accrued Real Estate
Taxes. . . . . . . . . 122 175
Accounts Payable and
Other Accrued
Expenses . . . . . . . 267 346
Dividends Declared . . . - 1,514
_______ _______
Total Liabilities . . . . . 4,077 6,409
_______ _______
Stockholders' Equity
Common Stock, $.001 Par
Value, Authorized
5,500,000 Shares;
Issued and Outstanding
1,607,757 and
1,529,446 Shares . . . 1 1
Additional Paid-In
Capital. . . . . . . . 19,507 18,526
Dividends in Excess
of Net Income. . . . . (1,672) (1,956)
_______ _______
Total Stockholders' Equity. 17,836 16,571
_______ _______
$ 21,913 $ 22,980
_______ _______
_______ _______
See accompanying notes to condensed consolidated financial
statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands except per-share amounts)
Three Months Ended
March 31,
1997 1996
____ ____
Revenues
Rental
Income. . . . . . . . . . . $ 1,045 $ 1,304
Interest Income . . . . . . . . 32 26
________ ________
1,077 1,330
________ ________
Expenses
Property Operating
Expenses. . . . . . . . . . 295 519
Real Estate Taxes . . . . . . . 105 192
Depreciation and
Amortization. . . . . . . . 198 164
Investment Advisory Fees. . . . 57 70
Fund Management Expenses. . . . 51 37
Interest Expense. . . . . . . . 87 199
Minority Interest . . . . . . . - 20
________ ________
793 1,201
________ ________
Net Income. . . . . . . . . . . $ 284 $ 129
________ ________
________ ________
Activity per Share
Net Income. . . . . . . . . . . $ 0.18 $ 0.08
________ ________
________ ________
Dividends Declared. . . . . . . - $ 0.15
________ ________
________ ________
Weighted Average Number
of Shares
Outstanding . . . . . . . . 1,586,874 1,525,199
________ ________
________ ________
See accompanying notes to condensed consolidated financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Unaudited
(In thousands except share data)
Dividends
Additional in Excess
Common Stock Paid-In of Net
Shares Amount Capital Income Total
______ _____ ______ _______ _____
Balance,
December 31,
1996. . . . . .1,529,446 $ 1 $18,526 $ (1,956) $
16,571
Net Income. . . . - - - 284 284
Dividend
Reinvest-
ments . . . . . 83,489 0 1,039 - 1,039
Share
Repur-
chases. . . . . (5,178) 0 (58) -
(58 . . . . . . .)
________ ____ _______ _______ _______
Balance,
March 31,
1997. . . . . .1,607,757 $ 1 $19,507 $ (1,672)$ 17,836
________ ____ _______ _______ _______
________ ____ _______ _______ _______
See accompanying notes to condensed consolidated financial
statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Three Months Ended
March 31,
1997 1996
________ ________
Cash Flows from Operating
Activities
Net Income. . . . . . . . . . . . $ 284 $ 129
Adjustments to Reconcile
Net Income to Net Cash
Provided by Operating
Activities
Depreciation and
Amortization . . . . . . . 198 164
Minority Interest's Share
of Net Income. . . . . . . - 20
Change in Accounts Receivable,
Net of Allowances. . . . . 55 (8)
Decrease in Other Assets . . 30 14
Decrease in Security Deposits
and Prepaid Rents. . . . . (42) (3)
Decrease in Accrued Real
Estate Taxes . . . . . . . (53) (67)
Decrease in Accounts Payable
and Other Accrued
Expenses . . . . . . . . . (79) (9)
________ ________
Net Cash Provided by Operating
Activities . . . . . . . . . . 393 240
________ ________
Cash Flows Used in Investing
Activities
Investments in Real Estate. . . . (170) (80)
________ ________
Cash Flows from Financing
Activities
Dividends Paid. . . . . . . . . . (1,514) (76)
Reinvestments in Shares . . . . . 1,039 54
Repurchases of Shares . . . . . . (58) (79)
Minority Interest Distribution. . - (21)
Repayment of Mortgage Loan. . . . (644) (228)
________ ________
Net Cash Used in Financing
Activities . . . . . . . . . . (1,177) (350)
________ ________
Cash and Cash Equivalents
Net Decrease during Period. . . . (954) (190)
At Beginning of Year. . . . . . . 2,738 1,608
________ ________
At End of Period. . . . . . . . . $ 1,784 $ 1,418
________ ________
________ ________
See accompanying notes to condensed consolidated financial
statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
The unaudited interim condensed consolidated financial
statements reflect all adjustments which are, in the opinion
of management, necessary for a fair statement of the results
for the interim periods presented. All such adjustments are of
a normal, recurring nature.
The unaudited interim financial information contained in
the accompanying condensed consolidated financial statements
should be read in conjunction with the consolidated financial
statements contained in the 1996 Annual Report to
Stockholders.
NOTE 1 - TRANSACTIONS WITH RELATED PARTIES AND OTHER
Pursuant to contracts executed in 1991, the Fund pays advisory
fees to T. Rowe Price Real Estate Group, Inc. (the "Investment
Manager"), an affiliate of the Fund's Sponsor, and LaSalle
Advisors Limited Partnership (the "Investment Advisor"). The
Investment Manager provides communications, cash management,
administrative, and other related services to the Fund for an
advisory fee of .45% per year of the fair market value, as
defined, of the Fund's assets and earned $27,000 for the first
three months of 1997. The Investment Advisor provides the Fund
with real estate advisory, accounting, and other related
services for an advisory fee of .50% per year of the fair
market value, as defined, of the Fund's assets and earned
$29,000 for the first three months of 1997. Recognition of
these investment advisory fees is subject to limitations
adopted by the Fund pursuant to guidelines promulgated by the
North American Securities Administrators Association.
An affiliate of the General Partner earned a normal and
customary fee of $1,000 from the money market mutual funds in
which the Partnership made its interim cash investments during
the first three months of 1997.
The Fund also reimburses the Investment Manager and
Investment Advisor for certain defined expenses incurred in
operating and administering the affairs of the Fund. Expense
reimbursements for the Investment Manager and Investment
Advisor totaled $6,000 and $5,000, respectively, for the first
three months of 1997.
NOTE 2 - REAL ESTATE PROPERTY INVESTMENTS
On April 11, 1997, the Fund entered into a contract with a
buyer for the sale of its four properties at a sales price of
$27,150,000 before selling expenses. The transaction is
subject to further due diligence by the buyer and approval of
the stockholders which could result in changes to or the
cancellation of the contract. If the transaction is closed,
the Fund will have sold all of its real estate property
investments and will begin liquidation.
