UNITED STATES
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 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 1-12875
CORNERSTONE REALTY INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1589139
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
306 EAST MAIN STREET
RICHMOND, VIRGINIA 23219
(Address of principal executive offices) (Zip Code)
(804) 643-1761
(Registrant's telephone number, including area code)
Not Applicable
(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 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
At August 1, 1998, there were outstanding 43,026,249 shares of common
stock, no par value, of the registrant.
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
FORM 10-Q
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - June 30, 1998 3
and December 31, 1997
Consolidated Statements of Operations - 4
Three months ended June 30, 1998
and June 30, 1997
Six months ended June 30, 1998
and June 30, 1997
Consolidated Statement of Shareholders' Equity 5
Six months ended June 30, 1998
Consolidated Statements of Cash Flows - 6
Six months ended June 30, 1998
and June 30, 1997
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis 10
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings (not applicable).
Item 2. Changes in Securities (not applicable).
Item 3. Defaults Upon Senior Securities
(not applicable).
Item 4. Submission of Matters to a Vote of
Security Holders (not applicable).
Item 5. Other Information (not applicable).
Item 6. Exhibits and Reports on Form 8-K. 14
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
<S> <C>
ASSETS
Investment in Rental Property
Land $82,938,664 $76,812,953
Buildings and property improvements 442,482,870 402,545,094
Furniture and fixtures 9,896,228 8,217,149
------------ ------------
535,317,762 487,575,196
Less accumulated depreciation (37,176,705) (27,486,630)
------------ ------------
498,141,057 460,088,566
Cash and cash equivalents 4,218,878 4,513,986
Prepaid expenses 506,155 797,484
Other assets 8,816,564 8,786,414
------------ ------------
Total Assets $511,682,654 $474,186,450
============ ============
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Notes payable $162,447,999 $151,569,147
Accounts payable 1,997,273 3,812,578
Accrued expenses 3,297,074 1,158,014
Rents received in advance 189,798 463,997
Tenant security deposits 1,843,827 1,854,462
------------ ------------
Total Liabilities 169,775,971 158,858,198
Shareholders' equity
Common stock, no par value, authorized 50,000,000
shares; issued and outstanding 38,608,345 shares
and 35,510,327 shares, respectively 383,128,652 349,135,379
Deferred compensation (51,978) (62,976)
Distributions greater than net income (41,169,991) (33,744,151)
------------ ------------
Total Shareholders' Equity 341,906,683 315,328,252
------------ ------------
Total Liabilities and Shareholders' Equity $511,682,654 $474,186,450
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
------------------------ ------------------------
<S> <C>
REVENUE:
Rental income $21,871,386 $16,832,067 $41,991,821 $31,837,382
Other income 850,520 522,677 1,692,554 902,707
EXPENSES:
Property and maintenance 5,976,007 4,715,814 11,475,532 8,896,453
Taxes and insurance 1,681,144 1,436,538 3,204,993 2,833,397
Property management 543,061 439,881 1,055,380 832,081
General and administrative 566,998 363,728 923,337 709,847
Amortization expense and other depreciation 14,146 17,641 30,284 25,282
Depreciation of rental property 5,006,691 3,781,370 9,690,075 6,965,373
Other 361,697 382,005 768,656 741,442
Management contract termination - 135,999 - 271,998
------------------------ ----------------------
Total expenses 14,149,744 11,272,976 27,148,257 21,275,873
------------------------ ----------------------
Income before interest income (expense) 8,572,162 6,081,768 16,536,118 11,464,216
Interest and investment income 128,189 100,641 221,199 103,781
Interest expense (3,187,420) (1,653,105) (6,008,338) (3,036,953)
------------------------ ----------------------
Net income $5,512,931 $4,529,304 $10,748,979 $8,531,044
======================== ======================
Basic and diluted earnings per common share $ 0.15 $ 0.14 $ 0.30 $ 0.28
======================== ======================
Distributions per common share $ 0.26 $ 0.25 $ 0.51 $ 0.50
======================== ======================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Distributions
(Greater) Total
Number Deferred Less than Shareholders'
of Shares Amount Compensation Net Income Equity
-----------------------------------------------------------------
<S> <C>
Balance at December 31, 1997 35,510,327 $349,135,379 ($62,976) ($33,744,151) $315,328,252
Net proceeds from the sale of shares 2,611,475 28,437,797 - - 28,437,797
Net income - - - 10,748,979 10,748,979
Cash distributions declared to shareholders ($. 51 per share) - - - (18,174,819) (18,174,819)
Amortization of deferred compensation - - 10,998 - 10,998
Shares issued through dividend reinvestment plan 486,543 5,555,476 - - 5,555,476
-----------------------------------------------------------------
Balance at June 30, 1998 38,608,345 $383,128,652 ($51,978) ($41,169,991) $341,906,683
=================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1998 1997
-------------------------------------
<S> <C>
Cash flow from operating activities:
Net income $10,748,979 $8,531,044
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 9,720,359 6,990,655
Amortization of deferred compensation 10,998 11,000
Amortization of Apple Realty Group contract purchase 463,538 456,000
Amortization of deferred financing costs 106,531 -
Management contract termination - 271,998
Changes in operating assets and liabilities:
Prepaid expenses 291,329 (45,222)
Other assets (630,503) 335,356
Accounts payable (1,815,305) (914,741)
Accrued expenses 2,139,060 1,426,855
Rent received in advance (274,199) (282,739)
Tenant security deposits (10,635) 216,240
----------- -----------
Net cash provided by operating activities 20,750,152 16,996,446
Cash flow from investing activities:
Acquisitions of rental property (36,200,620) (74,526,278)
Capital improvements (11,541,946) (11,981,229)
Purchase of Apple Realty Group contract - (350,000)
Purchasee of Apple Residential Income Trust, Inc. common stock - (3,760,000)
----------- -----------
Net cash used in investing activities (47,742,566) (90,617,507)
Cash flow from financing activities:
Proceeds from short-term borrowings 53,883,852 164,624,294
Repayments of short-term borrowings (43,005,000) (132,377,147)
Net proceeds from issuance of shares 33,993,273 57,595,792
Cash distributions paid to shareholders (18,174,819) (14,141,344)
----------- -----------
Net cash provided by financing activities 26,697,306 75,701,595
Increase in cash and cash equivalents (295,108) 2,080,534
Cash and cash equivalents, beginning of year 4,513,986 3,182,651
----------- -----------
Cash and cash equivalents,
end of period $4,218,878 $5,263,185
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1998
(1) Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
required by generally accepted accounting principles. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six months ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1998. These financial statements should be read in
conjunction with the Company's December 31, 1997 Form 10-K.
All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128 requirements.
Certain previously reported amounts have been reclassified to conform with
the current financial statement presentation.
As of January 1, 1998, the Company adopted Statement 130, "Reporting
Comprehensive Income." Statement 130 establishes new rules for the
reporting and display of comprehensive income and its components; however,
the adoption of this Statement had no impact on the Company's net income
or shareholders' equity. The Company does not currently have any items of
comprehensive income requiring separate reporting and disclosure.
(2) Investment in Rental Property
The Company purchased four properties for $35.8 million during the six
months ended June 30, 1998. The following is a summary of rental property
acquired during the six months ended June 30, 1998:
Initial Date of
Description Acquisition Cost Acquisition
----------- ---------------- -----------
Stone Point $ 9,700,000 January, 1998
Hampton Pointe 12,225,000 March, 1998
Pinnacle Ridge 5,731,150 March, 1998
(formerly named Edgewood
Knoll)
The Timbers 8,100,000 June, 1998
<PAGE>
(3) Notes Payable
In October, 1997, the Company obtained a $175 million unsecured line of
credit with a consortium of six banks to fund property acquisitions. The
line of credit bears interest at one month LIBOR plus 120 basis points. In
addition, the Company is obligated to pay the lenders a quarterly
commitment fee equal to .20% per annum of the unused portion of the line.
The entire balance is due on October 30, 2000. At June 30, 1998,
borrowings under the agreement were $155 million.
During 1997, the Company also obtained a $5 million unsecured line of
credit for general corporate purposes. This line of credit bears interest
at LIBOR plus 160 basis points and is due on March 31, 1999. At June 30,
1998, borrowings under the agreement were $2 million.
(4) Common Stock
During the quarter ended June 30, 1998, the Company raised $30 million by
issuing 2.6 million shares through its participation in a Unit Investment
Trust, which resulted in $28.4 million net proceeds to the Company, after
underwriting discounts, commissions and other direct costs. The Company
used the proceeds to pay down its line of credit, the acquisition of
additional apartment communities and for working capital.
(5) Related Parties
In August 1996, Glade M. Knight, Chairman and Chief Executive Officer of
the Company, established Apple Residential Income Trust, Inc. (Apple) for
the purpose of acquiring apartment communities in Texas. Companies owned
by Mr. Knight provided advisory, property management, and asset
acquisition services to Apple. In March 1997, the Company entered into
subcontract arrangements with the companies owned by Mr. Knight to provide
property management services and advisory services to Apple. Property
management fees are 5% of monthly gross revenues plus certain expense
reimbursements. Advisory fees are .1% to .25% of total capital raised by
Apple based on the financial performance of Apple as defined in the
agreement. The amount of fees received by the Company under the contracts
for the six months ended June 30,1998 was $817,954 and direct expenses
associated with providing these services were $253,819, net of $84,000
expense reimbursement.
During March 1997, the Company acquired all the assets of Apple Realty
Group, Inc., which provided the real estate acquisition and disposal
services for Apple. The sole asset of Apple Realty Group, Inc. was the
acquisition/disposition contract with Apple, which expires on October 31,
2001. The Company paid $350,000 cash and issued stock valued at $1,650,000
for this contract. Under the terms of the contract, Apple pays a real
estate commission equal to 2% of the purchase price of the properties
acquired. The Company is amortizing its purchase of this contract over the
anticipated total acquisitions by Apple during the contract period. For
the six months ended June 30, 1998, the Company received $874,600 in real
estate commissions and $12,500 in expense reimbursements under this
contract and amortized $463,538 of the purchase price of this contract.
<PAGE>
Apple granted the Company a continuing right to own 9.8% of the common
shares of Apple at its selling price, net of selling commissions. In April
1997, the Company purchased 417,778 shares of Apple for $3.76 million.
This represents approximately 2% of the common shares of Apple outstanding
as of June 30, 1998. Apple shares are sold under a "best efforts"
offering, and no market exists for trading of Apple shares. For the six
months ended June 30, 1998, dividend income from the Company's investment
in Apple was $168,777.
(6) Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Six Months Three Month Six Months
Ended Ended Ended Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ------------- -------------- -------------
<S> <C>
Numerator:
Net income $ 5,512,931 $ 10,748,979 $ 4,529,304 $ 8,531,044
Numerator for basic and
diluted earnings 5,512,931 10,748,979 4,529,304 8,531,044
Denominator:
Denominator for basic
earnings per share-weighted-
average shares 36,894,332 36,301,575 32,139,535 30,210,173
Effect of dilutive securities:
Stock options 5,651 5,651 343 568
- ------------------------------------------------------------------------------------------------
Denominator for diluted earnings
per share-adjusted weighted-
average shares and assumed
conversions 36,899,983 36,307,226 32,139,878 30,210,741
- ------------------------------------------------------------------------------------------------
Basic and diluted earnings per
common share $ .15 $ 0.30 $ .14 $ 0.28
- ------------------------------------------------------------------------------------------------
</TABLE>
(7) Subsequent Events
In July 1998, the Company distributed to its shareholders approximately $10
million (26 cents per share) of which approximately $2.7 million was reinvested
in the purchase of additional shares of the Company.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1993, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include, without limitation, statements concerning anticipated
improvements in financial operations from completed and planned property
renovations, and expected benefits from the Company's ownership of stock
in Apple and the acquisition, advisory and property management services
provided to Apple. Such statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance, or achievement of the Company to be materially different from
the results of operations or plans expressed or implied by such
forward-looking statements. Such factors include, among other things,
unanticipated adverse business developments affecting the Company, the
properties or Apple, as the case may be, adverse changes in the real
estate markets and general and local economies and business conditions.
Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore there can be no assurance
that such statements included in this quarterly report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by the Company or
any other person that the results or conditions described in such
statements or the objectives and plans of the Company will be achieved.
Results of Operations
Income and occupancy
Substantially all of the Company's income is from the rental operation of
apartment communities. The Company's rental income increased 32% in the
first six months of 1998 to $42 million up $10 million over the first six
months of 1997. For the second quarter of 1998, the Company's rental
income of $21.9 million was $5 million, or 30% higher than the same period
of 1997. The increases in rental income are primarily due to the
acquisition of additional apartment communities in 1998 and 1997.
Rental income is expected to continue to increase from the impact of
planned improvements, which are being made in an effort to improve the
properties' marketability, economic occupancies, and rental rates. The
Company's other sources of income are fees for certain services provided
to Apple and returns on the investment of its cash and cash reserves.
Overall economic occupancy for the Company's properties averaged 92% for
the six months ended June 1998 and 1997, respectively. For the second
quarter of 1998 and 1997, economic occupancy averaged 93% and 92%,
respectively. Overall average rental rates for the portfolio increased
4.6% from $566 at June 30, 1997, to $592 at June 30, 1998. For the second
quarter of 1998 and 1997, average rental rates increased 6.8% from $546
to $583, respectively.
<PAGE>
Comparable property operations
On a comparative basis, the 39 properties acquired prior to 1997 provided
rental and operating income of $29 million and $18.6 million respectively
during the first six months of 1998 and $27.7 million and $17.4 million
for the same period in 1997. This represents an increase from the first
six months of 1997 to the first six months of 1998 of 5% and 7%,
respectively. During the second quarter of 1998 and 1997, these same
community operations provided rental and operating income of $14.8 million
and $9.5 million and $14 million and $8.8 million, respectively. This
represents an increase from the second quarter of 1997 to the second
quarter of 1998 of 5% and 7%, respectively.
Expenses
Total expenses for the first six months increased to $27 million in 1998
from $21 million in 1997. For the second quarter of 1998, total expenses
increased to $14 million from $11 million for the same period in 1997. The
increases are due largely to the increase in the number of apartments. The
operating expense ratio (the ratio of rental expenses, excluding
management contract termination, general and administrative, amortization
and depreciation expense, to rental income) was 39% and 42% for the six
months ended June 30, 1998 and 1997, respectively. For the second quarter
of 1998 and 1997, the operating expense ratio was 39% and 41%,
respectively.
Depreciation expense for the first six months has increased to $9.7
million in 1998 from $7 million in 1997. For the second quarter of 1998
and 1997 depreciation expense was $5 million and $3.8 million,
respectively. The increases are directly attributable to the acquisition
of additional apartment communities in 1998 and 1997.
General and administrative expenses totaled 2.2% of rental income for the
first six months of 1998 and 1997. For the second quarter of 1998 and
1997, general and administrative expenses totaled 2.6% and 2.2%,
respectively, of rental income. These expenses represent the
administrative expenses of the Company as distinguished from the
operations of the Company's properties. The Company continues to expand
its internal administrative infrastructure to keep pace with its growth.
Interest and investment income and expense
The Company earned interest income of $52,422 in 1998 and $20,285 in 1997
from the investment of its cash and cash reserves. For the second quarter
of 1998, interest income was $42,962 and $17,086 for the same period in
1997.
The Company incurred interest expense of $6 million and $3 million during
the first six months of 1998 and 1997, respectively, associated with
borrowings under its line of credit. For the quarter ended June 30, 1998
and 1997, interest expense was $3 million and $2 million, respectively.
The increases are a result of the increased use of its line of credit to
fund acquisitions.
Income and expense from relationship with Apple Residential Income Trust
The Company received $817,954 and $228,641, for the first six months of
1998 and 1997, respectively, for advisory and property management services
rendered to Apple. For the
<PAGE>
second quarter of 1998 and 1997, the Company received $466,420 and
$182,151, respectively for the same services. The Company received
$874,600 and $674,066, for the first six months of 1998 and 1997,
respectively, in real estate commissions under separate contract and
amortized $463,538 as of June 30,1998 and $456,000 as of June 30, 1997
of the purchase price of this contract. During the second quarter of 1998
and 1997, the Company received $384,100 and $340,526, respectively, in
real estate commissions. The Company amortized $203,573 in the second
quarter of 1998 and amortized $206,000 for the same period in 1997 of the
purchase price of the contract. The Company incurred approximately
$253,819 and $122,114 for the six months ended June 30, 1998 and 1997 in
related expenses. For the second quarter of 1998, the Company incurred
$132,474 and $94,376 for the same period in 1997. Dividend income from the
Company's investment income in Apple was $168,777 for the first six months
of 1998 and $83,496 for the first six months of 1997. For the second
quarter of 1998, the investment income was $85,227.
Liquidity and Capital Resources
General
There was a significant change in the Company's liquidity during the first
six months of 1998 as the Company continued to acquire properties. Using
the proceeds from its line of credit and from the sale of its common
shares, the Company acquired 840 apartment homes in four residential
rental communities during the six months ended June 30, 1998. These
acquisitions brought the total number of residential communities to 55 and
the total apartment homes owned at June 30, 1998 to 12,762.
The following is a summary of the properties acquired during 1998:
<TABLE>
<CAPTION>
Apartment
Property Name Date Acquired Homes Purchase Price Location
------------- ------------- ----- -------------- --------
<S> <C>
Stone Point Apartments January 1998 192 $ 9,700,000 Charlotte,NC
Hampton Pointe Apartments March 1998 304 12,225,000 Charleston,SC
Pinnacle Ridge Apartments March 1998 166 5,731,150 Asheville,NC
(formerly named Edgewood Knoll)
The Timbers June 1998 176 8,100,000 Raleigh, NC
</TABLE>
Investment in Apple Residential Income Trust
As of June 30, 1998, the Company's 417,778 common shares of Apple
represent approximately 2% of common shares of Apple outstanding at
June 30, 1998. The Company has a right (extending through the end of
Apple's initial public offering) to own up to 9.8% of the common shares of
Apple at the offering price, net of selling commissions.
Notes payable
The Company continued to acquire property and finance improvements during
the first six months of 1998 using its unsecured line of credit with the
consortium of banks. As of June 30, 1998, the Company had an outstanding
balance of $155 million on the acquisition line of credit and $2 million
on its general corporate line of credit. In addition, the Company had
outstanding a $5.5 million unsecured note.
Capital Requirements
The Company has an ongoing capital expenditure commitment to fund its
renovation program for recently acquired properties. In addition, the
Company is always assessing
2
<PAGE>
potential acquisitions and intends to acquire additional properties during
1998. However, no material commitments existed on August 1, 1998 for the
purchase of additional properties. The expected source to fund the
improvements and acquisitions is from a variety of sources including
additional equity, cash reserves, and debt provided by its line of credit
(including possible increases thereunder).
The Company capitalized $11.5 million of improvements to its various
properties during the first two quarters of 1998. It is anticipated that
some $12 million in additional capital improvements will be completed
during the next twelve months on the current portfolio.
The Company has short-term cash flow needs in order to conduct the
operation of its properties. The rental income generated from the
properties supplies sufficient cash to provide for the payment of these
operating expenses and distributions.
Capital resources are expected to grow with the future sale of its shares
and from cash flow from operations. During 1998 approximately 30.6% of the
first and second quarter distributions, totaling $5,555,476, were
reinvested in additional common shares. In general, the Company's
liquidity and capital resources are expected to be adequate to meet its
cash requirements in 1998.
<PAGE>
Part II, Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Exhibit 27-Financial Data Schedule
(b) Reports on Form 8-K
The following table lists the reports on Form 8-K filed by the Company
during the quarter ended June 30, 1998, the items reported and the financial
statements included in such filings.
Type and Date
of Reports Items Reported Financial Statements Filed
-------------------------------------------------------------------------
Form 8-K dated 2, 7 Historical Statements of Income
March 31, 1998 and Direct Operating Expenses of
Hampton Pointe Apartments and
Pinnacle Ridge Apartments
(formerly Edgewood Knoll) for
the twelve months ended
February 28, 1998.
Form 8-K dated 5, 7 None
May 12, 1998
Form 8-K dated
May 29, 1998 5, 7 None
Form 8-K dated
June 4, 1998 2, 7 None
<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.
Cornerstone Realty Income Trust, Inc.
(Registrant)
DATE: 8-14-98 BY:/s/ Stanley J. Olander
------- ---------------------------
Stanley J. Olander
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> 4,218,878
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 535,317,762
<DEPRECIATION> 37,176,705
<TOTAL-ASSETS> 511,682,654
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 383,128,652
<OTHER-SE> (41,221,969)
<TOTAL-LIABILITY-AND-EQUITY> 511,682,654
<SALES> 0
<TOTAL-REVENUES> 43,684,375
<CGS> 0
<TOTAL-COSTS> 27,148,257
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,008,338
<INCOME-PRETAX> 10,748,979
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,748,979
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,748,979
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
<FN>
<F1> Current Assets and Current Liabilities are
not separated to conform with industry
standards.
<F2> Income is from rental income. There are no
Sales or Cost of Goods Sold.
</FN>
</TABLE>
