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 March 31, 1999
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 April 20, 1999, there were outstanding 39,626,858 shares of common
stock, no par value, of the registrant.
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page Number
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 1999 3
and December 31, 1998
Consolidated Statements of Operations - 4
Three months ended March 31, 1999
and March 31, 1998
Consolidated Statement of Shareholders' Equity - 5
Three months ended March 31, 1999
Consolidated Statements of Cash Flows - 6
Three months ended March 31, 1999
and March 31, 1998
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
</TABLE>
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------------- --------------
<S> <C> <C>
ASSETS
Investment in Rental Property:
Land $ 86,336,129 $ 87,100,659
Buildings and property improvements 489,860,640 487,972,647
Furniture and fixtures 13,001,249 12,365,052
-------------- --------------
589,198,018 587,438,358
Less accumulated depreciation (54,030,131) (48,227,760)
-------------- --------------
535,167,887 539,210,598
Cash and cash equivalents 6,965,795 2,590,364
Prepaid expenses 1,213,358 1,372,498
Other assets 9,771,057 9,174,148
-------------- --------------
Total Assets $553,118,097 $552,347,608
============== ==============
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Notes payable $ 205,503,092 $ 201,892,999
Accounts payable 749,001 4,301,682
Accrued expenses 5,714,954 2,730,418
Rents received in advance 164,752 506,649
Tenant security deposits 1,591,572 1,729,671
-------------- --------------
Total Liabilities 213,723,371 211,161,419
Minority interest of unitholders in operating partnership 2,017,064 2,014,693
Shareholders' equity
Preferred stock, no par value, authorized 25,000,000
shares; issued and outstanding 0 shares - -
Common stock, no par value, authorized 100,000,000
shares; issued and outstanding 39,370,146 shares
and 39,113,916 shares, respectively 390,663,581 388,131,512
Deferred compensation (97,382) (108,905)
Distributions greater than net income (53,188,537) (48,851,111)
-------------- --------------
Total Shareholders' Equity 337,377,662 339,171,496
-------------- --------------
Total Liabilities and Shareholders' Equity $553,118,097 $552,347,608
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1999 1998
----------------------------------
<S> <C> <C>
REVENUE:
Rental income $ 23,467,091 $ 20,120,435
Other income 1,061,287 842,034
EXPENSES:
Property and maintenance 6,098,887 5,499,525
Taxes and insurance 2,062,366 1,523,849
Property management 549,368 512,319
General and administrative 448,596 356,339
Amortization expense and other depreciation 61,399 16,138
Depreciation of rental property 5,802,371 4,683,384
Other 297,706 406,959
----------------------------------
Total expenses 15,320,693 12,998,513
----------------------------------
Income before interest and dividend income (expense) 9,207,685 7,963,956
Interest and dividend income 90,874 93,010
Interest expense (3,415,448) (2,820,918)
----------------------------------
Income before minority interest in operating partnership 5,883,111 5,236,048
Minority Interest of unitholders in operating partnership 50,701 -
----------------------------------
Net income $ 5,832,410 $ 5,236,048
==================================
Basic and diluted earnings per common share $ 0.15 $ 0.15
==================================
Distributions per common share $ 0.26 $ 0.26
==================================
</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> <C> <C> <C> <C>
Balance at December 31, 1998 39,113,916 $388,131,512 ($108,905) ($48,851,111) $339,171,496
Net income - - - 5,832,410 5,832,410
Cash distributions declared to shareholders
($.26 per share) - - - (10,169,836) (10,169,836)
Exercise of stock options 539 5,390 - - 5,390
Amortization of deferred compensation - - 11,523 - 11,523
Shares issued through dividend reinvestment plan 255,691 2,526,679 - - 2,526,679
----------------------------------------------------------------------
Balance at March 31, 1999 39,370,146 $390,663,581 ($97,382) ($53,188,537) $337,377,662
======================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1999 1998
-----------------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 5,832,410 $ 5,236,048
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 5,863,770 4,699,522
Minority interest of unitholders in operating partnership 50,701
Amortization of deferred compensation 11,523 5,499
Amortization of Apple Realty Group contract purchase 134,798 50,001
Amortization of deferred financing costs 56,625 259,965
Changes in operating assets and liabilities:
Prepaid expenses 159,140 24,375
Other assets (849,730) (542,383)
Accounts payable (3,552,681) (1,631,639)
Accrued expenses 2,984,536 1,934,780
Rent received in advance (341,897) (243,077)
Tenant security deposits (138,099) 32,905
------------ ------------
Net cash provided by operating activities 10,211,096 9,825,996
Cash flow from investing activities:
Sale of land 764,668 (27,906,914)
Capital improvements (2,524,328) (5,072,554)
------------ ------------
Net cash used in investing activities (1,759,660) (32,979,468)
Cash flow from financing activities:
Proceeds from short-term borrowings 9,231,093 41,295,000
Repayments of short-term borrowings (5,621,000) (12,748,000)
Net proceeds from issuance of shares 2,532,068 2,733,284
Cash distributions to operating partnership unitholders (48,330)
Cash distributions paid to shareholders (10,169,836) (8,879,092)
------------ ------------
Net cash provided by (used in) financing activities (4,076,005) 22,401,192
Increase (decrease) in cash and cash equivalents 4,375,431 (752,280)
Cash and cash equivalents, beginning of year 2,590,364 4,513,986
------------- ------------
Cash and cash equivalents, end of period $ 6,965,795 $ 3,761,706
============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
Notes to Consolidated Financial Statements (Unaudited)
March 31, 1999
(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 months ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the year ended December
31, 1999. These financial statements should be read in conjunction with
the Company's December 31, 1998 Annual Report on Form 10-K.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-5, "Reporting the Costs of Start-up
Activities". The SOP is effective beginning on January 1, 1999, and
requires that start-up costs capitalized prior to January 1, 1999 be
written off and any future start-up costs to be expensed as incurred. The
unamortized balance of organization costs of $55,657 was written off as a
cumulative effect of an accounting change as of January 1, 1999 and is
included in other amortizaton expense.
Certain previously reported amounts have been reclassified to conform with
the current financial statement presentation.
The Company did not have any items of comprehensive income requiring
separate reporting and disclosure for the periods presented.
On March 30, 1999, the Company's Board of Directors voted to approve a
merger with Apple Residential Income Trust, Inc. ("Apple") subject, to
among other requirements, an affirmative vote of the Company's
shareholders. The transaction is valued at approximately $310 million.
Under the terms of the merger agreement, Apple shareholder will receive .4
of a share of the Company's $25 Series A convertible preferred stock for
each share of Apple common stock. The Series A Preferred Stock will have a
first year dividend yield of 8.5%, which will increase to 9% in the second
year and 9.5% in the third year and thereafter. Each share of Series A
Preferred Stock carries a $25 per share liquidation preference and is
convertible into 1.5823 shares of the Company's common stock, which
reflects a conversion price of $15.80 for the Company's common stock.
After five years, the Series A Preferred Stock will be redeemable at $25
per share plus any accrued dividends, at the option of the Company, in
whole or in part, for cash or stock, subject to certain conditions. In
addition, the Company will assume approximately $32.1 million of Apple
debt with an average interest rate of approximately 6.475%. The
transaction has been structured as a tax-free reorganization and will be
accounted for under the purchase method of accounting.
(2) Notes Payable
During October, 1998, the Company closed a $25 million extension on the
$175 million unsecured line of credit with a consortium of six banks,
bringing the maximum permitted borrowing to $200 million. The line of
credit bears interest at one month LIBOR plus 135 basis points. In
addition, the Company is obligated to pay lenders a quarterly commitment
fee equal to .20% per annum of the unused portion of the line. The due
date of the $25 million extension was extended from April 15, 1999 to
August 15, 1999 and the remaining balance is due on October 30, 2000. At
March 31, 1999, borrowings under the agreement were $200 million.
<PAGE>
The Company has available a $5 million unsecured line of credit for
general corporate purposes. This line of credit bears interest at LIBOR
plus 160 basis points and the due date was extended to October 31, 1999.
At March 31, 1999, borrowings under the agreement were $3,000.
(3) Related Parties
In August 1996, Glade M. Knight, Chairman and Chief Executive Officer of
the Company, established 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 three months ended March 31, 1999 and
1998 were $747,803 and $351,534, respectively.
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 three months ended March 31, 1999 and 1998, the Company received
$313,484 and $490,500, respectively, in real estate commissions under this
contract and amortized $134,798 and $259,965, respectively, of the
purchase price of this contract.
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 1.4% of the common shares of Apple
outstanding as of March 31, 1999. The Company recognized dividend income
for the three months ended March 31, 1999 and 1998 of $83,550,
respectively, on its investment in Apple.
<PAGE>
(4) Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share in accordance with FAS 128:
Three Months Three Months
Ended Ended
3/31/99 3/31/98
------- -------
Numerator:
Net income $ 5,832,410 $ 5,236,048
Numerator for basic and
diluted earnings 5,832,410 5,236,048
Denominator:
Denominator for basic
earnings per share-weighted-
average shares 39,315,952 35,752,760
Effect of dilutive securities:
Stock options - 5,651
- ---------------------------------------------------------------------
Denominator for diluted earnings
per share-adjusted weighted-
average shares and assumed
conversions 39,315,952 35,758,411
- --------------------------------------------------------------------
Basic and diluted earnings per
common share $ 0.15 $ 0.15
- --------------------------------------------------------------------
(5) Subsequent Events
In April 1999, the Company distributed to its shareholders approximately
$10,630,226 (26 cents per share) of which approximately $2,540,138 was
reinvested in the purchase of additional shares of the Company.
On April 15, 1999, the Board of Directors of the Company and Apple agreed
to modify the Company's right of first refusal to purchase Apple's common
shares or business and the service contracts between Apple and Cornerstone
to allow for termination of such agreements in the event of a change of
control of the Company. Apple has agreed to pay Cornerstone $1.5 million
for the contract modifications. The Company will record income for
payments received to allow the contract modifications.
<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 and
year 2000 compliance issues. 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.
On March 30, 1999, the Company's Board of Directors voted to approve a
merger with Apple subject, to among other requirements, an affirmative
vote of the Company's shareholders. The transaction is valued at
approximately $310 million. Under the terms of the merger agreement, Apple
shareholder will receive .4 of a share of the Company's $25 Series A
convertible preferred stock for each share of Apple common stock. The
Series A Preferred Stock will have a first year dividend yield of 8.5%,
which will increase to 9% in the second year and 9.5% in the third year
and thereafter. Each share of Series A Preferred Stock carries a $25 per
share liquidation preference and is convertible into 1.5823 shares of the
Company's common stock, which reflects a conversion price of $15.80 for
the Company's common stock. After five years, the Series A Preferred Stock
will be redeemable at $25 per share plus any accrued dividends, at the
option of the Company, in whole or in part, for cash or stock, subject to
certain conditions. In addition, the Company will assume approximately
$32.1 million of Apple debt with an average interest rate of approximately
6.475%. The transaction has been structured as a tax-free reorganization
and will be accounted for under the purchase method of accounting.
Results of Operations
Income and occupancy
The Company's property operations for the three months ended March 31,
1999 include the results of operations from the 58 properties acquired to
date. The increased rental income and operating expenses for the first
quarter 1999 over the first quarter 1998 is primarily due to a full
quarter of operation of the 7 properties acquired in 1998.
Substantially all of the Company's income is from the rental operation of
apartment communities. Rental income for the first three months increased
to $23,467,091 in 1999 from $20,120,435 in 1998 due to the factors above.
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 90% and
91% for the three months ended March 31, 1999 and 1998, respectively.
Overall average rental rates for the portfolio increased 4.4% from $586 at
March 31, 1998, to $612 at March 31, 1999.
Comparable property operations
On a comparative basis, the 51 properties acquired prior to 1998 provided
rental and operating income of $20,738,490 and $13,581,933, respectively
during the quarter ended March 31, 1999 and $19,820,432 and $12,883,959
for the same period in 1998. This represents an increase from the quarter
ended March 31, 1998 to the quarter ended March 31, 1999 of 5% for both
rental and operating income.
<PAGE>
Expenses
Total expenses for the first three months increased 18% to $15,320,693 in
1999 from $12,998,513 in 1998. The increase is due largely to full quarter
of expenses of the 1998 acquisitions. The operating expense ratio (the
ratio of operating expenses, excluding depreciation, amortization, general
and administrative, and other expenses, to rental income) was 37% for the
three months ended March 31, 1999 and 1998.
Depreciation expense for the first three months has increased to
$5,802,371 in 1999 from $4,683,384 in 1998. The increase is directly
attributable to the full quarter of depreciation of the 1998 acquisitions.
General and administrative expenses totaled 1.9% of rental income for the
three months ended March 31,1999 and 1.8% for the same period in 1998.
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 $7,324 in 1999 and $9,460 in 1998
from the investment of its cash and cash reserves. Dividend income from
the Company's investment in Apple was $83,550 for the three months ended
March 31,1999 and 1998. The Company incurred interest expense of
$3,415,448 and $2,820,918 during the first three months of 1999 and 1998,
respectively, associated with borrowings under its line of credit. This is
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 $747,803 and $351,534 for the quarters ended March
31,1999 and 1998, respectively, for advisory and property management
services rendered to Apple. The Company received $313,484 and $490,500 for
the quarters ended March 31,1999 and 1998, respectively, in real estate
commissions under separate contract and amortized $134,798 as of March
31,1999 and $259,965 as of March 31,1998 of the purchase price of this
contract.
<PAGE>
Liquidity and Capital Resources
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 potential acquisitions and intends to acquire
additional properties during 1999. However, no material commitments
existed on April 20, 1999 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 may seek to obtain additional debt financing to meet its
objectives. Given the Company's current debt level, the Company is
confident that it will be able to obtain debt financing from a variety of
sources, both secured and unsecured.
The Company capitalized $2.5 million of improvements to its various
properties during the first quarter of 1999. It is anticipated that some
$14 million in additional capital improvements will be completed during
the next year 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. Approximately 25% of all first quarter
1999 distributions, totaling $2,526,679, 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 1999.
Investment in Apple Residential Income Trust
As of March 31, 1999, the Company owned 417,778 common shares of Apple
representing approximately 1.4% of common shares of Apple outstanding at
March 31,1999. The Company has a continuing right to own up to 9.8% of the
common shares of Apple at the market price, net of selling commissions.
Notes payable
As of March 31, 1999, the Company's outstanding balance of $200 million on
the acquisition line which is the maximum permitted on the line. A $25
million extension included in the $200 million line of credit was extended
from April 15, 1999 to August 15, 1999. The Company continued to finance
improvements during the quarter using its unsecured line of credit with
the consortium of banks. As of March 31,1999 the Company had an
outstanding balance of $3,000 on its general corporate line of credit. In
addition, the Company had outstanding a $5.5 million unsecured note.
Impact of Year 2000
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
Company's computer programs or hardware that have date-sensitive software
or embedded chips may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations including among other
things a temporary inability to process transactions, send invoices or
engage in similar normal business activities.
There have been no significant changes to the Year 2000 disclosures
included in the 1998 Form 10-K.
Management believes it is devoting the resources necessary to achieve year
2000 readiness in a timely manner.
<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
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: 5/7/99 BY: /s/ Stanley J. Olander
-----------------------------
Stanley J. Olander
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 6,965,795
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 589,198,018
<DEPRECIATION> 54,030,131
<TOTAL-ASSETS> 553,118,097
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 390,663,581
<OTHER-SE> (53,285,919)
<TOTAL-LIABILITY-AND-EQUITY> 553,118,097
<SALES> 0
<TOTAL-REVENUES> 24,528,378
<CGS> 0
<TOTAL-COSTS> 15,265,036
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,415,448
<INCOME-PRETAX> 5,832,410
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,832,410
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,832,410
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
<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>
