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, 2000
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, 2000, there were outstanding 35,996,759 shares of common
stock, no par value, of the registrant.
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 2000 3
and December 31, 1999
Consolidated Statements of Operations - 4
Three months ended March 31, 2000
and March 31, 1999
Consolidated Statement of Shareholders' Equity- 5
Three months ended March 31, 2000
Consolidated Statements of Cash Flows - 6
Three months ended March 31, 2000
and March 31, 1999
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis 10
of Financial Condition and Results of
Operations
Item 3. Quantitative and Qualitative Disclosures about 14
Market Risk
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
15
</TABLE>
2
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS
Investment in rental property:
Land ............................................................................. $ 123,364,853 $ 136,326,140
Buildings and property improvements .............................................. 667,620,358 760,712,650
Furniture and fixtures ........................................................... 18,139,708 22,089,948
------------- -------------
809,124,919 919,128,738
Less accumulated depreciation .................................................... (64,970,057) (77,538,085)
------------- -------------
744,154,862 841,590,653
Cash and cash equivalents ........................................................ 4,218,948 16,268,336
Prepaid expenses ................................................................. 2,139,830 2,803,488
Other assets ..................................................................... 34,558,416 8,602,399
------------- -------------
Total Assets ..................................................... $ 785,072,056 $ 869,264,876
============= =============
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Notes payable-unsecured .......................................................... $ 105,297,000 $ 157,500,000
Notes payable-secured ............................................................ 104,920,300 105,045,682
Distributions payable ............................................................ 6,720,337 6,779,012
Accounts payable ................................................................. 2,574,949 11,670,338
Accrued expenses ................................................................. 4,776,431 11,387,531
Rents received in advance ........................................................ 178,536 613,214
Tenant security deposits ......................................................... 1,655,254 1,903,857
------------- -------------
Total Liabilities ................................................ 226,122,807 294,899,634
Shareholders' equity
Preferred stock, no par value, authorized 25,000,000
shares; $25 liquidation preference, Series A
Cumulative Convertible Redeemable; issued and outstanding ...................... 264,125,339 263,656,281
12,641,304 shares and 12,650,047 shares, respectively
Common stock, no par value, authorized 100,000,000
shares; issued and outstanding 35,967,485 shares
and 38,712,037 shares, respectively ........................................... 353,862,474 383,969,899
Deferred compensation ............................................................ (67,452) (72,976)
Distributions greater than net income ............................................ (58,971,112) (73,187,962)
------------- -------------
Total Shareholders' Equity ....................................... 558,949,249 574,365,242
------------- -------------
Total Liabilities and Shareholders' Equity ....................... $ 785,072,056 $ 869,264,876
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
2000 1999
------------------------------------
<S> <C> <C>
REVENUE:
Rental income ........................................................... $ 37,097,915 $ 23,467,091
Other income ............................................................ -- 1,061,287
EXPENSES:
Property and maintenance ................................................ 9,040,274 6,098,887
Taxes and insurance ..................................................... 4,027,996 2,062,366
Property management ..................................................... 692,482 549,368
General and administrative .............................................. 484,961 448,596
Amortization expense .................................................... -- 55,657
Other depreciation ...................................................... 5,742 5,742
Depreciation of rental property ......................................... 9,065,610 5,802,371
Other ................................................................... 21,460 297,706
------------------------------------
Total expenses .................................. 23,338,525 15,320,693
------------------------------------
Income before interest and dividend income (expense) ............................... 13,759,390 9,207,685
Interest and dividend income .................................................... 109,889 90,874
Interest expense ................................................................ (4,651,686) (3,415,448)
------------------------------------
Income before gains on sales of investments and
minority interest in operating partnership....................................... 9,217,593 5,883,111
Gains on sales of investments ................................................... 23,406,233 --
------------------------------------
Income before minority interest in operating partnership ........................... 32,623,826 5,883,111
Minority Interest of unitholders in operating partnership ........................ -- 50,701
------------------------------------
Net income ......................................................................... $ 32,623,826 $ 5,832,410
Distributions to preferred shareholders ............................................ 7,997,200 --
------------------------------------
Net income available to common shareholders ........................................ $ 24,626,626 $ 5,832,410
====================================
Net Income per share-basic and diluted ............................................. $ 0.65 $ 0.15
====================================
Distributions per common share ..................................................... $ 0.27 $ 0.26
====================================
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Number Common Number
of Common Stock of Preferred
Shares Amount Shares
---------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1999 ...................... 38,712,037 $ 383,969,899 12,650,047
Net income ........................................ -- -- --
Cash distributions declared to common
shareholders ($.27 per share).................... -- -- --
Distributions for Series A Convertible ............ -- -- --
Preferred Stock
Imputed distributions on Series A
Convertible Preferred Stock..................... -- -- --
Purchase of common stock .......................... (2,949,000) (32,100,505) --
Preferred stock converted to common stock ......... 13,829 218,575 (8,743)
Amortization of deferred compensation ............. -- -- --
Shares issued through dividend reinvestment plan... 190,619 1,774,505 --
---------------------------------------------------------
Balance at March 31, 2000 ......................... 35,967,485 $ 353,862,474 12,641,304
---------------------------------------------------------
<CAPTION>
Preferred Distributions Total
Stock Deferred Greater Than Shareholders'
Amount Compensation Net Income Equity
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1999 ...................... $263,656,281 ($72,976) ($73,187,962) $574,365,242
Net income ..................................... -- -- 32,623,826 32,623,826
Cash distributions declared to common .......... -- -- (10,409,776) (10,409,776)
shareholders ($.27 per share)
Distributions for Series A Convertible ......... -- -- (7,309,567) (7,309,567)
Preferred Stock
Imputed distributions on Series A .............. 687,633 -- (687,633) --
Convertible Preferred Stock
Purchase of common stock ....................... -- -- -- (32,100,505)
Preferred stock converted to common stock ...... (218,575) -- -- --
Amortization of deferred compensation .......... -- 5,524 -- 5,524
Shares issued through dividend reinvestment plan -- -- -- 1,774,505
-----------------------------------------------------------------------------
Balance at March 31, 2000 ...................... $264,125,339 ($67,452) ($58,971,112) $558,949,249
=============================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
2000 1999
----------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net income .............................................................................. $ 32,623,826 $ 5,832,410
Adjustments to reconcile net income to net cash
provided by operating activities
Gain on sale on investments ........................................................... (23,406,233) --
Depreciation and amortization ......................................................... 9,071,352 5,863,770
Minority interest of unitholders in operating partnership ............................. -- 50,701
Amortization of deferred compensation ................................................. 5,524 11,523
Amortization of Apple Realty Group contract purchase .................................. -- 134,798
Amortization of deferred financing costs .............................................. 117,103 56,625
Changes in operating assets and liabilities:
Operating assets .................................................................... (25,409,463) (690,590)
Operating liabilities ............................................................... (16,389,770) (1,048,141)
------------- -------------
Net cash provided by operating activities .................. (23,387,661) 10,211,096
Cash flow from investing activities:
Acquistions of rental property .......................................................... (8,791,131) --
Proceeds from the sale of land .......................................................... -- 764,668
Net proceeds from the sale of investments ............................................... 128,182,171 --
Capital improvements .................................................................... (7,620,367) (2,524,328)
------------- -------------
Net cash used in investing activities ....................... 111,770,673 (1,759,660)
Cash flow from financing activities:
Proceeds from short-term borrowings ..................................................... 71,517,000 9,231,093
Repayments of short-term borrowings ..................................................... (123,720,000) (5,621,000)
Repayment of mortgage notes ............................................................. (125,382) --
Net proceeds from issuance of common stock .............................................. 1,774,505 2,532,068
Purchase of common stock ................................................................ (32,100,505) --
Cash distributions to operating partnership unitholders ................................. (50,190) (48,330)
Cash distributions paid to preferred shareholders ....................................... (7,318,052) --
Cash distributions paid to common shareholders .......................................... (10,409,776) (10,169,836)
------------- -------------
Net cash provided by (used in) financing activities ......... (100,432,400) (4,076,005)
Increase (decrease) in cash and cash equivalents ............ (12,049,388) 4,375,431
Cash and cash equivalents, beginning of year ............................................... 16,268,336 2,590,364
------------- -------------
Cash and cash equivalents, end of period ................................................... $ 4,218,948 $ 6,965,795
============= =============
Supplemental information:
Non-cash transactions associated with:
Accretion of preferred dividends ........................................... 687,633 --
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
(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, 2000 are not necessarily
indicative of the results that may be expected for the year ended December
31, 2000. These financial statements should be read in conjunction with
the Company's December 31, 1999 Annual Report on Form 10-K.
The Company did not have any items of comprehensive income requiring
separate reporting and disclosure for the periods presented.
(2) INVESTMENT IN RENTAL PROPERTY
Disposition of Investments
On March 10, 2000, the Company closed the sale of 16 properties containing
3,609 apartment units. The proceeds of the sale were used to pay down the
Company's existing line of credit and fund $35 million tax free exchange.
At March 31, 2000 $27 million is held in escrow pending completion of
tax free exchange.
Acquisition
On March 16, 2000, the Company purchased The Enclave at the Meadows
Apartments, a 168- unit apartment community, located in Asheville, North
Carolina for a purchase price of $8.8 million. The purchase was structured
as a tax free exchange using proceeds from the sale described above.
(3) NOTES PAYABLE
Unsecured
During 1999, the Company's $175 million unsecured line of credit with a
consortium of six banks was increased to $185 million and the maturity
date was extended to July 9, 2002. The unsecured line of credit bears
interest at one month LIBOR plus 120 basis points. In connection with the
sale of the 16 properties in March 2000, the Company repaid $90 million of
the Company's unsecured line of credit. The Company had additional
borrowings under its unsecured line of credit of $45 million during 2000.
At March 31, 2000, the Company had an unused borrowing capacity of $80
million under the unsecured line of credit. 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. At March 31, 2000, total
unsecured borrowings under these agreements were $105 million.
7
<PAGE>
During 1999, the Company increased the $5 million unsecured line of credit
for general corporate purposes to $7.5 million. The general corporate
purpose line of credit bears interest at LIBOR plus 120 basis points. The
maturity date is October 31, 2000. At March 31, 2000, borrowings under
this agreement were $297,000.
(3) RELATED PARTIES
Mr. Glade M. Knight, Chairman and Chief Executive Officer of the Company,
also served as the Chairman and Chief Executive Officer of Apple. Prior to
the merger the Company provided advisory, property management, and asset
acquisition services to Apple. The services of the Company rendered to
Apple terminated upon the consummation of the merger.
The Company provided property management services and advisory services to
Apple. Property management fees were 5% of monthly gross revenues plus
certain expense reimbursements. Advisory fees were .1% to 25% of total
capital raised by Apple, depending on the financial performance of Apple.
The amount of fees received by the Company under the contracts described
above for the three months ended March 31, 1999 was $747,803.
Prior to the merger, the Company provided real estate acquisition and
disposal services for Apple. Under the terms of the contract, the Company
received a real estate commission equal to 2% of the purchase price of the
properties acquired. The Company amortized the purchase price of the
contract through the date of the merger. For the three months ended March
31, 1999, the Company received $313,484 in real estate commissions under
this contract and amortized $134,798 of the purchase price of this
contract.
The Company received distributions on its investment in Apple through the
date of the merger. The Company recognized dividend income for the three
months ended March 31, 1999 of $83,550 on its investment in Apple.
8
<PAGE>
(5) 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
3/31/00 3/31/99
------- -------
Numerator:
Net income available to $24,626,626 $ 5,832,410
common shareholders
Numerator for basic and diluted
earnings per share - income
available to common stockholders
after assumed conversion 24,626,626 5,832,410
Denominator:
Denominator for basic
earnings per share-weighted-
average shares 37,997,170 39,315,952
Effect of dilutive securities:
Stock options
Series A Convertible Preferred
Stock* -- --
--------------------------------------------------------------------------
Denominator for diluted earnings
per share-adjusted weighted-
average shares and assumed
conversions 37,997,170 39,315,952
--------------------------------------------------------------------------
Basic and diluted earnings per
common share $ .65 $ 0.15
--------------------------------------------------------------------------
*Series A Convertible Preferred Stock was not included in dilutive
earnings per common share calculation since its effect was
anti-dilutive.
(6) SUBSEQUENT EVENTS
On May 11, 2000, the Company purchased Greystone Crossing Apartments, a
408-unit apartment community located in Charlotte, North Carolina for
$26.8 million. The purchase was structured as a tax fee exchange.
9
<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 acquisition of Apple
Residential Income Trust ("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
possibility that the merger with Apple will not have the effects
anticipated by the Company, and 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
The Company's property operations for the three months ended March 31, 2000
include the results of operations for the full quarter of 71 properties
acquired to date. The operations of the 16 properties sold on March 10,
2000 are reflected through the sale date. The increased rental income and
operating expenses for the first quarter 2000 over the first quarter 1999
is primarily due to the effect of the properties acquired through the Apple
merger in July 1999.
Substantially all of the Company's income is from the rental operation of
apartment communities. Rental income for the first three months increased
to $37 million in 2000 from $23 million in 1999. 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.
Overall economic occupancy for the Company's properties averaged 93% and
90% for the three months ended March 31, 2000 and 1999, respectively.
Overall average rental rates for the portfolio increased 3.8% from $612 at
March 31, 1999, to $635 at March 31, 2000. This increase is due to a
combination of increased rental rates from new leases and property
renovation as well as the acquisition of the properties of Apple.
10
<PAGE>
COMPARABLE PROPERTY OPERATIONS
The Company's "same-property" portfolio consists of 65 properties,
including 27 Apple properties, acquired prior to 1999, containing 16,207
apartment units owned by the Company or Apple since January 1, 1999. The 16
properties sold in March 2000 have been eliminated. On a comparative basis,
the 65 properties acquired prior to 1999 provided rental and operating
income of $30.1 million and $19 million, respectively during the quarter
ended March 31, 2000 and $28.1 million and $18 million for the same period
in 1999. This represents an increase from the quarter ended March 31, 1999
to the quarter ended March 31, 2000 of 7% and 8% for rental and operating
income, respectively.
EXPENSES
Total expenses for the first three months increased 52% to $23 million in
2000 from $15 million in 1999. The increase is due largely to a full
quarter of expenses of the properties acquired through the acquisition of
Apple on July 23, 1999. 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, 2000 and 1999.
Depreciation expense for the first three months has increased to $9 million
in 2000 from $6 million in 1999. The increase is directly attributable to
the addition of the properties acquired through the Apple merger.
General and administrative expenses totaled $484,961, or 1.2% of rental
income for the three months ended March 31, 2000 and $448,596, or 1.9% for
the same period in 1999. These expenses represent the administrative
expenses of the Company as distinguished from the operations of the
Company's properties. The decrease in percentage of rental income is
attributable to economies of scale realized from the Apple merger as the
Company provided advisory services to Apple prior to the merger.
INTEREST AND INVESTMENT INCOME AND EXPENSE
The Company's interest income increased to $109,889 in 2000 from $7,324 in
1999 from the investment of its cash and cash reserves due to investment of
proceeds from the sale of properties pending tax free exchanges. The
Company incurred interest expense of $4.7 million and $3.4 million during
the first three months of 2000 and 1999. The increase is due to debt
assumed in the Apple merger coupled with the increase in interest rates on
the Company's unsecured line of credit.
INCOME AND EXPENSE FROM RELATIONSHIP WITH APPLE RESIDENTIAL INCOME TRUST
Prior to the merger, the Company or affiliates provided property
management, advisory, and real estate brokerage services for Apple. The
fees received by the Company from service contracts with Apple terminated
upon consummation of the merger.
Property management fees charged to Apple were 5% of gross revenues.
Advisory fees charged to Apple were .1% to .25% of total capital raised by
Apple. Real estate commissions were generally 2% of the purchase price of
each property Apple acquired. The Company received $747,803 for the
quarters ended March 31, 1999, for advisory and property management
services rendered to Apple. The Company received $313,484 for the quarter
ended March 31, 1999 in real estate commissions under separate contract and
amortized $134,798 as of March 31, 1999 of the purchase price of this
contract.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are rental income generated from
the properties, proceeds from lines of credit, reinvestment of
distributions, and proceeds from secured debt.
The Company believes rental income generated from the properties and
borrowings on its line of credit will be sufficient to meet normal property
operating expenses, payment of distributions, capital improvements, and
payment of mortgage debt. At March 31, 2000, the Company had $4.2 million
in cash and cash equivalents and $80 million in availability under this
unsecured line of credit.
In September 1999, the Board of Directors authorized the repurchase of up
to $50 million of the Company's common shares. For the three month ended
March 31, 2000, the Company repurchased 2.9 million common shares at an
average price of $10.89 per share.
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 2000. However, no material commitments existed
on April 20, 2000, other than for the Greystone Crossing Apartments
described below, for the purchase of additional properties. The expected
source to fund the improvements and acquisitions is from a variety of
sources including equity, excess flow from operations over distributions,
and debt, provided by its line of credit. 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 $7.6 million of improvements to its various
properties during the first quarter of 2000. It is anticipated that some
$25 million in additional capital improvements will be completed during the
next twelve months on the current portfolio.
Capital resources are expected to grow with the future sale of its shares
and from cash flow from operations. Approximately 17% of all first quarter
2000 common stock divided distributions, or $1.8 million, 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 2000.
DISPOSITION OF INVESTMENTS
As part of its strategic repositioning, the Company has undertaken
proactive portfolio review analyses with the objective of identifying
properties that no longer meet the Company's long-term investment
objectives due to location, age and other factors. The disposition program
allows the Company to reduce the age of its existing portfolio and increase
shareholder value by capturing the hidden equity in the Company's mature
assets and will allow the Company to reinvest the net proceeds in assets
with higher growth potential. The proceeds from the sale paid down $90
million of the Company's existing line of credit and repurchased common
stock. The remaining amount of the proceeds from the sale will be used to
complete tax free exchanges.
12
<PAGE>
ACQUISITION
On March 16, 2000, the Company purchased The Enclave at the Meadows
Apartments, a 168-unit apartment community, located in Asheville, North
Carolina for a purchase price of $8.8 million. On May 11, 2000 the Company
purchased Greystone Crossing Apartments, a 408-unit apartment community
located in Charlotte, North Carolina for $26.8 million. The purchases were
structured as a tax free exchange using proceeds from the sale described
above.
NOTES PAYABLE
The Company has a $185 million unsecured line of credit with the consortium
of six banks for which the maturity date is July 9, 2002. The line of credit
bears interest at one month LIBOR plus 120 basis points. At March 31, 2000,
borrowings under the agreement were $105 million. At March 31, 2000, the
Company had an unused borrowing capacity of $80 million under the unsecured
line of credit.
The Company has available a $7.5 million unsecured line of credit for
general corporate purposes. This line of credit bears interest at LIBOR plus
120 basis points and the maturity date is October 31, 2000. At March 31,
2000, the Company's borrowings under this agreement were $297,000.
13
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes since December 31, 1999. See the information
provided in the Company's Annual Report on Form 10-K under Item 7-Management's
Discussion and Analysis of Financial Condition and Results of Operations.
14
<PAGE>
PART II, ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - Exhibit 27-Financial Data Schedule
(b) The following table lists the reports on Form 8-K filed by the Company
during the quarter ended March 31, 2000, the items reported and the
financial statements included in such filings.
<TABLE>
<CAPTION>
Type and Date
of Reports Items Reported Financials Statements Filed
<S> <C> <C>
Form 8-K dated and 5 None
filed January 18, 2000
Form 8-K dated and 5,7 None
filed February 28, 2000
Form 8-K dated 5,7 None
March 10, 2000 and filed
March 14, 2000
Form 8-K dated 2 None
March 10, 2000 and filed
March 27, 2000
</TABLE>
15
<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: 5-15-00 BY: /s/ Stanley J. Olander
------------------- ------------------------------------
Stanley J. Olander
Vice President and Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,218,948
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 809,124,919
<DEPRECIATION> 64,970,057
<TOTAL-ASSETS> 785,072,056
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
264,125,339
<COMMON> 353,862,474
<OTHER-SE> (59,038,564)
<TOTAL-LIABILITY-AND-EQUITY> 785,072,056
<SALES> 0
<TOTAL-REVENUES> 37,097,915
<CGS> 0
<TOTAL-COSTS> 23,338,525
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,651,686
<INCOME-PRETAX> 32,623,826
<INCOME-TAX> 0
<INCOME-CONTINUING> 32,623,826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,623,826
<EPS-BASIC> .65
<EPS-DILUTED> .65
<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>
