UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
Commission file Number 0-6103
ARLINGTON REALTY INVESTORS
(Exact name of registrant as specified in its charter.)
Texas 75-1372785
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10670 N. Central Expressway, Ste. 640, Dallas, TX 75231
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(214) 369-5064
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 [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date:
As of November 3, 1995, there were outstanding 542,413 shares of
beneficial interest of the registrant.
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
The accompanying Financial Statements have not been audited by independent
accountants, but in the opinion of management, all adjustments (which consist
of normal recurring accruals) necessary for a fair presentation of results
of operations, financial position and cash flows at the dates and for the
periods indicated have been included.
ARLINGTON REALTY INVESTORS
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS AND NINE MONTHS
ENDED SEPTEMBER 30, 1995 AND 1994
<CAPTION>
Three months ended Nine months ended
September 30 September 30
__________________ _________________
1995 1994 1995 1994
______ ______ ______ ______
<S> <C> <C> <C> <C>
Rental revenue $ --- $17,500 $ --- $52,500
Insurance refund --- --- --- 7,049
Gain on sale of land --- --- 3,765 ---
______ ______ ______ ______
Total Revenue --- 17,500 3,765 59,549
______ ______ ______ ______
Professional fees 4,940 --- 17,848 ---
Property taxes --- --- 2,147 ---
Other expense 750 12,786 2,250 26,378
______ ______ ______ ______
Total Expense 5,690 12,786 22,245 26,378
______ ______ ______ ______
Net earnings (loss) $ (5,690) $ 4,714 $(18,480) $33,171
====== ====== ====== ======
Earnings (loss) per share
of beneficial interest $ (.01) $ .01 $ (.03) $ .07
====== ====== ====== ======
Shares of beneficial
interest used in computing
per share amounts 542,413 498,985 542,413 498,985
======= ======= ======= =======
<FN>
The accompanying notes are an integral part of these Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ARLINGTON REALTY INVESTORS
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 1995 December 1994
(Unaudited)
______________ ______________
<S> <C> <C>
ASSETS
Real estate $ 168,588 $ 168,588
Less allowance for estimated
losses (168,588) (168,588)
___________ ___________
--- ---
___________ ___________
Cash and cash equivalents 7,220 33,087
___________ ___________
TOTAL ASSETS $ 7,220 $ 33,087
=========== ===========
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<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' DEFICIT
<S> <C> <C>
Accrued liabilities $ 26,458 $ 33,845
___________ ___________
Shareholders' Deficit
Shares of beneficial interest,
$1.00 par value, authorized
10,000,000 shares with 542,413
issued and outstanding 196,235 196,235
Accumulated deficit (215,473) (196,993)
___________ ___________
$ (19,238) $ (758)
___________ ___________
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $ 7,220 $ 33,087
=========== ===========
<FN>
The accompanying notes are an integral part of these Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ARLINGTON REALTY INVESTORS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<CAPTION>
1995 1994
_______ _______
<S> <C> <C>
Cash flow from operating activities:
Net earnings (loss) $ (18,480) $ 33,171
Adjustments to reconcile net
earnings to net cash provided by
(used in) operating activities
Net change in accrued
liabilities (7,387) (79,215)
_______ _______
Net cash used in operations $ (25,867) $ (46,044)
_______ _______
Decrease in cash (25,867) (46,044)
Cash and cash equivalents
At beginning of period $ 33,087 $ 46,357
_______ _______
At end of period 7,220 313
======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
ARLINGTON REALTY INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1995
Note 1.
Arlington Realty Investors, a Texas real estate investment trust
("Arlington" or the "Company") has, since 1985, been operating under a Plan
of Complete Liquidation and Termination (the "Liquidation Plan") originally
approved by the holders of Arlington's Shares of Beneficial Interest (the
"Shares") in 1985.
In January 1986, the Trustees voted to extend the Plan until such time
as Arlington's then largest remaining assets, Cambridge Station Apartments
and Willowbrook Security Storage, could be sold on satisfactory terms. Both
properties were sold during 1992. It is expected that the tax consequences
of the extended liquidation period did not affect Arlington's status as a
"REIT" to the extent that it distributed the profits from the sale of its
assets within the statutory time period (generally within 12 months of the
tax year end). Arlington distributed the profits during 1993.
In accordance with its Reorganization Plan and in an effort to liquidate
its interest in Arlington, Southmark entered into discussions with parties
interested in acquiring Southmark's 64.1% ownership of Arlington. In 1993,
Southmark's interest was acquired by Davister Corp. Davister sold its
interest to four investor groups in 1994.
On June 30, 1994 the shareholders voted to revoke and repeal the
liquidation plan.
Note 2.
Southmark Corporation ("Southmark"), headquartered in Dallas, Texas owned
approximately 64.1% of Arlington's outstanding shares. On July 14, 1989
Southmark filed a voluntary petition seeking reorganization under Chapter 11
of the United States Bankruptcy Code, as amended in the United States
Bankruptcy Court for the Northern District of Georgia, Atlanta Division, and
subsequently was transferred to the Northern District of Texas, Dallas
Division (the "Bankruptcy Court"). Southmark's Fourth Amended and Restated
Plan of Reorganization (the "Reorganization Plan") became effective on August
10, 1990. Under the Reorganization Plan, Southmark was to resolve all pre-
petition creditor claims and liquidate its remaining assets, including its
ownership of Arlington.
On July 12, 1991 Southmark filed a Complaint for Avoidance and Recovery
of Preferential and Post-petition Transfers and Turnover (the "Southmark
Preference Action") with the Bankruptcy Court seeking to have certain
transfers from Southmark to Arlington declared voidable by Southmark. The
Southmark Preference Action identified the following: (1) a pledge by
Southmark of a promissory note and lien in connection with the Southmark Note
on May 11, 1989; (2) three payments by Southmark to Arlington of $50,000 each
on February 8, 1989, February 10, 1989 and May 9, 1989; and (3) a set-off by
Arlington against a distribution to Southmark pursuant to the Liquidation
Plan.
On June 26, 1992, Southmark and Arlington agreed to settle the dividend
payable to Southmark and the note receivable from Southmark. Under the terms
of the settlement, Arlington paid to Southmark $92,500 of the dividend
payable and Arlington was given an allowed claim in Southmark's bankruptcy for
$219,000.
<PAGE>
Notes to Financial Statements (Continued)
As a result of the Southmark Preference Action, Arlington agreed to pay
Southmark the sum of $28,000. Arlington satisfied this liability by assigning
its allowed claim to Southmark.
Arlington does not believe that the bankruptcy filing of Southmark has
had any significant impact on its operations.
Note 3.
Rental operations for the nine months ended September 30, 1994 are
attributable to a ground lease to a related party on its Parker Road property
in Houston, Texas.
Note 4.
Until November 10, 1993, Davister, for no compensation, provided
headquarters and legal, administrative and accounting services to Arlington
under the supervision of Arlington's officers (who, at that time, also were
officers of Davister).
Note 5.
Arlington's last remaining real estate asset is Parker Road land, an
unimproved parcel of land in Houston, Texas. During 1992, a provision was
made to reduce the Parker Road land to its estimated net realizable value
which was determined to be zero at December 31, 1992.
Note 6.
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Watermark Texas One, which was formed
in March 1995. All significant intercompany accounts and transactions have
been eliminated.
In March 1995, Arlington transferred its Parker Road property to
Watermark Texas One.
<PAGE>
ARLINGTON REALTY INVESTORS
ITEM II. -
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
September 30, 1995
Liquidity and Capital Resources
At September 30, 1995, existing current liabilities exceed available cash
by approximately $19,250.
Results of Operations
In June 1995, Arlington sold a parcel of land to the City of Houston,
Texas for approximately $4,000.
Rental income for the nine months ended September 30, 1994 is
attributable to a one-year ground lease on Arlington's Parker Road property
in Houston, Texas. No expenses were incurred in connection with the lease.
The property was not leased during the nine months ended September 30, 1995.
During the nine months ended September 30, 1994, Arlington received a
refund of $7,049 of insurance premiums paid in prior years.
Balance Sheet Changes
Cash and accrued liabilities decreased as a result of payment of December
31, 1994 liabilities, including legal and professional fees.
<PAGE>
PART II - OTHER INFORMATION
ITEM # 1 LEGAL PROCEEDINGS
None.
ITEM # 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
None.
ITEM #6 EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
None.
B. Reports on Form 8-K
None.
<PAGE>
ARLINGTON REALTY INVESTORS
SIGNATURES
Pursuant to the requirement 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.
ARLINGTON REALTY INVESTORS
Registrant
November 7, 1995 F. Terry Shumate
Date F. Terry Shumate
Secretary and Treasurer
<TABLE> <S> <C>
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<S> <C>
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Sep-30-1995
<PERIOD-TYPE> 9-MOS
<CASH> 7220
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0
0
<OTHER-SE> (215473)
<TOTAL-LIABILITY-AND-EQUITY> 7220
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<CGS> 0
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<CHANGES> 0
<NET-INCOME> (18480)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
