--------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 22, 1998
------------------------
United Investors Realty Trust
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Texas 001-13915 76-0265701
- ------------------------------- ------------ -------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
5847 San Felipe, Suite 850
Houston, TX 77057
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 781-2860
<PAGE>
Item 2. Acquisition of Assets
On September 22, 1998, United Investors Realty Trust (the "Registrant") acquired
the Highland Square Shopping Center located in Sugar Land, Texas (a suburb of
Houston) (the "Property"). The Property was purchased pursuant to a Contract of
Sale dated June 4, 1998 through a wholly owned subsidiary controlled by the
Trust. The Property, an approximately 64,000 square foot community shopping
center, was purchased from Highland Square Partners, Ltd. for $7,685,575. The
asset was acquired with available cash of $3,247,119 and by taking title subject
to an existing loan having a principal balance outstanding on the date of
closing of $4,438,456. Interest on this loan is payable at the rate of 8.87% per
annum. This loan matures on December 1, 2006 and may be prepaid after December
1, 2001 upon 60 days prior written notice with a yield maintenance based penalty
of a minimum of one percent of the then outstanding principal balance. The
Registrant intends to continue to operate the Property as a shopping center.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements.
The index to the financial information for the Highland
Square Shopping Center is included on page F-1 of this report.
(b) Pro Forma Financial Information.
The index to the pro forma financial information is included on
page F-1 of this report.
(c) Exhibits.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on December 3, 1998.
UNITED INVESTORS REALTY TRUST
BY: /s/ R. STEVEN HAMNER
---------------------------
R. Steven Hamner
Chief Financial Officer
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
INDEX TO FINANCIAL INFORMATION
PRO FORMA FINANCIAL INFORMATION PAGE
----
Unaudited ProForma Condensed Consolidated Balance Sheet .................. F-3
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the nine months ended September 30, 1998 ........................... F-4
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1997 ................................... F-5
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.. F-6
HISTORICAL FINANCIAL INFORMATION
Highland Square Shopping Center
Report of Independent Auditors - Ernst & Young LLP....................... F-10
Statements of Revenues and Certain Expenses for the six months
ended June 30, 1998 (unaudited) and for the year ended
December 31, 1997 ..................................................... F-11
Notes to Statements of Revenue and Certain Expenses ..................... F-12
F-1
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
INTRODUCTION
The unaudited pro forma condensed consolidated statements of operations for the
year ended December 31, 1997 and the nine months ended September 30, 1998 are
presented as if the Prior Acquisitions, the Offering, the Highland Square
Acquisition and the application of the net proceeds of the Offering all had
occurred on January 1, 1997.
The unaudited condensed consolidated balance sheet of United Investors Realty
Trust and Subsidiaries as of September 30, 1998 already reflects the effects of
the Prior Acquisitions, the Offering, the Highland Square Acquisition, and the
application of the net proceeds of the Offering as each of these transactions
occurred prior to September 30, 1998.
The unaudited pro forma condensed consolidated statements of operations should
be read in conjunction with the consolidated financial statements of United
Investors Realty Trust ("UIRT"), including the notes thereto, included in UIRT's
Registration Statement on Form S-11 dated March 5, 1998 and UIRT's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998. The pro forma
condensed consolidated statements of operations do not purport to project the
Company's results of operations as of any future date or for any future period.
F-2
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
HISTORICAL
September 30,
1998
--------------
<S> <C>
ASSETS
Investment real estate:
Land $ 35,698,499
Buildings and improvements 97,313,647
--------------
133,012,146
Less accumulated depreciation (6,813,992)
--------------
Investment real estate, net 126,198,154
Cash and cash equivalents 7,106,483
Accounts receivable, net 1,781,504
Prepaid expenses and other assets 3,018,834
--------------
Total assets $ 138,104,975
==============
LIABILITIES, MINORITY INTEREST,
AND COMMON SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 48,312,043
Accounts payable -- trade 589,163
Accrued property taxes 2,278,811
Security deposits 482,637
--------------
Total liabilities 51,662,654
--------------
Minority interest in consolidated partnerships 2,434,464
Common shareholders' equity:
Common shares of beneficial interest, no par value,
500,000,000 shares authorized, 9,514,889
issued, and 9,504,889 outstanding at
September 30, 1998 87,081,264
Accumulated deficit (3,073,407)
--------------
Total common shareholders' equity 84,007,857
Total liabilities, minority interest,
and common shareholders' equity $ 138,104,975
==============
</TABLE>
F-3
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the nine months ended September 30, 1998
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA ADJUSTMENTS
UNITED INVESTORS ADJUSTMENTS HIGHLAND
REALTY TRUST PRIOR SQUARE TOTAL
HISTORICAL(1) TRANSACTIONS(2) ACQUISITION PRO FORMA
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Base rents $ 9,262,001 $2,084,297(A) $ 537,164(F) $11,883,462
Percentage rents - 26,434(A) -(F) 26,434
Expense reimbursements 2,610,559 563,533(A) 152,363(F) 3,326,455
Interest and other income 364,826 29,532(A) 10,557(F) 404,915
----------- ----------- ----------- -----------
Total revenues 12,237,386 2,703,796 700,084 15,641,266
Expenses:
Operating and maintenance 1,495,044 356,558(A) 125,467(F) 1,977,069
Real estate taxes 1,637,342 396,485(A) 86,900(F) 2,120,727
General and administrative 696,945 23,473(A) 17,373(F) 737,791
Advisory and trustee fees 545,609 129,749(C) 31,983(G) 707,341
Interest 5,009,675 634,996(B) 236,864(F) 5,881,535
Depreciation and amortization 2,043,550 443,152(A) 107,598(F) 2,594,300
----------- ---------- ----------- -----------
Total expenses 11,428,165 1,984,413 606,185 14,018,763
----------- ---------- ----------- -----------
Income before minority interest,
extraordinary item,and preferred share
distribution requirements 809,221 719,383 93,899 1,622,503
Minority Interest in net income of real estate
ventures (92,494) 52,804(D) - (39,690)
----------- ---------- ----------- -----------
Income before extraordinary item and
preferred share distribution requirements 716,727 772,187 93,899 1,582,813
Extraordinary item-prepayment penalties incurred on
early extinguishment of debt (232,532) 232,532(H) - -
----------- ---------- ----------- -----------
Income before preferred share distribution 484,195 1,004,719 93,899 1,582,813
requirements
Preferred share distribution requirements (20,670) 20,670(E) - -
----------- ---------- ----------- -----------
Net income available for
common shareholders $ 463,525 $1,025,389 $ 93,899 $ 1,582,813
=========== =========== =========== ===========
Net income per common shareholders
(basic and diluted) $ 0.07 $ 0.17
=========== ===========
Weighted average shares outstanding
(basic and diluted) 7,102,747 9,514,468
=========== ===========
</TABLE>
(1) Includes the results of operations of all properties from their respective
dates of acquisition forward.
(2) Includes the effects of the Offering, and the results of operations of the
Prior Acquisitions from January 1, 1998 to their respective dates of
acquisition.
F-4
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the year ended December 31, 1997
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA ADJUSTMENTS
UNITED INVESTORS ADJUSTMENTS HIGHLAND
REALTY TRUST PRIOR SQUARE TOTAL
HISTORICAL(1) TRANSACTIONS(2) ACQUISITION PRO FORMA
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Revenues:
Base rents $ 4,954,820 $ 9,742,179 (I)$ 797,595(N) $15,494,594
Percentage rents 26,400 266,930 (I) -(N) 293,330
Expense reimbursements 1,167,355 3,021,925 (I) 252,997(N) 4,442,277
Interest and other income 27,278 29,210 (I) 13,017(N) 69,505
----------- ---------- ---------- -----------
Total revenues 6,175,853 13,060,244 1,063,609 20,299,706
----------- ---------- ---------- -----------
Expenses:
Operating and maintenance 754,703 1,734,409 (I) 182,035(N) 2,671,147
Real estate taxes 793,359 1,820,690 (I) 145,477(N) 2,759,526
General and administrative 179,933 173,276 (I) 24,008(N) 377,217
Advisory and trustee fees 345,000 536,859 (J) 48,422(O) 930,281
Stock grant to Advisor and officers 787,500 - - 787,500
Other 204,829 - - 204,829
Interest 2,435,538 1,478,595 (M) 398,923(N) 4,313,056
Depreciation, amortization and ground lease 1,309,180 2,350,612 (I) 179,330(N) 3,839,122
----------- ---------- ---------- -----------
Total expenses 6,810,042 8,094,441 978,195 15,882,678
Income (loss) before minority interest and
preferred share distribution requirements (634,189) 4,965,803 85,414 4,417,028
Minority interest in net income of real estate
ventures (40,894) (67,184)(K) - (108,078)
----------- ---------- ---------- -----------
Income (loss) before preferred share distribution
requirements (675,083) 4,898,619 85,414 4,308,950
Preferred share distribution requirements (96,633) 96,633 (L) - -
----------- ---------- ---------- -----------
Net income (loss) available
for common shareholders $ (771,716) $4,995,252 $ 85,414 $ 4,308,950
=========== ========== ========== ===========
Net income (loss) per common share
(basic and diluted) $ (0.85) $ 0.45
=========== ===========
Weighted average shares outstanding
(basic and diluted) 912,493 9,512,493
=========== ===========
</TABLE>
(1) Does not include the effects of the Offering, the historical results of
operations of the Prior Acquisitions, or the Highland Square Acquisition as
these transactions were closed in 1998.
(2) Includes the effects of the Offering, and results of operations of the Prior
Acquisitions.
F-5
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - THE TRANSACTIONS
The pro forma adjustments described subsequently give effect to the following
transactions as if they were all completed on January 1, 1997 for the
accompanying unaudited condensed consolidated statements of operations for the
year ended December 31, 1997 and the nine months ended September 30, 1998.
The Offering
On March 16, the Company completed its initial public offering of 7,600,000
common shares of beneficial interest. The shares were sold at $10 per share, and
offering costs aggregated approximately $6,663,354. On April 6, 1998, the
underwriters exercised their over allotment option for the purchase of 1,000,000
common shares of beneficial interest. These shares were sold at the option price
of $10 per share, with related offering cost totaling approximately $700,000
(collectively, the "Offering"). Proceeds from the Offering were used to retire
debt of $16,392,755, acquire properties (see Prior Acquisitions and Colony Plaza
Acquisition below), redeem preferred shares for $1,068,226, redeem convertible
subordinated notes for $212,400, acquire minority interests in real estate joint
ventures for $1,457,239 and for general corporate purposes.
The Prior Acquisitions
In conjunction with the Offering, the Company planned and completed the
acquisition of eight neighborhood shopping centers (the IPO Acquisitions), four
of which are in Houston, Texas, and one each in Dallas, Texas, Tampa, Florida,
Fort Lauderdale, Florida, and Phoenix, Arizona. Four of the IPO acquisitions
were acquired in February 1998, two were acquired in March 1998, and two were
acquired in May 1998.
The eight properties were purchased for a combined total of $72,189,429. The
Company paid cash of $43,251,946, assumed debt of $26,551,543 (with fixed
interest rates ranging from 8.25% to 10.75%), and issued partnership units with
a value of $2,385,940. With the purchase of Town 'n Country, a single purpose
partnership was formed and the Company issued partnership units to the seller of
the property. The Company has a 99% interest in the partnership, which is
consolidated for financial reporting purposes.
In addition to the IPO Acquisitions, the Company acquired the Big Curve Shopping
Center on May 27, 1998. Big Curve is a 126,400 square foot shopping center in
Yuma, Arizona, and was acquired for approximately $8,850,000, including
$5,965,129 of assumed debt. The Company acquired the Colony Plaza Shopping
Center on July 20, 1998. Colony Plaza is a 26,800 square foot shopping center in
Houston, Texas, and was acquired for approximately $4,195,000, including
$3,187,371 of assumed debt.
The IPO Acquisitions, the Big Curve Acquisition, and the Colony Plaza
Acquisition, taken together hereafter are referred to as the Prior Acquisitions.
The Highland Square Acquisition
The Company acquired the Highland Square Shopping Center (the Highland Square
Acquisition) on September 22, 1998. Highland Square is a 64,171 square foot
shopping center in Sugar Land, Texas(a suburb of Houston), and was acquired for
approximately $7,685,600 including $4,438,456 of assumed debt.
F-6
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 - PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
The pro forma adjustments to the Pro Forma Condensed Consolidated Statement
of Operations for the nine months ended September 30, 1998, are as follows:
<TABLE>
<CAPTION>
<S> <C>
(A) Purchase of Prior Acquisitions:
Base rents ......................................... $2,084,297
Percentage rents ................................... 26,434
Expense reimbursements ............................. 563,533
Other income ....................................... 29,532
Operating and maintenance .......................... 356,558
Real estate taxes .................................. 396,485
General and administrative ......................... 23,473
Depreciation ....................................... 443,152
Depreciation above reflects the increased depreciable basis of the
properties, depreciated over an estimated 30 year useful life on a straight-line
basis.
(B) Decrease in interest expense related to repayment of mortgage debt and lines
of credit with proceeds from
the Offering........................................... $ (255,739)
Interest on mortgage loans assumed in Prior
Acquisitions........................................... 890,735
-----------
$ 634,996
===========
(C) Increase in Advisory Fees related to revenue from Prior
Acquisitions........................................... $ 129,749
===========
(D) Decrease in minority interest in earnings of consolidated
partnerships........................................... $ 92,494
Increase in minority interest in earnings of consolidated
partnership (Town 'N Country).......................... (39,690)
-----------
$ 52,804
===========
(E) Decrease in preferred share distributions related to
redemption of preferred shares with proceeds from the
Offering............................................... $ 20,670
===========
(F) Purchase of Highland Square Acquisition:
Base rents ......................................... $ 537,164
Expense reimbursements ............................. 152,363
Other income ....................................... 10,557
Operating and maintenance .......................... 125,467
Real estate taxes .................................. 86,900
General and administrative ......................... 17,373
Depreciation ....................................... 107,598
Interest on debt assumed............................ 236,864
Depreciation above reflects the increased basis of the property,
depreciated over an estimated 30 year useful life on a straight-line basis.
(G) Increase in Advisory Fees related to revenue from
Highland Square Acquisition............................... $ 31,983
===========
(H) Represents elimination of the extraordinary loss from the early
extinguishment of debt because the intent of the pro forma financial
information is to reflect the expected continuing impact of certain
transactions on United Investors Realty Trust and Subsidiaries. This
non-recurring expense has been excluded from the pro forma condensed
consolidated statement of operations.
</TABLE>
F-7
<PAGE>
The pro forma adjustments to the Pro Forma Condensed Consolidated Statement
of Operations for the year ended December 31, 1997, are as follows:
<TABLE>
<S> <C>
(I) Purchase of Prior Acquisitions:
Base rents..................................$ 9,742,179
Percentage rents............................ 266,930
Expense reimbursements...................... 3,021,925
Other income................................ 29,210
Operating and maintenance................... 1,734,409
Real estate taxes........................... 1,820,690
General and administrative.................. 173,276
Depreciation................................ 2,350,612
Depreciation above reflects the increased basis of the properties,
depreciated over an estimated 30 year useful life on a straight-line basis.
(J) Increase in Advisory Fees related to revenue from Prior
Acquisitions and amendment of advisory agreement....... 536,859
===========
(K) Decrease in minority interest in earnings of consolidated
partnerships........................................... $ 40,894
Increase in minority interest in earnings of consolidated
partnership (Town `N Country).......................... (108,078)
-----------
$ (67,184)
(L) Decrease in preferred share distributions related to
redemption of preferred shares with proceeds from the
Offering............................................... $ 96,633
===========
(M) Interest expense; net pro forma adjustment to interest expense is comprised
of the following:
Decrease in interest related to mortgage and
other loans repaid with IPO proceeds............. $(1,644,257)
Interest on mortgage loans assumed in Prior
Acquisitions..................................... 3,122,852
-----------
Total pro forma adjustment....................... $ 1,478,595
===========
</TABLE>
F-8
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C>
(N) Purchase of Highland Square Acquisition:
Base rents....................................... 797,595
Percentage rents................................. -
Expense reimbursements........................... 252,997
Other income..................................... 13,017
Operating and maintenance........................ 182,035
Real estate taxes................................ 145,477
General and administrative....................... 24,008
Depreciation and amortization.................... 179,330
Interest......................................... 398,923
Depreciation above reflects the increased basis of the properties,
depreciated over an estimated 30 year useful life on a straight-line basis.
(O) Increase in Advisory Fees related to revenue from
Highland Square............................................ $ 48,422
==========
</TABLE>
NOTE 3 - EARNINGS PER SHARE
Pro forma weighted average basic and diluted common shares outstanding is
calculated as follows:
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
WEIGHTED AVERAGE WEIGHTED AVERAGE
SHARES OUTSTANDING SHARES OUTSTANDING
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- -----------------
<S> <C> <C>
Total shares issued and outstanding at beginning
of period....................................... 837,489 914,889
Offering of 7,600,000 shares assumed
January 1, 1997................................. 7,600,000 7,600,000
Exercise of underwriters overallotment option
assumed January 1, 1997......................... 1,000,000 1,000,000
Grant of 75,000 shares on December 30, 1997
(assumed January 1, 1997)....................... 75,000 -
Grant of 2,400 shares on December 30, 1997...... 4 -
Repurchase of 5,000 shares on September 18, 1998 - (238)
Repurchase of 5,000 shares on September 21, 1998 - (183)
----------- -----------
Basic and Diluted Weighted
Average Shares Outstanding.............. 9,512,493 9,514,468
=========== ===========
</TABLE>
F-9
<PAGE>
Report of Independent Auditors
Board of Directors
United Investors Realty Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Highland Square Shopping Center (the Property) for the year ended December 31,
1997. The Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Statement of Revenue and Certain
Expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K of United
Investors Realty Trust as described in Note 1, and is not intended to be a
complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 of the Property for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Houston, Texas
December 1, 1998
F-10
<PAGE>
Highland Square Shopping Center
Statements of Revenue and Certain Expenses
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
(unaudited)
<S> <C> <C>
REVENUE:
Base rents $ 449,931 $ 797,595
Expense reimbursements 127,362 252,997
Other income 10,448 13,017
----------- -----------
Total revenue 587,741 1,063,609
----------- -----------
EXPENSES:
Operating and maintenance 100,450 182,035
Real estate taxes 72,749 145,477
General and administrative 15,168 24,008
----------- -----------
Total expenses 188,367 351,520
----------- -----------
Revenue in excess of certain expenses $ 399,374 $ 712,089
=========== ===========
</TABLE>
See accompanying notes.
F-11
<PAGE>
Highland Square Shopping Center
Notes to Statements of Revenue and Certain Expenses
Year ended December 31, 1997 and
Six Months ended June 30, 1998 (unaudited)
1. BASIS OF PRESENTATION
The accompanying Statement of Revenue and Certain Expenses relates to the
operations of Highland Square Shopping Center (the "Property"), a 64,171
square-foot shopping center located in Sugar Land, Texas.
United Investors Realty Trust (the "Company") acquired the Property on September
22, 1998.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K of the
Company. The accompanying statement excludes certain items not comparable to the
proposed future operations of the Property, including primarily depreciation,
amortization, mortgage interest expense, and certain owner expenses.
Consequently, the statement is not representative of the actual operations of
the Property for the periods presented nor indicative of future operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE AND EXPENSE RECOGNITION
Revenue is recognized in the period in which it is earned. Expenses are
recognized in the period incurred.
Certain leases of the Property provide for tenant occupancy during periods for
which no rent is due or where minimum rent payments increase during the term of
the lease. The Property records rental income for the full term of each lease on
a straight-line basis.
USE OF ESTIMATES
The preparation of the Statement of Revenue and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
certain expenses during the reporting period. Actual results could differ from
these estimates.
F-12
<PAGE>
HIGHLAND SQUARE SHOPPING CENTER
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES (continued)
Year ended December 31, 1997 and
Six months ended June 30, 1998 (unaudited)
3. RENTALS
The Property has lease agreements with lease terms ranging from three years to
ten years. The leases generally provide for tenants to share in operating
expenses and real estate taxes in excess of specified base amounts. The total
minimum rentals to be received under such non-cancelable operating leases as of
December 31, 1997, exclusive of tenant reimbursements and contingent rentals,
are as follows:
1998 $ 828,786
1999 688,752
2000 582,113
2001 355,703
2002 169,324
Thereafter 428,049
------------
$ 3,052,727
============
F-13
<PAGE>
