SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- - --- ACT OF 1934
For the fiscal year ended December 31, 1996
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-23972
AMERICAN MORTGAGE INVESTORS TRUST
(Exact name of registrant as specified in its governing instrument)
Massachusetts 13-6972380
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
625 Madison Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Shares of Beneficial Interest, par value $.10 per share
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's prospectus dated March 29, 1993, as supplemented April 22,
1993, August 9, 1993, November 9, 1993, January 31, 1994, April 25, 1994,
September 2, 1994, November 9, 1994 and January 31, 1995, as filed with the
Commission pursuant to Rules 424(b) and 424(c) of the Securities Act of 1933,
but only to the extent expressly incorporated by reference in Parts I, II, III
and IV.
Index to exhibits may be found on page 41
Page 1 of 107
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF
THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO THE "SAFE HARBOR" PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO
OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS
OR CIRCUMSTANCES OCCURING AFTER THE DATE HEREOF OR TO REFLECT THE OCCURENCE OF
UNANTICIPATED EVENTS.
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PART I
Item 1. Business.
General
American Mortgage Investors Trust (the "Company") is a business trust
which was formed under the laws of the State of Massachusetts on June 11, 1991.
The Company has elected to be treated as a real estate investment trust ("REIT")
under the Internal Revenue Code of 1986, as amended. The Advisor to the Company
is Related AMI Associates, Inc., a Delaware corporation (the "Advisor"). The
Advisor manages the day to day affairs of the Company under the control of the
Company's trustees and pursuant to an Advisory Services Agreement, dated as of
March 29, 1993 and as amended as of October 26, 1993, December 31, 1993 and
March 29, 1994, between the Company and the Advisor (the "Advisory Services
Agreement"). See Item 10, Directors and Executive Officers of the Registrant.
The Company issued 10,000 shares of beneficial interest at $20 per
share in exchange for $200,000 cash from the Advisor.
On March 29, 1993, the Company commenced a public offering (the
"Offering") through Related Equities Corporation (the "Dealer Manager"), an
affiliate of the Advisor, and other broker-dealers on a "best efforts" basis,
for up to 10,000,000 of its shares of beneficial interest at an initial offering
price of $20 per share. The Offering terminated as of November 30, 1994. As of
December 31, 1996, a total of 3,809,601 shares have been sold to the public,
either through the Offering or through the Company's dividend reinvestment plan
(the "Reinvestment Plan"), representing Gross Proceeds (the "Gross Proceeds") of
$76,192,021 (before volume discounts of $40,575) resulting in Net Proceeds
available for investment of approximately $69,334,743 after volume discounts,
payments of sales commissions and organization and offering expenses (the "Net
Proceeds"). Net Proceeds from sales pursuant to the Reinvestment Plan are
required to be used first to redeem shares under the Company's redemption plan
(the "Redemption Plan"), and any remaining proceeds may be used for additional
investments or working capital reserves.
Pursuant to the Redemption Plan, which became effective November 30,
1994, the Company is required to redeem eligible shares presented for redemption
for cash to the extent it has sufficient Net Proceeds from the sale of shares
under the Reinvestment Plan. After November 30, 1994, 151,918 shares were sold
through the Reinvestment Plan, the proceeds of which are restricted for use in
connection with the Redemption Plan and are not included in gross proceeds.
Pursuant to the Redemption Plan, as of December 31, 1996, 168,943 shares were
redeemed for an aggregate price of $3,206,353. Of such redemptions, 16,931
shares were redeemed from proceeds from the Reinvestment Plan before the
termination of the Offering and therefore the proceeds available for future
investment were reduced by $319,987.
In addition, the Advisor is authorized to receive 1% of all outstanding
shares. During the Offering, the Advisor received 38,481 restricted shares
(including 717 from the Reinvestment Plan) in addition to the 10,000 shares
purchased, which the Advisor has valued at $14.75 per share, pursuant to the
terms of the Offering. As a result of the shares being redeemed the Advisor was
required to return 172 shares as of December 31, 1996.
The Company's principal investment objectives are to: (i) preserve and
protect the Company's capital; (ii) provide quarterly cash distributions; and
(iii) provide additional distributions from additional interest arising from
participations in the annual cash flow of the Developments (defined below)
and/or the sale or refinancing of a Development. There can be no assurance that
such objectives can be achieved.
The Company has invested principally in two types of Mortgage
Investments ("Mortgage Investments"): (i) new mortgage loans originated by or on
behalf of the Company or by other lenders and sold to the Company prior to the
loans being fully funded and (ii) Ginnie Mae mortgage-backed securities and
pass-through certificates ("Originated Mortgages"); and existing mortgage loans
that it acquires ("Acquired Mortgages") on multifamily residential rental
properties ("Developments"). No more than 7% of the Net Proceeds may be invested
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in non-interest bearing uninsured loans made directly to developers or sponsors
of Developments (or the general partners or other principals of the owner of the
Developments) with respect to which the Company holds a mortgage ("Additional
Loans"). As of December 31, 1996, of the total Net Proceeds available for
investment, 84.9% had been invested in Originated Mortgages (including 6.32% in
Additional Loans) and 15.1% in Acquired Mortgages.
Mortgage Investments
As of December 31, 1996, the Company has made the following Mortgage
Investments:
Originated Mortgages
The Cove Apartments
On December 16, 1993, the Company funded an Originated Mortgage with
respect to a 308 unit project known as The Cove Apartments located in Houston,
Texas ("The Cove"). The Originated Mortgage is in the amount of $6,800,000 and
is fully insured by HUD under Section 223(f) of the National Housing Act and
applicable HUD regulations. The Company provided an additional $840,500 as a
non-interest bearing Additional Loan to the developer and an additional
loan-bridge loan in the amount of $84,210. On April 7, 1994, the additional
loan-bridge loan was repaid in full. The Additional Loan was made by the Company
directly to the developer to defray certain specific cash requirements in
connection with the Development and is not insured.
The Originated Mortgage has a term of 35 years, subject to mandatory
prepayment any time after 10 years, upon 1 years notice, and bears interest at
7.625% to 9.23% during the permanent loan period (8.125% on the total of the
Originated Mortgage and Additional Loan). In addition to the interest rate
during the permanent loan period, the Company is entitled to 30% of cash flow
remaining after payment of 9.23% interest and accrued interest, if any, and
certain amounts from sale or refinancing proceeds. Payments at the rate of 9.23%
were guaranteed by the developer until December 16, 1996. The Additional Loan
has a term of ten years and is secured by an unrecorded mortgage, an assignment
of the general partners' (Al L. Bradley, Jr. and Tim L. Myers) partnership
interests in the owning entity (Cove Apartments, L.L.C.) and an assignment of
the general partners' interests in surplus cash and residual proceeds.
Within a two-mile radius of The Cove, there are ten properties which
compete with The Cove. A current problem with curb appeal, due to defective
siding has caused occupancies at The Cove to fall to 75.7%. The problem is being
resolved and the property should do 90% occupancy shortly. See also, "Oxford on
Greenridge Apartments" below.
Oxford on Greenridge Apartments
On December 16, 1993, the Company funded an Originated Mortgage with
respect to a 405 unit project known as Oxford on Greenridge Apartments located
in Houston, Texas ("Oxford on Greenridge"). The Originated Mortgage is in the
amount of $9,350,000 and is fully insured by HUD under Section 223(f) of the
National Housing Act and applicable HUD regulations. The Company provided an
additional $1,156,000 as a non-interest bearing Additional Loan to the developer
and an additional loan-bridge loan in the amount of $115,790. On April 7, 1994
the additional loan-bridge loan was repaid in full. The Additional Loan was made
by the Company directly to the developer to defray certain specific cash
requirements in connection with the Development and is not insured.
The Originated Mortgage has a term of 35 years, subject to mandatory
prepayment at any time after 10 years, upon 1 years notice, and bears interest
at 7.625% to 9.23% during the permanent loan period (8.125% on the total of the
Originated Mortgage and Additional Loan). In addition to the interest rate
during the permanent loan period, the Company is entitled to 30% of cash flow
remaining after payment of 9.23% interest and accrued interest, if any, and
certain amounts from sale or refinancing proceeds. Payments at the rate of 9.23%
were guaranteed by the developer until December 16, 1996. The Additional Loan
has a term of ten years and is secured by an unrecorded mortgage, an assignment
of the general partners' (Al L. Bradley, Jr. and Tim L. Myers) partnership
interests in the owning entity (Oxford Apartments, L.L.C.) and an assignment of
the general partners' interests in surplus cash and residual proceeds.
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<PAGE>
Within a three-mile radius of Oxford on Greenridge, there are seven
properties which compete with Oxford on Greenridge. Although The Cove is also
located in the Houston area, Oxford on Greenridge is situated over 30 miles away
from The Cove. As a result of the physical distance between The Cove and Oxford
on Greenridge, the Company does not believe that the two properties compete with
each other. Nevertheless, there are additional risks associated with the loans
on both of these properties. These risks include the Company's concentration of
real estate loans in the Houston area and the fact that both of the Additional
Loans were made to the same borrower. The current market demand for rental
apartment units in the immediate area has caused Oxford on Greenridge to achieve
a 93.5% occupancy rate at competitive levels.
Town and Country IV Apartments
On April 24, 1994, the Company funded an Originated Mortgage with
respect to a 330 unit project known as Town & Country IV Apts. located in
Urbana, Illinois ("Town and Country IV"). The Originated Mortgage is in the
amount of $9,348,000 and is fully insured by HUD under Section 223(f) of the
National Housing Act and applicable HUD regulations. The Company provided an
additional $1,039,000 as a non-interest bearing Additional Loan to the
developer. The Additional Loan was made by the Company directly to the developer
to defray certain specific cash requirements in connection with the Development
and is not insured.
The Originated Mortgage has a term of 35 years, subject to mandatory
prepayment at any time after 12 years, upon 1 years notice, and bears interest
at 7.375% to 9.167% during the permanent loan period (8.25% on the total of the
Originated Mortgage and Additional Loan). In addition to the interest rate
during the permanent loan period, the Company will be entitled to 30% of cash
flow remaining after payment of 9.167% interest and accrued interest, if any,
and certain amounts from sale or refinancing proceeds. Payments at the rate of
9.167% are guaranteed by the developer until June 1997. The Additional Loan has
a term of twelve years and is secured by an unrecorded mortgage, an assignment
of the general partners' (Leonard Wineburgh and Arnold Dwinn) partnership
interests in the owning entity (Town and Country Estates, Ltd.) and an
assignment of the general partners' interests in surplus cash flow and residual
proceeds.
Within the Urbana submarket, there are a number of properties which
compete with Town & Country IV. The Company does not believe that the three
preceding projects, Town & Country, Phases I, II & III, directly compete with
Town and Country IV because they are significantly older and of a different
architectural style. The current market demand for rental apartment units in the
submarket has caused the project to achieve a 97% occupancy rate at competitive
rent levels.
Columbiana Lakes Apartments
On April 28, 1994, the Company funded an Originated Mortgage with
respect to the construction of a 204 unit project known as Columbiana Lakes
Apts. located in Columbia, South Carolina ("Columbiana Lakes"). The Originated
Mortgage is in the amount of $8,683,000 and is fully insured by HUD under
Section 221(d)(4) of the National Housing Act and applicable HUD regulations. As
of December 31, 1996, $8,016,128 of the mortgage loan had been funded. The
Company provided an additional $563,000 as a non-interest bearing Additional
Loan to the developer. The Additional Loan was made by the Company directly to
the developer to defray certain specific cash requirements in connection with
the Development and is not insured.
The Originated Mortgage has a term of approximately 40 years, subject
to mandatory prepayment at any time after 10 years, upon 1 years notice, and
bears interest at 7.40% during the construction period and at 7.90% to 8.678%
during the permanent loan period (8.15% on the total of the Originated Mortgage
and Additional Loan). In addition to the interest rate during the permanent loan
period, the Company will be entitled to 25% of cash flow remaining after payment
of 8.678% interest and accrued interest, if any, and certain amounts from sale
or refinancing proceeds. Payments at the rate of 8.678% are guaranteed by the
developer until December 1998. The Additional Loan has a term of ten years plus
the construction period and is secured by an unrecorded mortgage, an assignment
of the general partner's (Ronald P. Curry) and limited partner's (Anderson G.
Wise) interests in the owning entity (Columbiana Lakes Limited Partnership) and
an assignment of the general partner's and limited partner's interests in
surplus cash flow and residual proceeds.
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Within a two mile radius of Columbiana Lakes there are eight properties
of which only two are expected to compete with Columbiana Lakes. Monthly
construction draws will be disbursed to Columbiana Lakes based on percentage
completion of the Development's construction as approved by HUD. The current
market demand for rental apartment units in the submarket has caused the initial
lease-up of the project to reach an 84% occupancy rate at competitive rent
levels.
Stony Brook Loan
On December 15, 1995, the Company committed to fund two loans in the
aggregate amount of $9,263,909 (the "Stony Brook Loan" or "Total Loan"), to
SCI-ROEV East Haven Land, L.P., a Connecticut limited partnership (the "SCI-ROEV
Partnership" or "Mortgagor"). Stony Brook commenced construction in December
1995. The Mortgagor's general partners (the "General Partners") are SCI Real
Estate Development, Ltd., and ROEV General, Inc.
The Stony Brook Loan, described below, provided construction and
permanent financing in connection with the construction of 125 apartment units
known as Stony Brook Village II Apartments in East Haven, Connecticut ("Stony
Brook II").
The Total Loan is comprised of (i) an Originated Mortgage to the
Mortgagor in an amount of $8,500,000 (the "Mortgage Loan") and (ii) a
non-interest bearing Additional Loan to the General Partners in an amount of
$763,909 has been funded. As of December 31, 1996, $6,294,663 of the Mortgage
Loan had been funded.
The Mortgage Loan was made by Rockport Mortgage Corporation
("Rockport"), an unaffiliated third party, on behalf of the Company. Rockport
received the funds to make the Mortgage Loan from the Company, which purchased a
100% participation interest from Rockport. The Mortgage Loan, which has a term
of 40 years, is evidenced by a note (the "Mortgage Note") and secured by a
non-recourse first mortgage or deed of trust encumbering the Project.
The Mortgage Note provides for interest at a rate (the "Note Rate") of
8.625% during the construction period (7.914% on the Total Loan), and 7.75%
during the permanent loan period (7.111% on the Total Loan), commencing 60 days
after completion of construction and continuing until maturity (the "Permanent
Loan Period"). It is anticipated that the construction period for Stony Brook II
will last approximately 16 months. Construction commenced in December 1995. The
Mortgage Loan, with interest at the Note Rate, is insured by HUD under Section
221 (d) (4) of the National Housing Act and applicable HUD regulations. During
the Permanent Loan Period, all interest rates stated herein include a servicing
fee of 0.125% per annum on the Mortgage Loan (0.1147% on the Total Loan) payable
to Rockport. Failure to make any payments due under the Mortgage Note will
constitute a default under HUD regulations.
Notwithstanding the Note Rate, during the Permanent Loan Period, the
Company is entitled to (a) interest on the Mortgage Loan, at the rate of 9.128%
per annum (8.375% on the Total Loan) (the "Annual Yield"), (b) 40% of
distributable cash remaining, if any, after payment of the Annual Yield and all
accrued payments of Annual Yield due on the Mortgage Loan, and (c) 35% of net
proceeds from capital transactions (such as the (i) sale of the Project, (ii)
sale of a substantial interest in the SCI-ROEV Partnership, (iii) refinancing or
full prepayment of the Total Loan, (iv) acceleration or (v) default) remaining,
if any, after payment of the Annual Yield and all accrued payments of Annual
Yield due on the Mortgage Loan. This amount, in excess of the Note Rate, is
collectively referred to as "Additional Interest". In no event will the
Mortgagor be liable for an aggregate amount in excess of 50% of distributable
cash or net proceeds after payment of the Note Rate.
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GNMA Certificates
The Company used a portion of the net proceeds of its Offering to
purchase three Ginnie Mae Guaranteed FHA Insured Project Loan Backed
Certificates from unaffiliated third parties. The full amount of the purchase
price of each of the GNMA Certificates was allocated as a permanent Originated
Mortgage. The following table outlines pertinent information relating to the
GNMA Certificates:
<TABLE>
<CAPTION>
Principal
Balances at
Purchase Price 12/31/96 Stated Final
Certificate Date -------------------- Including Interest Payment
Seller Number Purchased % Amount Prem/(Disc) Rate Date
- - ------ --------- --------- ------- ---------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Bear, Stearns
& Co. 0355540 7/27/94 90.7500% $2,407,102 $2,367,410 7.125% 3/15/2029
Malone
Mortgage Co. 0382486 7/28/94 99.6250 2,197,130 2,172,525 8.500 8/15/2029
Goldman, Sachs 0328502 7/29/94 99.9063 3,928,615 3,780,267 8.250 7/15/2029
</TABLE>
Acquired Mortgages
REMIC Certificates
The Company used a portion of the net proceeds of its Offering to
purchase six REMIC Certificates from unaffiliated third parties. Except as set
forth in the notes to the table, each of the REMIC Certificates was purchased as
a permanent Acquired Mortgage. The following table outlines pertinent
information relating to the REMIC Certificates:
<TABLE>
<CAPTION>
Principal
Balances at
Purchase Price 12/31/96 Stated Final
Certificate Date -------------------------- Including Interest Payment
Seller Number Purchased % Amount Prem/(Disc) Rate Date
- - ------ --------- --------- ------- ---------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Bear, Stearns
& Co. 1992-17G (1) 8/27/93 101.609375% $10,160,938 $ 0 6.50% Sold(1)
Bear, Stearns
& Co. G-024C (2) 10/26/93 100.00 4,838,600 0 4.85 Sold(2)
Meridan Capital
Markets 1292ZA (3) 10/25/94 98.96875 1,721,291 335,245 5.75 6/15/97
Meridan Capital
Markets 1992-153A (3) 10/25/94 97.875 258,357 60,113 5.25 9/25/97
Meridan Capital
Markets 1580A (3) 10/27/94 99.3125 742,538 213,073 6.50 9/15/98
Meridan Capital
Markets 1258C (3) 11/9/94 100.375 269,658 28,677 7.35 5/15/2004
</TABLE>
(1) On October 15, 1993 the Company allocated $5,000,000 of the principal
face value as an Acquired Mortgage based on the expectation that a
majority of the investment would be held for at least two years. Based
on such allocation, compensation was paid to the Advisor. The Advisor
has undertaken to reimburse the Company for any compensation paid to it
which is attributable to the portion of any REMIC Certificate which is
sold to support the Company's distribution policy (the "Advisor's
Reimbursement Undertaking"). On November 4, 1993 and February 1, 1994,
the Company sold $200,000 and $200,000, respectively, of the REMIC
Certificate and the Advisor has reimbursed the Company for the fees
previously paid and the trading loss incurred with respect to the
portions of the REMIC Certificate which were sold. Also on March 30,
1995, the Company sold $4,500,000 of the temporary portion at the
discounted price of 90.9375% or $4,092,188. The realized loss on this
sale
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was $447,472. Also on August 15, 1996, the Company sold the remaining
balance of the temporary and permanent portions of the REMIC
Certificate which totaled $5,100,000. The realized loss on this sale
was $328,895.
The REMIC Certificate represented a beneficial ownership interest in
Fannie Mae REMIC Trust 1992-17. The assets of the trust consisted
primarily of interests in a separate trust which held Fannie Mae
Guaranteed Pass-Through Certificates (the "MBS Certificates"), each of
which represented a beneficial interest in a pool of first lien,
fixed-rate residential mortgage loans (the "Mortgage Loans").
The Company was entitled to monthly interest payments on the
outstanding principal amount of the REMIC Certificate.
(2) Represented an FHLMC Mortgage Participation Certificate. On May 4,
1994, the Company allocated $2,419,300 of the principal face value as a
permanent Acquired Mortgage based on the expectation that a majority of
the investment would be held for at least two years. Based upon such
allocation, compensation was paid to the Advisor. On May 5, 1994, the
Company sold $1,000,000 of the permanent portion of the Mortgage
Participation Certificate and on October 11, 1994, the Company sold the
remaining balance of the temporary and permanent portions of the
Mortgage Participation Certificate which totaled $3,838,600. Pursuant
to the Advisor's Reimbursement Undertaking, the Advisor has reimbursed
the Company for the fees previously paid and the trading loss incurred
with respect to the permanent investment portion of the certificate
which was sold. A loss of $297,836 was recorded on these sales in 1994.
(3) Purchased as a permanent investment using a portion of the proceeds
from the sale of FHLMC REMIC Certificate #G-024C. See (2) above.
FHA Insured Project Loan
The Company used a portion of the net proceeds of its Offering to
purchase a FHA Insured Project Loan from an unaffiliated third party. The full
amount of the purchase price was allocated as a permanent Acquired Mortgage. The
table set forth below outlines pertinent information relating to the FHA Insured
Project Loan:
<TABLE>
<CAPTION>
Principal
Balances at
Purchase Price 12/31/96 Stated Final
Certificate Date -------------------- Including Interest Payment
Seller Number Purchased % Amount Prem/(Disc) Rate Date
- - ------ --------- --------- ------- ---------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Donaldson Lufkin
& Jenrette 092-11005 1/3/95 96.6875% $3,374,679 $3,295,340 8.60% 4/1/2019
</TABLE>
Competition
As described above, the Company's business is affected by competition
to the extent that the underlying properties from which it is to derive interest
and principal payments may be subject to competition from neighboring
properties.
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Employees
The Company does not directly employ anyone. All services are performed
for the Company by the Advisor and its affiliates. The Advisor receives
compensation in connection with such activities as set forth in Item 8,
Financial Statements and Supplementary Data, Item 11, Executive Compensation and
Item 13, Certain Relationships and Related Transactions. In addition, the
Company reimburses the Advisor and certain of its affiliates for expenses
incurred in connection with the performance by their employees of services for
the Company in accordance with the Declaration of Trust.
Item 2. Properties.
The Company does not own or lease any property.
Item 3. Legal Proceedings.
The Company is not a party to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Shareholders.
No matters were submitted to a vote of shareholders during the fourth
quarter of the fiscal year covered by this report through the solicitation of
proxies or otherwise.
PART II
Item 5. Market for the Registrant's Common Stock and Related Shareholder
Matters.
The Offering terminated as of November 30, 1994. As of December 31,
1996, a total of 3,809,601 shares have been sold to the public, either through
the Offering or the Company's dividend reinvestment plan (the "Reinvestment
Plan"), representing Gross Proceeds of $76,192,021 (before volume discounts of
$40,575). Pursuant to the Redemption Plan, which became effective November 30,
1994, the Company is required to redeem eligible shares presented for redemption
for cash to the extent it has sufficient net proceeds from the sale of shares
under the Reinvestment Plan. After November 30, 1994 151,918 shares were sold
through the Reinvestment Plan, the proceeds of which are restricted for use in
connection with the Redemption Plan and are not included in gross proceeds.
Pursuant to the Redemption Plan as of December 31, 1996, 168,943 shares were
redeemed for an aggregate price of $3,206,353.
The number of shareholders as of December 31, 1996 was 3,575. Although
the shares are freely transferable, shareholders may not be able to liquidate
their investment because the shares are not intended to be included for listing
or quotation on any established market and no public trading market is expected
to develop for the shares, although there may be an informal market. Shares may,
therefore, not be readily accepted as collateral for a loan. Furthermore, even
if an informal market for the sale of shares develops, a shareholder may only be
able to sell its shares at a substantial discount from the public offering
price. Consequently, the purchase of shares should be considered only as a
long-term investment.
Reinvestment Plan
A Reinvestment Plan is available which enables shareholders to have
their distributions from the Company invested in shares of the Company, or
fractions thereof. The Reinvestment Plan became effective on March 29, 1993, the
effective date of the Offering.
During the offering period the price per share purchased pursuant to
the Reinvestment Plan equaled $20. From November 30, 1994 (the termination of
the offering period) until November 30, 1997 (the third anniversary of the final
closing date), the price per share purchased pursuant to the Reinvestment Plan
will equal $19. Thereafter, the price per share purchased pursuant to the
Reinvestment Plan will be the greater of $20 (the
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public offering price) or 95% of the then fair market value of such share (as
determined by the Advisor under procedures adopted by the Board of Trustees).
Shares received pursuant to the Reinvestment Plan will entitle
participants to the same rights and be treated in the same manner as those
issued pursuant to the Offering. In connection with shares issued pursuant to
the Company's Reinvestment Plan, the Company will issue shares to the Advisor in
an amount which will equal (after such issuance) 1% of the outstanding shares.
Experience under the Reinvestment Plan may indicate that changes are
desirable. The Company's Declaration of Trust gives the Trustees broad powers to
renew, modify, extend, consolidate or cancel the Company's Reinvestment Plan
without the consent of shareholders.
Redemption Plan
The Company's Redemption Plan became effective November 30, 1994. Under
the Redemption Plan, any shareholder (except the Advisor who cannot participate
in the Redemption Plan) who acquired or received shares directly from the
Company or the Reinvestment Plan (such shares, for so long as owned by the
original holder, are called "Eligible Shares") may present such Eligible Shares
to the Company for redemption. The Company is required to redeem such Eligible
Shares presented for redemption for cash to the extent it has sufficient net
proceeds ("Reinvestment Proceeds") from the sale of shares under the
Reinvestment Plan. There is no assurance that there will be Reinvestment
Proceeds available for redemption and, accordingly, an investor's shares may not
be redeemed. The full amount of Reinvestment Proceeds in any quarter will be
used to redeem Eligible Shares presented for redemption during such quarter. If
the full amount of Reinvestment Proceeds available for redemption in any given
quarter is insufficient to redeem all Eligible Shares presented for redemption
during such quarter, the Company will redeem the Eligible Shares presented for
redemption on a pro rata whole share basis, without redemption of fractional
shares.
Upon presentment of Eligible Shares to the Company for redemption, the
redemption price will be $19 per Eligible Share. The Trustees, in their sole
discretion, may determine that it is appropriate to pay a higher price than
described above. The redemption price of $19 will be reduced by that portion of
all distributions received with respect to such share which represent principal
payments.
A shareholder may present less than all his Eligible Shares to the
Company for redemption, provided, however, that (i) he must present the lesser
of all of his Eligible Shares or 125 Eligible Shares (50 Eligible Shares for an
Individual Retirement Account or Keogh Plan) for redemption, and (ii) if he
retains any Eligible Shares, he must retain at least 125 Eligible Shares (50
Eligible Shares for an Individual Retirement Account or Keogh Plan).
Pursuant to the Redemption Plan, through March 27, 1997, the Company
redeemed 168,943 shares aggregating $3,206,353.
The Trustees, may amend or suspend the Redemption Plan at any time they
determine, in their sole discretion, that it is in the best interest of the
Company.
-10-
<PAGE>
Distribution Information
Cash distributions per share for the years ended December 31, 1996 and
1995 were as set forth in the following table:
Cash Distribution Total Amount
for Quarter Ended Date Paid Per Share Distributed
----------------- --------- --------- -----------
March 31, 1996 5/15/96 $ .3575 $1,373,248
June 30, 1996 8/14/96 .3615 1,388,505
September 30, 1996 11/14/96 .3655 1,403,765
December 31, 1996 2/14/97 .3655 1,403,765
------- ----------
Total for 1996 $1.4500 $5,569,283
------- ----------
March 31, 1995 5/15/95 $ .3575 $1,373,469
June 30, 1995 8/14/95 .3615 1,388,505
September 30, 1995 11/14/95 .3655 1,403,816
December 31, 1995 2/14/96 .3655 1,403,765
------- ----------
Total for 1995 $1.4500 $5,569,555
------- ----------
Quarterly distributions were made 45 days following the close of the
calendar quarter and were funded from cash provided from earnings through
approximately the distribution dates.
There are no material legal restrictions upon the Company's present or
future ability to make distributions in accordance with the provisions of the
Declaration of Trust.
The Company has adopted a policy of attempting to maintain stable
distributions to shareholders during the offering and acquisition stages of the
Company. In order to accomplish this result, it has disposed of, and may be
required to continue to dispose of, a portion of the Mortgage Investments
consisting of CMOs and REMICs during this period. The effect of this policy has
been the following: (a) a portion of the distributions have constituted, and
will continue to constitute, a return of capital; (b) earlier investors' returns
from an investment in the Company will be greater than later investors' returns;
and (c) there will be a decrease in funds remaining invested in Mortgage
Investments.
Of the total distributions of $5,569,283 and $5,566,609 made in the
years ended December 31, 1996 and 1995, $2,281,652 ($.57 per share or 41%) and
$2,419,477 ($.61 per share or 43%) represented returns of capital determined in
accordance with generally accepted accounting principles. As of December 31,
1996, the aggregate amount of the distributions made since the commencement of
the Offering representing a return of capital, in accordance with generally
accepted accounting principles, totaled $6,983,015 ($1.74 per share or 43%). The
portion of the distributions which constitutes a return of capital may continue
to be significant during the acquisition stage in order to maintain level
distributions to shareholders. However, the aggregate amount of the disposition
proceeds used for distributions cannot in the aggregate, exceed 3% of the Gross
Proceeds. As of December 31, 1996, the aggregate amount of disposition proceeds
used to support distributions equaled 2.44% of the Gross Proceeds. During the
years ended December 31, 1996 and 1995, no investments were sold in order to
support the distribution policy.
-11-
<PAGE>
Item 6. Selected Financial Data.
The information set forth below presents selected financial data of the
Company. Additional financial information is set forth in the audited financial
statements and footnotes thereto contained in Item 8, Financial Statements and
Supplementary Data.
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------------------------------------------
OPERATIONS 1996 1995 1994 1993 1992
- - ---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Interest income:
Temporary investments $ 252,140 $ 515,295 $ 631,825 $ 320,147 $ 226
Investments in loans 2,866,017 2,257,883 1,817,057 66,251 0
Investments in REMIC
and GNMA certificates
and FHA Insured
Project Loan 1,306,658 1,582,724 1,089,333 181,730 0
Other income 0 0 97,221 0 0
------------ ------------ ------------ ------------ ------------
Total revenues 4,424,815 4,355,902 3,635,436 568,128 226
Total expenses 1,137,184 1,208,770 1,015,734 215,789 7,342
------------ ------------ ------------ ------------ ------------
Net income (loss) $ 3,287,631 $ 3,147,132 $ 2,619,702 $ 352,339 $ (7,116)
============ ============ ============ ============ ============
Net income (loss) per
weighted average share$ .83 $ .81 $ .72 $ .37 $ (.71)
============ ============ ============ ============ ============
Distribution per share $ 1.4500 $ 1.4500 $ .1391-1.4500* $.0159-.7548* $ .00
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------------------------
FINANCIAL POSITION 1996 1995 1994 1993 1992
- - ------------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total Assets $ 63,147,215 $ 65,517,610 $ 65,041,319 $ 55,086,936 $ 818,336
============ ============ ============ ============ ============
Total Liabilities $ 986,551 $ 1,002,976 $ 356,602 $ 601,398 $ 626,927
============ ============ ============ ============ ============
Total Shareholders'
Equity $ 62,160,664 $ 64,514,634 $ 64,684,717 $ 54,485,538 $ 191,409
============ ============ ============ ============ ============
</TABLE>
* Amounts received by shareholders varied depending on the dates they
became shareholders.
-12-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
The Company issued 10,000 shares of beneficial interest at $20 per
share in exchange for $200,000 cash from the Advisor to the Company. As of
November 30, 1994 (the termination date of the Offering), the Company had
received $76,192,021 (before volume discounts of $40,575) in Gross Proceeds from
the sale of 3,738,613 shares pursuant to the Offering and 70,988 shares through
the Reinvestment Plan, resulting in Net Proceeds available for investment of
approximately $69,334,743 after volume discounts, payments of sales commissions
and organization and offering expenses. Pursuant to the Redemption Plan, which
became effective November 30, 1994, the Company is required to redeem eligible
shares presented for redemption for cash to the extent it has sufficient net
proceeds from the sale of shares under the Reinvestment Plan. After November 30,
1994, 151,918 shares were sold through the Reinvestment Plan, the proceeds of
which are restricted for use in connection with the Redemption Plan and are not
included in gross proceeds. Pursuant to the Redemption Plan, as of December 31,
1996, the Company redeemed 168,943 shares for an aggregate price of $3,206,353.
Of such redemptions, 16,931 shares were redeemed from proceeds from the
Reinvestment Plan before the termination of the Offering and therefore, the
proceeds available for future investment were reduced by $319,987. During the
Offering, the Advisor had received 38,481 shares pursuant to the terms of the
Offering and Reinvestment Plan in addition to the 10,000 shares purchased. As a
result of the shares being redeemed, the Advisor was required to return 172
shares as of December 31, 1996.
During the year ended Demember 31, 1996, cash and cash equivalents
decreased approximately $1,414,000 primarily due to distributions to
shareholders ($5,569,000) and an increase in investment in loans ($6,148,000)
which exceeded proceeds from the sale of REMIC Certificates ($4,941,000), cash
provided by operating activities ($3,947,000) and principal repayments of loans,
GNMAs, REMICs and the FHA Insured Project Loan ($1,466,000). Included in the
adjustments to reconcile the net income to cash flow from operations is net
amortization in the amount of $463,000.
The Company has utilized the Net Proceeds of the Offering primarily to
make or invest in Originated Mortgages and Acquired Mortgages. The Company has
also invested in uninsured Additional Loans made directly to the developers or
sponsors of Developments provided that not more than an aggregate of 7% of the
Net Proceeds raised in the Offering were invested in Additional Loans. As of
December 31, 1996, of the total Net Proceeds available for investment, 84.9% had
been invested in Originated Mortgages (including 6.32% in Additional Loans) and
15.1% in Acquired Mortgages.
As of December 31, 1996, the Company had funded five Originated
Mortgages (excluding GNMAs-see below) in an aggregate amount of $40,008,791, and
five non-interest bearing Additional Loans in the aggregate amount of
$4,362,409, in connection with the permanent financing provided on five
Developments.
In 1993, the Company made investments in two REMIC Certificates in the
aggregate amount of $14,999,538, which were sold during 1993, 1994, 1995 and
1996. In 1994, the Company acquired (i) three Ginnie Mae Guaranteed FHA Insured
Project Loan Backed Certificates in the aggregate amount of $8,532,847 and (ii)
three FHLMC REMIC Certificates and one Fannie Mae Mortgage Guaranteed REMIC
Certificate in the aggregate amount of $2,991,844. In 1995, the company acquired
a FHA Insured Project Loan in the aggregate amount of $3,374,679. Unrealized
losses on REMIC and GNMA and FHA Insured Project Loan investments included in
shareholders' equity pursuant to Statement of Financial Accounting Standards No.
115 aggregated $81,386 at December 31, 1996. This represents an increase of
$22,323 from December 31, 1995 of which a decrease of $248,254 is attributable
to the sale of securities (which created a realized loss of $415,975) and an
increase of $270,577 is attributed to a decrease in market prices for the
investments held at December 31, 1996 and 1995. As of March 18, 1997, the
unrealized loss was approximately $135,000.
The yield on the REMIC and GNMA Certificates will depend, in part, upon
the rate and timing of principal prepayments on the underlying mortgages in the
asset pool. Generally, as market interest rates decrease, mortgage prepayment
rates increase and the market value of interest rate sensitive obligations like
the REMIC and
-13-
<PAGE>
GNMA Certificates increases. As market interest rates increase, mortgage
prepayment rates tend to decrease and the market value of interest rate
sensitive obligations like the REMICs and GNMAs tends to decrease. The effect of
prepayments on yield is greater the earlier a prepayment of principal is
received. Due to the complexity of the REMIC structure and the uncertainty of
future economic and other factors that affect interest rates and mortgage
prepayments, it is not possible to predict the effect of future events upon the
yield to maturity or the market value of the REMIC and GNMA Certificates upon
any sale or other disposition or whether the Company, if it chose to, would be
able to reinvest proceeds from prepayments at favorable rates relative to the
coupon rate.
The Company intends to continue to invest the Net Proceeds (including
the portion of reinvested dividends not used for the Redemption Plan) in
Mortgage Investments. Unadvanced amounts will be invested in temporary
investments. The Company expects that cash generated from the Company's
investments will be sufficient to pay all of the Company's expenses in the
foreseeable future.
Initially, liquidity was based upon the proceeds raised from the
Offering. Subsequent to the offering period, which terminated as of November 30,
1994, the Company's liquidity is based primarily on interest received from
permanent Mortgage Investments and interest on unadvanced amounts from
Originated Mortgages. In order to qualify as a REIT under the Internal Revenue
Code, as amended, the Company must distribute at least 95% of its taxable
income.
For a description of the Company's investments in Originated Mortgages,
REMIC and GNMA Certificates and FHA Insured Project Loan, see Notes 3 and 4 to
the financial statments in Item 8, Financial Statements and Supplementary Data.
Results of Operations
Results of operations for the years ended December 31, 1996, 1995 and
1994, primarily consists of interest income from Originated Mortgages, REMIC
Certificates, FHA Insured Project Loan and temporary investments less
administrative expenses, realized losses on sale of REMICs and GNMAs and FHA
Insured Project Loan and amortization expenses. The total of the annual
operating expenses of the Company may not exceed the greater of (i) 2% of the
Average Invested Assets of the Company or (ii) 25% of the Company's net income,
unless such excess is approved by the Independent Trustees. On an annualized
basis, there was no excess for the years ended December 31, 1996, 1995 and 1994.
1996 vs 1995
Results of operations for the year ended December 31, 1996 consist
primarily of interest income of approximately $2,866,000 earned on Originated
Mortgages (excluding GNMAs), approximately $1,307,000 earned from investments in
REMIC and GNMA Certificates and the FHA Insured Project Loan, and approximately
$252,000 earned from temporary investments.
The increase in interest income from Originated Mortgages (excluding
GNMAs) of approximately $608,000 for the year ended December 31, 1996 as
compared to 1995 is due to the addition of the Stony Brook Originated Mortgage
in December 1995 and additional advances on the Columbiana Originated Mortgage
during 1995 and 1996.
The decrease in interest from REMIC and GNMA Certificates and the FHA
Insured Project Loan of approximately $276,000 for the year ended December 31,
1996 as compared to 1995 is primarily due to the sale of a portion of one of the
REMICs in March 1995 and the sale of one REMIC in August 1996, as well as
decreased principal balances as a result of principal repayments.
The decrease in interest income from temporary investments of
approximately $263,000 for the year ended December 31, 1996 as compared to 1995
is primarily due to a decrease in uninvested proceeds, temporary investments
earning interest in 1996.
-14-
<PAGE>
The decrease in general and administrative expenses of approximately
$28,000 for the year ended December 31, 1996 as compared to 1995 is primarily
due to a decrease in printing and stationery expenses.
1995 vs. 1994
Results of operations for the year ended December 31, 1995 consisted
primarily of interest income of approximately $2,258,000 earned on Originated
Mortgages (excluding GNMAs), approximately $1,583,000 earned from investments in
REMIC and GNMA Certificates and FHA Insured Project Loan, and approximately
$515,000 earned from temporary investments.
The increase in interest income from Originated Mortgages (excluding
GNMAs) of approximately $441,000 for the year ended December 31, 1995 compared
to the year ended December 31, 1994 was due to the addition of two new
Originated Mortgages in April 1994 and one new Originated Mortgage in December
1995.
The increase in interest income from REMIC and GNMA Certificates and
the FHA Insured Project Loan of approximately $493,000 for the year ended
December 31, 1995 compared to the year ended December 31, 1994 was primarily due
to the acquisition of three GNMAs in the third quarter of 1994, four REMICs in
the fourth quarter in 1994 and the acquisition of the FHA Insured Project Loan
in the first quarter in 1995.
The decrease in interest income from temporary investments of
approximately $117,000 for the year ended December 31, 1995 compared to the year
ended December 31, 1994, was primarily due to a decrease in uninvested proceeds
earning interest in 1995.
The increase in general and administrative related parties expenses of
approximately $67,000 for the year ended December 31, 1995 compared to the year
ended December 31, 1994, was primarily due to an increase in asset management
fees as a result of an increase in investments in 1995 as compared to 1994.
There was a realized loss on sale of REMICs and GNMAs and FHA Insured Project
Loan of $439,247 and $298,812 for the years ended December 31, 1995 and 1994,
respectively.
Distribution Policy
The Company has adopted a policy of attempting to maintain stable
distributions to shareholders during the offering and acquisition stages of the
Company. In order to accomplish this result, it has disposed of, and may be
required to continue to dispose of a portion of the CMOs and REMICs during this
period. The effect of this policy has been the following: (a) a portion of the
distributions have constituted, and will continue to constitute, a return of
capital; (b) earlier investors' returns from an investment in the Company will
be greater than later investors' returns; and (c) there will be a decrease in
funds remaining to be invested in Mortgage Investments.
In order to minimize the possible adverse effects of the investment and
distribution policy described above, the Company has made the following
undertakings: (a) the Advisor has agreed not to retain acquisition fees or loan
disposition fees with respect to any portion of REMICs or CMOs which are sold
pursuant to the distribution policy; such fees totaled $96,112 as of December
31, 1996 and 1995; (b) the Advisor has agreed to contribute to the Company funds
equal to the amount by which all trading losses exceed the gains resulting from
the sale of REMIC and CMO investments to supplement the distribution policy;
such funds totaled $97,221 as of December 31, 1996 and 1995 and is included in
other income during the year ended December 31, 1994; and (c) the Company has
agreed to limit the total amount which can be returned to investors from the
early sale of investments to support the distributions policy to less than 3% of
the Gross Proceeds. During the years ended December 31, 1996 and 1995, no
investments were sold in order to support the distribution policy.
Of the total distributions of $5,569,283, $5,566,609 and $4,839,766
made for the years ended December 31, 1996, 1995 and 1994, $2,281,652 ($.57 per
share or 41%), $2,419,477 ($.61 per share or 43%) and $2,220,064 ($.58 per share
or 46%) represents a return of capital determined in accordance with generally
accepted
-15-
<PAGE>
accounting principles. As of December 31, 1996, the aggregate amount of the
distributions made since the commencement of the Offering representing a return
of capital, in accordance with generally accepted accounting principles, totaled
$6,983,015 ($ 1.74 per share or 43%). The portion of the distributions which
constitute a return of capital may be significant during the acquisition stage
in order to maintain level distributions to shareholders. However, as described
above, the aggregate amount of the disposition proceeds used for distributions
cannot in the aggregate exceed 3% of the Gross Proceeds. As of December 31,
1996, the aggregate amount of disposition proceeds used to support distributions
equaled 2.44% of the Gross Proceeds resulting in approximately $428,000 being
available to support future distributions if necessary.
Management expects that cash flow from operations combined with the
balance of the disposition proceeds above will be sufficient to fund the
Company's operating expenses and continue to make distributions at the current
level in the future.
Item 8. Financial Statements and Supplementary Data.
<TABLE>
<CAPTION>
(a) 1. Financial Statements Page
-------------------- ----
<S> <C> <C>
Independent Auditors' Report 17
Balance Sheets as of December 31, 1996 and 1995 18
Statements of Income for the years ended December 31, 1996, 1995 and 19
1994
Statements of Changes in Shareholders' Equity for the years ended
December 31, 1996, 1995 and 1994 20
Statements of Cash Flows for the years ended December 31, 1996, 1995 and
1994 22
Notes to Financial Statements 24
(a) 2. Financial Statement Schedules
All schedules have been omitted because they are not required or
because the required information is contained in the financial
statements or notes thereto.
</TABLE>
-16-
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees
American Mortgage Investors Trust:
We have audited the accompanying balance sheets of American Mortgage Investors
Trust (a Massachusetts Business Trust) as of December 31, 1996 and 1995, and the
related statements of income, changes in shareholders' equity, and cash flows
for each of the years in the three-year period ended December 31, 1996. These
financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Mortgage Investors
Trust as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
1996, in conformity with generally accepted accounting principles.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
January 24, 1997 except for
Note 6 which is as of February 14, 1997
-17-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
ASSETS
1996 1995
------------ ------------
<S> <C> <C> <C>
Investments in loans (Note 3) $ 45,049,596 $ 39,497,133
Investment in REMIC and GNMA Certificates and
FHA Insured Project Loan (Note 4) 12,683,331 19,327,518
Cash and cash equivalents (Note 6) 4,828,561 6,242,945
Organization costs (net of accumulated amortization
of $35,000 and $25,000, respectively) 15,000 25,000
Deferred costs 12,581 70,988
Accrued interest receivable 558,146 354,026
------------ ------------
Total assets $ 63,147,215 $ 65,517,610
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 99,768 $ 83,855
Due to affiliates (Note 5) 886,783 919,121
------------ ------------
Total liabilities 986,551 1,002,976
------------ ------------
Shareholders' equity:
Shares of beneficial interest; $.10 par value; 12,500,000 shares authorized;
4,010,000 and 3,934,423 shares issued
and outstanding, respectively 401,001 393,443
Treasury stock; $.10 par value; 169,115 and 93,539 shares,
respectively (16,912) (9,354)
Additional paid-in capital 68,849,567 68,899,562
Accumulated deficit (6,991,606) (4,709,954)
Net unrealized loss on marketable securities (Note 4) (81,386) (59,063)
------------ ------------
Total shareholders' equity 62,160,664 64,514,634
------------ ------------
Total liabilities and shareholders' equity $ 63,147,215 $ 65,517,610
============ ============
</TABLE>
See accompanying notes to financial statements.
-18-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Interest income:
Mortgage loans (Note 3) $2,866,017 $2,257,883 $1,817,057
REMIC and GNMA Certificates and
FHA Insured Project Loan (Note 4) 1,306,658 1,582,724 1,089,333
Temporary investments 252,140 515,295 631,825
Other income (Note 5) 0 0 97,221
---------- ---------- ----------
Total revenues 4,424,815 4,355,902 3,635,436
---------- ---------- ----------
Expenses:
General and administrative (Note 5) 203,846 232,075 246,293
General and administrative-related parties (Note 5) 507,363 527,448 460,629
Realized loss on sale of REMICs and GNMAs and
FHA Insured Project Loan (Note 4) 415,975 439,247 298,812
Amortization 10,000 10,000 10,000
---------- ---------- ----------
Total expenses 1,137,184 1,208,770 1,015,734
---------- ---------- ----------
Net income $3,287,631 $3,147,132 $2,619,702
========== ========== ==========
Net income per weighted average share $ .83 $ .81 $ .72
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
-19-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Shares of
Beneficial Interest Treasury Stock
------------------------ --------------------------
Shares Amount Shares Amount
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Balance at
January 1, 1994 3,021,896 $ 302,190 0 $ 0
Net unrealized loss
upon adoption of
SFAS No. 115 0 0 0 0
Net Income 0 0 0 0
Distributions 0 0 0 0
Issuance of shares of
beneficial interest
(Note 5) 836,186 83,619 0 0
Offering Costs 0 0 0 0
Change in net unrealized
loss on
securities available
for sale (Note 4) 0 0 0 0
--------- ------------ ---------- ------------
Balance at
December 31, 1994 3,858,082 385,809 0 0
Net Income 0 0 0 0
Distributions 0 0 0 0
Purchase of
Treasury Stock 0 0 (93,539) (9,354)
Issuance of shares of
beneficial interest
(Note 5) 76,341 7,634 0 0
Offering Costs 0 0 0 0
Change in net unrealized
loss on
securities available
for sale (Note 4) 0 0 0 0
--------- ------------ ---------- ------------
</TABLE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Continued)
<TABLE>
<CAPTION>
Net Unrealized
Gain
(Loss) on
Securities
Additional Accumulated Available
Paid-in Capital Deficit for Sale Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at
January 1, 1994 $ 54,253,761 $ (70,413) $ 0 $ 54,485,538
Net unrealized loss
upon adoption of
SFAS No. 115 0 0 (306,908) (306,908)
Net Income 0 2,619,702 0 2,619,702
Distributions 0 (4,839,766) 0 (4,839,766)
Issuance of shares of
beneficial interest
(Note 5) 16,580,628 0 0 16,664,247
Offering Costs (1,613,807) 0 0 (1,613,807)
Change in net unrealized
loss on
securities available
for sale (Note 4) 0 0 (2,324,289) (2,324,289)
--------- ------------ ---------- ------------
Balance at
December 31, 1994 69,220,582 (2,290,477) (2,631,197) 64,684,717
Net Income 0 3,147,132 0 3,147,132
Distributions 0 (5,566,609) 0 (5,566,609)
Purchase of
Treasury Stock (1,763,587) 0 0 (1,772,941)
Issuance of shares of
beneficial interest
(Note 5) 1,442,844 0 0 1,450,478
Offering Costs (277) 0 0 (277)
Change in net unrealized
loss on
securities available
for sale (Note 4) 0 0 2,572,134 2,572,134
--------- ------------ ---------- ------------
</TABLE>
-20-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(continued)
<TABLE>
<CAPTION>
Shares of
Beneficial Interest Treasury Stock
------------------------ --------------------------
Shares Amount Shares Amount
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Balance at
December 31, 1995 3,934,423 $ 393,443 (93,539) $ (9,354)
Net Income 0 0 0 0
Distributions 0 0 0 0
Purchase of
Treasury Stock 0 0 (75,576) (7,558)
Issuance of shares of
beneficial interest
(Note 5) 75,577 7,558 0 0
Offering Costs 0 0 0 0
Change in net unrealized
loss on
securities available
for sale (Note 4) 0 0 0 0
--------- ------------ -------- ------------
Balance at
December 31, 1996 4,010,000 $ 401,001 (169,115) $ (16,912)
========= ============ ======== ============
</TABLE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(continued)
<TABLE>
<CAPTION>
Net Unrealized
Gain
(Loss) on
Securities
Additional Accumulated Available
Paid-in Capital Deficit for Sale Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at
December 31, 1995 $ 68,899,562 $ (4,709,954) $ (59,063) $ 64,514,634
Net Income 0 3,287,631 0 3,287,631
Distributions 0 (5,569,283) 0 (5,569,283)
Purchase of
Treasury Stock (1,428,391) 0 0 (1,435,949)
Issuance of shares of
beneficial interest
(Note 5) 1,428,396 0 0 1,435,954
Offering Costs (50,000) 0 0 (50,000)
Change in net unrealized
loss on
securities available
for sale (Note 4) 0 0 (22,323) (22,323)
------------ ------------ ------------ ------------
Balance at
December 31, 1996 $ 68,849,567 $ (6,991,606) $ (81,386) $ 62,160,664
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
-21-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,287,631 $ 3,147,132 $ 2,619,702
------------ ------------ ------------
Adjustments to reconcile net income to net cash
provided by operating
activities:
Amortization expense-organization costs 10,000 10,000 10,000
Amortization expense-loan premium and origination costs 477,342 417,254 357,160
Amortization of REMIC premium 19,523 24,149 57,413
Amortization of REMIC and GNMA and
FHA Insured Project Loan discount (43,376) (54,490) (11,994)
Loss on sale of REMIC certificates 408,692 441,967 299,480
(Gain) loss on sale of GNMA certificates 5,689 (1,596) (668)
(Gain) loss on sale of FHA Insured Project Loan 1,594 (1,124) 0
Changes in operating assets and liabilities:
Increase in accrued interest receivable (204,120) (50,743) (189,614)
(Decrease) increase in due to affiliates (32,338) 832,703 0
Increase (decrease) in accounts payable and
accrued expenses 15,913 (186,329) (79,589)
------------ ------------ ------------
Total adjustments 658,919 1,431,791 442,188
------------ ------------ ------------
Net cash provided by operating activities 3,946,550 4,578,923 3,061,890
------------ ------------ ------------
Cash flows from investing activities:
Investments in loans, net (6,148,482) (6,375,200) (13,301,018)
Purchase of FHA Insured Project Loan 0 (3,374,679) 0
Purchase of REMIC and GNMA certificates 0 0 (11,524,691)
Principal repayments of loans 177,095 164,285 121,446
Proceeds from sale of REMIC certificates 4,940,625 4,092,188 4,740,764
Principal repayments of GNMA certificates 95,396 87,819 33,708
Principal repayments of REMIC certificates 1,149,123 1,061,809 165,100
Principal repayments of FHA Insured Project Loan 44,598 37,460 0
Origination costs 0 (421,187) (1,163,690)
Increase in deferred costs (11) (4,815) (133,505)
------------ ------------ ------------
Net cash provided by (used in) investing activities 258,344 (4,732,320) (21,061,886)
------------ ------------ ------------
Cash flows from financing activities:
Decrease in due from Advisor 0 0 541,253
Decrease in due to affiliate 0 0 (165,207)
Distributions to shareholders (5,569,283) (5,566,609) (4,839,766)
Proceeds from issuance of shares of beneficial interest 1,435,954 1,450,478 16,540,907
Purchase of treasury stock (1,435,949) (1,770,404) 0
Increase in offering costs (50,000) (2,814) (1,490,467)
------------ ------------ ------------
Net cash (used in) provided by financing activities (5,619,278) (5,889,349) 10,586,720
------------ ------------ ------------
</TABLE>
(Continued)
-22-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF CASH FLOWS
(continued)
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net decrease in cash and cash equivalents (1,414,384) (6,042,746) (7,413,276)
Cash and cash equivalents at beginning of year 6,242,945 12,285,691 19,698,967
------------ ------------ ------------
Cash and cash equivalents at end of year $ 4,828,561 $ 6,242,945 $ 12,285,691
============ ============ ============
Supplemental schedule of noncash financial activities:
Offering costs incurred (value of shares issued
to the Advisor) $ 0 $ 2,538 $ (123,340)
Shares issued to the Advisor 0 0 123,340
Treasury stock (return of shares issued to Advisor) 0 (2,538) 0
Decrease in deferred costs 58,418 112,479 287,952
Increase in investments in loans (58,418) (74,130) (156,989)
Increase in investments in REMICs and GNMAs 0 (38,349) (130,963)
------------ ------------ ------------
$ 0 $ 0 $ 0
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
-23-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
NOTE 1 - General
American Mortgage Investors Trust (the "Company") was formed on June
11, 1991 as a Massachusetts business trust for the primary purpose of investing
in government-insured mortgages and guaranteed mortgage-backed certificates. The
Company is electing to be treated as a real estate investment trust ("REIT")
under the Internal Revenue Code of 1986, as amended.
The Company issued 10,000 shares of beneficial interest at $20 per
share in exchange for $200,000 cash from Related AMI Associates, Inc., the
current advisor to the Company (the "Advisor").
On March 29, 1993, the Company commenced a public offering (the
"Offering") through Related Equities Corporation, (the "Dealer Manager") an
affiliate of the Advisor, and other broker-dealers on a "best efforts" basis,
for up to 10,000,000 of its shares of beneficial interest at an initial offering
price of $20 per share. The Offering terminated as of November 30, 1994. As of
November 30, 1994, a total of 3,809,601 shares had been sold to the public,
either through the Offering or the Company's dividend reinvestment plan (the
"Reinvestment Plan"), representing Gross Proceeds (the "Gross Proceeds") of
$76,192,021 (before volume discounts of $40,575). Pursuant to the Redemption
Plan which became effective November 30, 1994, the Company is required to redeem
eligible shares presented for redemption for cash to the extent it has
sufficient net proceeds from the sale of shares under the Reinvestment Plan.
After November 30, 1994, 151,918 shares were sold through the Reinvestment Plan,
the proceeds of which are restricted for use in connection with the Redemption
Plan and are not included in Gross Proceeds. Pursuant to the Redemption Plan as
of December 31, 1996, 168,943 shares were redeemed for an aggregate price of
$3,206,353. Of such redemptions, 16,931 shares were redeemed from proceeds from
the Reinvestment Plan before the termination of the Offering and therefore, the
proceeds available for future investment have been reduced by $319,987. In
addition, during the Offering, the Advisor received 38,481 restricted shares
(including 717 from the Reinvestment Plan) in addition to the 10,000 shares
purchased, which the Advisor has valued at $14.75 per share, pursuant to the
terms of the Offering. As a result of the shares being redeemed the Advisor was
required to return 172 shares as of December 31, 1996.
The Company has invested principally in two types of mortgage
investments ("Mortgage Investments"): (i) new mortgage loans originated by or on
behalf of the Company or by other lenders and sold to the Company prior to the
loans being fully funded and (ii) Ginnie Mae mortgage-backed securities and
pass-through certificates ("Originated Mortgages") and existing mortgage loans
that it acquires ("Acquired Mortgages") on multifamily residential rental
properties ("Developments"). No more than 7% of the Net Proceeds may be invested
in non-interest bearing uninsured loans made directly to developers or sponsors
of Developments (or the general partners or other principals of the owner of the
Developments) with respect to which the Company holds a mortgage ("Additional
Loans"). As of December 31, 1996, all of the original Net Proceeds available for
investment had been invested in permanent Mortagage Investments. As of December
31, 1996, of the total Net Proceeds available for investment, 84.9% had been
invested in Originated Mortgages (including 6.32% in Additional Loans) and 15.1%
had been invested in Acquired Mortgages.
The Company also invests in REMICs and in CMOs or participations
therein that are backed by single family and/or multifamily mortgage loans
insured by FHA or mortgage certificates guaranteed by Ginnie Mae, Fannie Mae or
Freddie Mac. Due to the complexity of the REMIC structure and the uncertainty of
future economic and other factors that affect interest rates and mortgage
prepayments, it is not possible to predict the effect of future events upon the
yield to maturity or the market value of the REMIC and GNMA Certificates upon
any sale or other disposition or whether the Company, if it chose to, would be
able to reinvest proceeds from prepayments at favorable rates relative to the
coupon rate.
-24-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - Accounting Policies
a) Basis of Accounting
The books and records of the Company are maintained on the accrual
basis of accounting in accordance with generally accepted accounting principles.
b) Cash and Cash Equivalents
Cash and cash equivalents include temporary investments with original
maturity dates equal to or less than 3 months and are carried at cost plus
accrued interest, which approximates market.
c) Loan Origination Costs
Acquisition fees and expenses incurred for the investment of mortgage
loans have been capitalized and are included in investment in loans. Loan
origination costs are being amortized on the effective yield method over the
lives of the respective mortgages.
d) Organization and Offering Costs
Costs incurred to organize the Company including, but not limited to,
legal, accounting, and registration fees are considered organization costs.
These costs have been capitalized and are amortized on a straight line basis
over a 60-month period.
Costs incurred to sell shares including brokerage and nonaccountable
expense allowance are considered offering costs. These costs are charged
directly to shareholders' equity.
e) Income Taxes
The Company has qualified as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"). A real estate investment
trust is generally not subject to federal income tax on that portion of its real
estate investment trust taxable income ("Taxable Income") which is distributed
to its shareholders provided that at least 95% of Taxable Income is distributed.
No provision for federal income taxes has been made in the financial statements,
as the Company believes it is in compliance with the Code and has distributed
all of its Taxable Income.
f) Net Income Per Weighted Average Share
Net income per weighted average share is computed based on the net
income for the period, divided by the weighted average number of shares
outstanding for the period. The weighted average number of shares outstanding
for the years ended December 31, 1996, 1995 and 1994 were 3,972,625, 3,896,620
and 3,638,977, respectively.
g) Investments in Mortgage-Backed Securities
The Company follows the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity Securities". At December
31, 1996 and 1995, the Company has classified its securities as
available-for-sale.
Available-for-sale securities are carried at fair value with net
unrealized gain (loss) reported as a
-25-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - Accounting Policies continued)
separate component of shareholders' equity until realized. A decline in the
market value of any available-for-sale security below cost that is deemed other
than temporary is charged to earnings resulting in the establishment of a new
cost basis for the security.
Premiums and discounts are amortized or accreted over the life of the
related security as an adjustment to yield using the effective interest method.
Dividend and interest income are recognized when earned. Realized gains and
losses for securities are included in earnings and are derived using the
specific identification method for determining the cost of the securities sold.
h) Reclassifications
Certain prior year amounts have been reclassified to conform with
current year presentation.
i) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
j) Financial Instruments
The Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 107, Disclosures about Fair Value of Financial
Instruments, defines fair value of a financial instrument as the amount at which
the instrument could be exchanged in a current transaction between willing
parties. Financial instruments held by the Company include cash and cash
equivalents, investments in loans, investment in REMIC and GNMA Certificates and
FHA Insured Project Loan, interest receivable and accounts payable and accrued
expenses.
For cash and cash equivalents, investments in loans, interest
receivable and accounts payable and accrued expenses the carrying amounts are a
reasonable estimate of fair value. The investment in REMIC and GNMA Certificates
and FHA Insured Project Loan are carried at fair value.
k) Accounting by Creditors for Impairment of a Loan
Effective January 1, 1995, the Company has adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan." SFAS No. 114 requires
lenders to measure impaired loans based on: (i) the present value of expected
future cash flows discounted at the loans' effective interest rate; (ii) the
loan's observable market price; or (iii) the fair value of the collateral if the
loan is collateral-dependent. An allowance for loan losses is maintained if the
measure of an impaired loan is less than its recorded investment. Adjustments to
the allowance are made through corresponding charges or credits to the provision
for loan losses.
SFAS No. 114 made certain changes to existing accounting principles
applicable to in-substance foreclosures and restructured loans. SFAS No. 114
substantially narrows the definition of an in-substance foreclosure to
situations in which the lender has physical possession of the collateral.
SFAS No. 114 was amended by SFAS No. 118 which allows for
existing income recognition practices to continue. The implementation of SFAS
Nos. 114 and 118 did not have any impact on the financial statements.
-26-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - Investments in Loans
The Company originally funded five Originated Mortgages (excluding
GNMAs-see Note 4), five non-interest bearing Additional Loans and two additional
loan-bridge loans in the aggregate amount of $44,371,200.
Information relating to investments in Originated Mortgages and
Additional Loans for the years ended December 31, 1996 and 1995 are as follows:
Investments in loans - January 1, 1995 $ 33,284,852
Additions:
Columbiana Originated Mortgage 8,683,000
Columbiana Originated Mortgage - unadvanced (1,130,900)
----------
Columbiana total advanced 7,552,100
Columbiana advanced in 1994 (2,551,018)
---- ----------
Columbiana-advanced in 1995 5,001,082
Stonybrook Originated Mortgage 8,500,000
Stonybrook Originated Mortgage - unadvanced (7,889,791)
----------
Stonybrook advanced in 1995 610,209
Stonybrook equity loan 763,909
Columbiana-loan origination costs 58,152
Stonybrook - loan origination costs 360,468
------------
40,078,672
------------
Deductions:
Amortization of Additional Loans (312,165)
Amortization of loan origination costs (105,089)
Collection of principal - Cove (43,288)
- Oxford (59,521)
- Town and Country (61,476)
------------
(581,539)
------------
Investments in loans, December 31, 1995 $ 39,497,133
-27-
<PAGE>
Note 3- Investments in loans (continued)
Additions:
Columbiana Originated Mortgage 8,683,000
Columbiana Originated Mortgage - unadvanced (666,872)
----------
Columbiana total advanced 8,016,128
Columbiana advanced in 1995 and 1994 (7,552,100)
----------
Columbiana-advanced in 1996 464,028
Columbiana-loan origination costs 5,395
Stonybrook Originated Mortgage 8,500,000
Stonybrook Originated Mortgage - unadvanced (2,205,337)
----------
Stonybrook total advanced 6,294,663
Stonybrook advanced in 1995 (610,209)
----------
Stonybrook advanced in 1996 5,684,454
Stonybrook - loan origination costs 54,023
------------
45,704,033
------------
Deductions:
Amortization of Additional Loans (372,916)
Amortization of loan origination costs (104,426)
Collection of principal - Cove (46,706)
- Oxford (64,222)
- Town and Country (66,167)
------------
(654,437)
------------
Investments in loans - December 31, 1996 $ 45,049,596
============
-28-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - Investments in Loans
Information relating to investments in Originated Mortgages and Additional Loans
as of December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
Date of
Invest- Amounts Advanced
ment/ ---------------------------------------------------
Final Total
Maturity Additional Bridge Mortgage Amounts
Property Description Date Loans Loans Loans Advanced
- - -------- ----------- -------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
The Cove Apts 308 Dec. 93 $ 840,500 $ 84,210 $ 6,800,000 $ 7,724,710
Houston, Apartment Jan. 29 (D)
TX (A) Units (E)
Oxford on 405 Dec. 93 1,156,000 115,790 9,350,000 10,621,790
Greenridge Apartment Jan. 29 (D)
Apts Units (E)
Houston,
TX (A)
Town & 330 Apr. 94 1,039,000 None 9,348,000 10,387,000
Country IV Apartment May 29
Apts Units (F)
Urbana,
IL (B)
Columbiana 204 Apr. 94 563,000 None 8,016,128 8,579,128
Lakes Apts Apartment Nov. 35
Columbia, Units (G)
SC (C)
Stony Brook 125 Dec. 95 763,909 None 6,294,663 7,058,572
Village II Apts Apartment June 37
East Haven, Units (G)
CT (H)
-----------------------------------------------------
Total $ 4,362,409 $ 200,000 $39,808,791 $44,371,200
=====================================================
</TABLE>
<TABLE>
<CAPTION>
Total
Amounts
Advanced Loan
Amounts and Outstanding Origination Accumulated
Property Unadvanced Unadvanced Loan Balance Costs Amortization
- - -------- ---------- ---------- ------------ ----- ------------
<S> <C> <C> <C> <C> <C>
The Cove Apts $ 0 $ 7,724,710 $ 7,513,614 $ 444,215 $ 307,952
Houston,
TX (A)
Oxford on 0 10,621,790 10,331,531 610,814 423,522
Greenridge
Apts
Houston,
TX (A)
Town & 0 10,387,000 10,225,529 603,895 313,914
Country IV
Apts
Urbana,
IL (B)
Columbiana 666,872 9,246,000 8,579,128 529,803 149,039
Lakes Apts
Columbia,
SC (C)
Stony Brook 2,205,337 9,263,909 7,058,572 413,491 66,569
Village II Apts
East Haven,
CT (H)
-------------------------------------------------------------------
Total $ 2,872,209 $47,243,409 $43,708,374 $ 2,602,218 $ 1,260,996
===================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Interest
Earned
Final Balance Final Balance by the Net
At December At December Company Less 1996 Interest
Property 31, 1996(I) 31, 1995 for 1996 Amortization Earned
- - -------- -------- -------- -------- ------------ ------
<S> <C> <C> <C> <C> <C>
The Cove Apts $ 7,649,877 $ 7,797,927 $ 604,479 $ 101,344 $ 503,135
Houston,
TX (A)
Oxford on 10,518,823 10,722,421 845,682 139,376 706,306
Greenridge
Apts
Houston,
TX (A)
Town & 10,515,510 10,698,339 824,654 116,662 707,992
Country IV
Apts
Urbana,
IL (B)
Columbiana 8,959,892 8,546,769 671,018 56,300 614,718
Lakes Apts
Columbia,
SC (C)
Stony Brook 7,405,494 1,731,677 397,526 63,660 333,866
Village II Apts
East Haven,
CT (H)
-------------------------------------------------------------------
Total $45,049,596 $39,497,133 $ 3,343,359 $ 477,342 $ 2,866,017
===================================================================
</TABLE>
(A) The interest rates for The Cove and Oxford are 7.625%-9.129% during the
permanent loan period. In addition to the interest rate during the permanent
loan period, the Company will be entitled to 30% of the cash flow remaining
after payment of 9.129% interest and accrued interest, if any. Payments at
the rate of 9.129% are guaranteed by the developer for three years after
closing of the loans.
(B) The interest rates for Town and Country are 7.375%-9.167% during the
permanent loan period. In addition to the interest rate during the permanent
loan period, the Company will be entitled to 30% of the cash flow remaining
after payment of 9.167% interest.
(C) The interest rates for Columbiana are 7.9%-8.678% during the permanent loan
period and 7.4% during the construction period. In addition to the interest
rate during the permanent loan period, the Company will be entitled to 25%
of the cash flow remaining after payment of 8.678% interest.
(D) Bridge loans were repaid in full on April 7, 1994.
(E) The Originated Mortgages have terms of 35 years, subject to mandatory
prepayment at any time after 10 years and upon one year's notice.
(F) The Originated Mortgage has a term of 35 years, subject to mandatory
prepayment at any time after 12 years and upon one year's notice.
(G) The Originated Mortgage has a term of 40 years, subject to mandatory
prepayment at any time after 10 years and upon one year's notice.
(H) The interest rates for Stony Brook are 7.75%-9.128% during the permanent
loan period and 8.625% during the construction period. In addition to the
interest rate during the permanent loan period, the Company will be entitled
to 40% of the cash flow remaining after payment of 9.128% interest.
(I) Aggregate cost for federal income tax purposes is $ 45,707,370
-29-
<PAGE>
NOTE 4 - Investment in REMIC and GNMA Certificates and FHA Insured Project
Loan
Originated Mortgages
GNMA Certificates
The Company used a portion of the net proceeds of its Offering to
purchase three Ginnie Mae Guaranteed FHA Insured Project Loan Backed
Certificates from unaffiliated third parties. The full amount of the purchase
price of each of the GNMA Certificates was allocated as a permanent Originated
Mortgage. The table set forth below outlines pertinent information relating to
the GNMA Certificates.
Acquired Mortgages
REMIC Certificates
The Company used a portion of the net proceeds of its Offering to
purchase six REMIC Certificates from unaffiliated third parties. Except as set
forth in the notes to the table, each of the REMIC Certificates was purchased as
a permanent Acquired Mortgage. The table set forth below outlines pertinent
information relating to the REMIC Certificates.
FHA Insured Project Loan
The Company used a portion of the net proceeds of its Offering to
purchase a FHA Insured Project Loan from an unaffiliated third party. The full
amount of the purchase price was allocated as a permanent Acquired Mortgage. The
table set forth below outlines pertinent information relating to the FHA Insured
Project Loan.
Information relating to investments in REMIC and GNMA Certificates and
FHA Insured Project Loan for the years ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
<S> <C>
Investments in REMIC and GNMA Certificates and FHA Insured
Project Loan - January 1, 1995 $18,953,841
Additions:
FHA Insured Project Loan (092-11005) 3,374,679
Amortization of Discount 54,490
Origination of Costs 115,046
Gain on Sale of GNMAs 1,596
Gain on Sale of FHA Insured Project Loan 1,124
-----------
22,500,776
-----------
Deductions:
Principal Repayments (Sales) of GNMA (87,819)
Principal Repayments (Sales) of REMIC (1,061,809)
Principal Repayments (Sales) of FHA Insured Project Loan (37,460)
Proceeds from Sale of REMIC Certificates (4,092,188)
Loss on Sale of REMIC Certificates (441,967)
Amortization of REMIC Premium (24,149)
-----------
(5,745,392)
-----------
</TABLE>
-30-
<PAGE>
NOTE 4 - Investment in REMIC and GNMA Certificates and FHA Insured Project Loan
(continued)
<TABLE>
<CAPTION>
<S> <C>
Amortized Cost at December 31, 1995 $16,755,384
Change in net unrealized loss on securities available for sale 2,572,134
-----------
Fair value at December 31, 1995 19,327,518
Additions:
Amortization of Discount 43,376
-----------
19,370,894
-----------
Deductions:
Principal Repayments (Sales) of GNMA Certificates (95,396)
Principal Repayments (Sales) of REMIC Certificates (1,149,123)
Principal Repayments (Sales) of FHA Insured Project Loan (44,598)
Proceeds from Sale of REMIC Certificates (4,940,625)
Loss on Sale of REMIC Certificates (408,692)
Loss on Sale of GNMA Certificates (5,689)
Loss on Sale of FHA Insured Project Loan (1,594)
Amortization of REMIC Premium (19,523)
-----------
(6,665,240)
-----------
Amortized Cost at December 31, 1996 12,705,654
(including unrealized loss of $59,063 at December 31, 1995)
Change in net unrealized loss on securities available for sale (22,323)
-----------
Carrying value at December 31, 1996 $12,683,331
===========
</TABLE>
-31-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - Investment in REMIC and GNMA Certificates and FHA Insured Project Loan
(continued)
Information relating to investments in REMIC and GNMA Certificates and
FHA Insured Project Loan as of December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
Date Original
Purchased Purchase
/Final Stated Price Principal
Certificate Payment Interest Including at December
Seller Number Date Rate Prem/(Disc) 31, 1996
- - ------ ----------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
GNMA Certificates
Bear Stearns 355540 7/27/94 7.13% $2,407,102 $2,608,716
Malone 3/15/29
Mortgage 382486 7/28/94 8.50% 2,197,130 2,180,702
8/15/29
Goldman Sachs 328502 7/29/94 8.25% 3,928,615 3,783,812
7/15/29
REMIC Certificates
Bear Stearns 1992-17G(1) 8/27/93 6.50% 10,160,938 0
Sold (1)
Bear Stearns G-024C(2) 10/26/93 4.85% 4,838,600 0
Sold(3)
Meridan Capital
Markets 1292ZA(3) 10/25/94 5.75% 1,721,291 338,738
6/15/97
Meridan Capital
Markets 1992-153A(3) 10/25/94 5.25% 258,357 61,418
9/25/97
Meridan Capital
Markets 1580A(3) 10/27/94 6.50% 742,538 214,548
9/15/98
Meridan Capital
Markets 1258C(3) 11/9/94 7.35% 269,658 28,785
5/15/04
FHA Insured
Loan Project
Donaldson,
Lufkin &
Jenrette 092-11005 1/3/95 8.60% 3,374,679 3,408,238
4/1/19
----------- -----------
Total $29,898,908 $12,624,957
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Loan
Premium Accumulated Origination Unrealized Final
(Discount) Amortization Costs Gain(Loss) Balance
at December at December at December at December at December
31, 1996 31, 1996 31, 1996 31, 1996 31, 1996
----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
GNMA Certificates
Bear Stearns ($241,306) $49,281 $80,707 $29,593 $2,526,991
Malone
Mortgage (8,177) 1,744 74,064 (21,290) 2,227,043
Goldman Sachs (3,545) 822 128,873 (107,232) 3,802,730
REMIC Certificates
Bear Stearns 0 0 0 0 0
Bear Stearns 0 0 0 0 0
Meridan Capital
Markets (3,493) 3,493 11,429 (12,134) 338,033
Meridan Capital
Markets (1,305) 1,305 2,049 (2,386) 61,081
Meridan Capital
Markets (1,475) 1,475 7,264 (6,996) 214,816
Meridan Capital
Markets 108 (108) 985 (991) 28,779
FHA Insured
Loan Project
Donaldson,
Lufkin &
Jenrette (112,898) 36,127 112,341 40,050 3,483,858
--------- ------- -------- -------- -----------
Total ($372,091) $94,139 $417,712 ($81,386) $12,683,331
========= ======= ======== ======== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Interest
Final Earned
Balance by the Net
at December Company 1996 Interest
31, 1995 for 1996 Amortization Earned
----------- --------- ------------ -------
<S> <C> <C> <C> <C>
GNMA Certificates
Bear Stearns $2,628,912 $186,501 $20,468 $206,969
Malone
Mortgage 2,268,623 185,803 723 186,526
Goldman Sachs 3,966,233 314,666 343 315,009
REMIC Certificates
Bear Stearns 5,098,406 230,357 (19,523) 210,834
Bear Stearns 0 0 0 0
Meridan Capital
Markets 1,013,800 37,563 2,076 39,639
Meridan Capital
Markets 151,388 5,373 666 6,039
Meridan Capital
Markets 470,090 21,523 906 22,429
Meridan Capital
Markets 158,324 6,124 0 6,124
FHA Insured
Loan Project
Donaldson,
Lufkin &
Jenrette 3,571,742 294,895 18,194 313,089
----------- ---------- ------- ----------
Total $19,327,518 $1,282,805 $23,853 $1,306,658
=========== ========== ======= ==========
</TABLE>
-32-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - Investment in REMIC and GNMA Certificates and FHA Insured Project Loan
(continued)
(1) On October 15, 1993 the Company allocated $5,000,000 of the principal
face value as an Acquired Mortgage based on the expectation that a
majority of the investment would be held for at least two years. Based
on such allocation, compensation was paid to the Advisor. The Advisor
has undertaken to reimburse the Company for any compensation paid to it
which is attributable to the portion of any REMIC Certificate which is
sold to support the Company's distribution policy (the "Advisor's
Reimbursement Undertaking"). On November 4, 1993 and February 1, 1994,
the Company sold $200,000 and $200,000, respectively, of the REMIC
Certificate and the Advisor has reimbursed the Company for the fees
previously paid and the trading loss incurred with respect to the
portions of the REMIC Certificate which were sold. Also on March 30,
1995, the Company sold $4,500,000 of the temporary portion at the
discounted price of 90.9375% or $4,092,188. The realized loss on this
sale was $447,472. Also on August 15, 1996, the Company sold the
remaining balance of the temporary and permanent portion of the REMIC
Certificate which totaled $5,100,000. The realized loss on this sale
was $328,895.
The REMIC Certificate represented beneficial ownership interest in
Fannie Mae REMIC Trust 1992-17. The assets of the trust consisted
primarily of interests in a separate trust which held Fannie Mae
Guaranteed Pass-Through Certificates (the "MBS Certificates"), each of
which represented a beneficial interest in a pool of first lien,
fixed-rate residential mortgage loans (the "Mortgage Loans").
The Company was entitled to monthly interest payments on the
outstanding principal amount of the REMIC Certificate.
(2) Represented an FHLMC Mortgage Participation Certificate. On May 4,
1994, the Company allocated $2,419,300 of the principal face value as a
permanent Acquired Mortgage based on the expectation that a majority of
the investment would be held for at least two years. Based upon such
allocation, compensation was paid to the Advisor. On May 5, 1994, the
Company sold $1,000,000 of the permanent portion of the Mortgage
Participation Certificate and on October 11, 1994, the Company sold the
remaining balance of the temporary and permanent portions of the
Mortgage Participation Certificate which totaled $3,838,600. Pursuant
to the Advisor's Reimbursement Undertaking, the Advisor has reimbursed
the Company for the fees previously paid and the trading loss incurred
with respect to the permanent investment portion of the certificate
which was sold. A loss of $297,836 was recorded on these sales in 1994.
(3) Purchased as a permanent investment using a portion of the proceeds
from the sale of FHLMC REMIC Certificate #G-024C. See (2) above.
-33-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - Investment in REMIC and GNMA Certificates and FHA Insured Project Loan
(continued)
The amortized cost, unrealized gain (loss) and fair value for the
investment in REMIC and GNMA Certificates and FHA Insured Project Loan at
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Unrealized Unrealized
Amortized Gain Fair Amortized Gain Fair
Cost at (Loss) at Value at Cost at (Loss) at Value at
December December December December December December
Security 31, 1996 31, 1996 31, 1996 31, 1995 31, 1995 31, 1995
- - -------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FHA Insured
Project Loan $ 3,443,808 $ 40,050 $ 3,483,858 $ 3,471,806 $ 99,936 $ 3,571,742
Fannie Mae
REMICs 63,467 (2,386) 61,081 5,450,047 (200,253) 5,249,794
Federal
Home Loan
REMICs 601,749 (20,121) 581,628 1,729,483 (87,269) 1,642,214
Ginnie Mae
Certificates 8,655,693 (98,929) 8,556,764 8,735,245 128,523 8,863,768
------------ ------------ ------------ ------------ ------------ ------------
$ 12,764,717 $ (81,386) $ 12,683,331 $ 19,386,581 $ (59,063) $ 19,327,518
============ ============ ============ ============ ============ ============
</TABLE>
The change in the unrealized loss for the years ended December 31,
1996 and 1995 were as follows:
Unrealized loss at December 31, 1994 $ (2,631,197)
Sale of securities during the year
ended December 31, 1995 included in
unrealized loss at December 31, 1994 887,415
Unrealized gain on securities purchased
during the year ended
December 31, 1995 99,936
Unrealized gain on securities held
at December 31, 1995 and
December 31, 1994 1,584,783
------------
Unrealized loss at December 31, 1995 (59,063)
------------
Sale of securities during the year
ended December 31, 1996 included in
unrealized loss at December 31, 1995 248,254
Unrealized loss on securities held
at December 31, 1996 and
December 31, 1995 (270,577)
------------
Unrealized loss at December 31, 1996 $ (81,386)
============
-34-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - Investment in REMIC and GNMA Certificates and FHA Insured Project Loan
(continued)
For the year ended December 31, 1996, proceeds from the sale of REMICs
were $4,940,625 from the August 15, 1996 sale. The realized loss on this sale in
the amount of $328,895 (including acquisition fees and expenses) in addition to
losses of $87,080 (including acquisition fees and expenses) on principal
repayments of REMICs, GNMAs and FHA Insured Project Loan, resulted in a net loss
of $415,975 for the year ended December 31, 1996.
NOTE 5 - Related Party Transactions
The Company has entered into an agreement with the Advisor pursuant to
which the Advisor receives compensation consisting primarily of (i) compensation
in connection with the organization and start-up of the Company and the
Company's investment in the Mortgage Investments; (ii) asset management fees
calculated as a percentage of total assets invested by the Company which totaled
approximately $376,000, $340,000 and $233,000 for the years ended December 31,
1996, 1995 and 1994, respectively; (iii) a subordinated incentive fee based on
the economic gain on the sale of Mortgage Investments; (iv) an amount, payable
in shares of the Company which, after issuance, will equal 1% of all shares of
the Company issued during the offering period or pursuant to the Company's
Reinvestment Plan as compensation for services rendered. During the Offering the
Advisor received 38,481 shares, in addition to the 10,000 shares purchased,
however as a result of the shares being redeemed the Advisor was required to
return 172 shares. (As of December 31, 1996 and 1995, shares received by the
Advisor totaled 38,309 at a total value of $565,058 ($14.75 per share)); (v)
acquisition expense allowance and acquisition fees calculated as a percentage of
the Gross Proceeds applicable to the origination of Originated Mortgages and
related Additional Loans and the acquisition of Acquired Mortgages and
Additional Loan; (acquisition fees and acquisition expense allowance
approximated $2,545,000 and $722,000 as of December 31, 1996 and $2,545,000 and
$664,000 as of December 31, 1995); and (vi) certain other fees. In addition to
the costs, fees and expenses discussed above, the Company will reimburse
affiliates of the Advisor for certain administrative and other costs incurred on
behalf of the Company. The costs and expenses incurred for the years ended
December 31, 1996, 1995 and 1994 were approximately $131,000, $187,000 and
$227,000, respectively.
The Company paid commissions of up to 6% of the aggregate purchase
price of shares sold, subject to quantity discounts, as well as a
non-accountable due diligence expense reimbursement in an amount up to .5% of
Gross Proceeds to certain broker-dealers selected by the Dealer Manager and
approved by the Advisor. The Dealer Manager received commissions of 6% of the
aggregate purchase price of shares sold through the Reinvestment Plan during the
Offering. At December 31, 1996 and 1995, the Company has paid $4,943,069 of
commissions and due diligence to broker-dealers (including $98,655 to the Dealer
Manager).
In order to minimize the possible adverse effects of the investment and
distribution policy described above, the Company has made the following
undertakings: (a) the Advisor has agreed not to retain acquisition fees or loan
disposition fees with respect to any portion of REMICs or CMOs which are sold
pursuant to the distribution policy; such fees totaled $96,112 as of December
31, 1996 and 1995; (b) the Advisor has agreed to contribute to the Company funds
equal to the amount by which all trading losses exceed the gains resulting from
the sale of REMICs and CMOs investments to supplement the distribution policy;
such funds totaled $97,221 as of December 31, 1996 and 1995 and is included in
other income during the year ended December 31, 1994; and (c) the Company has
agreed to limit the total amount which can be returned to investors from the
early sale of investments to support the distributions policy to less than 3% of
the Gross Proceeds.
-35-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - Subsequent Event
On February 14, 1997, a distribution of $1,403,765 and $17,656 was paid
to the Investors and the Advisor, respectively, representing the 1996 fourth
quarter distribution. The distribution has been funded from cash collections of
debt service payments and interest income through approximately the distribution
date, February 14, 1997.
-36-
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Trustees are responsible for the management and control of the
affairs of the Company but have retained the Advisor to manage the Company's
day-to-day affairs and have delegated to the Advisor responsibilities with
respect to, among other things, overseeing the portfolio of Mortgage Investments
and the acquisition and disposition of investments.
The Trustees and Executive Officers of the Company are as follows:
Name Age Offices Held Year First Became
---- --- ------------ Officer/Trustee
-----------------
J. Michael Fried 52 Trustee, President, 1991
Chairman of the Board
and Chief Executive Officer
Peter T. Allen 51 Trustee 1991
Arthur P. Fisch 55 Trustee 1991
Stuart J. Boesky 40 Executive Vice President 1991
and Chief Operating Officer
Alan P. Hirmes 42 Senior Vice President and 1991
Chief Financial Officer
Mark J. Schlacter46 Vice President 1993
Richard A. Palermo36 Treasurer and
Chief Accounting Officer 1997
Lynn A. McMahon 41 Secretary 1993
J. MICHAEL FRIED, age 52, is Trustee, President, Chairman of the Board
and Chief Executive Officer of the Company, is Director and President of the
Advisor and is the sole shareholder of one of the general partners of Related,
the real estate finance affiliate of The Related Companies, L.P. In that
capacity, he is generally responsible for all syndication, finance, acquisition
and investor reporting activities of Related and its Affiliates. Mr. Fried
practiced corporate law in New York City with the law firm of Proskauer Rose
Goetz & Mendelsohn from 1974 until he joined Related in 1979. Mr. Fried
graduated from Brooklyn Law School with a Juris Doctor degree, magna cum laude;
from Long Island University Graduate School with a Master of Science degree in
Psychology; and from Michigan State University with a Bachelor of Arts degree in
History.
PETER T. ALLEN, age 51, is President of Peter Allen & Associates, Inc.,
a real estate development, consulting, brokerage and management firm, in which
capacity he has been responsible for the leasing, refinancing and development of
major commercial properties. Mr. Allen has also been an Adjunct Professor of the
Graduate School of Business at the University of Michigan since 1981. Mr. Allen
received a Bachelor of Arts Degree in history/economics from DePauw University
and a Masters Degree in Business Administration with Distinction from the
University of Michigan. Mr. Allen is an Independent Trustee.
-37-
<PAGE>
ARTHUR P. FISCH, age 55, has been an attorney in private practice
specializing in real property and securities law since October 1987, with Arthur
P. Fisch, P.C. and Fisch & Kaufman. From 1975-1987, Mr. Fisch was employed by
E.F. Hutton & Company, serving as First Vice President in the Direct Investment
Department from 1981-1987 and associate general counsel from 1975-1980 in the
legal department. As First Vice President, he was responsible for the
syndication and acquisition of millions of dollars in residential real estate.
Mr. Fisch was the Corporate General Partner in four public real estate funds and
responsible for the acquisition of several thousand apartment units. He was also
in charge of the Subsidized Housing and Cable TV groups at E.F. Hutton's Direct
Investment Department. Mr. Fisch received a B.B.A. from Bernard Baruch College
of the City University of New York and a Juris Doctor degree from New York Law
School. Mr. Fisch is admitted to practice law in New York and Pennsylvania. Mr.
Fisch is an Independent Trustee.
STUART J. BOESKY, age 40, is Executive Vice President and Chief
Operating Officer of the Company and is a Senior Vice President and a Managing
Director of the Advisor. Mr. Boesky practiced real estate and tax law in New
York City with the law firm of Shipley & Rothstein from 1984 until February 1986
when he joined Related. From 1983 to 1984, Mr. Boesky practiced law with the
Boston law firm of Kaye, Fialkow, Richmond & Rothstein (which subsequently
merged with Strook & Strook & Lavan) and from 1978 to 1980 was a consultant
specializing in real estate at the accounting firm of Laventhol & Horwath. Mr.
Boesky is the sole shareholder of one of the general partners of Related. Mr.
Boesky graduated from Michigan State University with a Bachelor of Arts degree
and from Wayne State School of Law with a Juris Doctor degree. He then received
a Master of Laws degree in Taxation from Boston University School of Law.
ALAN P. HIRMES, age 42, is a Senior Vice President and Chief Financial
Officer of the Company and is Senior Vice President of the Advisor. Mr. Hirmes
has been a Certified Public Accountant in New York since 1978. Prior to joining
Related in October 1983, Mr. Hirmes was employed by Weiner & Co., certified
public accountants. Mr. Hirmes is also the sole shareholder of one of the
general partners of Related. Mr. Hirmes graduated from Hofstra University with a
Bachelor of Arts degree.
MARK J. SCHLACTER, age 46, is a Vice President of the Company. Mr.
Schlacter is a Vice President of Mortgage Acquisitions of Related, and has been
with Related since June 1989. Mr. Schlacter is responsible for the origination
of Related's taxable participating debt programs and low-income housing tax
credit debt programs. Prior to joining Related, Mr. Schlacter garnered 16 years
of direct real estate experience covering commercial and residential
construction, single and multifamily mortgage origination and servicing,
commercial mortgage origination and servicing, multifamily property acquisition
and financing, and multifamily mortgage lending program underwriting and
development. He was a Vice President with Bankers Trust Company from 1986 to
June 1989, and held prior positions with Citibank, Anchor Savings Bank and the
Pyramid Companies covering the 1972-1986 period. Mr. Schlacter holds a Bachelor
of Arts degree in Political Science from Pennsylvania State University and
periodically teaches multifamily underwriting at the New York University School
of Continuing Education, Real Estate Institute.
RICHARD A. PALERMO, 36, is Treasurer and Chief Accounting Officer of
the Company and is Treasurer of the Advisor. Mr. Palermo has been a Certified
Public Accountant in New York since 1985. Prior to joining Related in September
1993, Mr. Palermo was employed by Sterling Grace Capital Management from October
1990 to September 1993, Integrated Resources, Inc. from October 1988 to October
1990 and E.F. Hutton & Company, Inc. from June 1986 to October 1988. From
October 1982 to June 1986, Mr. Palermo was employed by Marks Shron & Company and
Mann Judd Landau, certified public accountants. Mr. Palermo graduated from
Adelphi University with a Bachelor of Business Administration degree.
LYNN A. McMAHON, age 41, is Secretary of the Company and of the
Advisor. She has served since 1983 as assistant to J. Michael Fried. From 1978
to 1983, she was employed at Sony Corporation of America in the Government
Relations Department.
-38-
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). These persons are required by regulation of the
Commission to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the fiscal year
ended December 31, 1996, the Company's officers, directors and greater than ten
percent beneficial owners complied with all applicable Section 16(a) filing
requirements.
The Advisor
The Advisor is Related AMI Associates, Inc. The directors and executive
officers of the Advisor are set forth below. These officers of the Advisor may
also provide services to the Company on behalf of the Advisor.
Related AMI Associates, Inc.
Year First Became
Name Age Offices Held Officer/Director
---- --- ------------ ----------------
J. Michael Fried 52 Director and President 1991
Stuart J. Boesky 40 Director and
Senior Vice President 1991
Alan. P. Hirmes 42 Senior Vice President 1991
Richard A. Palermo 36 Treasurer 1997
Lynn A. McMahon 41 Secretary 1991
Biographical information with respect to Messrs. Fried, Boesky, Hirmes,
Palermo and Ms. McMahon is set forth above.
Item 11. Executive Compensation.
The Company has six executive officers and three Trustees (two of whom
are Independent Trustees). The Company does not pay or accrue any fees, salaries
or other forms of compensation to its officers. Independent Trustees receive
compensation for serving as Trustees at the rate of $10,000 per year. Certain
directors and officers of the Advisor and certain officers of the Company
receive compensation from the Advisor and its affiliates for services performed
for various affiliated entities, which may include services performed for the
Company. Such compensation may be based in part on the performance of the
Company; however, the Advisor believes that any compensation attributable to
services performed for the Company is immaterial. See also Note 5 to the
financial statements above in Item 8, Financial Statements and Supplementary
Data, which is incorporated herein by reference.
-39-
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of December 31, 1996, no person was known by the Company to be the
beneficial owner of more than five percent of the outstanding shares of the
Company. The Advisor purchased 10,000 Shares at an aggregate purchase price of
$200,000 prior to the Offering. In addition, pursuant to the terms of the
Offering and the Advisory Services Agreement, the Company will issue shares to
the Advisor in an amount which will equal (after such issuance) 1% of the shares
of the Company as compensation for services rendered in connection with the
organization of the Company. During the Offering the Advisor received 38,481
shares, in addition to the 10,000 shares purchased by the Advisor, however as a
result of shares being redeemed the Advisor was required to return 172 shares.
As of December 31, 1996, shares received by the Advisor totaled 38,309 at a
total value of $565,058 ($14.75 per share). Such costs have been charged
directly to shareholders' equity as part of offering costs. As of December 31,
1996, J. Michael Fried, Trustee of the Trust, owned 1,920 shares of the Trust.
No other directors and officers or trustees of the Advisor or the Company own
any shares of the Company.
Item 13. Certain Relationships and Related Transactions.
The Company has and will continue to have certain relationships with
the Advisor and its affiliates, as discussed in Item 11, Executive Compensation
and Note 5 to Item 8, Financial Statements and Supplementary Data. However,
there have been no direct financial transactions between the Company and the
directors and officers of the Advisor.
-40-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
<TABLE>
<CAPTION>
Sequential
(a) 1. Financial Statements Page
-------------------- ----
<S> <C> <C>
Independent Auditors' Report 17
Balance Sheets at December 31, 1996 and 1995 18
Statements of Income for the years ended December 31, 19
1996, 1995 and 1994
Statements of Changes in Shareholders' Equity for the 20
years ended December 31, 1996, 1995 and 1994
Statements of Cash Flows for the years ended December 22
31, 1996, 1995 and 1994
Notes to Financial Statements 24
(a) 2. Financial Statement Schedules
All schedules have been omitted because they are not required or
because the required information is contained in the financial
statements or notes thereto.
(a) 3. Exhibits
1(a) Dealer Manager Agreement, dated March 29, 1993 as
previously filed as an Exhibit to Amendment No. 3 dated
March 23, 1993 to Registrant's Registration Statement
No. 33-42481.
1(b) Form of Soliciting Dealer Agreement as previously filed
as an Exhibit to Amendment No. 3 dated March 23, 1993 to
Registrant's Registration Statement No. 33-42481.
3,4 Amended and Restated Declaration of Trust, dated as of March 29, 1993,
as amended as of July 1, 1993 as previously filed as an Exhibit to
Post-Effective Amendment No. 1 dated November 9, 1993.
Amendment No. 2 to Amended and Restated Declaration of
Trust, dated as of April 5, 1994 as previously filed as
an Exhibit to Annual Report on Form 10-K for the year
ended December 31, 1993.
10(a) Escrow Agreement, dated as of April 16, 1993 and amended as of August
25, 1993 as previously filed as an Exhibit to Post-Effective Amendment
No. 1 dated November 9, 1993.
10(b) Advisory Services Agreement, dated as of March 29, 1993,
as amended as of October 26, 1993 as previously filed as
an Exhibit to Post-Effective Amendment No. 1 dated
November 9, 1993.
</TABLE>
-41-
<PAGE>
Exhibits, Financial Statement Schedules, and Reports on Form 8-K (continued)
(a)3. Exhibits (continued)
<TABLE>
<CAPTION>
<S> <C> <C>
Amendment to Advisory Services Agreement, dated as of December 31, 1993
as previously filed as an Exhibit to Annual Report on Form 10-K for the
year ended December 31, 1993.
Third Amendment to Advisory Services Agreement, dated as of March 29,
1994 as previously filed as an Exhibit to Annual Report on Form 10-K
for the year ended December 31, 1993.
10(c) TRI Capital Corporation Mortgage Note in the principal amount of
$9,350,000 dated December 16, 1993 as previously filed as an Exhibit to
Current Report on Form 8-K dated December 16, 1993.
10(d) Equity Loan Note in the principal amount of $1,156,000 dated December
16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(e) Bridge Loan Note in the principal amount of $115,790, dated December
16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(f) Subordinated Promissory Note by Oxford Apartments, L.C., dated December
16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(g) Limited Operating Guaranty between Al L. Bradley, Jr.,
Tim L. Myers, Allied Realty Services, Ltd. and American
Mortgage Investors Trust, dated December 16, 1993 as
previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(h) TRI Capital Corporation Mortgage Note in the principal amount of
$6,800,000, dated December 16, 1993 as previously filed as an Exhibit
to Current Report on Form 8-K dated December 16, 1993.
10(i) Equity Loan Note in the principal amount of $840,500, dated December
16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(j) Bridge Loan Note in the principal amount of $84,210, dated December 16,
1993 as previously filed as an Exhibit to Current Report on Form 8-K
dated December 16, 1993.
10(k) Subordinated Promissory Note by Cove Apartments, L.C., dated December
16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(l) Limited Operating Guaranty between Al L. Bradley, Jr.,
Tim L. Myers, Allied Realty Services, Ltd. and American
Mortgage Investors Trust, dated December 16, 1993 as
previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
</TABLE>
-42-
<PAGE>
Exhibits, Financial Statement Schedules, and Reports on Form 8-K (continued)
(a)3. Exhibits (continued)
<TABLE>
<CAPTION>
<S> <C> <C>
10(m) Cambridge Realty Capital LTD Mortgage Note in the principal amount of
$9,348,000, dated April 5, 1994 as previously filed as an Exhibit to
Current Report on Form 8-K dated April 21, 1994.
10(n) Equity Loan Note in the principal amount of $1,039,000, dated April 5,
1994 as previously filed as an Exhibit to Current Report on Form 8-K
dated April 21, 1994.
10(o) Subordinated Promissory Note by Town and Country IV Apartments, L.C.,
dated April 5, 1994 as previously filed as an Exhibit to Current Report
on Form 8-K dated April 21, 1994.
10(p) Limited Operating Guaranty between Leonard E. Wineburgh,
Arnold H. Dwinn and the Company, dated April 5, 1994 as
previously filed as an Exhibit to Current Report on Form
8-K dated April 21, 1994.
10(q) American Capital Resource, Inc. Mortgage Note in the principal amount
of $8,683,000 dated April 5, 1994 as previously filed as an Exhibit to
Current Report on Form 8-K dated April 28, 1994.
10(r) Equity Loan Note in the principal amount of $563,000 dated April 5,
1994 as previously filed as an Exhibit to Current Report on Form 8-K
dated April 28, 1994.
10(s) Subordinated Promissory Note by Columbiana Lakes Apartments, L.C.,
dated April 5, 1994 as previously filed as an Exhibit to Current Report
on Form 8-K dated April 28, 1994.
10(t) Limited Operating Guaranty between Anderson G. Wise,
Ronald P. Curry and the Company, dated April 5, 1994 as
previously filed as an Exhibit to Current Report on Form
8-K dated April 28, 1994.
10(u) Rockport Mortgage Corporation Mortgage Note in the principal amount of
$8,500,000 dated December 15, 1995, as previously filed as an Exhibit
to Current Report on Form 8-K dated December 15, 1995.
10(v) Equity Loan Note in the principal amount of $1,039,000 dated December
15, 1995, as previously filed as an Exhibit to Current Report on Form
8-K dated December 15, 1995.
10(w) Subordinated Promissory Note by SCI-ROEV East Haven Land Limited
Partnership, dated December 15, 1995, as previously filed as an Exhibit
to Current Report on Form 8-K dated December 15, 1995.
10(x) Limited Operating Guaranty between SCI Real Estate Development, Ltd.,
and Euro General East Haven, Inc., and the Company dated December 15,
1995, as previously filed as an Exhibit to Current Report on Form 8-K
dated December 15, 1995.
</TABLE>
-43-
<PAGE>
Exhibits, Financial Statement Schedules, and Reports on Form 8-K (continued)
(a)3. Exhibits (continued)
<TABLE>
<CAPTION>
Sequential
Page
-----------
<S> <C> <C>
23(a) Consent of KPMG Peat Marwick LLP with respect to incorporation by
reference in its report in the Company's Registration Statement on
Form S-3 47
23(b) Consent of Hidalgo, Banfill, Zlotnick and Kermali, P.C.
with respect to incorporation to reference on its report
in the Company's Registration Statement on Form S-3. 48
27 Financial Data Schedule (filed herewith) 107
99. Additional Exhibits
99(a) The Financial Statements of Cove Apartments, L.L.C., a Limited
Liability Company which owns and operates a multifamily housing project
known as the Cove Apartments located in Houston, Texas, as required by
Staff Accounting Bulletin No. 71. 51
99(b) The Financial Statements of Oxford Apartments, L.L.C., a Limited
Liability Company which owns and operates a multifamily housing project
known as the Oxford Apartments located in Houston, Texas, as required
by Staff Accounting Bulletin No. 71. 80
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarterly period ended
December 31, 1996.
</TABLE>
-44-
<PAGE>
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.
AMERICAN MORTGAGE INVESTORS TRUST
(Registrant)
Date: March 27, 1997 By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Senior Vice President and
Chief Financial Officer
Date: March 27, 1997 By: /s/ Richard A. Palermo
----------------------
Richard A. Palermo
Treasurer and Chief Accounting Officer
-45-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ J. Michael Fried Trustee, President, Chairman of the Board, March 27, 1997
- - ------------------------- and Chief Executive Officer
J. Michael Fried
/s/ Peter T. Allen
- - ------------------------- Trustee March 27, 1997
Peter T. Allen
/s/ Arthur P. Fisch
- - ------------------------- Trustee March 27, 1997
Arthur P. Fisch
/s/ Alan P. Hirmes Senior Vice President and Chief Financial Officer March 27, 1997
- - -------------------------
Alan P. Hirmes
/s/ Richard A. Palermo
- - ------------------------- Treasurer and Chief Accounting Officer March 27, 1997
Richard A. Palermo
</TABLE>
-46-
EXHIBIT 23(a)
ACCOUNTANTS' CONSENT
The Board of Trustees
Amencan Mortgage Investors Trust
We consent to incorporation by reference in the registration statement on Form
S-3 (No. 33-42481) of American Mortgage Investors Trust of our report dated
January 24, 1997, relating to the balance sheets of American Mortgage Investors
Trust as of December 31, 1996 and 1995. and the related statements of income,
changes in shareholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1996, which report appears in the December
31, 1996 annual report on Form 10-K of American Mortgage Investors Trust
/s/ KPMG PEAT MARWICK LLP
New York, New York
March 28, 1997
Exhibit 23(b)
Hidalgo, Banfill, Zlotnik & Kermali, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
(originally Founded in 1949)
March 22, 1997
The Board of Trustees
American Mortgage Investors Trust
The Board of Directors
Related AMI Associates, Inc.
We consent to the use of our reports dated February 7, 1997 accompanying
the Financial Statements and supplemental Supporting Data for the year
ended December 31, 1996 of Oxford Apartments, L.C. and Cove Apartments,
L.C. contained in this form 10-K filed by American Mortgage Investors
Trust for the year ended December 31, 1996.
/s/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
HIDALGO,BANFILL, ZLOTNIK & RERMALI, P.C.
Houston, Texas
March 22, 1997,
3555 TIMMONS LANE, SUITE 460 - HOUSTON.TEXAS 77027 -(713)963-8008
COVE APARTMENTS, LC.
(HUD Protect Number 114-11122-REF)
Financial Statements and Supplemental Supporting Data
For the Year Ended December 31, 1996
<PAGE>
COVE APARTMENTS, LC.
(HUD Project Number 114-11122-REF)
Form Year Ended December 31, 1996
Page
Independent Auditors' Report 1
Financial Statements:
Balance Sheet 2 - 3
Statement of Profit and Loss 4 - 5
Statement of Changes in Members' Equity 6
Statement of Cash Flows 7
Notes to Financial Statements 8 - 10
Supplemental Supporting Data Required by HUD 11 - 21
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS REPORT
The Members
Cove Apartments, L.C.
We have audited the accompanying balance sheet of Cove Apartments, L.C. (a Texas
Limited Liability Company), U.S. Department of Housing and Urban Development
("HUD") Project Number 114-1112-REF, as of December 31, 1996 and the related
statements of profit and loss, changes in members' equity and cash flows for the
year ended December 31, 1996. These financial statements are the responsibility
of the company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in a
material respects, the financial position of Cove Apartments, L.C. (the Company)
as of December 31, 1996 and the results of its operations, changes in members'
equity and cash flows for the year then ended in conformity with generally
accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 7, 1997, on its
compliance and specific requirements applicable to major HUD programs and
specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11-21 are presented for purposes of additional
analysis and is not a required part of the basic financial statements of the
Company. Such information has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material in relation to the basic financial statements taken as a
whole.
/s/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
-------------------------------------------
Certified Public Accounts
February 7, 1997
355 TIMMONS LAND, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
BALANCE SHEET
DECEMBER 31, 1996
ASSETS
CURRENT ASSETS:
1110 Petty Cash $ 300
1120 TCB depository account 167,752
1130 Tenant accounts receivable 109
1140 Accounts receivable -other --
1900 Deposits 200
1240 Prepaid insurance 36,408
1250 Mortgage insurance $ 30,442
-----------
Total current assets $ 235,211
-----------
Deposits Held in Trust - Funded:
1191 Tenant security deposits: 53,529
-----------
Restricted Deposits and Funded Reserves:
1310 Mortgage escrow deposits:
MIP escrow --
FHA repair escrow --
Property tax escrow 202,581
Insurance escrow 11,545
1320 Reserve for replacements - Note 2 117,835
-----------
Total restricted deposits and funded reserves 331,961
-----------
Fixed Assets:
1410 Land 1,354,280
1420 Buildings 5,175,669
1450 Furniture and equipment 352,410
6,882,359
-----------
Less accumulated depreciation (563,373)
-----------
Total fixed assets 6,318,986
-----------
Other Assets:
1800 Financing and organization costs net of
accumulated amortization of $33,167 341.726
-----------
Total Assets $ 7,281,413
===========
See accompanying notes to financial statements.
2
<PAGE>
COVE APARTMENTS LC.
(HUD Project Number 114-11122-REF)
BALANCE SHEET
DECEMBER 31, 1996
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
2110 Accounts payable $ 59,766
2120 Accrued wages and payroll taxes payable 3,829
2130 Mortgage interest payable 42,402
2150 Accrued property taxes 228,482
2210 Prepaid rents 5,107
2320 Current portion of mortgage loan payable - Note 2 50.395
----------
Total current liabilities 389,981
Deposits Liabilities:
2191 Tenant security deposits: 43,154
Long-Term Liabilities:
2310 Mortgage loan payable, net of current portion - Note 2 6,622,718
----------
Total Liabilities 7,055,853
----------
Members' Equity 225.560
----------
Total Liabilities and Members' Equity $7,281,413
==========
See accompanying notes to financial statements.
3
<PAGE>
Statement or U.S. Department of Housing
Profit and Loss and Urban Development
Office of Housing 0MB Approval No.
Federal Housing Commissioner 2502-0052 (Exp. 1/31/95)
- - --------------------------------------------------------------------------------
Public Reporting Burden for this collection of information is estimated to
average 1.0 hours per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments regarding
this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to the Reports Management
Officer, Office of Information Policies and Systems, U.S. Department of Housing
and Urban Development, Washington, D.C. 20410-3600 and to the Office of
Management and Budget, Paperwork Reduction Project (2502-0052), Washington, D.C.
20503. Do not send this completed form to either of these addresses.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
For Monthly Period
Beginning: Ending: Project Number: Project Name;
01/01/96 12/31/96 114-11122-REF COVE APARTMENTS, L.C.
- - ------------------------------------------------------------------------------------------------------------------------------------
Part I Description of Account Acct. No. Amount
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Apartments or Member Carrying Charges (Coops) 5120 $ 1,944,500
Rental Tenant Assistance Payments 5121 $
Income Furniture and Equipment 5140 $
5100 Garage and Parking Spaces 5170 $
Flexible Subsidy Income 5160 $
Miscellaneous (specify) 5190 $
Total Rent Revenue Potential at 100% Occupancy $ l ,944,500
- - ------------------------------------------------------------------------------------------------------------------------------------
Apartments 5220 (319,453)
Furniture and Equipment 5230 $
Vacancies Stores and Commercial 5240 $
5200 Garage and Parking Spaces 5270 $
Miscellaneous (Specify) 5290 $
Total Vacancies (319,453)
Net Rental Revenue Rent Revenue Less Vacancies $ 1,625,047
Elder and Congregate Services Income_5300 $
Total Service Income (Schedule Attached) 5300
- - ------------------------------------------------------------------------------------------------------------------------------------
Interest Income-Project Operations 5410 $ 1,334
Financial Income from Investments-Residual Receipts 5430 $
Revenue Income from Investments-Reserve for Replacement 5440 $ 7,302
5400 Income from Investments-Miscellaneous 5490 $
Total Financial Revenue $ 8,636
- - ------------------------------------------------------------------------------------------------------------------------------------
Laundry and Vending 5910 34,280
NSF and Late Charges 5920 $ 2,849
Other Damages and Cleaning Fees 5930 $ 8,635
Revenue Forfeited Tenant Security Deposits 5940 $ 12,749
5900 Other Revenue (specify) 5990 $ 4,550
Total Other Revenue $ 63,063
Total Revenue $ l ,696,746
- - ------------------------------------------------------------------------------------------------------------------------------------
Advertising 6210 $ 58,318
Other Administrative Expense 6250 $ 6,780
Office Salaries 6310 $ 87,992
Office Supplies 6311 $ 3,940
Office or Model Apartment Rent 6312 $ 6,240
Administrative Management 6320 $ 67,475
Expenses Manager or Superintendent Salaries 6330 $
6200/6300 Manager or Superintendent Rent Free Unit 6331 $
Legal Expenses (Project) 6340 $ 525
Auditing Expenses (Project) 6350 $ 5,000
Bookkeeping Fees/Accounting Services 6351 $ 1,900
Telephone and Answering Service 6360 $ 6,582
Bad Debts 6370 $
Miscellaneous Administrative Expenses (specify) 6390 $ 5,034
Total Administrative Expenses $ 249,786
- - ------------------------------------------------------------------------------------------------------------------------------------
Utilities Fuel Oil/Coal 6420 $
Expense Electricity (Light and Misc. Power) 6450 $ 30,276
6400 Water 6451 $ 22,176
Gas 6452 $ 28,692
Sewer 6453 $
Total Utilities Expenses $ 81,144
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* All amounts must be rounded to the nearest dollar; form HUD-92410 (7/91)
$.50 and over, round up - $.49 and below, round down. ref Handbook 4370.2
Page 1 of 2
4
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
For Monthly Period
Beginning: Ending: Project Number: Project Name;
01/01/96 12/31/96 114-11122-REF COVE APARTMENTS, L.C.
- - ------------------------------------------------------------------------------------------------------------------------------------
Part I Description of Account Acct. No. Amount
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janitor and Cleaning Payroll 6510 $
Janitor and Cleaning Supplies 6515 $ 1,155
Janitor and Cleaning Contract 6517 $
Exterminating Payroll/Contract 6519 $ 4,621
Exterminating Supplies 6520 $
Garbage and Trash Removal 6525 $ 11,750
Security Payroll/Contract 6530 $ 10,272
Grounds Payroll 6535 $
Operating and Grounds Supplies 6536 $
Maintenance Grounds Contract 6537 $ 28,957
Expenses Repairs Payroll 6540 $ 86,366
6500 Repairs Material 6541 $ 49,259
Repairs Contract 6542 $
Elevator Maintenance/Contract 6545 $ 31,572
Heating/Cooling Repairs and Maintenance 6546 $ 8,772
Swimming Pool Maintenance/Contract 6547 2,442
Snow Removal 6548 $
Decorating Payroll/Contract 6560 $
Decorating Supplies 6561 $
Other 6570 $
Miscellaneous Operating and Maintenance Expenses 6590 $ 37
Total Operating and Maintenance Expenses $ 235,203
- - ------------------------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 232,231
Payroll Taxes (FICA) 6711 $ 16,981
Miscellaneous Taxes, Licenses and Permits 6719 $
Taxes Property and Liability Insurance (Hazard) 6720 $ 45,164
and Fidelity Bond Insurance 6721 $
Insurance Workmen's Compensation 6722 $ 15,747
6700 Health Insurance and Other Employee Benefits 6723 $ 14,109
Other Insurance (specify) 6729 $
Total Taxes and Insurance $ 324,232
- - ------------------------------------------------------------------------------------------------------------------------------------
Interest on Bonds Payable 6810 $
Financial Interest on Mortgage Payable 6820 $ 510,480
Expenses Interest on Notes Payable (Long-Term) 6830 $
6800 Interest on Notes Payable (Short Term) 6840 $
Mortgage Insurance Premium/Service Charge 6850 $ 33,454
Miscellaneous Financial Expenses 6890 $
Total Financial Expenses $ 543,934
- - ------------------------------------------------------------------------------------------------------------------------------------
Elderly Total Service Expenses_Schedule Attached 6900 $
Congregate Total Cost of Operations Before Depreciation $ 1,434,299
Service Profit (Loss) Before Depreciation $ 262,447
Expenses Depreciation (Total)_6600 (specify) 6600 $ 206.132
6900 Operating Profit or (Loss) $ 56,315
- - ------------------------------------------------------------------------------------------------------------------------------------
Corporate Officer Salaries 7110 $
Mortgagor Legal Expenses (Entity) 7120 $
Entity Taxes (Federal-State-Entity) 7130-32 $
Expenses Other Expenses (Entity) 7190 $
7100 Total Corporate Expenses $
Net Profit or (Loss) $ 56,315
- - ------------------------------------------------------------------------------------------------------------------------------------
Warning: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001,
1010, 1012; 31 U.S.C. 3729, 3802)
Miscellaneous or other Income and Expense Sub-account Groups. If miscellaneous or other income and/or expense sub-accounts (5190,
5290, 5490, 5990, 6390, 6590, 6729, 6890, and 7190) exceed the Account Groupings by 10% or more, attach a separate schedule
describing or explaining the miscellaneous income or expense.
- - ------------------------------------------------------------------------------------------------------------------------------------
Part II
- - ------------------------------------------------------------------------------------------------------------------------------------
1. Total principal payments required under the mortgage, even if payments under a Workout
Agreement are less or more than those required under the mortgage $ 46,707
- - ------------------------------------------------------------------------------------------------------------------------------------
2. Replacenent Reserve deposits required by the Regulatory Agreement or Amendments thereto,
even if payments may be temporarily suspended or waived. $ 37,528
- - ------------------------------------------------------------------------------------------------------------------------------------
3. Replacement or Painting Reserve release which are included as expense items
on this Profit and Loss statement. $ -0-
- - ------------------------------------------------------------------------------------------------------------------------------------
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that
are included as expense items on this Profit and Loss Statement. $ -0-
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
form HUD-92410 (7/91)
ref Handbook 4370.2
Page 2 of 2
5
<PAGE>
COVE APARTMENTS, LC.
(HUD Project Number 114-11122-REF)
STATEMENT OF CHANGES IN MEMBERS EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996
Balance, December 31, 1995 $ 317,134
Contributions -
Distributions (147,889)
Net Profit for the Period 56,315
---------
Balance, December 31, 1996 $ 225,560
=========
See accompanying notes to financial statements.
6
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ 56,315
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 206,132
(Increase) decrease in:
Accounts receivable - tenants 333
Mortgage insurance 599
Prepaid insurance (12,908)
Escrow accounts 177,642
Security deposits (1,191)
Accounts receivable - other -
Increase (decrease) in:
Accounts payable and accrued liabilites 52,242
Accrued interest payable (297)
Accrued taxes payable 7,484
Deposit liabilities (3,490)
Prepaid rents (2.785)
---------
480,076
---------
Cash Flows from Investing Activities:
Property improvements (234,714)
---------
Cash Flows from Financing Activities:
Mortgage principal payments (46,707)
Distributions (147,889)
---------
(194,596)
=========
Increase in Cash 50,766
Cash, Beginning of Year 117,286
---------
Cash, End of Year $ 168,052
=========
Supplemental Disclosures of Cash Flow Information:
Interest Paid During the Year $ 510,480
=========
</TABLE>
See accompanying notes to financial statements
7
<PAGE>
COVE APARTMENTS, LC.
(HUD Project Number 114-11122-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
Note 1 Organization and Summary of Significant Accounting Policies
Organization
Cove Apartments, L.C. (the "Company") was organized as a Limited
Liability Company on June 25, 1992, under the laws of the State of
Texas, for the purpose of acquiring and operating a housing project or
projects with the assistance of mortgage insurance under the National
Housing Act, Section 223F. Such projects are regulated by the
Department of Housing and Urban Development ("HUD"). The Regulatory
Agreement limits distributions of net operating income to "surplus
cash" available for distribution at the end of a semiannual or annual
fiscal period. The Limited Liability Company will terminate June 24,
2032, according to the terms of the Articles of Organization.
On December 16, 1993, the Members of Cove Apartments, L.C. contributed
a 308 unit multifamily project located at 2000 Bay Area Blvd. in
Houston, Texas known as the Cove Apartments (the "Project') and certain
other assets to the Company. Concurrently, the Company obtained a
mortgage loan in the amount of $6,800,000, collateralized by the
Project and other assets. The Project was recorded by the Company at
the members' net carrying basis of $6,127,303 which represents cost
less accumulated depreciation. The proceeds of the mortgage loan were
used to repay the members' existing debt on the Project, fund escrow
balances and pay closing costs all of which were funded at closing and
did not flow through the cash accounts of the Company. The aggregate
amount of the assets contributed, including the Project and other
assets and escrow balances, in excess of the mortgage loan totaled
$378,206 and was recorded as a capital contribution.
Revenue Recognition
The Company recognizes real estate rental revenue in accordance with
the terms of the respective leases.
Property, Furniture and Equipment
Property, furniture and equipment are carried at cost and are
depreciated using the straight line method over the estimated useful
lives of 5 to 10 years for furniture and equipment and 20 to 40 years
for building and building improvements.
8
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31,1996
Note 1 Organization and Summary of Significant Accounting Policies
(Continued)
Financing Costs
Financing costs consist principally of fees incurred in conjunction
with obtaining the permanent mortgage loan and are being amortized
over the 35 year term of the mortgage loan using the straight-line
method.
Income Taxes
No provision for Federal income taxes is made in the accounts of the
Company since taxes on its operations are the obligations of
individual members.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Note 2 Mortgage Loan Payable
The mortgage loan payable to TRI Capital Corporation bears interest at
7.625% and is due in monthly installments of $46,457, including
interest, through January 1, 2029. The Company's property and
equipment and the various funded reserves collateralize the mortgage
loan.
Annual principal payments for years subsequent to December 31, 1996
are as follows:
Years Ending December 31. Amount
------------------------- ------------
1997 $ 50,395
1998 54,375
1999 58,669
2000 63,302
2001 68,301
Thereafter 6,378,071
------------
$ 6.673.113
============
Note 3 Real Estate Leases
At December 31, 1996 approximately 80% of the Projects 308 units were
committed under either month-to-month leases or noncancelable
operating leases with terms varying from-six to twelve months. Future
minimum real estate rental income under the noncancelable operating
leases existing at December 31, 1996, expected during the year ending
December 31, 1997 is approximately $477,933.
9
<PAGE>
COVE APARTMENTS,LC.
(HUD Project Number 114-11122-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
Note 4 Related Party Transactions
Operations of the Prided are managed by Bradley Apartment Homes
("BAH"), which is affiliated with the members of the Cove Apartments,
L.C. Management fees paid to BAH are based on four percent of rents
collected. Such fees aggregated $67,475 for the year ended December
31, 1996.
Consulting services related to contracting for repair/replacement
expenditures on the project were provided during the year by Allied
Construction Services, which is also affiliated with the members of
Cove Apartments, L.C. Consulting fees paid to Allied Construction
during the year ended December 31, 1996 aggregated $15,441 and were
calculated on a percentage of the repair/replacement cost basis.
Note 5 Concentration of Credit Risk
The Company maintains unrestricted cash balances at a bank. Cash
accounts at the bank are insured by the FDIC for up to $100,000.
Amounts in excess of the insured limits were $ 67,752 at December 31,
1996.
10
<PAGE>
SUPPLEMENTAL SUPPORTING DATA REQUIRED BY HUD
<PAGE>
COVE APARTMENTS, LC.
(HUD Protect Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
December 31, 1996
Accounts Receivable (other than from regular [tenants):
None
Delinquent Tenant Accounts Receivable:
1996
-----------------------------
Number of Amount
Tenants Past Due
-------- --------
Delinquent 30 days 1 $ 107
Delinquent 31 to 60 days 0 0
Delinquent 61 to 90 days 0 0
Delinquent over 90 days 0 0
-------- --------
1 $ 107
-------- --------
Mortgage Escrow Deposits:
Estimated amount required as of December 31, 1996 for future payment of:
1996
--------------
Property insurance, 8 months $ 20,794
Mortgage insurance, 11 months 33,209
Real estate taxes, 12 months 228.482
------------
Total 282,485
Amount confirmed by mortgagee 244.567
------------
Amount on deposit in excess (deficient)
of estimated requirements (37,918)
Check in transit at December 31,1996 23,304
------------
Deficiency $ (14,614)
============
An additional escrow check of $15,000 was paid on January 27,1997 to offset the
deficiency.
11
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 11-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Reserve for Replacements:
In accordance with the provisions of the Regulatory Agreement restricted
cash is held by the TRI Capital Corporation to be used for replacement of
property with the approval of HUD as follows:
Balance, beginning of period $ 278,250
Deposits made during period 44,830
Withdrawals made during period (205,245)
-----------------
Balance, end of period $ 117,835
=================
The following information pertains to withdrawals made from the Reserve for
Replacements during the year.
<TABLE>
<CAPTION>
Interior
Date Decoration Exterior A/C Misc. Total
---- ---------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
February 13, 1996 $ 29,111 $ 18,980 $ 9,714 $ 4,690 $ 62,495
July 9, 1996 9,746 26,579 3,605 - 39,930
October 1, 1996 66,220 - - 66,220
December 10, 1996 _ 36.600 - - 36.600
----------- ------------ ------------ ---------- -----------
$ 38,857 148,379 13,319 4,690 205,245
=========== ============ ============ ========== ===========
</TABLE>
Accounts Payable (other than to trade creditors):
None
Compensation of Partners:
None from Project funds
Changes in Fixed Assets:
<TABLE>
<CAPTION>
Furniture
Land Buildings Equipment Total
-------------- --------------- -------------- ---------------
Cost:
<S> <C> <C> <C> <C>
December 31, 1995 $ 1,354,280 $ 4,990,383 $ 302,982 $ 6,647,645
Additions - 185,287 49,427 234,714
-------------- --------------- ------------ ---------------
Dispositions
December 31, 1996 $ 1,354,280 $ 5,175,670 $ 352,409 $ 6,882,359
============== =============== ============ ===============
Accumulated Depreciation:
December 31, 1995 $ 288,142 $ 79,815 $ 367,957
Additions 147,631 47,785 195,416
Dispositions _ _ -
--------------- ------------ --------------
December 31, 1996 $ 435,773 $ 127,600 $ 563 373
=============== ============ ==============
</TABLE>
12
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Accrued Taxes:
Description of Basis for Period Amount
Tax Accrual Covered Date Due Accrued
-------------- --------- ------------ ----------- --------
<S> <C> <C> <C> <C>
Houston ISD Tax January 1, 1996
Statement though January 31, 1997
December 31, 1996 $ 126,157
City of Houston and Tax January 1, 1996
Hams County Statement though January 31,1997
December 31, 1996 102,325
-----------
Total $ 228,482
===========
</TABLE>
Tenant Security Deposits:
Tenant security deposits are held in account # 25526-00219 at Bank of America
Texas NA, Houston, Texas. This federally insured account, in the name of the
Project had a balance of $43,154 at December 31,1996, including earned interest
that does not inure to the tenants.
Schedule of Unauthorized Distributions of Project Income:
None
Changes in Ownership Interests:
No ownership changes occurred during the period covered by the financial
statements.
Distributions paid to the members:
Date Declared and Paid Period Covered Amount Declared and Paid
---------------------- -------------- ------------------------
February 1996 2nd half 1995 $ 32,969
July 1996 1st half 1996 $ 114.920
---------
$ 147,889
=========
13
<PAGE>
- - --------------------------------------------------------------------------------
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HOUSING - FEDERAL HOUSING COMMISSIONER
OFFICE Of MULTIFAMILY HOUSING Management AND OCCUPANCY
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND
RESIDUAL RECEIPTS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER
COVE APARTMENTS, L.C. - 06/60/96 114-11122-REF
- - ------------------------------------------------------------------------------------------------------------------------------------
PART A - COMPUTE SURPLUS CASH
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Cash (Accounts 1110, 1120, 1191, 1192) $ 146,121
Cash 2. Tenant subsidy vouchers due for period covered $
by financial statement
3. Other (describe) Approved Hud Replacement
Reserve Draw Not Received $ 39,929
(a) Total Cash (Add Lines 1, 2, and 3) $ 186,050
- - ------------------------------------------------------------------------------------------------------------------------------------
4. Accrued mortgage interest payable $ _
5. Delinquent mortgage principal payments $ _
Current 6. Delinquent deposits to reserve for replacements $ _
Obliga- 7. Accounts payable (due within 30 days) $ _
tions 8. Loans and nonpayable _
(due within 30 days) $ _
9. Deficient Tax Insurance or MIP Escrow Deposits $ _
10.Accrued expenses (not escrowed) $ 13 079
11.Prepaid Rents (Account 2210) $ 8,484
12.Tenant security deposits liability (Account 2191) $ 49,567
13.Other (Describe) $ _
(b) Less Total Current Obligations (Add Lines 4 through 13) $ 71,130
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $ 114,920
- - ------------------------------------------------------------------------------------------------------------------------------------
PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO
TO RESIDUAL RECEIPTS
- - ------------------------------------------------------------------------------------------------------------------------------------
1. Surplus Cash $ 114,920
2a. Annual Distribution Earned During Fiscal Period
Covered by the Statement $
Limited 2b.Distribution Accrued and Unpaid as of the
Dividend End of the Prior Fiscal Period $
Projects 2c.Distributions Paid During Fiscal Period Covered by Statement $
3. Amount to be Carried on Balance Sheet as Distribution
Earned but Unpaid (Line 2a plus 2b minus 2c) $
4. Amount Available for Distribution During Next Fiscal Period $ 114, 920
5. Deposit Due Residual Receipts (Must be deposited with Mortgagee within
60 days after Fiscal Period ends) $
- - ------------------------------------------------------------------------------------------------------------------------------------
PREPARED BY REVIEWED BY
- - ------------------------------------------------------------------------------------------------------------------------------------
LOAN TECHNICIAN LOAN SERVICER
- - ------------------------------------------------------------------------------------------------------------------------------------
DATE DATE
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
{See Reverse for Instructions) HUD-93486 (12-80)
14
<PAGE>
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HOUSING - FEDERAL HOUSING COMMISSIONER
OFFICE Of MULTIFAMILY HOUSING Management AND OCCUPANCY
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND
RESIDUAL RECEIPTS
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER
COVE APARTMENTS, L.C. - 12/31/96 114-11122-REF
- - ------------------------------------------------------------------------------------------------------------------------------------
PART A - COMPUTE SURPLUS CASH
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash
1. Cash (Accounts 1110, 1120, 1191, 1192) $ 221,581
2. Tenant subsidy vouchers due for period covered $
by financial statement
3. Other (describe) $
(a) Total Cash (Add Lines 1, 2, and 3) $ 221,581
4. Accrued mortgage interest payable $ 42,402
5. Delinquent mortgage principal payments $ _
6. Delinquent deposits to reserve for replacements $ 3,127
7. Accounts payable (due within 30 days) $ _
8. Loans and nonpayable
(due within 30 days) $ 4,055
9. Deficient Tax Insurance or MIP Escrow Deposits $ 37,917
10. Accrued expenses (not escrowed) $ 63,595
11. Prepaid Rents (Account 2210) $ 5,107
12. Tenant security deposits liability (Account 2191) $ 43,154
13. Other (Describe) $ _
(b) Less Total Current Obligations (Add Lines 4 through 13) $ 199,357
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $ 22,224
- - ------------------------------------------------------------------------------------------------------------------------------------
PART B COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO
RESIDUAL RECEIPTS
- - ------------------------------------------------------------------------------------------------------------------------------------
1. Surplus Cash $ 137,144
2a. Annual Distribution Earned During Fiscal Period
Limited Covered by the Statement $
Dividend 2b. Distribution Accrued and Unpaid as of the
Projects End of the Prior Fiscal Period $
2c. Distributions Paid During Fiscal Period Covered by Statement $ 114,920
3. Amount to be Carried on Balance Sheet as Distribution
Earned but Unpaid (Line 2a plus 2b minus 2c) $ 22,224
4. Amount Available for Distribution During Next Fiscal Period $ 22,224
5. Deposit Due Residual Receipts (Must be deposited with Mortgagee within 60
days after Fiscal Period ends) $
- - ------------------------------------------------------------------------------------------------------------------------------------
PREPARED BY REVIEWED BY
- - ------------------------------------------------------------------------------------------------------------------------------------
LOAN TECHNICIAN LOAN SERVICER
- - ------------------------------------------------------------------------------------------------------------------------------------
DATE DATE
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Reverse for Instructions) UD-93486 (12-80)
15
<PAGE>
COVE APARTMENTS, LC.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Statement of Receipts and Disbursements:
Source of Funds:
Revenues:
Rental income, net 1,625,047
Service commissions --
Financial 8,636
Other income 63,063
---------
1,696,746
---------
Expenses:
Administrative 182,311
Management fees 67,475
Utilities 81,144
Operating 23,177
Maintenance 125,660
Maintenance payroll 86,366
Real estate taxes 232,231
Other taxes 16,981
Insurance 59,273
Workmens' compensation 15,747
Mortgage insurance 33,454
Mortgage interest 510.480
---------
1,434,299
---------
Cash provided by operations before principal
payments and changes in assets and liabilities 262,447
Principal payments 46,707
---------
Cash provided by operations before changes
in assets and liabilities 215,740
---------
16
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Statement of Receipts and Disbursements (Continued)
Application of Funds:
(Increase) decease in:
Accounts receivable - tenants $ 333
Accounts receivable - other --
Prepaid insurance (12,908)
Security deposits (1,191)
Escrow accounts 177,642
Mortgage insurance 599
Increase (decrease) in:
Accounts payable and accrued liabilities 52,242
Accrued interest payable (297)
Accrued taxes payable 7,484
Deposit and prepayment liabilities (6,275)
Additions to Property (234,714)
Surplus Cash Distributions (147,889)
---------
(164,974)
---------
Increase (decrease) in cash 50,766
Unrestricted cash, beginning period 117,286
---------
Unrestricted cash, end of period $ 168,052
=========
17
o
<PAGE>
COVE APARTMENTS, LC.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
<TABLE>
<S> <C> <C>
Schedule of Funds in Financial Institutions as of December 31,1996:
Funds Held by Mortgagor, Regular Operating Account
Texas Commerce Bank (checking)(1) $ 167,752
Funds Held by Mortgagor in Trust, Tenant Security Deposits:
Bank of America(2) 53,529
Funds Held by Mortgagee, (in Trust):
Reserve for Replacements(3)
Sanwa Bank, (checking) 1.25% $ 38,113
Bank United (checking) 2.50% 29,722
Treasury Bill, 4.6891% 50,000 117,835
-----------
Mortgage Insurance Escrow,(3) Sanwa Bank 30,442
Property Tax Escrow,(3) Sanwa Bank 202,581
Property Insurance Escrow,(3) Sanwa Bank 11,545
-----------
Funds Held by Mortgagee 362,403
-----------
Total Funds in Financial Institutions $ 583,684
===========
1 Balances Confirmed by Texas Commerce Bank
2 Balances Confirmed by Bank of America
3 Balances Confirmed by TRI
</TABLE>
18
<PAGE>
COVE APARTMENTS, LC.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Listing of Identity of Interest Companies and Activities
Doing Business with Owner/Agent
during the year ended December 31, 1996
Company Name Type of Service Amount Received
--------------------------- --------------------- ---------------
Bradley Apartment Homes Property Management $ 67,475
Allied Construction Service Consulting Services 15,441
20
<PAGE>
COVE APARTMENTS, LC.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Certification of Members
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
We hereby certify that we have examined the foregoing financial statement of
Cove Apartments, L.C. Project Number 11-11122-REF, and, to the best of our
knowledge and belief, the same is complete and accurate.
/s/ Tim Myers /s/ Al Bradley, Jr.
- - ------------------------------------- ------------------------
Tim Myers Al Bradley, Jr.
President Vice President
2/18/97 2/18/97
- - ------------------------------------ --------------------------
Date Date
Limited Liability Company
Identification Number 76-0372786
20
<PAGE>
COVE APARTMENTS, L.C.
(HUD Protect Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Management Agent's Certification
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
We hereby certify that we have examined the foregoing financial statement of
Cove Apartments, L.C. Project Number 11-11122-REF, and, to the best of our
knowledge and belief, the same is complete and accurate.
/s/ Linda handley /s/ Al Bradley, Jr.
- - ------------------------------------ ----------------------------
Linda Handley Al Bradley, Jr.
President Chairman
Allied Development Corporation Allied Development Corporation
dba, Bradley Apartment Homes dba, Bradley Apartment Homes
2/20/97 2/18/97
- - ----------------------------------- -----------------------------
Date Date
Allied Development Corporation
Identification Number 76 0156150
21
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P.C
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
February 7,1997
To the Department of Housing and Urban Development
Attached is the financial report of Cove Apartments, L.C. (HUD Project No.
11-11122-REF) for the year ended December 31, 1996.
/s/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
- - ----------------------------------------------
Certified Public Accountants
Houston, Texas
Employer Identification No.: 74-1716599
Engagement Partner: Mr. Naushad Kermali
3555 Timmons Lane, #460
Houston, TX 77027
(713) 963-8008
3555 TIMMONS LANE, SUITE 460 - HOUSTON TEXAS 77027 - (713) 963~8008
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P.C
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO AFFIRMATIVE FAIR HOUSING
The Members Cove Apartments, LC.
We have audited the financial statements of U.S. Department of Housing and Urban
Development ("HUD") Project No. 114-11122-REF, Cove Apartments, L.C. (the
Company) for the year ended December 31, 1996 and have issued our report thereon
dated February 7, 1997.
We have applied procedures to test the Company's compliance with the Affirmative
Fair Housing requirements applicable to its HUD assisted programs for the year
ended December 31, 1996.
Our procedures were limited to the applicable compliance requirement described
in the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S.
Department of Housing and Urban Development, Office of Inspector General in July
1993. Our procedures were substantially less in scope than an audit the
objective of which would be the expression of an opinion on the Company's
compliance with the Affirmative Fair Housing requirements. Accordingly, we do
not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are
required to be reported herein under the Guide.
This report is intended for the information of management and the U.S.
Department of Housing and Urban Development. However, this report is a matter of
public record and its distribution is not limited.
/S/Hidalgo, Banfill, Zlotnik & Kermali, P.C.
--------------------------------------------
HIDALGO, BANFILL, BEATNIK & KERMALI, P.C.
February 7, 1997
3555 TIMMONS LANE, SUITE ~ HOUSTON TEXAS 77027 - (713) 963-8008
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P.C
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS
The Members
Cove Apartments, L.C.
We have audited the financial statements of U.S. Department of Housing and Urban
Development ("HUD") Project No. 114-11122-REF, Cove Apartments, L.C. (the
Company) for the year ended December 31, 1996 and have issued our report thereon
dated February 7, 1997. In addition, we have audited the Company's compliance
with the specific program requirements governing mortgage status, replacement
reserve, security deposits and cash receipts and disbursements that are
applicable to each of its major HUD-assisted programs, for the year ended
December 31, 1996. The management of Cove Apartments, L.C. is responsible for
compliance with those requirements. Our responsibility is to express an opinion
on compliance with those requirements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the Guide')
issued by the U.S. Department of Housing and Urban Development, Office of
Inspector General in July 1993. Those standards and the Guide require that we
plan and perform the audit to obtain reasonable assurance about whether material
noncompliance with the requirements referred to above occurred. An audit
includes examining, on a test basis, evidence about the Companies compliance
with those requirements. We believe that our audit provides a reasonable basis
for our opinion.
The results of our audit procedures disclosed no instances of noncompliance with
the requirements referred to above, that are required to be reported herein.
In our opinion, Cove Apartments, L.C. complied in all material respects with the
requirements governing Section 207 pursuant to Section 223(f) of the National
Housing Act that are applicable to each of its HUD assisted programs for the
year ended December 31, 1 996.
This report is intended for the information of management and the U.S.
Department of Housing and Urban Development. However, this report is a matter of
public record and its distribution is not limited.
/S/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
------------------------------------------------
HIDALGO, BANFILL, ZLOTNIK & KERMALI, P.C.
February 7, 1997
3555 TIMMONS LANE, SUITE 460 - HOUSTON TEXAS 77027 - (713) 963-8008
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P.C
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL
STRUCTURE (COMBINED REPORT APPLICABLE TO THE
FINANCIAL STATEMENTS AND HUD-ASSISTED PROGRAMS)
The Members
Cove Apartments, L.C.
We have audited the financial statements of U.S. Department of Housing and Urban
Development ("HUD") Project No. 1114-11122-REF Cove Apartments, L.C. (the
Company) as of and for the year ended December 31, 1996 and have issued our
report thereon dated February 7, 1997. We have also audited the Company's
compliance with requirements applicable to major HUD-assisted programs and have
issued our report thereon dated February 7, 1997.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States, and the Consolidated Audit Guide for Audits of HUD Programs (the
Guide ), issued by the U.S. Department of Housing and Urban Development, Office
of the Inspector General, in July 1993. Those standards and the Guide require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatements and about whether
the Company complied with laws and regulations, noncompliance with which would
be material to a major HUD assisted program.
The management of Cove Apartments, L.C. is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. The objections of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, that transactions
are executed in accordance with management's authorization and recorded properly
to permit the preparation of financial statements in accordance with generally
accepted accounting principles, and that HUD-assisted programs are managed in
compliance with applicable laws and regulations. Because of inherent limitations
in any internal control structure, errors, irregularities, or instances of
noncompliance may nevertheless occur and not be detected. Also, projection of
any evaluation of the stature to future periods is subject to the risk that
procedures may become inadequate because of changes in conditions or that the
effectiveness of the design and operation of policies and procedures may
deteriorate.
<PAGE>
Page 2
In planning and performing an understanding of the design of relevant Optimal
control structure policies and procedures and determined whether they had been
placed in operation, and we assessed control risk in order to determine our
auditing procedures for the purpose of expressing our opinions on the Company's
financial statements and on its compliance with specific requirements applicable
to its major HUD-assisted programs and the report on the Internal control
structure in accordance with the provisions of the Guide and not to provide any
assurance on the Internal control structure.
We performed tests of controls, as required by the Guide, to evaluate the
effectiveness of the design and operation of Internal control structure policies
and procedures that we considered relevant to preventing or detecting material
noncompliance with specific requirements applicable to the major HUD-assisted
programs. Our procedures were less in scope than would be necessary to render an
opinion on such Internal control polices and procedures. Accordingly, we do not
express such an opinion.
Our consideration of the Internal structure would not necessarily disclose all
matters in the Internal control structure that might be material weaknesses
under standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or operation
of one or more of the Internal control structure elements does not reduce to a
relatively low level risk that error or irregularities in amounts that would be
material in relation to the financial statements or that noncompliance laws and
regulations that would be material to a HUD-assisted program may occur and not
be detected within a timely period by employees in the nominal course of
performing their assigned functions.. We noted no matters involving the Internal
control structure and its operations that we consider to be material weaknesses
as defined above.
This report is intended for the information of the audit committee, management,
and the Department of Housing and Urban Development. However, this report is a
matter of public record and its distribution is not limited.
/S/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
----------------------------------------------
HIDALGO, BANFILL, ZLOTNIK KERMALI, P.C.
February 7, 1997
3555 TIMMONS LANE, SUITE 460 - HOUSTON TEXAS 77027 - (713) 963-8008
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P. C.
<PAGE>
OXFORD APARTMENTS, LC.
(HUD Protect Number 114-11123-REF)
Financial Statements and Supplemental Supporting Data
For the Year Ended December 31, 1996
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
For the Year Ended December 31, 1996
Page
-------
Independent Auditors' Report 1
Financial Statements
Balance Sheet 2 - 3
Statement of Profit and Loss 4
Statement of Changes in Members' Equity 5 - 6
Statement of Cash Flows 7
Notes to Financial Statements 8 - 10
Supplemental Supporting Data Required by HUD 11 - 21
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P.C
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS REPORT
The Members
Oxford Apartments, L.C.
We have audited the accompanying balance sheet of Oxford Apartments, L.C. (a
Texas Limited Liability Company), U.S. Department of Housing and Urban
Development ("HUD") Project Number 114-1112-REF, as of December 31, 1996 and the
related statements of profit and loss, changes in members' equity and cash flows
for the year ended December 31, 1996. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in a
material respects, the financial position of Cove Apartments, L.C. (the Company)
as of December 31, 1996 and the results of its operations, changes in members'
equity and cash flows for the year then ended in conformity with generally
accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 7, 1997, on its
compliance and specific requirements applicable to major HUD programs and
specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11-21 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the
Company. Such information has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material in relation to the basic financial statements taken as a
whole.
/s/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
---------------------------------------------
Certified Public Accounts
February 7, 1997
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
BALANCE SHEET
DECEMBER 31, 1996
CURRENT ASSETS:
1110 Petty Cash $ 300
1120 TCB depository account 195,296
1130 Tenant accounts receivable 1,447
1900 Deposits 2,057
1240 Prepaid insurance 46,017
1250 Mortgage insurance 41,858
-----------------
Total current assets $ 286,975
-----------------
Deposits Held in Trust - Funded:
1191 Tenant security depot: 69,519
-----------------
Restricted Deposits and Funded Renews:
1310 Mortgage escrow deposits:
MIP escrow
FHA repair escrow
Property tax escrow 232,649
Insurance escrow 3,250
1320 Reserve for replacements - Note 2 359,609
-----------------
Total restricted deposits and funded reserves 595.508
-----------------
Fixed Assets:
1410 Land 2,304,054
1420 Buildings 6,464,316
1450 Furniture and equipment 450,814
-----------------
9,219;184
Less accumulated depreciation (1.369.993)
-----------------
Total fixed assets 7,849,191
-----------------
Over Assets:
1800 Fit and organization costs net of
accumulated amortization of $43,510 455,439
-----------------
Total Assets $ 9,256,632
=================
See accompanying notes to financial statements.
2.
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Protect Number 114~11123-REF)
BALANCE SHEET
DECEMBER 31, 1996
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities ties:
2110 Accounts payable $ 7,987
2120 Accrued wages and payroll taxes payable 4,370
2130 Mortgage interest payable 58,303
2150 Accrued property taxes 256,327
2210 Prepaid rents 4,149
2320 Current portion of mortgage loan payable - Note 2 69,293
--------------
Total Current liabilities 400,429
Deposits Liabilities:
2191 Tenant security deposits: 64,590
Long Term Liabilities:
2310 Mortgage loan payable, net of current portion - Note 2 9,106,238
--------------
Total Liabilities 9,571,257
Members Equity (Deficit) (314.625)
--------------
Total Liabilities and Members Equity $ 9,256,632
==============
See accompanying notes to financial statements.
<PAGE>
Statement or U.S. Department of Housing
Profit and Loss and Urban Development
Office of Housing 0MB Approval No. 2502-0052
Federal Housing Commissioner (Exp. 1/31/95)
- - --------------------------------------------------------------------------------
Public Reporting Burden for this collection of information is estimated to
average 1.0 hours per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments regarding
this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to the Reports Management
Officer, Office of Information Policies and Systems, U.S. Department of Housing
and Urban Development, Washington, D.C. 20410-3600 and to the Office of
Management and Budget, Paperwork Reduction Project (2502-0052), Washington, D.C.
20503. Do not send this completed form to either of these addresses.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------------
For Monthly Period
Beginning: Ending: Project Number: Project Name;
01/01/96 12/31/96 114-11123-REF OXFORD APARTMENTS, L.C.
- - -------------------------------------------------------------------------------------------------------------------------------
Part I Description of Account Acct. No. Amount
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Apartments or Member Carrying Charges (Coops) 5120 $ 2,617,040
Rental Tenant Assistance Payments 5121 $
Income Furniture and Equipment 5140 $
5100 Garage and Parking Spaces 5170 $
Flexible Subsidy Income 5160 $
Miscellaneous (specify) 5190 $
Total Rent Revenue Potential at 100% Occupancy $ 2,617,040
- - -------------------------------------------------------------------------------------------------------------------------------
Apartments 5220 ( 393,814)
Furniture and Equipment 5230 ( )
Vacancies Stores and Commercial 5240 ( )
5200 Garage and Parking Spaces 5270 ( )
Miscellaneous (Specify) 5290 ( )
Total Vacancies (393,814)
Net Rental Revenue Rent Revenue Less Vacancies $ 2,223,226
Elder and Congregate Services Income_5300
Total Service Income (Schedule Attached) 5300
- - -------------------------------------------------------------------------------------------------------------------------------
Interest Income_Project Operations 5410 $ 1,732
Financial Income from Investments_Residual Receipts 5430 $
Revenue Income from Investments_Reserve for Replacement 5440 $ 14,818
5400 Income from Investments_Miscellaneous 5490 $
Total Financial Revenue $ 16,550
- - -------------------------------------------------------------------------------------------------------------------------------
Laundry and Vending 5910 30,008
NSF and Late Charges 5920 $ 5,758
Other Damages and Cleaning Fees 5930 $ 12,327
Revenue Forfeited Tenant Security Deposits 5940 $ 12,917
5900 Other Revenue (specify) 5990 $ 5,369
Total Other Revenue $ 66,379
Total Revenue $ 2,306,155
- - -------------------------------------------------------------------------------------------------------------------------------
Advertising 6210 $ 82,280
Other Administrative Expense 6250 $ 6,456
Office Salaries 6310 $ 114,371
Office Supplies 6311 $ 5,242
Office or Model Apartment Rent 6312 $ 20,090
Administrative Management 6320 $ 90,889
Expenses Manager or Superintendent Salaries 6330 $
6200/6300 Manager or Superintendent Rent Free Unit 6331 $
Legal Expenses (Project) 6340 $ 100
Auditing Expenses (Project) 6350 $ 5,000
Bookkeeping Fees/Accounting Services 6351 $ 1,900
Telephone and Answering Service 6360 $ 7,718
Bad Debts 6370 $
Miscellaneous Administrative Expenses (specify) 6390 $ 4,792
Total Administrative Expenses $ 338,838
- - -------------------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
Electricity (Light and Misc. Power) 6450 $ 50,630
Water 6451 $ 88,881
Gas 6452 $ 26,022
Sewer 6453 $
Total Utilities Expenses $ 165,533
- - -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------------
For Monthly Period
Beginning: Ending: Project Number: Project Name;
01/01/96 12/31/96 114-11123-REF OXFORD APARTMENTS, L.C.
- - -------------------------------------------------------------------------------------------------------------------------------
Part I Description of Account cct. No. Amount
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janitor and Cleaning Payroll 6510 $
Janitor and Cleaning Supplies 6515 $ 1,813
Janitor and Cleaning Contract 6517 $
Exterminating Payroll/Contract 6519 $ 5,270
Exterminating Supplies 6520 $
Garbage and Trash Removal 6525 $ 10,806
Security Payroll/Contract 6530 $ 24,453
Grounds Payroll 6535 $ 28,603
Operating and Grounds Supplies 6536 $
Maintenance Grounds Contract 6537 $
Expenses Repairs Payroll 6540 $ 121,446
6500 Repairs Material 6541 $ 53,027
Repairs Contract 6542 $ 31,950
Elevator Maintenance/Contract 6545 $
Heating/Cooling Repairs and Maintenance 6546 $ 5,859
Swimming Pool Maintenance/Contract 6547 3,027
Snow Removal 6548 $
Decorating Payroll/Contract 6560 $
Decorating Supplies 6561 $
Other 6570 $
Miscellaneous Operating and Maintenance Expenses 6590 $ 110
Total Operating and Maintenance Expenses $ 286,364
- - -------------------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 256,869
Payroll Taxes (FICA) 6711 $ 23,874
Miscellaneous Taxes, Licenses and Permits 6719 $
Taxes Property and Liability Insurance (Hazard) 6720 $ 48,448
and Fidelity Bond Insurance 6721 $
Insurance Workmen's Compensation 6722 $ 22,130
6700 Health Insurance and Other Employee Benefits 6723 $ 19,708
Other Insurance (specify) 6729 $
Total Taxes and Insurance $ 371,029
- - -------------------------------------------------------------------------------------------------------------------------------
Interest on Bonds Payable 6810 $
Financial Interest on Mortgage Payable 6820 $ 701,909
Expenses Interest on Notes Payable (Long-Term) 6830 $
6800 Interest on Notes Payable (Short Term) 6840 $
Mortgage Insurance Premium/Service Charge 6850 $ 46,000
Miscellaneous Financial Expenses 6890 $
Total Financial Expenses $ 747,909
- - -------------------------------------------------------------------------------------------------------------------------------
Elderly Total Service Expenses_Schedule Attached 6900 $
Congregate Total Cost of Operations Before Depreciation $ 1,910,123
Service Profit (Loss) Before Depreciation $ 396,032
Expenses Depreciation (Total)_6600 (specify) 6600 $ 477,114
6900 Operating Profit or (Loss) $( 81,082)
- - -------------------------------------------------------------------------------------------------------------------------------
Corporate Officer Services 7110 $
Mortgagor Legal Expenses (Entity) 7120 $
Entity Taxes (Federal-State-Entity) 7130-32 $
Expenses Other Expenses (Entity) 7190 $
7100 Total Corporate Expenses $
Net Profit or (Loss) $
- - -------------------------------------------------------------------------------------------------------------------------------
Warning: HUD will prosecute false claims and statements. Conviction may result in criminal and/or
civil penalties. (18 U.S.C. 1001, 1010, 1012; 31 U.S.C. 3729, 3802)
Miscellaneous or other Income and Expense Sub-account Groups. If miscellaneous or other income
and/or expense sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6729, 6890, and 7190) exceed the
Account Groupings by 10% or more, attach a separate schedule describing or explaining the
miscellaneous income or expense.
- - -------------------------------------------------------------------------------------------------------------------------------
Part II
1. Total principal payments required under the mortgage, even if payments
under a Workout Agreement are less or more than those required under the
mortgage $ 64,222.12
- - -------------------------------------------------------------------------------------------------------------------------------
2. Replacement Reserve deposits required by the
Regulatory Agreement or Amendments thereto, even if payments may be
temporarily suspended or waived. $ 48,892
- - -------------------------------------------------------------------------------------------------------------------------------
3. Replacement or Painting Reserve release which are included as expense items
on this Profit and Loss statement. $ -0-
- - -------------------------------------------------------------------------------------------------------------------------------
4. Project Improvement Reserve Release under the Flexible Subsidy Program that
are included as expense items on this Profit and Loss Statement. $ -0-
- - -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996
Balance, December 31, 1995 $ (79,826)
Contributions -
Distributions (154,167)
Net Loss for the Period (80.632)
---------------
Balance, December 31, 1996 $ (314,625)
===============
See accompanying notes to financial statements.
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
Cash Flows from Operating Activities:
Net Income (Loss) $ (80,632)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 477,114
(Increase) deal ease in:
Accounts receivable - tenants (346)
Mortgage insurance (22,869)
Prepaid insurance (1,859)
Escrow accounts 140,285
Security deposits (1,550)
Accounts receivable - other
Increase (decrease) in:
Accounts payable and accrued liabilities (603)
Accrued interest payable (408)
Accrued taxes payable 2,528
Deposit liabilities (1,485)
Prepaid rents 3,813
---------
513,988
---------
Cash Flows from Investing Activities:
Property improvements (214,567)
---------
Cash Flows from Financing Activities:
Mortgage principal payments (64,222)
Distributions (154,167)
---------
(218,389)
---------
Increase in Cash 81,032
Cash, Beginning of Year 114,564
---------
Cash, End of Year $ 195,596
---------
Supplemental Disclosures of Cash Flow Information:
Interest Paid During the Year $ 701,909
=========
See accompanying notes to financial statements.
7
<PAGE>
OXFORD APARTMENTS, LC.
(HUD Project Number 114~11123-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
Note 1 Organization and Summary of Significant Accounting Policies
Organization
Oxford Apartments, L.C. (the "Company") was organized as a Limited
Liability Company on June 25, 1992, under the laws of the State of
Texas, for the purpose of acquiring and operating a housing project or
projects with the assistance of mortgage insurance under the National
Housing Act, Section 223 F. Such project are regulated by the
Department of Housing and Urban Development ("HUD"). The Regulatory
Agreement limits distributions of net operating income to "surplus
cash" available for distribution at the end of a semiannual or annual
fiscal period. The Limited Liability Company will terminate June 24,
2032, according to the terms of the Articles of Organization.
On December 16, 1993, the Members of Oxford Apartments, L.C.
contributed a 405 unit multifamily project located at 2815 Greenridge
in Houston, Texas, known as the Oxford Apartments (the "Project") and
certain other assets to the Company. Concurrently, the Company
obtained a mortgage loan in the amount of $9,350,000, collateralized
by the Project and other assets. The Project was recorded by the
Company at the members' net carrying basis of $8,614,164 which
represents cost less accumulated depreciation. The proceeds of the
mortgage loan were used to repay the members' existing debt on the
Project, fund escrow balances and pay closing costs all of which were
funded at closing and did not flow through the cash accounts of the
Company. The aggregate amount of the assets contributed, including the
Project and other assets and escrow balances, in excess of the
mortgage loan totaled $484,789 and was recorded as a capital
contribution.
Revenue Recognition
The Company recognizes real estate rental revenue in accordance with
the terms of the respective leases.
Property, Furniture and Equipment
Property, furniture and equipment are carried at cost and are
depreciated using the straight line method over the estimated useful
lives of 5 to 10 years for furniture and equipment and 19 to 40 years
for building and building improvements.
8
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31,1996
Note 1 Organization and Summary of Significant Accounting Policies (Continued)
Financing Costs
Financing costs consist principally of fees incurred in conjunction
with obtaining the permanent mortgage loan and are being amortized
over the 35 year term of the mortgage loan using the straight-line
method.
Income Taxes
No provision for Federal income taxes is made in the accounts of the
Company since taxes on its operations are the obligations of
individual members.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Note 2 Mortgage Loan Payable
The mortgage loan payable to TRI Capital Corporation bears interest at
7.625% and is due in monthly installments of $63,878, including
interest, through January 1, 2029. The Company's property and
equipment and the various funded reserves collateralize the mortgage
loan.
Annual principal payments for years subsequent to December 31, 1996
are as follows:
Years Ending December 31, Amount
------------------------
1997 $ 69,293
1998 74,765
1999 80,670
2000 87,041
2001 95,108
Thereafter 8,768,654
----------
$9,175,531
==========
Note 3 Real Estate Leases
At December 31, 1996 approximately 92% of the Projects 308 units were
committed under either month-to-month leases or noncancelable
operating leases with terms varying from six to twelve months. Future
minimum real estate rental income under the noncancelable operating
leases existing at December 31, 1996, expected during the year ending
December 31, 1997 is approximately $824,389.
9
<PAGE>
OXFORD APARTMENTS, LC.
(HUD Project Number 114-11123-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31,1996
Note 4 Related Party Transactions
Operations of the Project are managed by Bradley Apartment Homes
("BAH"), which is affiliated with the members of the Oxford
Apartments, L.C. Management fees paid to BAH are based on four percent
of rents collected. Such fees aggregated $90,889 for the year ended
December 31, 1996.
Consulting services related to contracting for repair/replacement
expenditures on the project were provided during the year by Allied
Construction Services, which is also affiliated with the members of
Oxford Apartments, L.C. Consulting fees paid to Allied Construction
during the year ended December 31, 1996 aggregated $15,737 and were
calculated on a percentage of the repair/replacement cost basis.
Note 5 Concentration of Credit Risk
The Company maintains unrestricted cash balances at a bank. Cash
accounts at the bank are insured by the FDIC for up to $100,000.
Amounts in excess of the insured limits were $95,596 at December 31,
1996.
10
<PAGE>
SUPPLEMENTAL SUPPORTING DATA REQUIRED BY HUD
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
December 31, 1998
Accounts Receivable (other than from regular tenants):
None
Delinquent Tenant Accounts Receivable:
1996
-------------------------
Number of Amount
Tenants Past Due
-------- --------
Delinquent 30 days 5 $ 1,447
Delinquent 31 to 60 days 0 0
Delinquent 61 to 90 days 0 0
Delinquent over 90 days 0 0
5 $ 1,447
Mortgage Escrow Deposits:
Estimated amount required as of December 31, 1996 for future payment of:
1996
---------
Property insurance, 2 months $ 8,367
Mortgage insurance, 12 months 45,663
Real estate taxes, 12 months 256,327
---------
Total 310,357
Amount confirmed by mortgage 277,757
---------
Amount on deposit in excess (deficient)
of estimated requirements (32,600)
Check in transit at December 31, 1996 30,234
---------
Deficiency $ (2,366)
========
An additional escrow checks of $2,500 was paid on January 27, 1997 to offset the
deficiency.
11
<PAGE>
OXFORD APARTMENTS,
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Reserve for Replacements:
In accordance with the provisions of the Regulatory Agreement, restricted
cash is held by the TRI Capital Corporation to be used for replacement of
property with the approval of HUD as follows:
Balance, beginning of period $ 486,862
Deposits made during period 63,710
Withdrawals made during period (190,963)
----------
Balance, end of period $ 359,609
==========
The following information pertains to withdrawals made from the Reserve for
Replacements during the year:
<TABLE>
<CAPTION>
Interior Hot Water
Date Decoration Exterior A/C System Misc Total
---- ---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
January 22, 1996 $ 48,497 $ 43,188 $ 5,361 $ 6,141 $ 6,440 $ 109,627
July 9,1996 19,629 57,283 4,424 - - 81,336
-------- --------- --------- -------- -------- ---------
$ 68,126 $ 100,471 $ 9,785 $ 6,141 $ 6,440 $ 190,963
======== ========= ========= ======== ======== =========
</TABLE>
Accounts Payable (other than to trade creditors):
None
Compensation of Partners:
None from Project funds
Changes in Fixed Assets:
<TABLE>
<CAPTION>
Furniture &
Land Buildings Equipment Total
--------------- -------------- ----------- ---------------
Cost:
<S> <C> <C> <C> <C>
December 31, 1995 $ 2,304,054 $ 6,313,187 $ 387,374 $ 9,004,615
Additions - 151,129 63,440 214,569
Dispositions - . - - -
---------------- --------------- ---------- ----------------
December 31, 1996 $ 2,304,054 $ 6,464,316 $ 450,814 $ 9,219,184
================ =============== ========== ================
Accumulated Depreciation:
December 31, 1995 $ 796,175 $ 110,959 $ 907,134
Additions 395,390 67,469 462,859
Dispositions _ _ _
---------------- --------------- ---------- ----------------
December 31,1996 $ 1,191,565 $ 178,428 $ 1,369,993
================ =============== ========== ================
</TABLE>
12
<PAGE>
OXFORD APARTMENTS,. L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Accrued Taxes:
Description of Basis for Period Amount
Tax Accrual Covered Date Due Accrued
-------------- --------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Houstonn ISD Tax January 1, 1996
Statement through January 31,1997
December 31, 1996 $ 128,557
City of Houston and Tax January 1,1996
Harris County Statement through January 31, 1997
December 31, 1996 127,770
-----------
Total $ 256,327
===========
</TABLE>
Tenant Security Deposits:
Tenant security deposits are held in account # 25523-00220 at Bank of America
Texas NA, Houston, Texas. The federally insured account, in the name of the
Project, had a balance of $69,519 at December 31, 1996, including earned
interest that does not inure to the tenants.
Schedule of Unauthorized Distributions of Project Income:
None
Changes in Ownership interests:
No ownership changes occurred during the period covers by the financial
statements. Distributions paid to the members:
Date Declared and Paid Period Covered Amount Declared and Paid
February 1996 2nd half 1995 $ 113,906
July 1996 1st half 1996 $ 40,261
---------
$ 154,167
=========
13
<PAGE>
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HOUSING - FEDERAL HOUSING COMMISSIONER
OFFICE Of MULTIFAMILY HOUSING management AND OCCUPANCY
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND
RESIDUAL RECEIPTS
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER
OXFORD APARTMENTS, L.C. 06/30/96 114-11123-REF
- - ------------------------------------------------------------------------------------------------------------------------------------
PART A - COMPUTE SURPLUS CASH
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Cash (Accounts 1110, 1120, 1191, 1192) $ 44,786
2. Tenant subsidy vouchers due for period covered $
by financial statement
3. Other (describe) Approved Hud Replacement
Reserve Draw Not Received $ 81,336
(a) Total Cash (Add Lines 1, 2, and 3) $ 126,122
4. Accrued mortgage interest payable $ _
5. Delinquent mortgage principal payments $ _
6. Delinquent deposits to reserve for replacements $ _
7. Accounts payable (due within 30 days) $ _
8. Loans and nonpayable _
(due within 30 days) $ _
9. Deficient Tax Insurance or MIP Escrow Deposits $ _
10. Accrued expenses (not escrowed) $ 12,182
11. Prepaid Rents (Account 2210) $ 6,786
12. Tenant security deposits liability (Account 2191) $ 66,894
13. Other (Describe) $ _
(b) Less Total Current Obligations (Add Lines 4 through 13) $ 85,862
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $ 40,260
- - ------------------------------------------------------------------------------------------------------------------------------------
PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO REQUIRED
DEPOSIT TO RESIDUAL RECEIPTS
- - ------------------------------------------------------------------------------------------------------------------------------------
1. Surplus Cash $ 40,260
2a. Annual Distribution Earned During Fiscal Period $
Covered by the Statement
2b. Distribution Accrued and Unpaid as of the $
End of the Prior Fiscal Period
2c. Distributions Paid During Fiscal Period Covered by Statement $
3. Amount to be Carried on Balance Sheet as Distribution
Earned but Unpaid (Line 2a plus 2b minus 2c) $
4. Amount Available for Distribution During Next Fiscal Period $ 40,260
5. Deposit Due Residual Receipts (Must be deposited with Mortgagee within 60
days after Fiscal Period ends)
- - ------------------------------------------------------------------------------------------------------------------------------------
PREPARED BY REVIEWED BY
- - ------------------------------------------------------------------------------------------------------------------------------------
LOAN TECHNICIAN LOAN SERVICER
- - ------------------------------------------------------------------------------------------------------------------------------------
DATE DATE
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Reverse for Instructions) HUD-93486 (12-80)
<PAGE>
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HOUSING - FEDERAL HOUSING COMMISSIONER
OFFICE Of MULTIFAMILY HOUSING Management AND OCCUPANCY
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND
RESIDUAL RECEIPTS
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER
OXFORD APARTMENTS, L.C. 06/60/96 114-11123-REF
- - ------------------------------------------------------------------------------------------------------------------------------------
PART A - COMPUTE SURPLUS CASH
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Cash (Accounts 1110, 1120, 1191, 1192) $ 265,115
2. Tenant subsidy vouchers due for period covered $
by financial statement
3. Other (describe)(Approved HUD replacement reserve draw not received) $ 55,682
(a) Total Cash (Add Lines 1, 2, and 3) $ 320,797
4. Accrued mortgage interest payable $ 58,303
5. Delinquent mortgage principal payments $ 4,074
6. Delinquent deposits to reserve for replacements $
7. Accounts payable (due within 30 days) $
8. Loans and nonpayable
(due within 30 days) $ 5,575
9. Deficient Tax Insurance or MIP Escrow Deposits $ 32,600
10. Accrued expenses (not escrowed) $ 12,357
11. Prepaid Rents (Account 2210) $ 4,149
12. Tenant security deposits liability (Account 2191) $ 64,590
13. Other (Describe) $ _
(b) Less Total Current Obligations (Add Lines 4 through 13) $ 181,648
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $ 139,149
- - ------------------------------------------------------------------------------------------------------------------------------------
PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO REQUIRED
DEPOSIT TO RESIDUAL RECEIPTS
- - ------------------------------------------------------------------------------------------------------------------------------------
1. Surplus Cash $179,409
2a. Annual Distribution Earned During Fiscal Period
Covered by the Statement $
2b. Distribution Accrued and Unpaid as of the
End of the Prior Fiscal Period $
2c. Distributions Paid During Fiscal Period Covered by Statement $ 40,260
3. Amount to be Carried on Balance Sheet as Distribution
Earned but Unpaid (Line 2a plus 2b minus 2c) $ 139,149
4. ~ Amount Available for Distribution During Next Fiscal Period
$ 139,149
5. Deposit Due Residual Receipts
(Must be deposited with Mortgagee within 60 days after Fiscal Period ends) $
- - ------------------------------------------------------------------------------------------------------------------------------------
PREPARED BY REVIEWED BY
- - ------------------------------------------------------------------------------------------------------------------------------------
LOAN TECHNICIAN LOAN SERVICER
- - ------------------------------------------------------------------------------------------------------------------------------------
DATE DATE
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Reverse for Instructions) HUD-93486 (12-80)
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Statement of Receipts and Disbursements:
Source of Funds:
Revenues:
Rental income, net $ 2,223,226
Service commissions -
Financial 16,550
Other income 66,379
-----------
2,306,155
-----------
Expenses:
Administrative: 247,949
Management fees 90,889
Utilities 165,533
Operating 37,073
Maintenance 127,845
Maintenance payroll 121,446
Real estate taxes 256,869
Other taxes 23,874
Insurance 68,156
Workmens' compensation 22,130
Mortgage insurance 46,000
Mortgage interest 701,909
----------
1,909,673
----------
Cash prodded by operations before principal
payments and changes in assets and liabilities 396,482
Principal payments 64,222
----------
Cash provided by operations before changes
in assets and liabilities 332;260
16
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Protect Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Statement of Receipts and Disbursements (Continued)
Application of Funds:
(Increase) decrease in:
Accounts receivable - tenants $ (346)
Prepaid insurance (1,859)
Security deposits (1,550)
Escrow accounts 140,285
Mortgage insurance (22,869)
Increase (decrease) in:
Accounts payable and accrued liabilities (603)
Accrued interest payable (408)
Accrued taxes payable 2,528
Deposit and prepayment liabilities 2,328
Additions to Property (214,567)
Surplus Cash Distributions (154,167)
------------
Increase in cash 81,032
Unrestricted cash, beginning period 114,564
------------
Unrestricted cash, end of period $ 195,596
============
17
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
December 31,1996
<TABLE>
<S> <C> <C>
Schedule of Funds in Financial Institutions as of December 31, 1996:
Funds Held by Mortgagor, Regular Operating Account:
Texas Commerce Bank, (checking)(1) $ 195,296
Funds Held by Mortgagor in Trust, Tenant Security Deposits:
Bank of America)(2) 69,519
Funds Held by Mortgagee, (in Trust):
Reserve for Replacements(3)
Sanwa Bank, (checking) 1.25% $ 64,641
Bank United, (checking) 2.50% 44,968
Treasury Bill, 4.689% 250.000 359,609
----------
Mortgage Insurance Escrow,(3) Sanwa Bank 41,858
Property Tax Escrow,(3) Sanwa Bank 232,649
Property Insurance Escrow,(3) Sanwa Bank 3,250
---------
Funds Held by Mortgagee 637,366
---------
Total Funds in Financial Institutions $ 902,181
=========
</TABLE>
1 Balance Confirmed by Texas Commerce Bank
2 Balance Confirmed by Bank of America
3 Balance Confirmed by TRI
18
<PAGE>
OXFORD APARTMENTS
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
Form the Year Ended December 31, 1996
Listing of Identity of Interest Companies and Activities
Doing Business with Owner/Agent
doing the year ended Decanter 31, 1996
Company Name Type of Service Amount Received'
--------------------- ------------------- ----------------
Bradley Apartment Homes Property Management $ 90,889
Allied Construction Service Consulting Services 15,737
19
<PAGE>
OXFORD APARTMENTS, LC.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Certification of Members
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
We hereby certify that we have examined the foregoing financial statement of
Oxford Apartments, L.C. Project Number 114-11123-REF, and, to the best of our
knowledge and belief, the same is complete and accurate.
/s/ Tim Myers /s/ Al Bradely, Jr.
- - --------------------------- ---------------------------
Tim Myers Al Bradley, Jr.
President Vice President
2/18/97 2/18/97
- - ---------------------------- ---------------------------
Date Date
Limited Liability Company
Identification Number 76-0372784
20
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1996
Management Agent's Certification
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
We hereby certify that we have examined the foregoing financial statement of
Oxford Apartments, L.C. Project Number 114-11123-REF, and, to the best of our
knowledge and belief, the same is complete and accurate.
/s/ Linda Handley /s/ Al Bradley, Jr.
---------------------------------- --------------------------------
Linda Handley Al Bradley, Jr.
President Chairman
Allied Development Corporation Allied Development Capaabon
dba, Bradley Apartment Homes dba, Bradley Apartment Homes
2/20/97 2/20/97
- - ----------------------------------- ---------------------------------
Date Date
Allied Development Corporation
Identification Number 76-0156150
21
<PAGE>
Hidalgo, Banfi11, Zlotnik & Kermali, P. C
CERTIFIED PUBLIC ACCOUNTS
(Originally Founded in 1949)
February 7,1997
To the Department of Housing and Urban Development
Attached is the financial report of Oxford Apartments, L.C. (HUD Project No.
114-11123-REF) for the year ended December 31, 1996.
/s/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
- - --------------------------------------------
Certified Public Accountants
Houston, Texas
Employer Identification No.: 74-1716599
Engagement Partner Mr. Naushad Kermali
3555 Timmons Lane, #460
Houston, TX 77027
(713) 963 8008
3555 TIMMONS LANE. SUITE 460 - HOUSTON TEXAS 77027- (713) 963-8008
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P.C
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO AFFIRMATIVE FAIR HOUSING
The Members
Oxford Apartments, LC.
We have audited the financial statements of U.S. Department of Housing and Urban
Development ("HUD") Project No. 114-11123-REF, Oxford Apartments, L.C. (the
Company) for the year ended December 31, 1996 and have issued our report thereon
dated February 7, 1997.
We have applied procedures to test the Company's compliance with the Affirmative
Fair Housing requirements applicable to its HUD-assisted programs for the year
ended December 31, 1996.
Our procedures were limited to the applicable compliance requirement described
in the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S.
Department of Housing and Urban Development, Office of Inspector General in July
1993. Our procedures were substantially less in scope than an audit the
objective of which would be the expression of an opinion on the Company's
compliance with the Affirmative Fair Housing requirements. Accordingly, we do
not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are
required to be reported herein under the Guide.
This report is intended for the information of management and the U.S.
Department of Housing and Urban Development. However, this report is a matter of
public record and as distribution is not limited.
/S/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
------------------------------------------------
HIDALGO, BANFILL, BEATNIK & KERMALI, P.C.
February 7, 1997
3555 TIMMONS LANE, SUITE ~ HOUSTON TEXAS 77027 - (713) 963-8008
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P.C
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS
The Members
Oxford Apartments, L.C.
We have audited the financial statements of U.S. Department of Housing and Urban
Development (-HUD') Project No. 114-11122-REF, Oxford Apartments, L.C. (the
Company) for the year ended December 31, 1996 and have issued our report thereon
dated February 7, 1997. In addition, we have audited the Company's compliance
with the specific program requirements governing mortgage status, replacement
reserve, security deposits and cash receipts and disbursements that are
applicable to each of its major HUD-assisted programs, for the year ended
December 31, 1996. The management of Cove Apartments, L.C. is responsible for
compliance with those requirements. Our responsibility is to express an opinion
on compliance with those requirements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the Guide')
issued by the U.S. Department of Housing and Urban Development, Office of
Inspector General in July 1993. Those standards and the Guide require that we
plan and perform the audit to obtain reasonable assurance about whether material
noncompliance with the requirements referred to above occurred. An audit
includes examining, on a test basis, evidence about the Companys compliance with
those requirements. We believe that our audit provides a reasonable basis for
our opinion.
The results of our audit procedures disclosed no instances of noncompliance with
the requirements referred to above, that are required to be reported herein.
In our opinion, Oxford Apartments, L.C. complied in all material respects with
the requirements governing Section 207 pursuant to Section 223(f) of the
National Housing Act that are applicable to each of its HUD assisted programs
for the year ended December 31, 1996.
This report is intended for the information of management and the U.S.
Department of Housing and Urban Development. However, this report is a matter of
public record and its distribution is not limited.
/S/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
---------------------------------------------
HIDALGO, BANFILL, ZLOTNIK & KERMALI, P.C.
February 7, 1997
3555 TIMMONS LANE, SUITE 460 - HOUSTON TEXAS 77027 - (713) 963-8008
<PAGE>
Hidalgo, Banfill, Zlotnik & Kermali, P.C
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL
STRUCTURE (COMBINED REPORT APPLICABLE TO THE
FINANCIAL STATEMENTS AND HUD^SSISTED PROGRAMS)
The Members
Oxford Apartments, L.C.
We have audited the financial statements of U.S. Department of Housing and Urban
Development ("HUD") Project No. 114-11123-REF Oxford Apartments, L.C. (the
Company) as of and for the year ended December 31, 1996 and have issued our
report thereon dated February 7, 1997. We have also audited the Companies
compliance with requirements applicable to major HUD-assisted programs and have
issued our report thereon dated February 7, 1997.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States, and the Consolidated Audit Guide for Audits of HUD Programs (the
Guide ), issued by the U.S. Department of Housing and Urban Development, Office
of the Inspector General, in July 1993. Those standards and the Guide require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatements and about whether
the Company complied with laws and regulations, noncompliance with which would
be material to a major HUD assisted program.
The management of Cove Apartments, L.C. is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. The objections of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, that transactions
are executed in accordance with managements authorization and recorded properly
to permit the preparation of financial statements in accordance with generally
accepted accounting principles, and that HUD-assisted programs are managed in
compliance with applicable laws and regulations. Because of inherent limitations
in any internal control structure, errors, irregularities, or instances of
noncompliance may nevertheless occur and not be detected. Also, projection of
any evaluation of the stature to future periods is subject to the risk that
procedures may become inadequate because of changes in conditions or that the
effectiveness of the design and operation of policies and procedures may
deteriorate.
<PAGE>
Page 2
In planning and performing an understanding of the design of relevant Optimal
control structure policies and procedures and determined whether they had been
placed in operation, and we assessed contra risk in order to determine our
auditing procedures for the purpose of expressing our opinions on the Company's
financial statements and on its compliance with specific requirements applicable
to its major HUD-assisted programs and the report on the internal control
structure in accordance with the provisions of the Guide and not to provide any
assurance on the internal control structure.
We performed tests of controls, as required by the Guide, to evaluate the
effectiveness of the design and operation of internal control structure policies
and procedures that we considered relevant to preventing or detecting material
noncompliance with specific requirements applicable to the major HUD-assisted
programs. Our procedures were less in scope than would be necessary to render an
opinion on such Internal control polices and procedures. Accordingly, we do not
express such an opinion.
Our consideration of the Internal structure would not necessarily disclose all
matters in the internal control structure that might be material weaknesses
under standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or operation
of one or more of the Internal control structure elements does not reduce to a
relatively low level risk that error or irregularities in amounts that would be
material in relation to the financial statements or that noncompliance laws and
regulations that would be material to a HUD-assisted program may occur and not
be detected within a timely period by employees in the nominal course of
performing their assigned functions.. We noted no matters involving the internal
control structure and its operations that we consider to be material weaknesses
as defined above.
This report is intended for the information of the audit committee, management,
and the Department of Housing and Urban Development. However, this report is a
matter of public record and its distribution is not limited.
/S/ Hidalgo, Banfill, Zlotnik, Kermali, P.C.
------------------------------------------
HIDALGO, BANFILL, ZLOTNIK & KERMALI, P.C.
February 7, 1997
3555 TIMMONS LANE, SUITE 460 - HOUSTON TEXAS 77027 - (713) 963-8008
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements for American Mortgage Investors Trust and is qualified in its
entirety by reference to such financial statements
</LEGEND>
<CIK> 0000878774
<NAME> Art. 5 FDS FOR 4TH QUARTER 10-K
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 4,828,561
<SECURITIES> 12,683,331
<RECEIVABLES> 45,635,323
<ALLOWANCES> 0
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<TOTAL-ASSETS> 63,147,215
<CURRENT-LIABILITIES> 986,551
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0
0
<COMMON> 0
<OTHER-SE> 62,160,664
<TOTAL-LIABILITY-AND-EQUITY> 63,147,215
<SALES> 0
<TOTAL-REVENUES> 4,424,815
<CGS> 0
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<OTHER-EXPENSES> 1,137,184
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<NET-INCOME> 3,287,631
<EPS-PRIMARY> .83
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</TABLE>
