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, 1997
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
incorporation or organization) Identification No.)
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 46
Page 1 of
<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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<PAGE>
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'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 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, 1997, 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, 1997, the Company has made the following Mortgage
Investments:
Originated Mortgages
Information relating to investments in Originated Mortgages and Additional Loans
as of December 31, 1997 is as follows:
<TABLE>
<CAPTION>
Date of
Invest-
ment/ Amounts Advanced Total Out-
Final ------------------------------------ Amounts standing
Matu- Total Advanced Loan Occu-
Descrip- rity Mortgage Additional Amounts Amounts and Balance at pancy at
Property tion Date Loans Loans Advanced Unadvanced Unadvanced 12/31/97 3/22/98
- - -------- -------- ------- ---------- ---------- -------- ---------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Cove 308 12/93 $ 6,800,000 $ 840,500 $ 7,640,500 $ 0 $ 7,724,710 $7,463,218 96.1%
Apts. Apt 1/29
Houston, Units (D)
TX (A)
Oxford on 405 12/93 9,350,000 1,156,000 10,506,000 0 10,621,790 10,262,238 95.2%
Greenridge Apt. 1/29
Apts. Units (D)
Houston,
TX (A)
Town & 330 4/94 9,348,000 1,039,000 10,387,000 0 10,387,000 10,154,314 99.1%
Country IV Apt. 5/29
Apts. Units (E)
Urbana,
IL (B)
Columbiana 204 4/94 8,276,895 563,000 8,839,895 406,105 9,246,000 8,830,977 90.0%
Lakes Apts. Apt. 11/35
Columbia, Units (F)
SC (C)
Stony Brook 125 12/95 8,500,000 763,909 9,263,909 0 9,263,909 9,247,960 93.6%
Village II Apt. 6/37
Apts. Units (F)
East Haven,
CT (G)
---------------------------------------------------------------------------------------
Total $42,274,895 $4,362,409 $46,637,304 $406,105 $47,243,409 $45,958,707
=======================================================================================
</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% were guaranteed by the developer until December 1996.
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<PAGE>
(B) The interest rates for Town & 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. Payments at the rate of 9.167% were guaranteed by the developer
until June 1997.
(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. Payments at the rate of
8.678% are guaranteed by the developer until December 1998.
(D) These Originated Mortgages have terms of 35 years, subject to mandatory
prepayment at any time after 10 years and upon one year's notice.
(E) This Originated Mortgage has a term of 35 years, subject to mandatory
prepayment at any time after 12 years and upon one year's notice.
(F) These Originated Mortgages have terms of 40 years, subject to mandatory
prepayment at any time after 10 years and upon one year's notice.
(G) 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.
GNMA Certificates
The Company used a portion of the net proceeds of its Offering to purchase four
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
Purchase Price at 12/31/97 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 $2,348,808 7.125% 3/15/2029
Malone Mortgage Co. 0382486 7/28/94 99.6250% 2,197,130 2,160,347 8.500 8/15/2029
Goldman Sachs 0328502 7/29/94 99.9063% 3,928,615 3,709,427 8.250 7/15/2029
SunCoast Capital Group, Ltd. G22412 (5) 6/23/97 99.34375% 1,981,566 1,957,730 7.000 4/20/2027
</TABLE>
Acquired Mortgages
REMIC Certificates
The Company used a portion of the net proceeds of its Offering to purchase ten
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
Purchase Price at 12/31/97 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) 10/26/93 100.000000 4,838,600 0 4.85 Sold (2)
Meridan Capital Markets 1292ZA (3) 10/25/94 98.968750 1,721,291 0 5.75 6/15/97
Meridan Capital Markets 1992-153A(3) 10/25/94 97.875000 258,357 0 5.25 9/25/97
Meridan Capital Markets 1580A (3) 10/27/94 99.312500 742,538 0 6.50 9/15/98 (6)
Meridan Capital Markets 1258C (3) 11/9/94 100.375000 269,658 0 7.35 5/15/2004 (4)
SunCoast Capital Group, Ltd. FHLMC 17218 (5) 5/30/97 100.453125 507,288 467,023 7.00 2/1/98
SunCoast Capital Group, Ltd. FHLMC 17161 (5) 5/30/97 100.203125 251,967 196,512 6.50 2/1/98
SunCoast Capital Group, Ltd. FHLMC 17125 (5) 6/23/97 100.343750 147,437 146,444 7.00 1/1/98
SunCoast Capital Group, Ltd. FNMA 1997-42V (5) 6/30/97 98.312500 983,125 983,125 7.50 10/18/2009
</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 both November 4, 1993 and
February 1, 1994, the Company sold $200,000 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
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<PAGE>
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
portions of the REMIC Certificate which totaled $5,100,000. The realized loss on
this sale was $328,895.
(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.
(4) The stated final payment date was May 15, 2004. The actual final payment
amounting to $7,099 was received on April 15, 1997.
(5) Purchased as a permanent investment using the proceeds from the final
payment received from the FHA Insured Project Loan (see FHA Insured Project Loan
below and a portion of the proceeds from the sale of Fannie Mae REMIC
Certificate #1992-17G (see (1) above).
(6) The stated final payment date was September 15, 1998. The actual final
payment amounting to $17,952 was received on November 15, 1997.
FHA Insured Project Loan
The Company used a portion of the net proceeds of its Offering to purchase a FHA
Insured Project Loan in the amount of $3,374,679 from an unaffiliated third
party. The full amount of the purchase price was allocated as a permanent
Acquired Mortgage. The stated final payment date was to be April 1, 2019. The
actual final payment amounting to $3,392,445 was received on May 23, 1997.
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.
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, 1997, 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. Since November 30, 1994, 229,501 shares have been 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, 1997, 248,167 shares have
been redeemed for an aggregate price of $4,604,870.
The number of shareholders as of December 31, 1997 was 3,478. 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
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<PAGE>
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
was equal to $19. Effective November 30, 1997, the Board adopted a policy to
adjust the reinvestment price annually to reflect the net asset value of a share
of the Company's stock.
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.
Through the quarter ended March 31, 1997, the redemption price was $19 per
Eligible Share. As permitted by the provisions of the Redemption Plan, the Board
of Trustees implemented the following change to the calculation of the
redemption price for the quarter ended June 30, 1997: the original $19 per share
redemption price was reduced to reflect any return of principal received by
shareholders. As of June 30, 1997, the amount of principal which had been
distributed to shareholders was $1.53 per share and, therefore, the redemption
price was $17.47 per share ($19 per share less $1.53 per share) for redemptions
which occurred in October 1997 for the quarter ended June 30, 1997. The Board
subsequently adopted a policy to adjust the redemption price annually to reflect
the then net asset value of a share of the Company's stock. This new policy is
effective for redemptions with respect to quarters ended September 30, 1997 and
thereafter. As of December 31, 1997, the backlog of shares to be redeemed is
129,275.
A shareholder may present less than all his or her Eligible Shares to the
Company for redemption, provided, however, that (i) he or she must present the
lesser of all of his or her Eligible Shares or 125 Eligible Shares (50 Eligible
Shares for an Individual Retirement Account or Keogh Plan) for redemption, and
(ii) if he or she retains any Eligible Shares, he or she 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, 1998, the Company redeemed
248,167 shares aggregating $4,604,870.
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.
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<PAGE>
Distribution Information
Cash distributions per share for the years ended December 31, 1997 and 1996 are
as set forth in the following table:
Cash Distribution Total Amount
for Quarter Ended Date Paid Per Share Distributed
- - ----------------- --------- --------- -----------
March 31, 1997 5/15/97 .3575 $1,379,996
June 30, 1997 8/14/97 .3615 1,388,505
September 30, 1997 11/14/97 .3655 1,403,266
December 31, 1997 2/14/98 .3655 1,403,165
------ ----------
Total for 1997 1.4500 $5,574,932
======= ==========
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
======= ==========
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.
The Company has completed the offering and acquisition stage and therefore, the
Board reviewed and changed the current distribution policy. Beginning in the
first quarter of 1998 the Company's distribution policy will call for quarterly
distributions which more closely reflect collections of interest payments.
Of the total distributions of $5,575,532 and $5,569,283 made in the years ended
December 31, 1997 and 1996, $2,029,717 ($.53 per share or 36%) and $2,281,652
($.57 per share or 41%) represented returns of capital determined in accordance
with generally accepted accounting principles. As of December 31, 1997, 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 $9,012,732. The portion of the distributions
which constitutes a return of capital was 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, 1997, 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. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Distribution
Policy".
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<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>
Year ended December 31,
----------------------------------------------------------------------------
OPERATIONS 1997 1996 1995 1994 1993
- - ---------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Interest income
Temporary investments $ 151,228 $ 252,140 $ 515,295 $ 631,825 $ 320,147
Investments in loans 3,118,027 2,866,017 2,257,883 1,817,057 66,251
Investments in REMIC and
GNMA certificates and
FHA Insured Project Loan 975,599 1,306,658 1,582,724 1,089,333 181,730
Other income 0 0 0 97,221 0
----------- ----------- ----------- ------------ ------------
Total revenues 4,244,854 4,424,815 4,355,902 3,635,436 568,128
Total expenses 699,039 1,137,184 1,208,770 1,015,734 215,789
----------- ----------- ----------- ------------ ------------
Net income $ 3,545,815 $ 3,287,631 $ 3,147,132 $ 2,619,702 $ 352,339
=========== =========== =========== ============= ============
Basic net income per
weighted average share $ .92 $ .83 $ .81 $ .72 $ .37
=========== =========== =========== ============= ============
Distribution per share $ 1.4500 $ 1.4500 $ 1.4500 $.1391-1.4500* $.0159-.7548*
=========== =========== =========== ============= ============
For the Years ended December 31,
----------------------------------------------------------------------------
FINANCIAL POSITION 1997 1996 1995 1994 1993
- - ------------------ ----------- ----------- ----------- ------------- -----------
Total Assets $61,645,922 $63,147,215 $65,517,610 $ 65,041,319 $ 55,086,936
=========== =========== =========== ============= ============
Total Liabilities $ 1,259,997 $ 986,551 $ 1,002,976 $ 356,602 $ 601,398
=========== =========== =========== ============= ============
Total Shareholders' Equity $60,385,925 $62,160,664 $64,514,634 $ 64,684,717 $ 54,485,538
=========== =========== =========== ============= ============
</TABLE>
* Amounts received by shareholders varied depending on the dates they became
shareholders.
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
The Company has completed the offering and acquisition stage and 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.
Not more than an aggregate of 7% of the Net Proceeds raised in the Offering may
be invested in Additional Loans. As of December 31, 1997, 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 permitted by the provisions of the Redemption Plan, the Board of Trustees
implemented the following change to the calculation of the redemption price for
the quarter ended June 30, 1997: the original $19 per share redemption price was
reduced to reflect any return of principal received by shareholders. As of June
30, 1997, the amount of principal which had been distributed to shareholders was
$1.53 per share and, therefore, the redemption price was $17.47 per share ($19
per share less $1.53 per share) for redemptions which occurred in October 1997
for the quarter ended June 30, 1997. The Board subsequently adopted a policy to
adjust the redemption price each quarter to reflect the then net asset value of
a share of the Company's stock. This new policy is effective for redemptions
with respect to quarters ended September 30, 1997 and thereafter. As of December
31, 1997, the backlog of shares to be redeemed is 129,275. With respect to the
Reinvestment Plan, the Board also adopted a policy to adjust the reinvestment
price at which participants may acquire additional shares under the Reinvestment
Plan to also reflect the then net assets value of a share of the Company's
stock. The change in policy with respect to the reinvestment price is effective
November 30, 1997.
During the year ended December 31, 1997, cash and cash equivalents decreased
approximately $2,988,000 due to investments in mortgage loans ($2,466,000),
purchase of REMIC and GNMA Certificates ($3,871,000) and distributions to
shareholders ($5,576,000) which exceeded cash provided by operating activities
($4,434,000) and principal repayments of loans, GNMAs, REMICs and the FHA
Insured Project Loan ($4,492,000). Included in the adjustments to reconcile the
net income to cash provided by operating activities is net amortization in the
amount of $494,000.
For a description of the Company's investments in Originated Mortgages, REMIC
and GNMA Certificates, see Item 1. Business.
Net unrealized gains on REMIC and GNMA investments included in shareholders'
equity pursuant to Statement of Financial Accounting Standards No. 115
aggregated $173,598 at December 31, 1997. This represents a decrease of $254,984
in the unrealized loss for the year ended December 31, 1997, of which a decrease
of $15,647 is attributable to the sale of securities (which resulted in a
realized loss of $66,735) a decrease of $53,925 is attributable to securities
purchased during 1997 and a decrease of $185,412 is attributable to an increase
in market prices for the investments held at December 31, 1997 and December 31,
1996. As of March, 16 1998, the unrealized gain was approximately $182,000.
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 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 expects to use its reinvestment dividend to redeem shares through
its Redemption Plan and does not expect to have reinvested dividends available
for investment. 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.
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, among other things, distribute at least 95% of its
taxable income.
Results of Operations
Results of operations for the years ended December 31, 1997, 1996 and 1995,
primarily consist of interest income from Original 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. There was no such
excess for the years ended December 31, 1997, 1996 and 1995.
1997 vs 1996
Results of operations for the year ended December 31, 1997 consist primarily of
interest income of approximately $3,118,000 earned on Originated Mortgages
(excluding GNMAs), approximately $976,000 earned from investments in REMIC and
GNMA Certificates and the FHA Insured Project Loan, and approximately $151,000
earned from temporary investments.
The increase in interest income from Originated Mortgages (excluding GNMAs) of
approximately $252,000 for the year ended December 31, 1997 as compared to 1996
is primarily due to the additional advances on the Stonybrook Orginated Mortgage
in 1997.
-9-
<PAGE>
The decrease in interest from REMIC and GNMA Certificates and the FHA Insured
Project Loan of approximately $331,000 for the year ended December 31, 1997 as
compared to 1996 is primarily due to the sale of one REMIC in August 1996 and
the repayment of the FHA Insured Project Loan in May 1997, partially offset by
the purchase of two REMICs in May 1997 and two REMICs and one GNMA in June 1997.
The decrease in interest income from temporary investments of approximately
$101,000 for the year ended December 31, 1997 as compared to 1996 is primarily
due to a decrease in uninvested proceeds earning interest in 1997.
The decrease in general and administrative expenses of approximately $60,000 for
the year ended December 31, 1997 as compared to 1996 is primarily due to a
decrease in legal, engineering and accounting fees, as well as decreases in
several other general and administrative expenses in 1997.
The decrease in realized loss on sale of REMICs and GNMAs and FHA Insured
Project Loan of approximately $349,000 for the year ended December 31, 1997 as
compared to 1996 is primarily due to the sale of one REMIC in August 1996.
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.
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.
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 has been a decrease in funds
remaining to be invested in Mortgage Investments. The Company has completed the
offering and acquisition stage and therefore, the Board reviewed and changed the
current distribution policy. Beginning in the first quarter of 1998 the
Company's distribution policy will call for quarterly distributions which more
closely reflect collections of interest payments.
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, 1997 and 1996; (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, 1997 and 1996; 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, 1997 and 1996, no
investments were sold in order to support the distribution policy.
Of the total distributions of $5,575,532, $5,569,283 and $5,566,609 made for the
years ended December 31, 1997, 1996 and 1995, $2,029,717 ($.53 per share or
36%), $2,281,652 ($.57 per share or 41%) and $2,419,477 ($.61 per share or 43%)
represents a return of capital determined in accordance with generally accepted
accounting principles. As of December 31, 1997, 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
$9,012,732. The portion of the distributions which constitute a return of
capital was 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, 1997, 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 as determined by the Board
on a quarterly basis.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has recently issued several new
accounting pronouncements. Statement No. 128, "Earnings per Share" establishes
standards for computing and presenting earnings per share. Statement No. 129,
"Disclosure of
-10-
<PAGE>
Information about Capital Structure" establishes standards for disclosing
information about an entity's capital structure. The adoption of these standards
in 1997 has not materially affected the Company's reported operating results,
per share amounts, financial position or cash flows.
In June 1997, SFAS No. 130, Reporting Comprehensive Income, and SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, were
issued. SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements.
Reclassification of financial statements for earlier periods, provided for
comparative purposes, is required. The statement also requires the accumulated
balance of other comprehensive income to be displayed separately from retained
earnings and additional paid-in capital in the equity section of the statement
of financial position.
SFAS No. 131 establishes standards for reporting information about operating
segments in annual and interim financial statements. Operating segments are
defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. Categories required to be reported as well as reconciled to the
financial statements are segment profit or loss, certain specific revenue and
expense items, and segment assets. SFAS No. 130 and No. 131 are effective for
fiscal years beginning after December 15, 1997.
Both SFAS No. 130 and 131 are disclosure related only and therefore will have no
impact on the Company's financial position or results of operations.
Year 2000 Compliance
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Advisor is in the process of working with the Company's
service providers to prepare for the year 2000. Based on information currently
available, the Company does not expect that it will incur significant operating
expenses or be required to incur material costs to be year 2000 compliant.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
Not Applicable
-11-
<PAGE>
Item 8. Financial Statements and Supplementary Data.
Page
----
(a) 1. Financial Statements
Independent Auditors' Report 13
Balance Sheets as of December 31, 1997 and 1996 14
Statements of Income for the years ended
December 31, 1997, 1996 and 1995 15
Statements of Changes in Shareholders' Equity for
the years ended December 31, 1997, 1996 and 1995 16
Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 17
Notes to Financial Statements 19
(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.
-12-
<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, 1997 and 1996, 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, 1997. 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, 1997 and 1996, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
January 30, 1998, except as to Note 6, which is as of February 14, 1998
-13-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
1997 1996
----------- ------------
Investments in mortgage loans (Note 3) $46,792,853 $45,049,596
Investment in REMIC and GNMA Certificates and
FHA Insured Project Loan (Note 4) 12,495,878 12,683,331
Cash and cash equivalents 1,840,715 4,828,561
Organization costs (net of accumulated
amortization of $45,000 and $35,000,
respectively) 5,000 15,000
Deferred costs 9,549 12,581
Accrued interest receivable 501,927 558,146
----------- -----------
Total assets $61,645,922 $63,147,215
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 49,123 $ 99,768
Due to affiliates (Note 5) 1,210,874 886,783
---------- ----------
Total liabilities 1,259,997 986,551
---------- ----------
Shareholders' equity:
Shares of beneficial interest;
$.10 par value; 12,500,000 shares
authorized; 4,087,583 and
4,010,000 shares issued and
outstanding, respectively 408,759 401,001
Treasury shares of beneficial
interest; $.10 par value;
248,339 and 169,115 shares,
respectively (24,834) (16,912)
Additional paid-in capital 68,849,725 68,849,567
Accumulated deficit (9,021,323) (6,991,606)
Net unrealized gain (loss)
on marketable securities
(Note 4) 173,598 (81,386)
----------- -----------
Total shareholders' equity 60,385,925 62,160,664
---------- ----------
Total liabilities and shareholders' equity $61,645,922 $63,147,215
========== ==========
See accompanying notes to financial statements
-14-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
Revenues:
Interest income:
Mortgage loans (Note 3) $3,118,027 $2,866,017 $2,257,883
REMIC and GNMA Certificates and
FHA Insured Project Loan (Note 4) 975,599 1,306,658 1,582,724
Temporary investments 151,228 252,140 515,295
---------- ---------- ----------
Total revenues 4,244,854 4,424,815 4,355,902
--------- --------- ---------
Expenses:
General and administrative 143,800 197,400 228,251
General and administrative-related parties (Note 5) 478,504 513,809 531,272
Realized loss on sale of REMICs and GNMAs and
FHA Insured Project Loan (Note 4) 66,735 415,975 439,247
Amortization 10,000 10,000 10,000
---------- ---------- ----------
Total expenses 699,039 1,137,184 1,208,770
---------- --------- ---------
Net income $3,545,815 $3,287,631 $3,147,132
========= ========= =========
Basic net income per weighted average share $ .92 $ .83 $ .81
========== ========== ==========
</TABLE>
See accompanying notes to financial statements
-15-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Shares of Treasury Shares of
Beneficial Interest Beneficial Interest
---------------------- --------------------
Shares Amount Shares Amount
---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1995 3,858,082 $385,809 0 $ 0
Net Income 0 0 0 0
Distributions 0 0 0 0
Purchase of Treasury Shares 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
gain on securities available
for sale (Note 4) 0 0 0 0
--------- -------- -------- --------
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 Shares 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)
Net Income 0 0 0 0
Distributions 0 0 0 0
Purchase of Treasury Shares 0 0 (79,224) (7,922)
Issuance of shares of beneficial
interest (Note 5) 77,583 7,758 0 0
Change in net unrealized gain on
securities available for
sale (Note 4) 0 0 0 0
--------- -------- -------- --------
Balance at December 31, 1997 4,087,583 $408,759 (248,339) $(24,834)
========= ======== ======== =======
<CAPTION>
Net Unrealized
Gain (Loss)
Additional on Securities
Paid-in Accumulated Available
Capital Deficit for Sale Total
----------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 $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 Shares (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
gain on securities available
for sale (Note 4) 0 0 2,572,134 2,572,134
----------- ----------- ---------- ----------
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 Shares (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
Net Income 0 3,545,815 0 3,545,815
Distributions 0 (5,575,532) 0 (5,575,532)
Purchase of Treasury Shares (1,390,593) 0 0 (1,398,515)
Issuance of shares of beneficial
interest (Note 5) 1,390,751 0 0 1,398,509
Change in net unrealized gain on
securities available for
sale (Note 4) 0 0 254,984 254,984
----------- ----------- ---------- ----------
Balance at December 31, 1997 $68,849,725 $(9,021,323) $ 173,598 $60,385,925
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
-16-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,545,815 $ 3,287,631 $ 3,147,132
---------- ---------- ----------
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 510,101 477,342 417,254
Accretion of REMIC premium 3,181 19,523 24,149
Amortization of REMIC and GNMA and
FHA Insured Project Loan discount (31,860) (43,376) (54,490)
Loss on sale of REMIC certificates 21,849 408,692 441,967
(Gain) loss on sale of GNMA certificates 1,807 5,689 (1,596)
(Gain) loss on sale of FHA Insured Project Loan 43,080 1,594 (1,124)
Changes in operating assets and liabilities:
Decrease (increase) in accrued interest
receivable 56,219 (204,120) (50,743)
Increase (decrease) in due to affiliates 324,091 (32,338) 832,703
(Decrease) increase in accounts payable and
accrued expenses (50,645) 15,913 (186,329)
----------- ----------- -------------
Total adjustments 887,823 658,919 1,431,791
---------- ----------- ------------
Net cash provided by operating activities 4,433,638 3,946,550 4,578,923
--------- --------- ------------
Cash flows from investing activities:
Investments in mortgage loans (2,466,104) (6,148,482) (6,375,200)
Proceeds from sale of REMIC certificates 0 4,940,625 4,092,188
Principal repayments of mortgage loans 215,778 177,095 164,285
Purchase of REMIC certificates (1,981,566) 0 0
Purchase of GNMA certificates (1,889,817) 0 0
Principal repayments of GNMA certificates 127,621 95,396 87,819
Principal repayments of REMIC certificates 739,904 1,149,123 1,061,809
Principal repayments of FHA Insured Project Loan 3,408,238 44,598 37,460
Purchase of FHA Insured Project Loan 0 0 (3,374,679)
Origination costs 0 0 (421,187)
Increase in deferred costs 0 (11) (4,815)
------------ ----------- ------------
Net cash provided by (used in)
investing activities (1,845,946) 258,344 (4,732,320)
---------- ---------- ----------
Cash flows from financing activities:
Distributions to shareholders (5,575,532) (5,569,283) (5,566,609)
Proceeds from issuance of shares of
beneficial interest 1,398,509 1,435,954 1,450,478
Purchase of treasury shares (1,398,515) (1,435,949) (1,770,404)
Increase in offering costs 0 (50,000) (2,814)
------------ ----------- -------------
Net cash used in financing activities (5,575,538) (5,619,278) (5,889,349)
---------- ---------- ----------
</TABLE>
(continued)
See accompanying notes to financial statements.
-17-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(continued)
<TABLE>
<CAPTION>
1997 1996 1995
----------- ------------ ----------
<S> <C> <C> <C>
Net decrease in cash and cash equivalents (2,987,846) (1,414,384) (6,042,746)
Cash and cash equivalents at beginning of year 4,828,561 6,242,945 12,285,691
--------- --------- ----------
Cash and cash equivalents at end of year $1,840,715 $4,828,561 $ 6,242,945
========= ========= ===========
Supplemental schedule of noncash
investing and financing activities:
Offering costs incurred (value of shares issued
to the Advisor) $ 0 $ 0 $ 2,538
Treasury shares (return of shares issued to Advisor) 0 0 (2,538)
Decrease in deferred costs 3,032 58,418 112,479
Increase in investments in mortgage loans (3,032) (58,418) (74,130)
Increase in investments in REMICs and GNMAs 0 0 (38,349)
</TABLE>
See accompanying notes to financial statements.
-18-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
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.
Since November 30, 1994, 229,501 shares have been 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, 1997, 248,167 shares have been redeemed for
an aggregate price of $4,604,870. 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. 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, 1994; no additional shares
were required to be redeemed since then. As of December 31, 1997, the backlog of
shares to be redeemed is 129,275. As permitted by the provisions of the
Redemption Plan, the Board of Trustees implemented the following change to the
calculation of the redemption price for the quarter ended June 30, 1997: the
original $19 per share redemption price was reduced to reflect any return of
principal received by shareholders. As of June 30, 1997, the amount of principal
which had been distributed to shareholders was $1.53 per share and, therefore,
the redemption price was $17.47 per share ($19 per share less $1.53 per share)
for redemptions which occurred in October 1997 for the quarter ended June 30,
1997. The Board subsequently adopted a policy to adjust the redemption price
annually to reflect the then net asset value of a share of the Company's stock.
This new policy is effective for redemptions with respect to quarters ended
September 30, 1997 and thereafter. With respect to the Reinvestment Plan, the
Board also adopted a policy to adjust the reinvestment price annually at which
participants may acquire additional shares under the Reinvestment Plan to also
reflect the then net asset value of a share of the Company's stock. The change
in policy with respect to the reinvestment price is effective November 30, 1997.
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, 1997, all of the original Net Proceeds available for
investment had been invested in permanent Mortagage Investments. As of December
31, 1997, 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 invested 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.
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.
-19-
<PAGE>
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 were 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
In February 1997, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 128, "Earnings per Share" which is effective for periods ending after
December 15, 1997. This statement requires that the current calculations of
earnings per share be replaced by basic and diluted earnings per share
calculations. The Company has determined that the application of SFAS No. 128
had no effect on its calculation of earnings per 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, 1997, 1996 and 1995 were 3,851,029, 3,972,625 and 3,896,620,
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, 1997 and
1996, 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 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 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." Under SFAS 114, a loan is impaired when,
based on current information and events, it is probable that a creditor will be
unable to collect all amounts due according to the contractual terms of the loan
agreement. 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 main-
-20-
<PAGE>
tained 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.
l) Recent Pronouncements
The Financial Accounting Standards Board has recently issued several new
accounting pronouncements. Statement No. 128, "Earnings per Share" establishes
standards for computing and presenting earnings per share. Statement No. 129,
"Disclosure of Information about Capital Structure" establishes standards for
disclosing information about an entity's capital structure. The adoption of
these standards in 1997 has not materially affected the Company's reported
operating results, per share amounts, financial position or cash flows.
In June 1997, SFAS No. 130, Reporting Comprehensive Income, and SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, were
issued. SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements.
Reclassification of financial statements for earlier periods, provided for
comparative purposes, is required. The statement also requires the accumulated
balance of other comprehensive income to be displayed separately from retained
earnings and additional paid-in capital in the equity section of the statement
of financial position.
SFAS No. 131 establishes standards for reporting information about operating
segments in annual and interim financial statements. Operating segments are
defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. Categories required to be reported as well as reconciled to the
financial statements are segment profit or loss, certain specific revenue and
expense items, and segment assets. SFAS No. 130 and No. 131 are effective for
fiscal years beginning after December 15, 1997.
Both SFAS No. 130 and 131 are disclosure related only and therefore will have no
impact on the Company's financial position or results of operations.
Note 3 - Investment in Mortgage 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 $46,837,304.
Information relating to investments in Originated Mortgages (excluding GNMAs -
see Note 4) and Additional Loans for the years ended December 31, 1997, 1996 and
1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Investments in mortgage loans - January 1, $ 45,049,596 $ 39,497,133 $ 33,284,852
------------ ------------ ------------
Additions:
Columbiana - advances 260,767 464,028 5,001,082
Columbiana - loan origination costs 3,032 5,395 58,152
Stonybrook - advances 2,205,337 5,684,454 610,209
Stonybrook - equity loan 0 0 763,909
Stonybrook - loan origination costs 0 53,023 360,468
------------ ------------ ------------
2,469,136 6,206,900 6,793,820
------------ ------------ ------------
Deductions:
Amortization of Additional Loans (372,916) (372,916) (312,165)
Amortization of loan origination costs (137,185) (104,426) (105,089)
Collection of principal - Cove (50,395) (46,706) (43,288)
- Oxford (69,293) (64,222) (59,521)
- Town and Country (71,215) (66,167) (61,476)
- Columbiana (8,918) 0 0
- Stonybrook (15,957) 0 0
------------ ------------ ------------
(725,879) (654,437) (581,539)
------------ ------------ ------------
Investments in mortgage loans - December 31, $ 46,792,853 $ 45,049,596 $ 39,497,133
============ ============ ============
</TABLE>
-21-
<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, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Date of
Invest-
ment/ Amounts Advanced Total
Final ------------------------------------ Amounts Out-
Matu- Total Advanced standing Origi-
Descrip- rity Mortgage Additional Amounts Amounts and Loan nation
Property tion Date Loans Loans Advanced Unadvanced Unadvanced Balance Costs
- - -------- -------- ------- --------- ----------- ---------- ----------- ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Cove 308 12/93 $ 6,800,000 $ 840,500 $ 7,640,500 $ 0 $ 7,724,710 $7,463,218 $ 444,215
Apts. Apt 1/29
Houston, Units (D)
TX (A)
Oxford on 405 12/93 9,350,000 1,156,000 10,506,000 0 10,621,790 10,262,238 610,814
Greenridge Apt. 1/29
Apts. Units (D)
Houston,
TX (A)
Town & 330 4/94 9,348,000 1,039,000 10,387,000 0 10,387,000 10,154,314 603,895
Country IV Apt. 5/29
Apts. Units (E)
Urbana,
IL (B)
Columbiana 204 4/94 8,276,895 563,000 8,839,895 406,105 9,246,000 8,830,977 532,835
Lakes Apts. Apt. 11/35
Columbia, Units (F)
SC (C)
Stony Brook 125 12/95 8,500,000 763,909 9,263,909 0 9,263,909 9,247,960 413,492
Village II Apt. 6/37
Apts. Units (F)
East Haven,
CT (G)
---------------------------------------------------------------------------------------------
Total $42,274,895 $4,362,409 $46,637,304 $406,105 $47,243,409 $45,958,707 $2,605,251
=============================================================================================
<CAPTION>
Interest
Accum- Balance Earned Less
ulated at Balance at by the 1997 Net
Amor- Dec. 31, December Company Amor- Interest
Property tization 1997 (H) 31, 1996 for 1997 tization Earned
- - -------- -------- --------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
The Cove $ 409,087 $7,498,346 $7,649,877 $600,083 $101,131 $498,952
Apts.
Houston,
TX (A)
Oxford on 562,609 10,310,443 10,518,823 836,716 139,083 697,633
Greenridge
Apts.
Houston,
TX (A)
Town & 430,369 10,327,840 10,515,510 818,036 116,455 701,581
Country IV
Apts.
Urbana,
IL (B)
Columbiana 205,339 9,158,473 8,959,892 692,443 56,300 636,143
Lakes Apts.
Columbia,
SC (C)
Stony Brook 163,701 9,497,751 7,405,494 680,850 97,132 583,718
Village II
Apts.
East Haven,
CT (G)
-----------------------------------------------------------------------------
Total $1,771,105 $46,792,853 $45,049,596 $3,628,128 $510,101 $3,118,027
=============================================================================
</TABLE>
-22-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
(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% were guaranteed by the developer until December 1996.
(B) The interest rates for Town & 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. Payments at the rate of 9.167% were guaranteed by the developer
until June 1997.
(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. Payments at the rate of
8.678% are guaranteed by the developer until December 1998.
(D) These Originated Mortgages have terms of 35 years, subject to mandatory
prepayment at any time after 10 years and upon one year's notice.
(E) This Originated Mortgage has a term of 35 years, subject to mandatory
prepayment at any time after 12 years and upon one year's notice.
(F) These Originated Mortgages have terms of 40 years, subject to mandatory
prepayment at any time after 10 years and upon one year's notice.
(G) 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.
(H) Aggregate cost for federal income tax purposes is $45,707,370.
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 four
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 ten
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.
-23-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
Information relating to investments in REMIC and GNMA Certificates and FHA
Insured Project Loan for the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Investments in REMIC and GNMA Certificates
and FHA Insured Project Loan - January 1, $12,683,331 $19,327,518 $18,953,841
---------- ---------- ----------
Additions:
Purchase of GNMA Certificates 1,981,566 0 0
Purchase of REMIC Certificates 1,889,817 0 0
Purchase of FHA Insured Project Loan 0 0 3,374,679
Origination costs 0 0 115,046
Gain on sale of GNMA Certificates 0 0 1,596
Gain on sale of FHA Insured Project Loan 0 0 1,124
Amortization of Discounts 33,394 43,376 54,490
----------- ----------- -----------
3,904,777 43,376 3,546,935
----------- ----------- -----------
Deductions:
Principal Repayments of GNMA Certificates (127,621) (95,396) (87,819)
Principal Repayments of REMIC Certificates (739,904) (1,149,123) (1,061,809)
Principal Repayments of FHA Insured
Project Loan (3,408,238) (44,598) (37,460)
Proceeds from sale of REMIC Certificates 0 (4,940,625) (4,092,188)
Loss on Sale of REMIC Certificates (21,849) (408,692) (441,967)
Loss on Sale of GNMA Certificates (1,807) (5,689) 0
Loss on Sale of FHA Insured Project Loan (43,080) (1,594) 0
Accretion of Premiums (4,715) (19,523) (24,149)
----------- ----------- -----------
(4,347,214) (6,665,240) (5,745,392)
----------- ----------- -----------
Amortized Cost at December 31,
(including unrealized loss of
$81,386, $59,063 and $2,631,197
at December 31, 1997, 1996 and 1995,
respectively) 12,240,894 12,705,654 16,755,384
Change in net unrealized gain
(loss) on securities available for sale 254,984 (22,323) 2,572,134
---------- ----------- -----------
Carrying value at December 31, $12,495,878 $12,683,331 $19,327,518
========== ========== ==========
</TABLE>
-24-
<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, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Date
Purchased/ Original Premium
Final Stated Purchase Price Principal at (Discount) at
Certificate Payment Interest Including December 31, December 31,
Seller Number Date Rate Prem/(Disc) 1997 1997
- - ------ ------------ --------- --------- ----------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
GNMA Certificates
Bear Stearns 0355540 7/27/94 7.125% $ 2,407,102 $ 2,588,218 $(239,410)
3/15/29
Malone Mortgage 0382486 7/28/94 8.500% 2,197,130 2,168,479 (8,132)
8/15/29
Goldman Sachs 0328502 7/29/94 8.250% 3,928,615 3,712,906 (3,479)
7/15/29
SunCoast Capital Group, Ltd. G22412(6) 6/23/97 7.000% 1,981,566 1,970,663 (12,933)
4/20/27
REMIC Certificates
Bear Stearns FNMA 8/27/93 6.500% 10,160,938 0 0
1992-17G(1) Sold (1)
Bear Stearns FHLMC 10/26/93 4.850% 4,838,600 0 0
G-024C(2) Sold(3)
Meridan Capital Markets FHLMC 10/25/94 5.750% 1,721,291 0 0
1292ZA(3) 6/15/97
Meridan Capital Markets FNMA 10/25/94 5.250% 258,357 0 0
1992-153A(3) 9/25/97
Meridan Capital Markets FHLMC 10/27/94 6.500% 742,538 0 0
1580A(3) 9/15/98(7)
Meridan Capital Markets FHLMC 11/9/94 7.350% 269,658 0 0
1258C(3) 5/15/04(4)
SunCoast Capital Group, Ltd. FHLMC 3/30/97 7.000% 507,288 464,916 2,107
17218(6) 2/1/98
SunCoast Capital Group, Ltd. FHLMC 5/30/97 6.500% 251,967 196,114 398
17161(6) 2/1/98
SunCoast Capital Group, Ltd. FHLMC 6/23/97 7.000% 147,437 145,942 502
17125(6) 4/20/27
SunCoast Capital Group, Ltd. FNMA 6/30/97 7.500% 983,125 1,000,000 (16,875)
1997-42V(6) 10/18/09
FHA Insured Loan Project
Donaldson, Lufkin & Jenrette 092-11005 1/3/95 8.600% 3,374,679 0 0
4/1/19(5)
----------------------------------------------
Total $33,770,291 $12,247,238 $(277,822)
==============================================
<CAPTION>
Accum-
ulated
Amorti- Loan Unrealized Interest
zation Origination Gain (Loss) Earned 1997
at Costs at at Balance at Balance at by the Amor- Net
December December December December December Company tization/ Interest
Seller 31, 1997 31, 1997 31, 1997 31, 1997 31, 1996 for 1997 (Accretion) Earned
- - ------ ---------- ----------- ----------- ----------- ----------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GNMA Certificates
Bear Stearns $69,127 $ 80,073 $106,386 $2,604,394 $ 2,526,991 $ 185,089 $20,313 $205,402
Malone Mortgage 2,452 73,648 16,738 2,253,185 2,227,043 184,804 720 185,524
Goldman Sachs 1,142 126,458 (3,451) 3,833,576 3,802,730 309,038 337 309,375
SunCoast Capital Group, Ltd. 1,437 0 22,888 1,982,055 0 72,505 1,447 73,952
REMIC Certificates
Bear Stearns 0 0 0 0 0 0 0 0
Bear Stearns 0 0 0 0 0 0 0 0
Meridan Capital Markets 0 0 0 0 338,033 3,848 0 3,848
Meridan Capital Markets 0 0 0 0 61,081 1,060 0 1,060
Meridan Capital Markets 0 0 0 0 214,816 5,798 0 5,798
Meridan Capital Markets 0 0 0 0 28,779 266 0 266
SunCoast Capital Group, Ltd. (2,107) 0 8,135 473,051 0 19,235 (2,168) 17,067
SunCoast Capital Group, Ltd. (398) 0 1,961 198,075 0 9,142 (510) 8,632
SunCoast Capital Group, Ltd. (502) 0 2,553 148,495 0 5,354 (504) 4,850
SunCoast Capital Group, Ltd. 1,534 0 18,388 1,003,047 0 37,708 1,534 39,242
FHA Insured Loan Project
Donaldson, Lufkin & Jenrette 0 0 0 0 3,483,858 113,073 7,510 120,583
----------------------------------------------------------------------------------------------------
Total $72,685 $280,179 $173,598 $12,495,878 $12,683,331 $946,920 $28,679 $975,599
====================================================================================================
</TABLE>
-25-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS
(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 both November 4, 1993 and
February 1, 1994, the Company sold $200,000, 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 portions of the REMIC Certificate which
totaled $5,100,000. The realized loss on this sale was $328,895.
(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.
(4) The stated final payment date was May 15, 2004. The actual final payment
amounting to $7,099 was received on April 15, 1997.
(5) The stated final payment date was April 1, 2019. The actual final payment
amounting to $3,392,445 was received on May 23, 1997.
(6) Purchased as a permanent investment using the proceeds from the final
payment received from the FHA Insured Project Loan (See (6) above) and a portion
of the proceeds from the sale of Fannie Mae REMIC Certificate #1992-17G (see (1)
above).
(7) The stated final payment date was September 15, 1998. The actual final
payment amounting to $17,952 was received on November 15, 1997.
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, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost at Gain at (Loss) at Value at Cost at Gain at (Loss) at Value at
December 31, December December December December December December December
Security 1997 31, 1997 31, 1997 31, 1997 31, 1996 31, 1996 31, 1996 31, 1996
- - -------- ----------- ---------- ---------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FHA Insured Project Loan $ 0 $ 0 $ 0 $ 0 $ 3,443,808 $40,050 $ 0 $ 3,483,858
Fannie Mae REMICs 984,659 18,388 0 1,003,047 63,467 0 (2,386) 61,081
Federal Home Loan REMICs 806,972 12,649 0 819,621 601,749 0 (20,121) 581,628
Ginnie Mae Certificates 10,530,649 146,012 (3,451) 10,673,210 8,655,693 29,593 (128,522) 8,556,764
---------- ------- ------ ---------- --------- ------ -------- ---------
$12,322,280 $177,049 $(3,451) $12,495,878 $12,764,717 $69,643 $(151,029) $12,683,331
========== ======= ====== ========== ========== ====== ======== ==========
</TABLE>
-26-
<PAGE>
The change in the unrealized gain (loss) for the years ended December 31, 1997
and 1996 were as follows:
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 1995 (270,577)
---------
Unrealized loss at December 31, 1996 (81,386)
Sale of securities during the year ended
December 31, 1997 included in unrealized
loss at December 31, 1996 15,647
Unrealized gain on securities purchased during
the twelve months ended December 31, 1997 53,925
Unrealized gain on securities held at
December 31, 1997 and 1996 185,412
Unrealized gain at December 31, 1997 $173,598
=========
For the year ended December 31,1997, there were losses of $66,735 (including
acquistion fees and expenses) on principal repayments of REMICs, GNMAs and the
FHA Insured Project Loan.
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
$367,000, $376,000 and $340,000 for the years ended December 31, 1997, 1996 and
1995, respectively, such amounts are included in due to affiliates; (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, 1997
and 1996, 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 $725,000 as of
December 31, 1997 and $2,545,000 and $722,000 as of December 31, 1996); and (vi)
certain other fees. In addition to the costs, fees and expenses discussed above,
the Company reimburses 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, 1997, 1996 and 1995 were approximately
$111,000, $138,000 and $191,000, respectively.
In order to minimize the possible adverse effects of the Company's investment
and distribution policy of attempting to maintain stable distributions to
shareholders during the offering and acquisition stages, 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, 1997 and 1996; (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, 1997 and 1996; 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. As of December
31, 1997, 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.
NOTE 6 - Subsequent Event
On February 14, 1998, a distribution of $1,385,509 and $17,656 was paid to the
Investors and the Advisor, respectively, representing the 1997 fourth quarter
distribution. The distribution was funded from cash collections of debt service
payments and interest income through approximately the distribution date,
February 14, 1998.
-27-
<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:
Year First
Became
Officer/
Name Age Offices Held Director
---- --- ------------ --------
J. Michael Fried 53 Trustee, President, Chairman of the
Board and Chief Executive Officer 1991
Peter T. Allen 52 Trustee 1991
Arthur P. Fisch 56 Trustee 1991
Stuart J. Boesky 41 Executive Vice President and
Chief Operating Officer 1991
Alan P. Hirmes 43 Senior Vice President and
Chief Financial Officer 1991
Mark J. Schlacter 47 Vice President 1993
Richard A. Palermo 37 Treasurer and Chief Accounting Officer 1997
Lynn A. McMahon 42 Secretary 1993
J. MICHAEL FRIED, age 53, 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 52, 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.
ARTHUR P. FISCH, age 56, 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 41, 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.
-28-
<PAGE>
ALAN P. HIRMES, age 43, 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 47, 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, 37, 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 42, 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.
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, 1997, 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 53 Director and President 1991
Stuart J. Boesky 41 Director and Senior Vice President 1991
Alan. P. Hirmes 43 Senior Vice President 1991
Richard A. Palermo 37 Treasurer 1997
Lynn A. McMahon 42 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.
-29-
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of December 31, 1997, 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 has issued 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, 1994;
no additional shares were required to be redeemed since then. As of December 31,
1997, 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, 1997, 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.
-30-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Sequential
Page
----
(a) 1. Financial Statements
Independent Auditors' Report 13
Balance Sheets at December 31, 1997 and 1996 14
Statements of Income for the years ended
December 31, 1997, 1996 and 1995 15
Statements of Changes in Shareholders' Equity
for the years ended December 31, 1997, 1996 and 1995 16
Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 17
Notes to Financial Statements 19
(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.
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.
-31-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(continued)
Sequential
Page
----
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.
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.
-32-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(continued)
Sequential
Page
----
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.
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.
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.
27 Financial Data Schedule (filed herewith)
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.
-33-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(continued)
Sequential
Page
----
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.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarterly
period ended December 31, 1997.
-34-
<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: By: ______________________________
J. Michael Fried
Trustee, President, Chairman of the
Board and Chief Executive Officer
<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:
Signature Title Date
--------- ----- ----
____________________ Trustee, President, Chairman of the
J. Michael Fried Board and Chief Executive Officer
____________________
Peter T. Allen Trustee
____________________
Arthur P. Fisch Trustee
____________________ Senior Vice President and
Alan P. Hirmes Chief Financial Officer
____________________ Treasurer and
Richard A. Palermo Chief Accounting Officer
<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 30, 1998 By: /s/ J. Michael Fried
----------------------------------
J. Michael Fried
Trustee, President, Chairman of the
Board and Chief Executive Officer
<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:
Signature Title Date
--------- ----- ----
/s/ J. Michael Fried Trustee, President, Chairman of the
- - ------------------------ Board and Chief Executive Officer March 30, 1998
J. Michael Fried
/s/ Peter T. Allen
- - ------------------------ Trustee March 30, 1998
Peter T. Allen
/s/ Arthur P. Fisch
- - ------------------------ Trustee March 30, 1998
Arthur P. Fisch
/s/ Alan P. Hirmes Senior Vice President and
- - ------------------------ Chief Financial Officer March 30, 1998
Alan P. Hirmes
/s/ Richard A. Palermo Treasurer and
- - ------------------------ Chief Accounting Officer March 30, 1998
Richard A. Palermo
EXHIBIT 23(a)
ACCOUNTANTS' CONSENT
The Board of Trustees
American 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 30, 1998, relating to the balance sheets of American Mortgage Investors
Trust as of December 31, 1997 and 1996, 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, 1997, which report appears in the December
31, 1997 annual report on Form 10-K of American Mortgage Investors Trust.
/s/ KPMG Peat Marwick LLP
New York, New York
April 9, 1998
[Letterhead]
Hidalgo, Banfill, Zlotnik & Kermali, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
April 9, 1998
The Board of Trustees
American Mortgage Investors Trust
The Board of Directors
Related AMI Associated Inc.
We consent to the use of our reports dated February 12, 1998, accompanying the
Financial Statements and Supplemental Supporting Data for the year ended
December 31, 1997 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, 1997.
/s/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
HIDALGO, BANFILL, ZLOTNIK & KERMALI, P.C.
Houston, Texas
April 9, 1998
<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> American Mortgage Investors Trust
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,840,715
<SECURITIES> 12,495,878
<RECEIVABLES> 47,309,329
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 61,645,922
<CURRENT-LIABILITIES> 1,259,997
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 60,385,925
<TOTAL-LIABILITY-AND-EQUITY> 61,645,922
<SALES> 0
<TOTAL-REVENUES> 4,244,854
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 699,039
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,545,815
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,545,815
<EPS-PRIMARY> .92
<EPS-DILUTED> 0
</TABLE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
FINANCIAL STATEMENTS AND SUPPLEMENTAL SUPPORTING DATA
FOR THE YEAR ENDED DECEMBER 31, 1997
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
FOR THE YEAR ENDED DECEMBER 31, 1997
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 - 20
<PAGE>
[Letterhead]
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) (the "Company"), U.S. Department of Housing and Urban
Development ("HUD") Project Number 114-11122-REF, as of December 31, 1997 and
the related statements of profit and loss, changes in members' equity and cash
flows for the year ended December 31, 1997. 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 statement
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
all material respects, the financial position of Cove Apartments, L.C. as of
December 31, 1997 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 8, 1998, on our
consideration of the Company's internal controls, and reports dated February 8,
1998, on its compliance with specific requirements applicable to major HUD
programs and specific requirements applicable to Fair Housing and
Non-Discrimination.
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 11-20 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 respects in relation to the basic financial statements
taken as a whole.
/s/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
Certified Public Accountants
February 8, 1998
<PAGE>
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
1110 Petty Cash $ 300
1120 TCB depository account 49,774
1130 Tenant accounts receivable 752
1140 Accounts receivable - other 607
1240 Prepaid insurance 41,276
1250 Mortgage insurance 32,945
---------
Total current assets 125,654
Deposits Held in Trust - Funded:
1191 Tenant security deposits: 55,348
---------
Restricted Deposits and Funded Reserves:
1310 Mortgage escrow deposits:
MIP escrow -
FHA repair escrow -
Property tax escrow 235,982
Insurance escrow 37,732
1320 Reserve for replacements 162,957
---------
Total restricted deposits and funded reserves 436,671
---------
Property, Furniture and Equipment
1410 Land 1,354,280
1420 Buildings 5,266,271
1450 Furniture and equipment 400,230
---------
7,020,781
Less accumulated depreciation (767,961)
Total property, furniture and equipment 6,252,820
Other Assets:
1800 Financing and organization costs net of
accumulated amortization of $43,883 331,010
---------
Total Assets $7,201,503
=========
See accompanying notes to financial statements.
2
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
BALANCE SHEET
DECEMBER 31, 1997
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
2110 Accounts payable $ 8,024
2120 Accrued wages and payroll taxes payable 3,829
2130 Mortgage interest payable -
2150 Accrued property taxes 223,294
2210 Prepaid rents 9,738
2320 Current portion of mortgage loan payable - Note 2 54,720
---------
Total current liabilities 299,605
Deposits Liabilities:
2191 Tenant security deposits: 55,599
Long-Term Liabilities:
2310 Mortgage loan payable, net of current portion - Note 2 6,563,623
---------
Total Liabilities 6,918,827
Members' Equity 282,676
Total Liabilities and Members' Equity $7,201,503
=========
See accompanying notes to financial statements.
3
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997
Balance, December 31, 1996 $225,560
Contributions -
Distributions (22,224)
Net Profit for the year 79,340
--------
Balance, December 31, 1997 $282,676
========
See accompanying notes to financial statements.
4
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
Cash Flows from Operating Activities:
Net Income (Loss) $ 79,340
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 215,304
(Increase) decrease in:
Accounts receivable - tenants (645)
Mortgage insurance (2,503)
Prepaid insurance (4,868)
Escrow accounts (104,709)
Security deposits (1,819)
Accounts receivable - other (607)
Deposits 200
Increase (decrease) in:
Accounts payable and accrued liabilities (51,742)
Accrued interest payable (42,402)
Accrued taxes payable (5,188)
Deposit liabilities 12,445
Prepaid rents 4,631
---------
97,437
---------
Cash Flows from Investing Activities:
Property improvements (138,421)
---------
Cash Flows from Financing Activities:
Mortgage principal payments (54,770)
Distributions (22,224)
---------
(76,994)
---------
Net Decrease in Cash (117,978)
Cash, Beginning of Year 168,052
---------
Cash, End of Year $ 50,074
=========
Supplemental Disclosures of Cash Flow Information:
Interest paid during the year $ 549,170
=========
See accompanying notes to financial statements.
5
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
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 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.
6
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
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, 1997
are as follows:
Years Ending December 31, Amount
------------------------- ------
1998 $ 54,720
1999 59,042
2000 63,705
2001 68,735
2002 74,164
Thereafter 6,297,977
----------
$6,618,343
==========
7
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
Note 3 Real Estate Leases
At December 31, 1997 approximately 93.5% of the Project's 308 units
were committed under either month-to-month leases or non-cancelable
operating leases with terms varying from six to twelve months.
Future minimum real estate rental income under the non-cancelable
operating leases existing at December 31, 1997, expected during the
year ending December 31, 1998 is approximately $557,770.
Note 4 Related Party Transactions
Operations of the Project are managed by Bradley Apartment Homes
("BAH"), which is affiliated with the members of the Company.
Management fees paid to BAH are based on four percent of rents
collected. Such fees aggregated $70,100 for the year ended December
31, 1997.
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
the Company. Consulting fees paid to Allied Construction during the
year ended December 31, 1997 aggregated $122,930 and were calculated
on a percentage of the repair/replacement cost basis.
8
<PAGE>
SUPPLEMENTAL SUPPORTING DATA REQUIRED BY HUD
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
December 31, 1997
Accounts Receivable (other than from regular tenants):
None
Delinquent Tenant Accounts Receivable:
1997
-----------------------
Number of Amount
Tenants Past Due
------- --------
Delinquent 30 days 8 $752
Delinquent 31 to 60 days 0 0
Delinquent 61 to 90 days 0 0
Delinquent over 90 days 0 0
--- ---
8 $752
=== ===
Mortgage Escrow Deposits:
Estimated amount required as of December 31, 1997 for future payment of:
1997
----
Property insurance, 8 months $ 23,207
Mortgage insurance, 11 months 33,210
Real estate taxes, 12 months 223,294
-------
Total 279,711
Amount confirmed by mortgagee 306,658
-------
Amount on deposit in excess
of estimated requirements $ 26,947
=======
9
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
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 $117,835
Deposits made during period 45,122
Withdrawals made during period -
--------
Balance, end of period $162,957
========
Accounts Payable (other than to trade creditors):
None
Compensation of Partners:
None from Project funds
Changes in Fixed Assets:
Furniture &
Land Buildings Equipment Total
---- --------- --------- -----
Cost:
December 31, 1996 $1,354,280 $5,175,670 $352,410 $6,882,360
Additions - 90,601 47,820 138,421
Dispositions - - - -
--------- --------- ------- ---------
December 31, 1997 $1,354,280 $5,266,271 $400,230 $7,020,781
========= ========= ======= =========
Accumulated Depreciation:
December 31, 1996 $ 435,773 $127,600 $ 563,373
Additions 151,079 53,509 204,588
Dispositions - - -
--------- ------- ---------
December 31, 1997 $ 586,852 $181,109 $ 767,961
========= ======= =========
10
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Accrued Taxes:
Description of Basis for Period Amount
Tax Accrual Covered Date Due Accrued
-------------- ---------- --------- -------- -------
Houston ISD Tax January 1, 1997
Statement through January 31,
December 31, 1997 1998 $129,080
City of Houston and Tax January 1, 1997
Harris County Statement through January 31,
December 31, 1997 1998 94,215
--------
Total $223,295
========
Tenant Security Deposits:
Tenant security deposits are held in account #25526-00219 at Bank of America
Texas N.A., Houston, Texas. This federally insured account, in the name of the
Project, had a balance of $55,348 at December 31, 1997, 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 1997 2nd half 1996 $22,224
=======
11
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Statement of Receipts and Disbursements:
Source of Funds:
Revenues:
Rental income, net $1,679,282
Financial 6,329
Other income 75,768
---------
1,761,379
---------
Expenses:
Administrative 205,134
Management fees 70,100
Utilities 84,546
Operating 21,695
Maintenance 124,553
Maintenance payroll 92,023
Real estate taxes 227,046
Other taxes 19,759
Insurance 65,155
Workmen's' compensation 16,746
Mortgage insurance 33,210
Mortgage interest 506,768
---------
1,466,735
---------
Cash provided by operations before principal
payments and changes in assets and liabilities 294,644
Principal payments 54,770
---------
Cash provided by operations before changes
in assets and liabilities 239,874
---------
12
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Statement of Receipts and Disbursements (Continued)
Application of Funds:
(Increase) decrease in:
Accounts receivable - tenants (645)
Accounts receivable - other (607)
Deposits 200
Prepaid insurance (4,868)
Security deposits (1,819)
Escrow accounts (104,709)
Mortgage insurance (2,503)
Increase (decrease) in:
Accounts payable and accrued liabilities (51,742)
Accrued interest payable (42,402)
Accrued taxes payable (5,188)
Deposit and prepayment liabilities 17,076
Additions to Property (138,421)
Surplus Cash Distributions (22,224)
--------
(357,852)
--------
Increase (decrease) in cash (117,978)
Unrestricted cash, beginning period 168,052
--------
Unrestricted cash, end of period $ 50,074
========
13
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
December 31, 1997
Schedule of Funds in Financial Institutions as of December 31, 1997:
Funds Held by Mortgagor, Regular Operating Account:
Texas Commerce Bank, (checking)(1) $135,738
Funds Held by Mortgagor in Trust, Tenant Security Deposits:
Bank of America(2) 55,348
Funds Held by Mortgagee, (in Trust):
Reserve for Replacements(3)
Sanwa Bank, (checking) 3.5% $162,957
Mortgage Insurance Escrow(3), Sanwa Bank 32,945
Property Tax Escrow(3), Sanwa Bank 235,982
Property Insurance Escrow(3), Sanwa Bank 37,732
--------
Funds Held by Mortgagee 469,616
-------
Total Funds in Financial Institutions $660,702
=======
(1) Balances Confirmed by Texas Commerce Bank
(2) Balances Confirmed by Bank of America
(3) Balances Confirmed by TRI
14
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Listing of Identity of Interest Companies and Activities
Doing Business with Owner/Agent
during the year ended December 31, 1997
Company Name Type of Service Amount Received
------------ --------------- ---------------
Bradley Apartment Homes Property Management $ 70,100
Allied Construction Service Consulting Services $122,930
15
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Certification of Members
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
We hereby certify that we have examined the foregoing financial statements of
Cove Apartments, L.C. Project Number 114-11122-REF, and, to the best of our
knowledge and belief, the same is complete and accurate.
/s/ Tim Meyers /s/ Al Bradley, Jr.
- - -------------------------------- ------------------------------------
Tim Myers Al Bradley, Jr.
President Vice-President
- - -------------------------------- ------------------------------------
Date Date
Limited Liability Company
Identification Number 76-0372786
16
<PAGE>
COVE APARTMENTS, L.C.
(HUD Project Number 114-11122-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Management Agent's Certification
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
We hereby certify that we have examined the foregoing financial statements of
Cove Apartments, L.C. Project Number 114-11122-REF, and, to the best of our
knowledge and belief, the same is complete and accurate.
/s/ Gene R. Blevins /s/ Al Bradley, Jr.
- - -------------------------------- ------------------------------------
Gene R. Blevins Al Bradley, Jr.
President Chairman
Allied Development Corporation Allied Development Corporation
dba, Bradley Apartment Homes dba, Bradley Apartment Homes
- - -------------------------------- ------------------------------------
Date Date
Allied Development Corporation
Identification Number 76-0156150
17
<PAGE>
[Letterhead]
Hidalgo, Banfill, Zlotnik & Kermali, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
February 8, 1998
To the Department of Housing
and Urban Development
Attached is the financial report of Cove Apartments, L.C. (HUD Project No.
114-11122-REF) for the year ended December 31, 1997.
/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>
[Letterhead]
Hidalgo, Banfill, Zlotnik & Kermali, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROLS
(COMBINED REPORT APPLICABLE TO THE
FINANCIAL STATEMENTS AND HUD-ASSISTED PROGRAMS)
To 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, 1997 and have issued our report
thereon dated February 8, 1998. We have also audited the Company's compliance
with requirements applicable to major HUD-assisted programs and have issued our
report thereon dated February 8, 1998.
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. Those standards and the Guide require that we plan and
perform the audit 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 internal controls. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal controls. The objectives of internal controls 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 internal controls 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.
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
<PAGE>
In planning and performing our audits, we obtained an understanding of the
design of relevant internal controls and determined whether they have 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 to report on internal controls in
accordance with the provisions of the Guide and not to provide any assurance on
internal controls.
We performed tests of controls, as required by the Guide, to evaluate the
effectiveness of the design and operation of internal controls that we
considered relevant to preventing or detecting material noncompliance with
specific requirements applicable to the Company's major HUD-assisted programs.
Our procedures were less in scope than would be necessary to render an opinion
on internal control policies and procedures. Accordingly, we do not express such
an opinion.
Our consideration of the internal controls would not necessarily disclose all
matters in internal controls 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 components does not reduce to a relatively low level
risk that errors or irregularities in the amounts that would be material in
relation to the financial statements being audited or that noncompliance with
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 normal course of
performing their assigned functions. We noted no matters involving internal
controls and their operations that we consider to be material weaknesses as
defined above.
This report is intended for the information of audit committee, 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 8, 1998
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
<PAGE>
[Letterhead]
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") as of and for the year ended December 31, 1997 and have issued our
report thereon dated February 8, 1998. 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, 1997. The management of the 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 US. Department of Housing and Urban Development, Office
of Inspector General. 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 Company's 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, the 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, 1997.
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 8, 1998
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
<PAGE>
[Letterhead]
Hidalgo, Banfill, Zlotnik & Kermali, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION
To 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") as of and for the year ended December 31, 1997 and have issued our
report thereon dated February 8, 1998.
We have applied procedures to test the Company's compliance with the Fair
Housing and Non-Discrimination requirements applicable to its HUD-assisted
programs for the year ended December 31, 1997.
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. 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
Fair Housing and Non-Discrimination 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, ZLOTNIK & KERMALI, P.C.
February 8, 1998
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
FINANCIAL STATEMENTS AND SUPPLEMENTAL SUPPORTING DATA
FOR THE YEAR ENDED DECEMBER 31, 1997
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
FOR THE YEAR ENDED DECEMBER 31, 1997
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>
[Letterhead]
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) (the "Company"), U.S. Department of Housing and
Urban Development ("HUD") Project Number 114-11123-REF, as of December 31, 1997
and the related statements of profit and loss, changes in members' equity and
cash flows for the year ended December 31, 1997. 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 statement
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
all material respects, the financial position of Oxford Apartments, L.C. as of
December 31, 1997 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 12, 1998, on our
consideration of the Company's internal controls, and reports dated February 12,
1998, on its compliance with specific requirements applicable to major HUD
programs and specific requirements applicable to Fair Housing and
Non-Discrimination.
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 respects in relation to the basic financial statements
taken as a whole.
/s/ Hidalgo, Banfill, Zlotnik & Kermali, P.C.
Certified Public Accountants
February 12, 1998
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
1110 Petty Cash $ 400
1120 TCB depository account 344,425
1130 Tenant accounts receivable 2,377
1900 Deposits 1,857
1240 Prepaid insurance 35,104
1250 Mortgage insurance 45,300
---------
Total current assets 429,463
---------
Deposits Held in Trust - Funded:
1191 Tenant security deposits: 72,452
---------
Restricted Deposits and Funded Reserves:
1310 Mortgage escrow deposits:
MIP escrow -
FHA repair escrow -
Property tax escrow 258,827
Insurance escrow 16,550
1320 Reserve for replacements 367,144
---------
Total restricted deposits and funded reserves 642,521
---------
Property, Furniture and Equipment
1410 Land 2,304,054
1420 Buildings 6,505,291
1450 Furniture and equipment 515,706
---------
9,325,051
Less accumulated depreciation (1,842,660)
---------
Total property, furniture and equipment 7,482,391
---------
Other Assets:
1800 Financing and organization costs net of
accumulated amortization of $57,766 441,184
---------
Total Assets $9,068,011
=========
See accompanying notes to financial statements.
2
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
BALANCE SHEET
DECEMBER 31, 1997
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
2110 Accounts payable $ 91,811
2120 Accrued wages and payroll taxes payable 4,370
2130 Mortgage interest payable -
2150 Accrued property taxes 249,419
2210 Prepaid rents 17,120
2320 Current portion of mortgage loan payable - Note 2 75,240
---------
Total current liabilities 437,960
Deposits Liabilities:
2191 Tenant security deposits: 74,029
Long-Term Liabilities:
2310 Mortgage loan payable, net of current portion - Note 2 9,024,982
---------
Total Liabilities 9,536,971
Members' Equity (468,960)
---------
Total Liabilities and Members' Equity $9,068,011
=========
See accompanying notes to financial statements.
3
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997
Balance, December 31, 1996 $(314,625)
Contributions -
Distributions (286,742)
Net profit for the year 132,407
---------
Balance, December 31, 1997 $(468,960)
=========
See accompanying notes to financial statements.
6
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
Cash Flows from Operating Activities:
Net Income (Loss) $ 132,407
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 486,923
(Increase) decrease in:
Accounts receivable - tenants (930)
Mortgage insurance (3,442)
Prepaid insurance 10,912
Escrow accounts (47,013)
Security deposits (2,933)
Deposits 200
Increase (decrease) in:
Accounts payable and accrued liabilities 83,824
Accrued interest payable (58,303)
Accrued taxes payable (6,908)
Deposit liabilities 9,439
Prepaid rents 12,971
--------
617,147
--------
Cash Flows from Investing Activities:
Property improvements (105,867)
--------
Cash Flows from Financing Activities:
Mortgage principal payments (75,309)
Distributions (286,742)
--------
(362,051)
--------
Increase in Cash 149,229
Cash, Beginning of Year 195,596
--------
Cash, End of Year $ 344,825
========
Supplemental Disclosures of Cash Flow Information:
Interest paid during the year $ 755,108
========
See accompanying notes to financial statements.
7
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
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 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 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 20 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, 1997
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, 1997
are as follows:
Years Ending December 31, Amount
------------------------- ------
1998 $ 75,240
1999 81,182
2000 87,594
2001 94,511
2002 101,975
Thereafter 8,659,720
----------
$9,100,222
==========
9
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
Note 3 Real Estate Leases
At December 31, 1997 approximately 94% of the Project's 405 units
were committed under either month-to-month leases or non-cancelable
operating leases with terms varying from six to twelve months.
Future minimum real estate rental income under the non-cancelable
operating leases existing at December 31, 1997, expected during the
year ending December 31, 1998 is approximately $809,136.
Note 4 Related Party Transactions
Operations of the Project are managed by Bradley Apartment Homes
("BAH"), which is affiliated with the members of the Company.
Management fees paid to BAH are based on four percent of rents
collected. Such fees aggregated $100,874 for the year ended December
31, 1997.
At December 31, 1997, the Company had accounts payable to BAH of
$76,311 for costs and expenses paid by BAH on behalf of the Company.
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, 1997
Accounts Receivable (other than from regular tenants):
None
Delinquent Tenant Accounts Receivable:
1997
-----------------------------
Number of Amount
Tenants Past Due
------- --------
Delinquent 30 days 3 $2,377
Delinquent 31 to 60 days 0 0
Delinquent 61 to 90 days 0 0
Delinquent over 90 days 0 0
--- ------
8 $2,377
=== ======
Mortgage Escrow Deposits:
Estimated amount required as of December 31, 1997 for future payment of:
1997
----
Property insurance, 2 months $ 7,021
Mortgage insurance, 12 months 45,300
Real estate taxes, 12 months 249,419
-------
Total 301,740
Amount confirmed by mortgagee 320,678
-------
Amount on deposit in excess
of estimated requirements $ 18,938
=======
11
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
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 $359,609
Deposits made during period 63,216
Withdrawals made during period (55,681)
--------
Balance, end of period $367,144
========
The following information pertains to withdrawals made from the Reserve
for Replacements during the year.
Interior Hot Water
Date Decoration Exterior A/C Misc. System Total
---- ---------- -------- --- ----- ---------- -----
February 10, 1997 $30,036 $25,645 $ - $ - $ - $55,681
Accounts Payable (other than to trade creditors):
None
Compensation of Partners:
None from Project funds
Changes in Fixed Assets:
Furniture &
Land Buildings Equipment Total
---- --------- --------- -----
Cost:
December 31, 1996 $2,304,054 $6,464,316 $450,814 $9,219,184
Additions - 40,975 64,892 105,867
Dispositions - - - -
--------- --------- ------- ---------
December 31, 1997 $2,304,054 $6,505,291 $515,706 $9,325,051
========= ========= ======= =========
Accumulated Depreciation:
December 31, 1996 $1,191,564 $178,429 1,369,993
Additions 397,790 74,877 472,667
Dispositions - - -
--------- ------- ---------
December 31, 1997 $1,589,354 $253,306 $1,842,660
========= ======= =========
12
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Accrued Taxes:
<TABLE>
<CAPTION>
Description of Basis for Period Amount
Tax Accrual Covered Date Due Accrued
------- ------- ------- -------- ------
<S> <C> <C> <C> <C>
Houston ISD Tax January 1, 1997
Statement through January 31, 1998
December 31, 1997 $124,483
City of Houston and Tax January 1, 1997
Harris County Statement through January 31, 1998
December 31, 1997 $124,936
--------
Total $249,419
========
</TABLE>
Tenant Security Deposits:
Tenant security deposits are held in account # 25523-00220 at Bank of America
Texas N.A., Houston, Texas. This federally insured account, in the name of the
Project, had a balance of $69,452 at December 31, 1997, 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 1997 2nd half 1996 $139,148
July 1997 1st half 1997 147,594
---------
$286,742
=========
13
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Statement of Receipts and Disbursements:
Source of Funds:
Revenues:
Rental income, net $2,457,366
Financial 12,683
Other income 77,868
---------
2,547,917
---------
Expenses:
Administrative 252,974
Management fees 100,874
Utilities 158,623
Operating 40,114
Maintenance 136,064
Maintenance payroll 125,131
Real estate taxes 249,926
Other taxes 27,371
Insurance 71,954
Workmens' compensation 23,087
Mortgage insurance 45,663
Mortgage interest 696,806
---------
1,928,587
---------
Cash provided by operations before principal
payments and changes in assets and liabilities 619,330
Principal payments 75,309
---------
Cash provided by operations before changes
in assets and liabilities 544,021
---------
16
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Statement of Receipts and Disbursements (Continued)
Application of Funds:
(Increase) decrease in:
Accounts receivable - tenants (930)
Deposits 200
Prepaid insurance 10,912
Security deposits (2,933)
Escrow accounts (47,013)
Mortgage insurance (3,442)
Increase (decrease) in:
Accounts payable and accrued liabilities 83,824
Accrued interest payable (58,303)
Accrued taxes payable (6,908)
Deposit and prepayment liabilities 22,410
Additions to Property (105,867)
Surplus Cash Distributions (286,742)
--------
(394,792)
--------
Increase in cash 149,229
Unrestricted cash, beginning period 195,596
--------
Unrestricted cash, end of period $ 344,825
========
17
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
December 31, 1997
Schedule of Funds in Financial Institutions as of December 31, 1997:
Funds Held by Mortgagor, Regular Operating Account:
Texas Commerce Bank, (checking)(1) $ 471,489
Funds Held by Mortgagor in Trust, Tenant Security Deposits:
Bank of America(2) 69,452
Funds Held by Mortgagee, (in Trust):
Reserve for Replacements(3)
Sanwa Bank, (checking) 3.5% $363,070
Mortgage Insurance Escrow(3), Sanwa Bank 45,300
Property Tax Escrow(3), Sanwa Bank 258,827
Property Insurance Escrow(3), Sanwa Bank 16,550
--------
Funds Held by Mortgagee 683,747
---------
Total Funds in Financial Institutions $1,224,688
=========
(1) Balances Confirmed by Texas Commerce Bank
(2) Balances Confirmed by Bank of America
(3) Balances Confirmed by TRI
18
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Listing of Identity of Interest Companies and Activities
Doing Business with Owner/Agent
during the year ended December 31, 1997
Company Name Type of Service Amount Received
------------ --------------- ---------------
Bradley Apartment Homes Property Management $100,874
19
<PAGE>
OXFORD APARTMENTS, L.C.
(HUD Project Number 114-11123-REF)
Supplemental Supporting Data Required by HUD
For the Year Ended December 31, 1997
Certification of Members
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
We hereby certify that we have examined the foregoing financial statements 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 Meyers /s/ Al Bradley, Jr.
- - ---------------------------------- ---------------------------------
Tim Myers Al Bradley, Jr.
President Vice-President
- - ---------------------------------- ---------------------------------
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, 1997
Management Agent's Certification
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
We hereby certify that we have examined the foregoing financial statements 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/ Gene R. Blevins /s/ Al Bradley, Jr.
- - ---------------------------------- ---------------------------------
Gene R. Blevins Al Bradley, Jr.
President Chairman
Allied Development Corporation Allied Development Corporation
dba, Bradley Apartment Homes dba, Bradley Apartment Homes
- - ---------------------------------- ---------------------------------
Date Date
Allied Development Corporation
Identification Number 76-0156150
21
<PAGE>
[Letterhead]
Hidalgo, Banfill, Zlotnik & Kermali, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
February 12, 1998
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, 1997.
/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>
[Letterhead]
Hidalgo, Banfill, Zlotnik & Kermali, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROLS
(COMBINED REPORT APPLICABLE TO THE
FINANCIAL STATEMENTS AND HUD-ASSISTED PROGRAMS)
To 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"), for the year ended December 31, 1997 and have issued our report
thereon dated February 12, 1998. We have also audited the Company's compliance
with requirements applicable to major HUD-assisted programs and have issued our
report thereon dated February 12, 1998.
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. Those standards and the Guide require that we plan and
perform the audit 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 Oxford Apartments, L.C. is responsible for establishing and
maintaining internal controls. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal controls. The objectives of internal controls 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 internal controls 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.
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
<PAGE>
In planning and performing our audits, we obtained an understanding of the
design of relevant internal controls and determined whether they have 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 to report on internal controls in
accordance with the provisions of the Guide and not to provide any assurance on
internal controls.
We performed tests of controls, as required by the Guide, to evaluate the
effectiveness of the design and operation of internal controls that we
considered relevant to preventing or detecting material noncompliance with
specific requirements applicable to the Company's major HUD-assisted programs.
Our procedures were less in scope than would be necessary to render an opinion
on internal control policies and procedures. Accordingly, we do not express such
an opinion.
Our consideration of the internal controls would not necessarily disclose all
matters in internal controls 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 components does not reduce to a relatively low level
risk that errors or irregularities in the amounts that would be material in
relation to the financial statements being audited or that noncompliance with
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 normal course of
performing their assigned functions. We noted no matters involving internal
controls and their operations that we consider to be material weaknesses as
defined above.
This report is intended for the information of audit committee, 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 12, 1998
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
<PAGE>
[Letterhead]
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. 114-11123-REF, Oxford Apartments, L.C. (the
"Company") as of and for the year ended December 31, 1997 and have issued our
report thereon dated February 12, 1998. 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, 1997. The management of the Oxford 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 US. Department of Housing and Urban Development, Office
of Inspector General. 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 Company's 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, the 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, 1997.
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 12, 1998
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
<PAGE>
[Letterhead]
Hidalgo, Banfill, Zlotnik & Kermali, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
(Originally Founded in 1949)
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION
To 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, 1997 and have issued our
report thereon dated February 12, 1998.
We have applied procedures to test the Company's compliance with the Fair
Housting and Non-Discrimination requirements applicable to its HUD-assisted
programs for the year ended December 31, 1997.
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. 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
Fair Housing and Non-Discrimination 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, ZLOTNIK & KERMALI, P.C.
February 12, 1998
3555 TIMMONS LANE, SUITE 460 - HOUSTON, TEXAS 77027 - (713) 963-8008
Statement of U.S. Department of Housing OMB Approval No. 2502-0052
Profit and Loss and Urban Development (Exp. 9/30/98)
Office of Housing
Federal Housing Commissioner
Public reporting burden for this collection of information is estimated to
average 1 hour 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 aspects of teh collection of information,
including suggestions for reducing this burden, to the Reports Management
Officer, Paperwork Reduction Project (2502-0052). Office of Information
Technology, U.S .Department of Housing and Urban Development, Washington, D.C.
20410-3600. This agency may not collect this information, and you are not
required to complete this form, unless it displays a currently valid OMB control
number.
<TABLE>
<CAPTION>
Do not send this form to the above address.
- - -------------------------------------------------------------------------------------------------------------------------------
For Month/Period
Beginning Ending Project Number Project Name:
- - --------- ------ -------------- -------------
<S> <C> <C> <C> <C> <C>
Jan. 1, 1997 Dec. 31, 1997 114-11122-REF COVE APARTMENTS, L.C.
- - -------------------------------------------------------------------------------------------------------------------------------
Part I Description of Account Acct. No. Amount*
- - -------------------------------------------------------------------------------------------------------------------------------
Apartments or Member Carrying Charges (Coops) 5120 $1,977,900
Tenant Assistance Payments 5121 $
Furniture and Equipment 5130 $
Rental Stores and Commercial 5140 $
Income Garage and Parking Spaces 5170 $
5100 Flexible Subsidy Income 5180 $
Miscellaneous (specify) 5190 $
Total Rent Revenue Potential at 100% Occupancy $1,977,900
- - -------------------------------------------------------------------------------------------------------------------------------
Apartments 5220 $ (298,618)
Furniture and Equipment 5230 ( )
Vacancies Stores and Commercial 5240 ( )
5200 Garage and Parking Spaces 5270 ( )
Miscellaneous (specify) 5290 ( )
Total Vacancies (298,618)
Net Rental Revenue Rent Revenue Less Vacancies $1,679,282
- - -------------------------------------------------------------------------------------------------------------------------------
Elderly and Congregate Services Income -- 5300
Total Service Income (Schedule Attached) 5300 $
- - -------------------------------------------------------------------------------------------------------------------------------
Interest Income -- Project Operations 5410
Financial Income from Investments -- Residual Receipts 5430 $ 1,819
Revenue Income from Investments -- Reserve for Replacement 5440 $ 4,510
5400 Income from Investments -- Miscellaneous 5490 $
Total Financial Revenue $ 6,329
- - -------------------------------------------------------------------------------------------------------------------------------
Laundry and Vending 5910 $ 38,965
NSF and Late Charges 5920 $ 1,977
Other Damages and Cleaning Fees 5930 $ 7,492
Revenue Forfeited Tenant Security Deposits 5940 $ 18,819
5900 Other Revenue (specify) Credit Report Reimburse. 5990 $ 8,515
Total Other Revenue $ 75,768
- - -------------------------------------------------------------------------------------------------------------------------------
Total Revenue $1,761,379
Advertising 6210 $ 63,176
Other Administrative Expense 6250 $ 11,644
Office Salaries 6310 $ 100,853
Office Supplies 6311 $ 5,318
Administrative Office or Model Apartment Rent 6312 $ 5,657
Expenses Management 6320 $ 70,100
6200/6300 Manager or Superintendent Salaries 6330 $
Manager or Superintendent Rent Free Unit 6331 $
Legal Expenses (Project) 6340 $
Auditing Expenses (Project) 6350 $ 5,000
Bookkeeping Fees/Accounting Services 6351 $ 2,500
Telephone and Answering Service 6360 $ 7,313
Bad Debts 6370 $
Miscellaneous Administrative Expenses (specify) 6390 $ 3,673
Total Administrative Expenses $ 275,234
- - -------------------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
Utilities Electricity (Light and Misc. Power) 6450 $ 28,860
Expense Water 6451 $ 22,176
6400 Gas 6452 $ 33,510
Sewer 6453 $
Total Utilities Expense $ 84,546
- - -------------------------------------------------------------------------------------------------------------------------------
*All amounts must be rounded to the nearest dollar; $.50 and over. form HUD-92410 (7/91)
ref Handbook 43702
Page 1 of 2
4
<PAGE>
- - -------------------------------------------------------------------------------------------------------------------------------
Janitor and Cleaning Payroll 6510 $
Janitor and Cleaning Supplies 6515 $ 1,430
Janitor and Cleaning Contract 6517 $
Exterminating Payroll Contract 6519 $ 5,094
Exterminating Supplies 6520 $
Garbage and Trash Removal 6525 $ 9,745
Operating and Security Payroll Contract 6530 $ 10,520
Maintenance Grounds Payroll 6535 $
Expenses Grounds Supplies 6536 $
6500 Grounds Contract 6537 $ 30,805
Repairs Payroll 6540 $ 92,023
Repairs Material 6541 $ 46,445
Repairs Contract 6542 $ 32,518
Elevator Maintenance Contract 6545 $
Heating/Cooling Repairs and Maintenance 6546 $ 6,292
Swimming Pool Maintenance/Contract 6547 $ 3,212
Snow Removal 6548 $
Decorating Payroll/Contract 6560 $
Decorating Supplies 6561 $
Other 6570 $
Miscellaneous Operating and Maintenance Expenses 6590 $ 188
Total Operating and Maintenance Expenses $ 238,272
- - -------------------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 227,046
Payroll Taxes (FICA) 6711 $ 19,759
Miscellaneous Taxes, Licenses and Permits 6719 $
Taxes Property and Liability Insurance (Hazard) 6720 $ 51,573
and Fidelity Bond Insurance 6721 $
Insurance Workmen's Compensation 6722 $ 16,746
6700 Health Insurance and Other Employee Benefits 6723 $ 13,582
Other Insurance (specify) 6729 $
Total Taxes and Insurances $ 328,706
- - -------------------------------------------------------------------------------------------------------------------------------
Interest on Bonds Payable 6810 $
Interest on Mortgage Payable 6820 $ 506,768
Financial Interest on Notes Payable (Long-Term) 6830 $
Expenses Interest on Notes Payable (Short-Term) 6840 $
6800 Mortgage Insurance Premium Service Charge 6850 $ 33,209
Miscellaneous Financial Expenses 6890 $
Total Financial Expenses $ 539,977
- - -------------------------------------------------------------------------------------------------------------------------------
Elderly & Total Service Expenses -- Schedule Attached 6900 $
Congregate Total Cost of Operations Before Depreciation $1,466,735
Service Profit (Loss) Before Depreciation $ 294,644
Expenses Depreciation (Total) -- 6600 (specify) 6900 $ 215,304
6900 Operating Profit or (Loss) $ 79,340
- - -------------------------------------------------------------------------------------------------------------------------------
Corporate or 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) $ 79,340
- - -------------------------------------------------------------------------------------------------------------------------------
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, 6690, 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. $ 54,770
- - -------------------------------------------------------------------------------------------------------------------------------
2. Replacement Reserve deposits required by the Regulatory Agreement or Amendments thereto, even
if payments may be temporarily suspended or waived. $ 37,530
- - -------------------------------------------------------------------------------------------------------------------------------
3. Replacement or Painting Reserve releases 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
- - -------------------------------------------------------------------------------------------------------------------------------
*All amounts must be rounded to the nearest dollar; $50 and over. form HUD-92410 (7/91)
ref Handbook 43702
</TABLE>
Page 2 of 2
5
<PAGE>
Computation of Surplus Cash, U.S. Department of Housing
Distributions and Residual and Urban Development
Receipts Office of Housing
Federal Housing Commissioner
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
Project Name: Fiscal Period Ended: Project Number:
COVE APARTMENTS, L.C. 12/31/97 114-11122-REF
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Part A -- Compute Surplus Cash
- - --------------------------------------------------------------------------------------------------------------------------------
Cash
- - --------------------------------------------------------------------------------------------------------------------------------
1. Cash (Accounts 1110, 1120, 1191, 1192) $ 105,422
- - --------------------------------------------------------------------------------------------------------------------------------
2. Tenant subsidy vouchers due for period covered by financial statement $
- - --------------------------------------------------------------------------------------------------------------------------------
3. Other (describe) $ 41,068
- - --------------------------------------------------------------------------------------------------------------------------------
(a) Total Cash (Add Lines 1, 2, and 3) $ 146,490
- - --------------------------------------------------------------------------------------------------------------------------------
Current Obligations
- - --------------------------------------------------------------------------------------------------------------------------------
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 notes payable (due within 30 days) $
- - --------------------------------------------------------------------------------------------------------------------------------
9. Deficient Tax Insurance or MIP Escrow Deposits $
- - --------------------------------------------------------------------------------------------------------------------------------
10. Accrued expenses (not escrowed) $ 11,893
- - --------------------------------------------------------------------------------------------------------------------------------
11. Prepaid Rents (Account 2210) $ 9,738
- - --------------------------------------------------------------------------------------------------------------------------------
12. Tenant security deposits liability (Account 2191) $ 55,599
- - --------------------------------------------------------------------------------------------------------------------------------
13. Other (Describe) $
- - --------------------------------------------------------------------------------------------------------------------------------
(b) Less Total Current Obligations (Add Lines 4 through 13) $ 77,190
- - --------------------------------------------------------------------------------------------------------------------------------
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $ 69,300
- - --------------------------------------------------------------------------------------------------------------------------------
Part B -- Compute Distributions to Owners and Required Deposit to Residual Receipts
- - --------------------------------------------------------------------------------------------------------------------------------
1. Surplus Cash $ 69,300
- - --------------------------------------------------------------------------------------------------------------------------------
Limited Dividends Projects
- - --------------------------------------------------------------------------------------------------------------------------------
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 Balanced Sheet as Distribution Earned but Unpaid $ 69,300
(Line 2a plus 2b minus 2c)
- - --------------------------------------------------------------------------------------------------------------------------------
4. Amount Available for Distribution During Next Fiscal Period $ 69,300
- - --------------------------------------------------------------------------------------------------------------------------------
5. Deposit Due Residual Receipts (Must be deposited with Mortgagee within
60 days after Fiscal Period ends) $
- - --------------------------------------------------------------------------------------------------------------------------------
Prepared By Reviewed By
- - --------------------------------------------------------------------------------------------------------------------------------
Loan Technician Date Loan Servicer Date
- - --------------------------------------------------------------------------------------------------------------------------------
Page 1 of 2 form HUD-93486 (12/80)
</TABLE>
14
<PAGE>
Statement of U.S. Department of Housing OMB Approval No. 2502-0052
Profit and Loss and Urban Development (Exp. 9/30/98)
Office of Housing
Federal Housing Commissioner
Public reporting burden for this collection of information is estimated to
average 1 hour 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 aspects of teh collection of information,
including suggestions for reducing this burden, to the Reports Management
Officer, Paperwork Reduction Project (2502-0052). Office of Information
Technology, U.S .Department of Housing and Urban Development, Washington, D.C.
20410-3600. This agency may not collect this information, and you are not
required to complete this form, unless it displays a currently valid OMB control
number.
<TABLE>
<CAPTION>
Do not send this form to the above address.
- - -------------------------------------------------------------------------------------------------------------------------------
For Month/Period
Beginning: Ending: Project Number: Project Name:
- - --------- ------ --------------- -------------
<S> <C> <C> <C> <C> <C>
01/01/97 12/31/97 114-11123-REF OXFORD APARTMENTS, L.C.
- - -------------------------------------------------------------------------------------------------------------------------------
Part I Description of Account Acct. No. Amount*
- - -------------------------------------------------------------------------------------------------------------------------------
Apartments or Member Carrying Charges (Coops) 5120 $2,702,190
Tenant Assistance Payments 5121 $
Furniture and Equipment 5130 $
Rental Stores and Commercial 5140 $
Income Garage and Parking Spaces 5170 $
5100 Flexible Subsidy Income 5180 $
Miscellaneous (specify) 5190 $
Total Rent Revenue Potential at 100% Occupancy $2,702,190
- - -------------------------------------------------------------------------------------------------------------------------------
Apartments 5220 $ (244,824)
Furniture and Equipment 5230 ( )
Vacancies Stores and Commercial 5240 ( )
5200 Garage and Parking Spaces 5270 ( )
Miscellaneous (specify) 5290 ( )
Total Vacancies (244,824)
Net Rental Revenue Rent Revenue Less Vacancies $2,457,366
- - -------------------------------------------------------------------------------------------------------------------------------
Elderly and Congregate Services Income -- 5300
Total Service Income (Schedule Attached) 5300 $
- - -------------------------------------------------------------------------------------------------------------------------------
Interest Income -- Project Operations 5410 $ 2,433
Financial Income from Investments -- Residual Receipts 5430 $
Revenue Income from Investments -- Reserve for Replacement 5440 $ 10,250
5400 Income from Investments -- Miscellaneous 5490 $
Total Financial Revenue $ 12,863
- - -------------------------------------------------------------------------------------------------------------------------------
Laundry and Vending 5910 $ 36,697
NSF and Late Charges 5920 $ 7,238
Other Damages and Cleaning Fees 5930 $ 6,793
Revenue Forfeited Tenant Security Deposits 5940 $ 20,390
5900 Other Revenue (specify) Credit Report Reimburse. 5990 $ 6,750
Total Other Revenue $ 77,868
- - -------------------------------------------------------------------------------------------------------------------------------
Total Revenue $2,547,917
Advertising 6210 $ 80,471
Other Administrative Expense 6250 $ 10,274
Office Salaries 6310 $ 122,204
Office Supplies 6311 $ 6,261
Administrative Office or Model Apartment Rent 6312 $ 16,675
Expenses Management 6320 $ 100,874
6200/6300 Manager or Superintendent Salaries 6330 $
Manager or Superintendent Rent Free Unit 6331 $
Legal Expenses (Project) 6340 $ 1,192
Auditing Expenses (Project) 6350 $ 5,500
Bookkeeping Fees/Accounting Services 6351 $ 2,500
Telephone and Answering Service 6360 $ 8,613
Bad Debts 6370 $
Miscellaneous Administrative Expenses (specify) 6390 $ ( 716)
Total Administrative Expenses $ 353,848
- - -------------------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
Utilities Electricity (Light and Misc. Power) 6450 $ 41,694
Expense Water 6451 $ 86,298
Gas 6452 $ 30,631
Sewer 6453 $
Total Utilities Expense $ 158,623
- - -------------------------------------------------------------------------------------------------------------------------------
*All amounts must be rounded to the nearest dollar; $.50 and over. form HUD-92410 (7/91)
ref Handbook 4370.2
Page 1 of 2
4
<PAGE>
- - -------------------------------------------------------------------------------------------------------------------------------
Janitor and Cleaning Payroll 6510 $
Janitor and Cleaning Supplies 6515 $ 2,167
Janitor and Cleaning Contract 6517 $
Exterminating Payroll Contract 6519 $ 6,972
Exterminating Supplies 6520 $
Garbage and Trash Removal 6525 $ 10,612
Operating and Security Payroll Contract 6530 $ 27,335
Maintenance Grounds Payroll 6535 $
Expenses Grounds Supplies 6536 $
6500 Grounds Contract 6537 $ 29,837
Repairs Payroll 6540 $ 125,131
Repairs Material 6541 $ 51,108
Repairs Contract 6542 $ 36,283
Elevator Maintenance Contract 6545 $
Heating/Cooling Repairs and Maintenance 6546 $ 7,253
Swimming Pool Maintenance/Contract 6547 $ 3,055
Snow Removal 6548 $
Decorating Payroll/Contract 6560 $
Decorating Supplies 6561 $
Other 6570 $
Miscellaneous Operating and Maintenance Expenses 6590 $ 1,556
Total Operating and Maintenance Expenses $ 301,309
- - -------------------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 249,926
Payroll Taxes (FICA) 6711 $ 27,371
Miscellaneous Taxes, Licenses and Permits 6719 $
Taxes Property and Liability Insurance (Hazard) 6720 $ 53,144
and Fidelity Bond Insurance 6721 $
Insurance Workmen's Compensation 6722 $ 23,087
6700 Health Insurance and Other Employee Benefits 6723 $ 18,810
Other Insurance (specify) 6729 $
Total Taxes and Insurances $ 372,338
- - -------------------------------------------------------------------------------------------------------------------------------
Interest on Bonds Payable 6810 $
Interest on Mortgage Payable 6820 $ 696,806
Financial Interest on Notes Payable (Long-Term) 6830 $
Expenses Interest on Notes Payable (Short-Term) 6840 $
6800 Mortgage Insurance Premium Service Charge 6850 $ 45,663
Miscellaneous Financial Expenses 6890 $
Total Financial Expenses $ 742,469
- - -------------------------------------------------------------------------------------------------------------------------------
Elderly & Total Service Expenses -- Schedule Attached 6900 $
Congregate Total Cost of Operations Before Depreciation $1,928,587
Service Profit (Loss) Before Depreciation $ 619,330
Expenses Depreciation (Total) -- 6600 (specify) 6900 $ 486,923
6900 Operating Profit or (Loss) $ 132,407
- - -------------------------------------------------------------------------------------------------------------------------------
Corporate or 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) $ 132,407
- - -------------------------------------------------------------------------------------------------------------------------------
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, 6690, 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. $ 75,309
- - -------------------------------------------------------------------------------------------------------------------------------
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 releases 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
- - -------------------------------------------------------------------------------------------------------------------------------
*All amounts must be rounded to the nearest dollar; $50 and over. form HUD-92410 (7/91)
ref Handbook 43702
</TABLE>
Page 2 of 2
5
<PAGE>
Computation of Surplus Cash, U.S. Department of Housing
Distributions and Residual and Urban Development
Receipts Office of Housing
Federal Housing Commissioner
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
Project Name: Fiscal Period Ended: Project Number:
OXFORD APARTMENTS, L.C. 06/30/1997 114-11123-REF
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Part A -- Compute Surplus Cash
- - --------------------------------------------------------------------------------------------------------------------------------
Cash
- - --------------------------------------------------------------------------------------------------------------------------------
1. Cash (Accounts 1110, 1120, 1191, 1192) $ 243,235
- - --------------------------------------------------------------------------------------------------------------------------------
2. Tenant subsidy vouchers due for period covered by financial statement $
- - --------------------------------------------------------------------------------------------------------------------------------
3. Other (describe) $
- - --------------------------------------------------------------------------------------------------------------------------------
(a) Total Cash (Add Lines 1, 2, and 3) $ 243,235
- - --------------------------------------------------------------------------------------------------------------------------------
Current Obligations
- - --------------------------------------------------------------------------------------------------------------------------------
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 notes payable (due within 30 days) $
- - --------------------------------------------------------------------------------------------------------------------------------
9. Deficient Tax Insurance or MIP Escrow Deposits $
- - --------------------------------------------------------------------------------------------------------------------------------
10. Accrued expenses (not escrowed) $ 22,614
- - --------------------------------------------------------------------------------------------------------------------------------
11. Prepaid Rents (Account 2210) $ 5,065
- - --------------------------------------------------------------------------------------------------------------------------------
12. Tenant security deposits liability (Account 2191) $ 67,962
- - --------------------------------------------------------------------------------------------------------------------------------
13. Other (Describe) $
- - --------------------------------------------------------------------------------------------------------------------------------
(b) Less Total Current Obligations (Add Lines 4 through 13) $ 95,641
- - --------------------------------------------------------------------------------------------------------------------------------
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $ 147,594
- - --------------------------------------------------------------------------------------------------------------------------------
Part B -- Compute Distributions to Owners and Required Deposit to Residual Receipts
- - --------------------------------------------------------------------------------------------------------------------------------
1. Surplus Cash $ 147,594
- - --------------------------------------------------------------------------------------------------------------------------------
Limited Dividends Projects
- - --------------------------------------------------------------------------------------------------------------------------------
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 Balanced Sheet as Distribution Earned but Unpaid $
(Line 2a plus 2b minus 2c)
- - --------------------------------------------------------------------------------------------------------------------------------
4. Amount Available for Distribution During Next Fiscal Period $ 147,594
- - --------------------------------------------------------------------------------------------------------------------------------
5. Deposit Due Residual Receipts (Must be deposited with Mortgagee within
60 days after Fiscal Period ends) $
- - --------------------------------------------------------------------------------------------------------------------------------
Prepared By Reviewed By
- - --------------------------------------------------------------------------------------------------------------------------------
Loan Technician Date Loan Servicer Date
- - --------------------------------------------------------------------------------------------------------------------------------
Page 1 of 2 form HUD-93486 (12/80)
</TABLE>
14
<PAGE>
Computation of Surplus Cash, U.S. Department of Housing
Distributions and Residual and Urban Development
Receipts Office of Housing
Federal Housing Commissioner
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
Project Name: Fiscal Period Ended: Project Number:
OXFORD APARTMENTS, L.C. 12/31/1997 114-11123-REF
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Part A -- Compute Surplus Cash
- - --------------------------------------------------------------------------------------------------------------------------------
Cash
- - --------------------------------------------------------------------------------------------------------------------------------
1. Cash (Accounts 1110, 1120, 1191, 1192) $ 417,277
- - --------------------------------------------------------------------------------------------------------------------------------
2. Tenant subsidy vouchers due for period covered by financial statement $
- - --------------------------------------------------------------------------------------------------------------------------------
3. Other (describe) $
- - --------------------------------------------------------------------------------------------------------------------------------
(a) Total Cash (Add Lines 1, 2, and 3) $ 417,277
- - --------------------------------------------------------------------------------------------------------------------------------
Current Obligations
- - --------------------------------------------------------------------------------------------------------------------------------
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 notes payable (due within 30 days) $
- - --------------------------------------------------------------------------------------------------------------------------------
9. Deficient Tax Insurance or MIP Escrow Deposits $
- - --------------------------------------------------------------------------------------------------------------------------------
10. Accrued expenses (not escrowed) $ 96,181
- - --------------------------------------------------------------------------------------------------------------------------------
11. Prepaid Rents (Account 2210) $ 17,120
- - --------------------------------------------------------------------------------------------------------------------------------
12. Tenant security deposits liability (Account 2191) $ 74,029
- - --------------------------------------------------------------------------------------------------------------------------------
13. Other (Describe) $
- - --------------------------------------------------------------------------------------------------------------------------------
(b) Less Total Current Obligations (Add Lines 4 through 13) $ 187,330
- - --------------------------------------------------------------------------------------------------------------------------------
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $ 229,947
- - --------------------------------------------------------------------------------------------------------------------------------
Part B -- Compute Distributions to Owners and Required Deposit to Residual Receipts
- - --------------------------------------------------------------------------------------------------------------------------------
1. Surplus Cash $ 377,541
- - --------------------------------------------------------------------------------------------------------------------------------
Limited Dividends Projects
- - --------------------------------------------------------------------------------------------------------------------------------
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 $ 147,594
- - --------------------------------------------------------------------------------------------------------------------------------
3. Amount to be Carried on Balanced Sheet as Distribution Earned but Unpaid $ 229,947
(Line 2a plus 2b minus 2c)
- - --------------------------------------------------------------------------------------------------------------------------------
4. Amount Available for Distribution During Next Fiscal Period $ 229,947
- - --------------------------------------------------------------------------------------------------------------------------------
5. Deposit Due Residual Receipts (Must be deposited with Mortgagee within
60 days after Fiscal Period ends) $
- - --------------------------------------------------------------------------------------------------------------------------------
Prepared By Reviewed By
- - --------------------------------------------------------------------------------------------------------------------------------
Loan Technician Date Loan Servicer Date
- - --------------------------------------------------------------------------------------------------------------------------------
Page 1 of 2 form HUD-93486 (12/80)
</TABLE>
15
