<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended June 30, 1999
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________________ to
Commission file number 000-21470
-------------
N'TANDEM TRUST
--------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 33-6109499
---------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6160 So. Syracuse Way, Greenwood Village, Colorado 80111
---------------------------------------------------------------------
(Address of principal executive offices)
(303) 741-3707
----------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [_]
At August 1, 1999, the issuer had 109,308 Common Shares of Beneficial Interest
and 98,073 Preferred Shares of Beneficial Interest outstanding.
Transitional small business disclosure format (check one): Yes [ ] No [X]
<PAGE>
TABLE OF CONTENTS
PART I
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<TABLE>
<CAPTION>
Page
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<C> <S> <C>
Item 1. Financial Statements 2
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II
-------
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14-15
SIGNATURE 16
</TABLE>
<PAGE>
PART I
------
Certain matters discussed under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere in this Quarterly
Report on Form 10-QSB may constitute forward-looking statements for purposes of
Section 21E of the Securities Exchange Act of 1934, as amended, and as such
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of N'Tandem Trust to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
1
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Item 1. Financial Statements
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N'TANDEM TRUST
--------------
BALANCE SHEET
--------------
(unaudited)
<TABLE>
<CAPTION>
June 30,1999
------------------------------
<S> <C>
ASSETS
- ------
Property held for investment:
Land $ 6,233,200
Buildings and improvements 21,391,200
Fixtures and equipment 163,000
------------------------------
27,787,400
Less accumulated depreciation (1,393,300)
------------------------------
26,394,100
Investments in joint ventures and limited partnerships 5,512,400
Cash and cash equivalents 220,500
Deferred financing costs 85,100
Other assets 605,200
------------------------------
Total Assets $ 32,817,300
==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Mortgage note payable $ 2,050,000
Note payable to affiliate 25,130,200
Accounts payable 16,600
Accrued expenses 1,331,000
Tenant deposits and other liabilities 1,092,100
Due to Advisor and affiliates 1,131,600
------------------------------
30,751,500
------------------------------
Shareholders' equity:
Preferred shares of beneficial interest, $0.01 par value,
500,000,000 shares authorized; 98,073 shares issued and
outstanding 2,121,700
Common shares of beneficial interest, $0.01 par value,
100,000,000 shares authorized; 109,308 shares issued and outstanding 2,401,400
Dividends in excess of accumulated earnings (2,457,300)
------------------------------
2,065,800
------------------------------
Total Liabilities and Shareholders' equity $ 32,817,300
==============================
</TABLE>
See accompanying notes to financial statements.
2
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N'TANDEM TRUST
--------------
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------------------------------
1999 1998
------------------------ ------------------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 859,400 $ 459,300
Equity in earnings (losses) of joint ventures and
limited partnerships (8,400) (9,400)
Interest 100 200
Other 38,500 5,200
------------------------ ------------------------
889,600 455,300
------------------------ ------------------------
COSTS AND EXPENSES
- ------------------
Property operating 425,900 210,800
Interest 391,100 175,000
Depreciation 220,100 109,500
Advisory fee 57,000 39,000
General and administrative:
Related parties 2,400 7,600
Other 21,900 11,400
------------------------ ------------------------
1,118,400 553,300
------------------------ ------------------------
Net loss $ (228,800) $ (98,000)
======================== ========================
Preferred dividends paid (36,800) (36,800)
======================== ========================
Net loss attributable to common shares $ (265,600) $ (134,800)
======================== ========================
Basic and diluted loss per common share $ (2.43) $ (1.35)
======================== ========================
Dividends per common share $ 0.38 $ 0.34
======================== ========================
</TABLE>
See accompanying notes to financial statements.
3
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N'TANDEM TRUST
--------------
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------------------------
1999 1998
---------------------- -----------------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 1,594,000 $ 680,200
Equity in earnings (losses) of joint ventures and
limited partnerships (16,700) (16,900)
Interest 100 800
Other 76,700 7,600
---------------------- -----------------------
1,654,100 671,700
---------------------- -----------------------
COSTS AND EXPENSES
- ------------------
Property operating 822,800 301,700
Interest 692,600 223,200
Depreciation 379,300 150,300
Advisory fee 106,100 63,800
General and administrative:
Related parties 10,300 11,400
Other 35,000 22,300
---------------------- -----------------------
2,046,100 772,700
---------------------- -----------------------
Net loss $ (392,000) $ (101,000)
====================== =======================
Preferred dividends paid (73,600) (73,600)
====================== =======================
Net loss attributable to common shares $ (465,600) $ (174,600)
====================== =======================
Basic and diluted loss per common share $ (4.26) $ (1.75)
====================== =======================
Dividends per common share $ 0.75 $ 0.68
====================== =======================
</TABLE>
See accompanying notes to financial statements.
4
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N'TANDEM TRUST
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STATEMENTS OF CASH FLOWS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------------------------
1999 1998
------------------------ ------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (392,000) $ (101,000)
Adjustments to reconcile net loss to net cash Provided
by operating activities:
Depreciation 379,300 150,300
Equity in (earnings) losses of joint ventures and
limited partnerships 16,700 16,900
Joint ventures' cash distributions (16,700) (16,900)
Amortization of deferred financing costs 7,000 6,000
Changes in operating assets and liabilities:
Other assets (136,200) (259,600)
Accounts payable 9,600 29,400
Accrued expenses 704,900 298,700
Tenant deposits and other liabilities 70,400 42,100
Due to Advisor and affiliates 404,500 60,900
------------------------ ------------------------
Net cash provided by operating activities 1,047,500 226,800
------------------------ ------------------------
Cash flows from investing activities:
Acquisition of and additions to property (10,420,600) (5,673,100)
Investment in joint ventures and limited partnerships (4,722,500) 100
Joint venture and limited partnerships cash
distributions 16,700 33,300
------------------------ ------------------------
Net cash used in investing activities (15,126,400) (5,639,700)
------------------------ ------------------------
Cash flows from financing activities:
Issuance of common shares 0 478,500
Proceeds from note due to Chateau Communities, Inc.
for property purchase 14,478,700 5,001,500
Deferred financing costs (50,000) 0
Dividends paid (155,600) (141,100)
------------------------ ------------------------
Net cash (used in) provided by financing activities 14,273,100 5,338,900
------------------------ ------------------------
Net increase (decrease) in cash and cash equivalents 194,200 (74,000)
Cash and cash equivalents at beginning of period 26,300 82,800
------------------------ ------------------------
Cash and cash equivalents at end of period $ 220,500 $ 8,800
======================== ========================
</TABLE>
See accompanying notes to financial statements.
5
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N'TANDEM TRUST
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. THE TRUST
---------
N'Tandem Trust, an unincorporated business trust (the "Trust"), was formed in
November 1991 under the laws of the State of California. The Trust was
organized to invest in existing, substantially developed and occupied
manufactured home communities. The sponsor and advisor of the Trust is The
Windsor Corporation, a California corporation (the "Advisor"). The Trust was
funded through a public offering of common shares of beneficial interest and
preferred shares of beneficial interest, which commenced in April 1992 and
terminated in April 1993. At June 30, 1999, the Trust's portfolio was comprised
of nine wholly-owned and seven partially-owned manufactured home communities
located in seven states.
The Trust operates so as to qualify as a real estate investment trust (a "REIT")
under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended
(the "Code"). As a REIT, the Trust is required to distribute at least 95% of
its REIT taxable income.
On October 23, 1998, at the 1998 Annual Meeting of Shareholders, the Trust's
shareholders approved, among other things, (i) the conversion of the Trust from
a finite-life entity to an infinite-life entity; and (ii) the amendment and
restatement of the Trust's Declaration of Trust (the "Amended Declaration") and
the adoption of By-laws for the Trust (collectively, the "Organizational
Amendments"). The principal purposes of the Organizational Amendments were to
convert the Trust from a finite-life to an infinite-life entity and to remove
various restrictions, limitations and other requirements contained in the
Trust's previous Declaration of Trust which are not typically found in the more
modern organizational documents of leading REITs. The Amended Declaration also
provided for changing the name of the Trust from "Windsor Real Estate Investment
Trust 8" to "N'Tandem Trust."
As a result of the approval of the Organizational Amendments, the Trust now
intends to move forward with certain transactions and to effect certain changes
including the following: (i) the Trust will complete its restructuring as an
"umbrella partnership" REIT in order to facilitate tax-free and/or tax-deferred
acquisitions of additional properties, (ii) the Trust will begin implementing a
growth-oriented business plan (the "Business Plan") intended to cause the Trust
to attain greater size and asset diversity; and (iii) if successful in the
implementation of the Business Plan, the Trust anticipates that it will seek to
list the Common Shares on a national securities exchange or NASDAQ, and if
deemed appropriate, raise additional capital through an underwritten public
offering of the Common Shares or other securities of the Trust.
Additionally, Chateau Communities, Inc., a publicly traded REIT which is one of
the largest owner/operators of manufactured home communities in the United
States ("Chateau"), has announced that the Trust will be a primary vehicle
through which Chateau will make investments in manufactured home communities
that do not fit the core asset type typical of the existing Chateau portfolio,
which is characterized by large, stable, institutional-quality, full amenitized
properties. The Trust will employ higher levels of leverage than Chateau and
will focus primarily on "lower profile assets", meaning properties that (i) are
typically not part of a portfolio of manufactured housing community properties;
(ii) are located in tertiary demographic and geographic markets; (iii) are not
managed by a nationally known manufactured home community operator; (iv) may be
smaller and are likely to have fewer amenities; and (v) have a greater
proportion of single-section homes than the typical Chateau community. The
Trust believes that its affiliation with Chateau will benefit the Trust by
providing it with access to Chateau's national organization, management team and
investment and management philosophies. Through its affiliation with Chateau,
the Trust believes that it will be exposed to a wider range of acquisition
opportunities as a result of Chateau's national organization and knowledge of
the manufactured housing community industry and will benefit from Chateau's
expertise in effectively and efficiently managing properties. At June 30,
6
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1999, Chateau held 9.8% of the Trust's outstanding shares.
The Trust believes that significant opportunities exist to acquire additional
properties that fit the investment objectives and guidelines set forth in its
Business Plan. The Trust anticipates that it will focus on acquisitions where
the Trust believes there is substantial opportunity to improve operational and
financial results or where for some reason, because of poor management or
otherwise, a property is operating substantially below its potential. The Trust
anticipates that the funds required to implement its Business Plan are likely to
come from (i) additional investments from Chateau or unaffiliated third parties
and (ii) traditional mortgage financing or refinancing or sales of equity and
debt securities.
The Trust will seek to engage in consolidation and acquisition transactions with
other owners of manufactured home communities, which meet the Trust's property
and acquisition criteria, using its equity securities or limited partner units
of N'Tandem Properties, L.P., a newly-formed Delaware limited partnership
subsidiary of the Trust, to facilitate such transactions.
NOTE 2. BASIS OF PRESENTATION
---------------------
The balance sheet at June 30, 1999 and the related statements of operations for
the three and six months ended June 30, 1999 and 1998 and the statements of cash
flows for the six months ended June 30, 1999 and 1998 are unaudited. However,
in the opinion of the Advisor, they contain all adjustments, of a normal
recurring nature, necessary for a fair presentation of such financial
statements. Interim results are not necessarily indicative of results for a
full year.
The financial statements and notes are presented as permitted by Form 10-QSB and
do not contain certain information included in the Trust's annual financial
statements and notes on Form 10-KSB/A for the year ended December 31, 1998.
NOTE 3. ACQUISITIONS OF PROPERTY
------------------------
During the first half of 1999, the Trust acquired two manufactured home
communities and ownership interests in six manufactured home communities.
On May 11, 1999, the Trust acquired Southpointe Village, a 282-homesite
community located in Albuquerque, New Mexico. The purchase price was $6,200,000,
of which $6,044,800 was borrowed from Chateau pursuant to a note entered into
between the parties. This note bears interest at 1% per annum above the prime
rate established by Bank One, N.A.
On June 30, 1999, the Trust acquired one manufactured home community and partial
ownership interests in six other manufactured home communities (together, the
"Acquired Properties") from Windsor Park Properties 4, A California Limited
Partnership ("WPP 4"), an affiliate of the Trust. The Acquired Properties
consisted of:
. Sunset Vista, a 207-site manufactured home community, located in Magna, Utah;
a 60% ownership interest in Big Country Estates, a 255-site manufactured home
community, located in Cheyenne, Wyoming;
. a 75% ownership interest in Harmony Ranch, a 193-site manufactured home
community, located in Thonotosassa, Florida;
. a 33% ownership interest in Rancho Margate, a 245-site manufactured home
community, located in Margate, Florida;
. a 33% ownership interest in Winter Haven, a 238-site manufactured home
community, located in Winter Haven, Florida;
. a 25% ownership interest in Apache East, a 123-site manufactured home
community, located in
7
<PAGE>
Phoenix, Arizona; and
. a 25% ownership interest in Denali Park, a 162-site manufactured home
community, located in Phoenix, Arizona.
The aggregate purchase price for the Acquired Properties was $8,509,850, of
which $8,433,800 was borrowed from Chateau pursuant to a note entered into
between Chateau and the Trust and the remainder of the purchase price was
related to adjustments and prorations at closing. The note bears interest at 1%
per annum above the prime rate established by Bank One, N.A. In connection with
the acquisition of the Acquired Properties, N'Tandem also assumed debt
attributable to the six partial ownership interests in the amount of $3,361,900.
NOTE 4. INVESTMENTS IN JOINT VENTURES AND LIMITED PARTNERSHIPS
------------------------------------------------------
The Trust's investments in joint ventures and limited partnerships consist of
interests in seven manufactured home communities at June 30, 1999. The combined
condensed results of operations of the joint venture and limited partnership
properties for the six months ended June 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------- ---------------------
<S> <C> <C>
Total revenues $ 629,100 $ 620,800
Expenses:
Property operating 358,900 352,300
Interest 200,100 229,900
Depreciation 140,300 137,400
General and administrative 5,500 5,100
-------------------- ---------------------
704,800 724,700
-------------------- ---------------------
Net income (loss) $ (75,700) $ (103,900)
==================== =====================
</TABLE>
NOTE 5. BASIC AND DILUTED LOSS PER COMMON SHARE
---------------------------------------
Basic and diluted loss per common share is calculated and based on the weighted
average number of common shares outstanding during the period and income or loss
available to the common shareholders. The weighted average number of common
shares outstanding during the three and six months ended June 30, 1999 was
109,308; and during the three and six months ended June 30, 1998, the weighted
average was 99,897.
NOTE 6. DEBT
----
The following table sets forth certain information regarding debt at June 30,
1999.
<TABLE>
<CAPTION>
Interest Rate Maturity Principal Balance
--------------------- ------------------- ---------------------
<S> <C> <C> <C>
Variable rate mortgage debt 7.92 % 2002 $ 2,050,000
Secured notes to Chateau 8.75 % 1999 23,779,300
Unsecured notes to Chateau 8.75 % 1999 1,350,900
---------------------
$ 27,180,200
=====================
</TABLE>
8
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NOTE 7. RELATED PARTY TRANSACTIONS
---------------------------
Advisory fee expense represents a fee payable to the Advisor for management of
the Trust's business. The fee is computed based on invested and uninvested asset
levels and is subject to certain subordination provisions. Advisory fee expense
for the three and six months ended June 30, 1999 was $57,000 and $106,100,
respectively, and $39,000 and $63,800 for the three and six months ended June
30,1998, respectively.
Chateau and/or its predecessor has been providing property management services
to the Trust since 1992. For this service, Chateau is paid a property
management fee, which is based on a percentage of actual gross receipts of the
properties. The total management fees paid to Chateau were $29,500 and $55,500
for the three and six months ended June 30, 1999, respectively, and $21,600 and
$32,700 for the three and six months ended June 30, 1998, respectively. In
addition certain direct expenses are paid by Chateau on behalf of the Trust and
then reimbursed by the Trust. These amounts were $84,900 and $153,900 for the
three and six months ended June 30, 1999, respectively, and $7,600 and $11,400
for the three and six months ended June 30, 1998, respectively.
For additional information concerning the Trust's relationship and transactions
with Chateau, see Note 1 herein.
NOTE 8. SUBSEQUENT EVENT
----------------
On July 1, 1999, the Trust acquired Longview Mobile Home Community, a
manufactured home community containing 93 sites located in Albuquerque, New
Mexico, for $1.8 million. To purchase Longview, N'Tandem borrowed $1,767,300
from Chateau at an annual interest rate equal to 1% per annum above the prime
rate established by Bank One, N.A.
9
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Item 2.
- -------
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion should be read in conjunction with the financial
statements and notes thereto included elsewhere in this Form 10-QSB.
Three months ended June 30, 1999 as compared to three months ended June 30, 1998
- --------------------------------------------------------------------------------
Results of Operations
- ---------------------
The results of operations for the three months ended June 30, 1999 and 1998 are
not directly comparable due to the purchase of the Southern, Lexington and
Suburban communities in December 1998, the purchase of the Southpointe community
in May 1999, and the purchase of the Sunset Vista community and ownership
interests in six communities on June 30, 1999. The Trust incurred a net loss of
$228,800 and $98,000 for the three months ended June 30, 1999 and 1998,
respectively. The net loss per common share was $2.43 in 1999 compared to a net
loss of $1.35 in 1998.
As a result of the 1998 and 1999 acquisitions, all major revenue and expense
categories increased in the first quarter of 1999, specifically rent and
utilities revenue, property operating costs, advisory fee expense and
depreciation.
Equity in earnings (losses) of joint ventures, which represents the Trust's
share of the net income (loss) of seven joint venture properties increased
slightly from a loss of $9,400 in 1998 to a loss of $8,400 in 1999.
Interest expense increased from $175,000 in 1998 to $391,100 in 1999, due to the
1998 and 1999 acquisitions.
Advisory fee expense represents a fee payable to the Advisor for management of
the Trust's business. The fee is computed based on invested and uninvested asset
levels and is subject to certain subordination provisions. Advisory fee expense
increased from $39,000 in 1998 to $57,000 for the second quarter of 1999, due to
the 1998 and 1999 acquisitions.
General and administrative expenses increased from $19,000 in 1998 to $24,300 in
1999 due mainly to an increase in professional fees.
Six months ended June 30, 1999 as compared to six months ended June 30, 1998
- ----------------------------------------------------------------------------
Results of Operations
- ---------------------
The results of operations for the six months ended June 30, 1999 and 1998 are
not directly comparable due to the purchase of the Woodland Hills community in
March 1998, the purchase of the Southern, Lexington and Suburban communities in
December 1998, the purchase of the Southpointe community in May 1999 and the
purchase of the Sunset Vista community and ownership interests in six
communities on June 30, 1999. The Trust incurred a net loss of $392,000 and
$101,000 for the six months ended June 30, 1999 and 1998, respectively. The net
loss per common share was $4.26 in 1999 compared to a net loss of $1.75 in 1998.
As a result of the 1998 and 1999 acquisitions, all major revenue and expense
categories increased in the first six months of 1999, specifically rent and
utilities revenue, property operating costs, advisory fee expense and
depreciation.
10
<PAGE>
Equity in earnings (losses) of joint ventures, which represents the Trust's
share of the net income (loss) of seven joint venture properties remained
relatively constant from a loss of $16,900 in 1998 to a loss of $16,700 in 1999.
Interest expense increased from $223,200 in 1998 to $692,600 in 1999, due to the
1998 and 1999 acquisitions.
Advisory fee expense represents a fee payable to the Advisor for management of
the Trust's business. The fee is computed based on invested and uninvested asset
levels and is subject to certain subordination provisions. Advisory fee expense
increased from $63,800 in 1998 to $106,100 in 1999, due to the 1998 and 1999
acquisitions.
General and administrative expenses increased from $33,700 in 1998 to $45,300 in
1999 due mainly to an increase in professional fees.
Liquidity and Capital Resources
- -------------------------------
The Trust's principal uses of its liquidity and capital resources have
historically been for distributions to shareholders, property acquisitions,
payment of advisory and management fees and payment of debt service. To
maintain its qualification as a REIT under the Code, the Trust is required to
distribute to its shareholders at least 95% of its "Real Estate Investment Trust
Taxable Income" as defined in the Internal Revenue Code of 1986. The Trust
declared a quarterly distribution on its common shares of $.38 per share in each
of the first and second quarters of 1999 and 1998. In addition, the Trust paid
quarterly distributions on its preferred shares of $.38 per share in each of the
first and second quarters of 1999 and 1998. Future distributions on the common
shares will be determined based on actual results of operations and cash
available for distribution.
The Trust's principal source of liquidity is its cash flow generated from
operations generated from its real estate investments. Net cash provided by
operating activities was $1,047,500 for the six months ended June 30, 1999. At
June 30, 1999, the Trust's cash and restricted cash amounted to approximately
$220,500.
During the first half of 1999, the Trust acquired two manufactured home
communities and ownership interests in six manufactured home communities.
On May 11, 1999, the Trust acquired Southpointe Village, a 282-homesite
community located in Albuquerque, New Mexico. The purchase price was $6,200,000,
of which $6,044,800 was borrowed from Chateau pursuant to a note entered into
between the parties. This note bears interest at 1% per annum above the prime
rate established by Bank One, N.A.
On June 30, 1999, the Trust acquired one manufactured home community and partial
ownership interests in six other manufactured home communities (together, the
"Acquired Properties") from Windsor Park Properties 4, A California Limited
Partnership ("WPP 4"), an affiliate of the Trust. The Acquired Properties
consisted of:
. Sunset Vista, a 207-site manufactured home community, located in Magna,
Utah;
. a 60% ownership interest in Big Country Estates, a 255-site manufactured
home community, located in Cheyenne, Wyoming;
. a 75% ownership interest in Harmony Ranch, a 193-site manufactured home
community, located in Thonotosassa, Florida;
. a 33% ownership interest in Rancho Margate, a 245-site manufactured home
community, located in Margate, Florida;
. a 33% ownership interest in Winter Haven, a 238-site manufactured home
community, located in
11
<PAGE>
Winter Haven, Florida;
. a 25% ownership interest in Apache East, a 123-site manufactured home
community, located in Phoenix, Arizona; and
. a 25% ownership interest in Denali Park, a 162-site manufactured home
community, located in Phoenix, Arizona.
The aggregate purchase price for the Acquired Properties was $8,509,850, of
which $8,433,800 was borrowed from Chateau pursuant to a note entered into
between Chateau and the Trust and the remainder of the purchase price was
related to adjustments and prorations at closing. The note bears interest at 1%
per annum above the prime rate established by Bank One, N.A. In connection with
the acquisition of the Acquired Properties, N'Tandem also assumed debt
attributable to the six partial ownership interests in the amount of $3,361,900.
The Trust's principal long-term liquidity requirements will be the repayment of
principal on its outstanding mortgage debt and the acquisition of additional
properties pursuant to the Trust's Business Plan. At June 30, 1999, the Trust's
total mortgage debt, including its proportionate share of joint venture and
limited partnership debt, was $31,508,500, consisting of fixed rate and variable
rate debt. At June 30, 1999, $25,130,200 of the debt consisted of secured and
unsecured notes payable to Chateau. The average rate of interest on the fixed
rate and variable rate debt was 8.9% and 8.7%, respectively, at June 30, 1999.
The Trust and affiliated entities are jointly and severally liable for the full
amounts of the loans obtained jointly.
The Trust intends to fund the repayment of its mortgage debt with equity or
other debt financings, including public financings. In addition, future
acquisitions of properties will be funded through investments by Chateau or by
other third parties in the Trust or with equity or other debt financings,
including public financings. The availability of such investments or such
financings will influence the Trust's decision to proceed with, and the pace of,
future acquisition activities.
Inflation
- ---------
All of the leases or terms of tenants' occupancies at the properties allow for
at least annual rental adjustments. In addition, all of the leases are month-
to-month and enable the Trust to seek market rentals upon reletting the sites.
Such leases generally minimize the risk to the Trust of any adverse effect of
inflation.
Year 2000 Compliance
- --------------------
The Advisor has assessed the impact of the year 2000 issue on its reporting
systems and operations. The year 2000 issue exists because many computer
systems and applications abbreviate dates by eliminating the first two digits of
the year, assuming that these two digits are always 19. As a result, date-
sensitive computer programs may recognize a date using "00" as the year 1900
rather than the year 2000. Unless, corrected, the potential exists for computer
system failures or incorrect processing of financial and operational
information, which could disrupt operations
Substantially all of the computer systems and applications and operating systems
in use by the Advisor and Chateau and properties have been, or are in the
process of being upgraded and modified. The Trust is of the opinion that, in
connection with those upgrades and modifications, it, as well as the Advisor and
Chateau, have addressed applicable year 2000 issues as they might affect the
computer systems and applications in use by the Advisor and Chateau and located
at the Trust's properties. The Trust anticipates that implementation of
solutions to any year 2000 issue which it may discover will require the
expenditure of sums which the Trust does not expect to be material.
The Trust is exposed to the risk that one or more of its vendors or service
providers may experience year 2000 problems which impact the ability of such
vendor or service provider to provide goods and services.
12
<PAGE>
Due to the availability of alternative suppliers, this is not considered as
significant a risk with respect to the suppliers of goods. The disruption of
certain services, however, such as utilities, could, depending upon the extent
of the disruption, have a material adverse impact on the Trust's operations. To
date, the Trust is not aware of any vendor or service provider year 2000 issue
that management believes would have a material adverse impact on the Trust's
operations if the Trust, however, has no means of ensuring that its vendors or
service providers will be year 2000 ready. The inability of vendors or service
providers to complete the year 2000 resolution process in a timely fashion could
have an adverse impact on the Trust and the effect of non-compliance by vendors
or service providers is not determinable at this time. Residents who pay rent to
the Trust do not pose Year 2000 problems for the Trust given the type and nature
of the Trust's properties and residents.
Widespread disruptions in the national or international economy, including
disruptions affecting the financial markets, resulting from year 2000 issues, or
in certain industries, such as commercial or investment banks, could also have
an adverse impact on the Trust. The likelihood and effect of such disruptions
is not determinable at this time.
The Advisor expects to have all systems appropriately modified before any
significant processing malfunctions could occur and does not expect the year
2000 issue will materially impact the financial condition or operations of the
Trust.
13
<PAGE>
PART II
-------
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
An Annual Meeting of Shareholders was held on June 15, 1999, in Greenwood
Village, Colorado. At the Annual Meeting, the shareholders voted to elect three
trustees to serve on the Trust's Board of Trustees until the 2000 Annual Meeting
of Shareholders and to ratify the appointment of PricewaterhouseCoopers LLP as
the Trust's independent auditors for the fiscal year ending December 31, 1999.
The following votes were cast by the shareholders of the Trust with respect to
the election of trustees named in the Proxy Statement:
Shares Shares
Voted For Withheld
------------- -----------------
Gary P. McDaniel 49,677 1,693
Richard B. Ray 49,677 1,693
Kenneth G. Pinder 49,677 1,693
The following votes were cast by the shareholders with respect to the resolution
to ratify the Board of Trustees' appointment of PricewaterhouseCoopers LLP as
the Trust's independent auditors for the fiscal year ending December 31, 1999.
Shares Shares Shares
Voted For Voted Against Abstained
- --------------------------------- ---------------------- --------------------
47,602 502 3,248
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a) Exhibits and Index of Exhibits
3.1) Amended and Restated Declaration of Trust*
3.2) By-laws of the Company**
10.1) 1998 Equity Compensation Plan***
10.2) Investment Agreement by and between Windsor Real Estate Investment
Trust 8 and Chateau Communities, Inc.****
21) List of Subsidiaries*****
27) Financial Data Schedule
- -------------------
* Filed as Appendix A to the Trust's Proxy Statement for its 1998 Annual
Meeting of Shareholders filed with the Commission on September 17, 1998.
** Filed as Appendix B to the Trust's Proxy Statement for its 1998 Annual
Meeting of Shareholders filed with the Commission on September 17, 1998.
*** Filed as an attachment the Trust's Proxy Statement for its 1998 Annual
Meeting of Shareholders filed with the Commission on September 17, 1998.
**** Filed as Exhibit 7.1 to Schedule 13D (Amendment No. 2) of Chateau
Communities, Inc. filed with the Commission on December 18, 1998.
***** Filed as Exhibit 21 to the Trust's Annual Report on Form 10-KSB/A for the
year ended December 31, 1998.
14
<PAGE>
b) Reports on Form 8-K
On April 30, 1999, the Trust filed a current report on Form 8-K/A amending the
financial statements contained in the current report on Form 8-K/A filed on
February 12, 1999.
The financial statements filed were as follows:
The Audited Historical Summary of Revenues and Direct Operating Expenses
for Lexington Manufactured Home Community and Suburban Manufactured Home
Community for the year ended December 31, 1997.
The Audited Historical Summary of Revenues and Direct Operating Expenses
for Southern Mobile Home Community for the year ended December 31, 1997.
The pro forma financial statements filed were as follows:
Pro Forma Condensed Statements of Operations of the Trust for the nine
months ended September 30, 1998 and for the year ended December 31, 1997
(Unaudited).
Pro Forma Condensed Balance Sheet of the Trust as of September 30, 1998
(Unaudited).
On May 20, 1999, the Trust filed a Current Report on Form 8-K, dated May 11,
1999, reporting, under Item 2, the acquisition of Southpointe Village located
in Albuquerque, New Mexico.
15
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
N'TANDEM TRUST
By /s/ Gary P. McDaniel
----------------------------------
GARY P. MCDANIEL
Trustee
Date: August 13, 1999
16
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 220,500
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 27,787,400
<DEPRECIATION> (1,393,300)
<TOTAL-ASSETS> 32,817,300
<CURRENT-LIABILITIES> 0
<BONDS> 27,180,200
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 32,817,300
<SALES> 0
<TOTAL-REVENUES> 1,654,100
<CGS> 0
<TOTAL-COSTS> 822,800
<OTHER-EXPENSES> 530,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 692,600
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (392,000)
<EPS-BASIC> (4.26)
<EPS-DILUTED> (4.26)
</TABLE>
