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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-21670
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CARDINAL REALTY SERVICES, INC.
(Exact name of registrant as specified in its charter)
OHIO 31-4427382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6954 AMERICANA PARKWAY
REYNOLDSBURG, OHIO 43068
(Address of principal executive offices including zip code)
(614) 759-1566
(Registrant's telephone number, including area code)
------------------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: SHARES OF COMMON
STOCK, NO PAR VALUE
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 8-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]
As of March 28, 1997 the aggregate market value of voting stock held by
non-affiliates (based on total shares outstanding reduced by the number of
shares held by directors, officers, and other affiliates) of the Registrant was
$91,050,152 based on the closing price reported on the National Association of
Securities Dealers Automated Quotation National Market System.
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES X NO
As of March 28, 1997 there were 4,445,531 shares of Common Stock outstanding.
The following document is incorporated herein by reference: None
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<PAGE>
2
CARDINAL REALTY SERVICES, INC.
FORM 10-K ANNUAL REPORT
FISCAL YEAR ENDED DECEMBER 31, 1996
PART I: PAGE:
ITEM 1 BUSINESS...............................................................3
ITEM 2 PROPERTIES............................................................16
ITEM 3 LEGAL PROCEEDINGS.................................................... 17
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................. 17
PART II:
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.................................... 18
ITEM 6 SELECTED FINANCIAL DATA............................................. 19
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.......................................... 21
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................... 32
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE........................................... 32
PART III:
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................... 32
ITEM 11 EXECUTIVE COMPENSATION............................................... 37
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....... 54
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................... 57
PART IV:
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K...... 57
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES..............................F-1
2
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3
PART I
This report contains forward-looking statements. The forward looking
statements include, without limitation, the stability of controlled Management
Services Fee revenues (page 6); potential increases in Ancillary Services Fee
revenues from apartment residents (page 8); future appreciation in real property
market value from investments and improvements (page 15); competitive advantages
based upon experience and quality of service (page 15); business strategies
(page 16); and increases in distributable cash flow available to the Company
(page 27). All of the forwarding looking statements contained in this report
represent management's good faith projections of future results and are based
upon existing market, financial and economic conditions known to management.
Future changes or developments in national, regional and local economic and
market conditions, especially increased competition at any of these levels
within the multi-family residential property industry; changing demographics in
the specific locations in which apartment communities owned or managed by the
Company are located; the discontinuance of the identifiable trend towards
consolidation within the multi-family residential property industry, generally;
increases in interest rates or increasing inflation all may operate to render
the forward looking statements contained in this report inaccurate. There can be
no assurance that any of the forward looking statements will prove to be
correct. Actual results may differ and such differences may be material.
ITEM 1. BUSINESS
--------
THE COMPANY
Cardinal Realty Services, Inc. (the "Company"), an Ohio corporation,
invests in, and holds direct and indirect ownership interests in, multi-family
real estate. Its wholly owned subsidiary, Lexford Properties, Inc. ("Lexford"),
a Texas corporation, provides property management and related services to owners
of multi-family real estate. According to 1997 rankings by the National Multi
Housing Council, the Company is the nation's 19th largest owner of multi-family
properties and Lexford is the 9th largest manager of multi-family properties.
As of December 31, 1996, the Company had an ownership interest in 522
apartment communities (consisting of an aggregate of 34,363 apartment units) in
14 states. As of the same date, Lexford managed 609 apartment communities
(consisting of an aggregate of 55,397 apartment units) in 22 states. Lexford's
management portfolio included 519 apartment communities (34,209 units) in which
the Company has an ownership interest (the "Properties" or "Portfolio") and 90
apartment communities (21,188 units) managed for third party owners.
The majority of the Portfolio was constructed during the 1980s and is
comprised entirely of buildings of modular construction. On December 31, 1996,
the average economic occupancy of the Portfolio was 92.5% and the average rent
collected per unit was $396. The Portfolio is mostly located in suburban,
secondary and tertiary markets in the eastern United States.
The Company's headquarters is located in suburban Columbus, Ohio at 6954
Americana Parkway, Reynoldsburg, Ohio 43068. The Company's telephone number is
(614) 759 - 1566. Lexford's headquarters is in suburban Dallas, Texas at 8615
Freeport Parkway, Suite 200, Irving, Texas 75063. Lexford also maintains
regional operations offices in: Columbus, Ohio; Orlando, Florida; Seattle,
Washington; and Houston and San Antonio, Texas. On December 31, 1996, the
Company employed 167 employees at its corporate headquarters and in the regional
office, an additional 61 employees who work at Lexford headquarters and in its
regional offices, and 1,665 employees at the Properties.
The Company's common stock, without par value ("Common Stock"), is traded
on the Nasdaq National Market tier of the Nasdaq Stock Market under the
symbol "CRSI." (SEE ITEM 5 - "MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS").
3
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4
The Company is successor by name only to Cardinal Industries, Inc. ("CII")
(SEE THE COMPANY'S FORM 10 REGISTRATION STATEMENT). The Company registered its
Common Stock with the Securities and Exchange Commission in June 1993. Prior to
March 1995, the Company's Common Stock was traded on the OTC Bulletin Board
(trading symbol "CNRV").
1996 DEVELOPMENTS
In January 1996, the Company implemented a corporate restructuring to
segregate its services and ownership businesses, creating a Management Services
division and an Investment Management division, respectively. The Investment
Management division was formerly referred to as Advisory Services. The corporate
restructuring allowed the Management Services division to pursue its growth
strategy of improving the performance of the apartment communities under
management and entering the third-party fee based property management business,
and allowed the Investment Management division to focus on its growth strategy
of improving return on the Company's investments in real estate. Related to the
corporate restructuring, the Company made a number of changes in senior-level
management.
Effective August 1, 1996, the Company significantly enhanced its Management
Services business when it acquired Lexford by merger (the "Lexford Merger") of a
wholly owned subsidiary of the Company with and into Lexford. Under the terms of
the Lexford Merger, the Company succeeded to the ownership of all the issued and
outstanding stock of Lexford and the shareholders of Lexford received 700,000
shares of restricted, newly issued Common Stock. For purposes of the Lexford
Merger, the Common Stock was valued at $20 per share. Approximately $9.0
million, or 450,000 shares, of the purchase price is subject to forfeiture in
whole or in part in the event Lexford does not achieve certain profitability
criteria within the three full fiscal years ending December 31, 1999. The
Lexford shareholders received 250,000 shares of Common Stock free of
contingencies in the Lexford Merger.
Lexford has been engaged in the practice of third-party property management
since commencing business in June 1988. The executives of Lexford have extensive
experience in managing apartment communities for third- party owners - a busines
which the Company had identified as an important part of its growth strategy
prior to the Lexford Merger. At the time of the Lexford Merger, Lexford managed
approximately 22,000 apartment units and enjoyed a reputation for extensive
training programs and the accuracy of its reporting systems. Through the Lexford
Merger, the Company was also able to expand its geographic scope to establish a
national presence, and to add class A and B residential properties to its
management portfolio. The unaffiliated properties managed by Lexford are located
primarily in the western U.S. and include a range of property types (from
affordable to luxury) while the Company's Portfolio is located primarily in the
eastern U.S. and consists entirely of affordable apartment communities of single
story modular construction. Since completing the Lexford Merger, the Company has
consolidated its Management Services division property and financial operations
with those of Lexford, and combined other functions, including payroll, training
and human resources. The Company's property management operations are conducted
under the Lexford name and the Lexford executives (who were among the former
owners of Lexford) direct day-to-day operations of the former Management
Services division.
THE COMPANY'S BUSINESS
The Company is engaged in two core business activities: 1) providing
management and other services to owners of multi-family real estate; and 2)
investing in real estate. The Company's real estate investments include
investments in limited partnerships or other entities that own apartment
communities in which the Company or one of its subsidiaries owns all of the
equity interest (the "Wholly Owned Properties"), and investments in limited
partnerships that own apartment communities in which the Company or one of its
subsidiaries serves as general partner of, and in most cases, also owns some
limited partner interests (the "Syndicated Partnerships").
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5
The unaudited net contribution to profit (revenues less direct expenses)
and Adjusted EBITDA (defined as Recurring Earnings Before Interest, Income
Taxes, Depreciation and Amortization excluding interest on mortgages secured by
the Wholly Owned Properties) by the two core business activities of the Company
for the years ended December 31, 1996 and 1995, are as follows. Financial
information presented includes revenue generated from the Wholly Owned
Properties which is eliminated in the Consolidated Financial Statements, and
does not include allocation of general corporate overhead. The 1995 financial
information is based on a Pro Forma Income Statement since the results of
operations of the Wholly Owned Properties were excluded from the consolidated
income statement during the period the assets were Held for Sale (SEE ITEM 7 --
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS").
Lexford - Management Services - Net Contribution to Profit
1996 1995
--------------- ---------------
Revenues
Controlled Contracts............. $11,916,175 $11,592,409
Third Party Contracts............ 2,135,429 0
Ancillary........................ 617,098 1,036,482
Other............................ 460,639 637,744
--------------- ---------------
15,129,341 13,266,635
--------------- ---------------
Direct Expenses....................... 9,386,591 6,707,291
--------------- ---------------
Net Contribution to Profit............ $5,742,750 $6,559,344
=============== ===============
Adjusted EBITDA....................... $5,742,750 $6,559,344
=============== ===============
The decline in Management Services' Net Contribution to Profit is primarily
due to two factors: 1) a decline in Ancillary Revenues associated with the
Company's restructuring of its parts supply operation (see "Ancillary
Services"), and 2) a decline in Other Income due to the one-time recovery in
1995 of accounts receivable which had previously been written off. The increase
in direct expenses primarily is due to the Lexford Merger.
Investment Management - Net Contribution to Profit
1996 1995
---------------- -----------------
Revenues
Interest Income.......................... $9,298,650 $4,361,497
Fee Based Services
Administrative Fees................ 1,532,447 1,573,694
Loan Fees.......................... 751,994 966,398
Income from Disposal of Non-Core Assets.. 962,761 3,408,379
Other.................................... 52,631 99,827
---------------- -----------------
12,598,483 10,409,795
---------------- -----------------
Direct Expenses............................. 1,958,136 1,960,068
---------------- -----------------
Net Equity in Wholly Owned Properties....... (455,234) (2,745,738)
---------------- -----------------
Net Contribution to Profit.................. $10,185,113 $5,703,989
================ =================
Adjusted EBITDA............................. $11,278,914 $6,052,544
================ =================
5
<PAGE>
6
The increase in the Investment Management contribution was derived
principally from the improved financial operating performances of the Syndicated
Partnerships (reflected in Interest Income) and the Wholly Owned Properties.
CONSOLIDATED SUMMARY
---------------------------
1996 1995
------------- -------------
Net Contribution to Profit:
Lexford - Management Services................. $5,742,750 $6,559,344
Investment Management......................... 10,185,113 5,703,989
------------- -------------
15,927,863 12,263,333
------------- -------------
Other Expenses:
Administration................................ 5,030,967 4,399,349
Restructure Costs............................. 242,899 1,537,073
Interest - Corporate.......................... 1,098,333 1,522,087
Depreciation and Amortization................. 769,434 537,849
------------- -------------
7,141,633 7,996,358
------------- -------------
Income before Income Taxes & Extraordinary Items.. $8,786,230 $4,266,975
============= =============
Adjusted EBITDA by
Business Activity
----------------------------
1996 1995
-------------- -------------
Adjusted EBITDA - Net Contribution:
Lexford - Management Services............ $5,742,750 $6,559,344
Investment Management ................... 11,278,914 6,052,544
Corporate Administration................. (5,030,967) (4,399,349)
-------------- -------------
Adjusted EBITDA.......................... $11,990,697 $8,212,539
============== =============
Lexford - Management Services
The Company's management services business, conducted by Lexford, provides
traditional property management services to owners of multi-family real estate.
Lexford earns fees for these services, which services include: day-to-day
management and maintenance of apartment communities; attracting and retaining
qualified residents; collecting rents and other receivables from residents;
providing cash management services for rental revenues, security deposits,
taxes, insurance and deferred maintenance escrows; and compiling and reporting
information to property owners. Lexford's client base includes 519 of the 522
apartment communities (34,209 units) in which the Company has an ownership
interest. Management contracts for the Properties are almost all long-term and
include incentive fees for rent collection. The revenue stream from managing the
Properties is considered to be stable and recurring. Lexford clients also
include unrelated third-party owners. The terms of management contracts for
third-party owners vary considerably according to the objectives of the owners,
and are typically subject to termination on 30-days' notice. Due to the
combination of controlled and third-party management contracts, the Company
expects that the number of units managed will fluctuate somewhat over time.
Lexford intends to aggressively seek to expand its third-party business, which
it may do without jeopardizing its base of long-term management contracts for
the Properties.
6
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7
Lexford's management philosophy centers on maximizing the financial
performance of the properties it manages for owners. Lexford believes that
managers must have detailed knowledge of their properties to maximize
performance. Consequently, Lexford's property management operations are
decentralized, with on-site managers responsible for day-to-day leasing and
maintenance issues, and multi-property managers frequently visiting the
properties to manage personnel and review the property's appearance and
financial performance. To maintain control and realize efficiencies, financial
operations, including payroll and cash management, are centralized in Columbus,
Ohio and Dallas, Texas. To help ensure compliance with legal and customer
service standards, Lexford has developed a system of policies and procedures for
on-site employees, who receive continuous training from Lexford's Training
Department. Lexford encourages its employees to pursue continuing education
opportunities, and a number of managers have earned the designation of Certified
Property Manager. Lexford holds the designation of Accredited Management
Organization from the Institute of Real Estate Management.
Location of Properties
The table below indicates the geographic locations of apartment communities
managed by Lexford as of December 31, 1996.
No. of No. of
State Properties Units
---------------- --------------- ----------------
Alabama 2 159
Arkansas 1 232
Arizona 3 1,015
California 9 2,764
Colorado 5 2,255
Florida 142 9,915
Georgia 74 5,059
Illinois 4 289
Indiana 71 4,817
Kentucky 35 2,132
Maryland 6 465
Michigan 25 1,739
Ohio 140 8,524
Oklahoma 1 138
Oregon 2 800
Pennsylvania 9 582
South Carolina 3 269
Tennessee 7 465
Texas 46 10,309
Virginia 2 732
Washington 15 2,259
West Virginia 7 478
--------------- ----------------
609 55,397
=============== ================
7
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8
Operating Performance
In the aggregate, Net Operating Income ("NOI") of the Portfolio increased
approximately 7.4% over 1995, (7.9% on a same unit basis) due primarily to an
approximate 4.5% increase in rental revenue (5.0% on a same unit basis).
Management also believes that the results were favorably influenced by increased
emphasis on accountability at the property management level, an incentive
compensation plan for on-site managers and leadership from the Lexford staff.
Ancillary Services
Lexford also provides ancillary services to real estate owners, including
replacement parts, laundry services and maintenance supplies. In prior years,
the Company maintained a warehouse with an inventory of parts and supplies,
which were shipped to the apartment communities upon the receipt of orders. In
November 1996, the Company disposed of such inventory and Lexford established a
"Preferred Vendor" program that features discounts with major vendors (including
General Electric, Whirlpool, Glidden, Sherman Williams, Sears, Roebuck & Co.,
and Maintenance Warehouse/Home Depot). The program allows Lexford clients to
benefit from volume purchasing by paying discounted prices for high-quality
goods. By outsourcing the replacement parts and supplies, Lexford eliminated its
inventory and reduced overhead significantly. As of December 31, 1996, more than
95% of the Portfolio were participating in the Preferred Vendor program. The
program was made available to third- party clients effective December 1, 1996.
Lexford receives a rebate for every purchase made through the Preferred Vendor
program, as well as a rebate from residents' use of laundry equipment. Lexford
expects that it can improve third party client participation in the "Preferred
Vendor" program in 1997.
Lexford also provides services to apartment residents, including renters
insurance and leased apartment furnishings. As of December 31, 1995, 20% of
residents at apartment communities in which the Company has an ownership
interest selected renters insurance offered through an insurance agency
affiliated with Lexford. As of December 31, 1996, the percentage increased to
27%. Lexford plans to make the renters insurance program available to residents
of third-party clients in the second quarter of 1997. Lexford receives
compensation for services rendered and a reimbursement of expenses. Lexford also
offers leased apartment furnishings through agreements with national companies
such as Aaron Rents, Inc. and Globe Furniture Rentals, and receives a rebate on
furniture packages leased by residents. Although there can be no assurance, the
Company believes that Lexford can continue to increase the number of residents
who select renters insurance and leased apartment furnishings offered through
Lexford or its affiliates.
On a very limited basis, Lexford offers telecommunications and cable
television services to residents. The Company expects that Lexford will expand
those services in 1997.
Investment Management
The Company's equity investments in real estate are comprised of the Wholly
Owned Properties, the Syndicated Partnerships and a small number of non-core
assets. The Portfolio Managers and Assets Managers employed in the Company's
Investment Management division are charged with maximizing the value of the
Company's real estate assets (the Wholly Owned Properties and Syndicated
Partnerships are collectively referred to herein as the "Properties") and its
return on real estate investments. The Company maintains at least a 1%
partnership interest in each of the Syndicated Partnerships, and typically a 9%
to 10% managing general partner interest. In addition to its equity investments
(i.e., partnership interests) in the Syndicated Partnerships, the Company holds
interest earning receivables from a majority of the Syndicated Partnerships. In
most instances, the Company's interest earning receivable from a Syndicated
Partnership is the Company's more meaningful, income producing asset. Positive
cash flow generated from the operations of Syndicated Partnerships is generally
available to pay accrued interest on receivables owing to the Company. Interest
income on receivables from Syndicated Partnerships is a major source of Company
revenue. (SEE NOTE 1 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
The Company's Investment Management division administers the Company's
duties and functions as general partner of the Syndicated Partnerships by
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providing asset management services to the Syndicated Partnerships. In addition,
the Investment Management division performs the following services for the
accounts of the co-owners (limited partners) of the Syndicated Partnerships:
informational and financial reporting services, including tax return preparation
and provision of tax return information; and capital and financial planning,
including determination of reserves, funding of capital requirements and
administration of capital distributions to partners. The Investment Management
division earns fees for providing these services, as well as for its efforts in
successful mortgage loan refinancing transactions.
Wholly Owned Properties
As of December 31, 1996, the Company's portfolio included 113 Wholly Owned
Properties (8,504 units). The Wholly Owned Properties are owned by (i) limited
partnerships in which the Company or one of its wholly owned subsidiaries owns
both the general partner interest and limited partner interests (ii) limited
liability companies in which the Company or one of its wholly owned subsidiaries
own all the member interests, or (iii) wholly owned subsidiaries of the Company.
Revenues from the Wholly Owned Properties, primarily generated from rent
payments collected from residents, increased approximately $1.9 million or 4.8%
in 1996.
The following table summarizes the unaudited operating results of the
Wholly Owned Properties by quarter in 1996 and for the years ended December 31,
1996 and 1995:
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Wholly Owned Properties (cont'd)
<TABLE>
<CAPTION>
Quarter Ending Year Year
------------------------------------------------------------ Ending Ending
March 31, June 30, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1996 1996 1996 1996 1996 1995
------------- ------------- ---------------- --------------- ------------ --------------
Statistical information
- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Properties at end of period 114 114 114 113 113 116
Average Units 8,777 8,587 8,574 8,568 8,626 8,777
Ave Economic Occupancy 89.7% 92.5% 91.0% 91.1% 91.1% 91.8%
Ave Rent Collected/Unit/Month $378 $385 $389 $396 $387 $366
Property - Operating Expenses/Unit/Month $433 $435 $446 $462 $1,776 $1,700
Capital & Maintenance/Unit/Month $82 $118 $94 $107 $401 $451
Real Estate Taxes/Unit/Month $96 $95 $97 $92 $380 $358
Property - Operating Expense Ratio 37.3% 36.4% 37.1% 37.6% 37.1% 37.9%
Financial Information (000's) omitted
- -------------------------------------
Revenues
Rental Income $ 9,954 $ 9,926 $ 10,004 $ 10,172 $ 40,055 $ 38,514
Other Property Income 236 328 307 350 1,221 862
------------- ------------- ---------------- --------------- ------------ --------------
Total Revenues 10,190 10,254 10,311 10,522 41,276 39,376
------------- ------------- ---------------- --------------- ------------ --------------
Expenses
Property Operating 3,802 3,736 3,824 3,956 15,319 14,921
Real Estate Taxes 842 814 833 789 3,277 3,145
------------- ------------- ---------------- --------------- ------------ --------------
Operating Expenses 4,644 4,550 4,657 4,745 18,596 18,066
------------- ------------- ---------------- --------------- ------------ --------------
Net Operating Income 5,546 5,704 5,654 5,777 22,680 21,310
------------- ------------- ---------------- --------------- ------------ --------------
Interest - Mortgage 3,564 3,637 3,500 3,431 14,132 13,549
Interest - Corporate Advances 100 100 100 101 401 262
Major Maintenance (1) 654 842 668 608 2,772 3,960
Non Operating 311 130 417 227 1,085 1,561
Depreciation 1,200 1,183 1,242 1,119 4,745 4,723
------------- ------------- ---------------- --------------- ------------ --------------
Non Operating 5,829 5,892 5,927 5,486 23,135 24,055
------------- ------------- ---------------- --------------- ------------ --------------
Inc./(Loss) bef. extraordinary items (283) (188) (273) 291 (455) (2,745)
------------- ------------- ---------------- --------------- ------------ --------------
Extraordinary gain/(Loss) (2) 0 0 0 (1,614) (1,614) 804
------------- ------------- ---------------- --------------- ------------ --------------
Net Income/(Loss) $ (283) $ (188) $ (273) $ (1,323) $ (2,069) $ (1,941)
============= ============= ================ =============== ============ ==============
Capital Expenditures (1) $ 62 $ 174 $ 135 $ 330 $ 701 $ 0
============= ============= ================ =============== ============ ==============
<FN>
Note: See Exhibit 99 for Individual Property Financial Information by Wholly
Owned Property for each Wholly Owned Property as of December 31, 1996.
(1) The Company initiated a limited capitalization program effective January 1,
1996 which requires capitalization of major exterior building improvements.
In prior years all items were expensed.
(2) See Note 6 to Notes to the Consolidated Financial Statements
</FN>
</TABLE>
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11
Same Units Comparison
The Company uses a "same unit" comparison as an indicator of the
performance of the 108 Wholly Owned Properties owned for the entire year in 1996
and 1995. Total Revenues increased 5.7%, while expenses increased 3.6% resulting
in a same unit net operating income increase of 7.5%. The average rent collected
was $391 in 1996 versus $373 for 1995 with economic occupancy at 92.5% in 1996
versus 91.8% in 1995.
Deconsolidated Balance Sheet
Effective January 1, 1996, the Company's Wholly Owned Properties were
reclassified from "Real Estate Assets Held For Sale" to operating assets on the
Company's Consolidated Balance Sheet and their results of operations were
reflected in the Company's Consolidated Income and Cash Flow Statements (SEE
NOTE 2 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS). The following unaudited
table is a pro forma presentation of the Company's Consolidated Balance Sheet as
of December 31, 1996 without the consolidation of the Wholly Owned Properties,
which highlights the impact of consolidating the Wholly Owned Properties on the
Company's Balance Sheet.
<TABLE>
<CAPTION>
Pro Forma
Deconsolidated Balance Sheet
December 31, 1996
(000s omitted)
Assets Liabilities and Equity
- -------------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
Cash................................ $ 271 Term Debt and Other........ $ 15,263
Accounts Receivable................. 5,348 Accounts Payable........... 400
Interests in and Receivables from Accrued Expenses and Taxes. 8,256
Syndicated Partnerships............. 54,610
Equity in Wholly Owned Properties... 17,073 Other Liabilities.......... 5,369
Furniture, Fixtures - Net........... 1,168
Funds Held in Escrow................ 7,031
Prepaids and Other.................. 6,296 Shareholders' Equity....... 62,509
------------- --------------
$ 91,797 $ 91,797
============= ==============
</TABLE>
Funds From Operations
Funds From Operations ("FFO") is a financial statistic primarily used
by real estate investment trusts ("REITs") to report performance of owned real
estate. FFO represents net income excluding depreciation, extraordinary gains or
losses and funding from escrows for deferred maintenance. The following table
sets forth unaudited condensed, combined FFO of the Wholly Owned Properties for
the years ended December 31, 1996, 1995, and 1994.
<TABLE>
<CAPTION>
1996 1995 1994
-------------- --------------- -------------
<S> <C> <C> <C>
Income, excluding Depreciation and Extraordinary Items $ 4,290 $ 1,978 $ 2,676
Maintenance funded from Deferred Escrows.................. 523 1,714 334
-------------- --------------- -------------
Funds from Operations..................................... $ 4,813 $ 3,692 $ 3,010
============== =============== =============
<FN>
Note: 1995 and 1994 FFO has been restated for interest expense capitalized
during the period the Wholly Owned Properties were classified as Held
for Sale.
</FN>
</TABLE>
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12
Syndicated Partnerships
The Company holds receivables from substantially all of the 409 Syndicated
Partnerships, in which the Company had an ownership interest on December 31,
1996, primarily in the form of second mortgages and general partner advances to
the Syndicated Partnerships. Interest payments on these receivables generate a
majority of the interest income recognized by the Company. On December 31, 1996,
the contractual value of the Company's interest in second mortgages, advances
and other receivables, including related accrued interest, was $238.9 million
(SEE NOTE 3 TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS). Over the past four
years, cash flow from the Syndicated Partnerships has improved, largely as a
result of refinanced first mortgage debt, investment in property improvements
and increased NOI. The improved cash flow allows for increased interest and, in
certain instances, principal reduction payments from the Syndicated Partnerships
to the Company.
The following table summarizes the overall unaudited operating results of
the Syndicated Partnerships by quarter in 1996 and for the years ended December
31, 1996 and 1995. The financial information presented is based upon accrual
accounting at the partnership level. Certain transactions between the Company
and the Syndicated Partnerships are recorded at amounts at the partnership level
that will not necessarily correspond to amounts recorded at the Company level as
Interest Income due to "Fresh Start" accounting (SEE NOTE 1 TO NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
Quarter Ending Year Year
-------------------------------------------------------- Ending Ending
March 31, June 30, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1996 1996 1996 1996 1996 1995
------------- ------------- -------------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Statistical information
- -----------------------
Properties at end of period................. 414 414 414 409 409 415
Average Units............................... 26,197 26,197 26,197 26,084 26,162 26,374
Ave Economic Occupancy...................... 91.2% 92.4% 92.7% 92.9% 92.4% 91.9%
Average Rent Collected/Unit/Month .......... $377 $385 $390 $395 $387 $369
Property - Operating Expenses/Unit/Month.... $453 $439 $455 $464 $1,811 $1,767
Capital & Maintenance/Unit/Month............ $103 $104 $126 $187 $519 $586
Real Estate Taxes/Unit/Month................ $91 $89 $88 $90 $358 $351
Property - Operating Expense Ratio.......... 39.1% 36.9% 37.7% 37.9% 37.9% 39.1%
</TABLE>
12
<PAGE>
13
Syndicated Partnerships (cont'd)
<TABLE>
<CAPTION>
Quarter Ending Year Year
------------------------------------------------------------ Ending Ending
March 31, June 30, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1996 1996 1996 1996 1996 1995
------------- ------------- ---------------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Rental Income............................. $ 29,641 $ 30,256 $ 30,693 $ 31,001 $ 121,591 $ 116,193
Other Property Income..................... 688 946 988 953 3,574 3,151
---------------------------------------------------------------------------------------
Total Revenues............................ 30,329 31,202 31,681 31,954 125,165 119,344
---------------------------------------------------------------------------------------
Expenses
Property Operating........................ 11,857 11,502 11,930 12,103 47,391 46,601
Real Estate Taxes......................... 2,378 2,321 2,317 2,348 9,364 9,247
---------------------------------------------------------------------------------------
Operating Expenses.................... 14,235 13,823 14,247 14,451 56,755 55,848
---------------------------------------------------------------------------------------
Net Operating Income.................. 16,094 17,379 17,434 17,503 68,410 63,496
---------------------------------------------------------------------------------------
Interest - Mortgage....................... 9,920 10,007 9,940 9,855 39,723 40,452
Interest - General Partner................ 3,035 3,090 3,078 3,337 12,539 12,203
Major Maintenance (1)..................... 2,484 2,129 2,618 3,120 10,350 15,462
Non Operating............................. 533 1,120 161 231 2,045 2,880
Depreciation.............................. 4,532 4,543 4,588 4,810 18,474 18,497
---------------------------------------------------------------------------------------
Non Operating......................... 20,504 20,889 20,385 21,353 83,131 89,494
---------------------------------------------------------------------------------------
Inc./(Loss) bef. extraordinary items........ (4,410) (3,510) (2,951) (3,850) (14,721) (25,998)
---------------------------------------------------------------------------------------
Extraordinary gain/(Loss)................... 0 0 1,247 (588) 659 33,429
---------------------------------------------------------------------------------------
Net Income/(Loss)........................... $ (4,410) $ (3,510) $ (1,704) $ (4,438) $ (14,062) $ 7,431
=======================================================================================
Capital Expenditures (1).................... $ 215 $ 588 $ 674 $ 1,757 $ 3,234 $ 0
=======================================================================================
<FN>
(1) The Syndicated Partnerships initiated a limited capitalization program
effective January 1, 1996 which requires capitalization of major
exterior building improvements. In prior years all items were
expensed.
</FN>
</TABLE>
Note: See Exhibit 99 for Syndicated Partnership performance, by property, for
all Properties in which the Company had an ownership interest as of December 31,
1996.
The Company's interest income is principally derived from the Syndicated
Partnerships. The following unaudited table reflects interest income from
Syndicated Partnerships recognized over the prior three years:
000s omitted
----------------------------------------------------
Interest Income 1996 1995 1994
----------------- --------------- ----------------
Recurring $ 6,960 $ 4,099 $ 2,633
Refinancing 1,937 0 0
----------------- --------------- ----------------
Total $ 8,897 $ 4,099 $ 2,633
================= =============== ================
13
<PAGE>
14
The $2.9 million increase in recurring interest income was generated by
the aggregate $4.9 million increase in net operating income and the
approximately $700,000 decrease in interest expense at the Syndicated
Partnerships. This $5.6 million increase in cash flow at the Syndicated
Partnership level was partially offset by (i) an approximately $852,000 increase
in distributions to outside limited partners in 1996 as compared to 1995 (ii) an
approximately $683,000 increase in principal payments on cash flow secondary
mortgages ("B Notes"). The $1.1 million balance of the partnership cash flow
increase did not flow to the Company as interest income for several reasons,
including: (1) many partnerships which experienced cash flow increases in 1996
were in negative cash flow situations in 1995, and the 1996 increases therefore
do not equate to distributable positive cash flow in whole or in part; and (2)
in connection with refinancings and major maintenance, partnerships may require
temporary advances (or holdbacks of cash distributions) which may not be repaid
as of the end of a fiscal year, thereby diminishing or delaying interest income
to the Company. (SEE "CAPITALIZATION OF PROPERTIES").
Capitalization of Properties
The Company believes that obtaining and maintaining the best available
financing for the Properties is vital to maximizing their operating performance
and managing refinancing risk. Over the past four years, the Company has
successfully negotiated long-term, non-recourse, fixed interest rate financing
for approximately 92% of the Properties. The Company has also negotiated and
established escrows for property improvements, real property tax liabilities and
working capital as provisions of refinancing.
The Company applies a two-fold first mortgage loan refinancing strategy.
First, securing serviceable long-term, fixed rate financing for the Properties'
first mortgage debt improves the chances of relatively stable cash flow with
sufficient coverage to properly maintain the Properties and thereby enhance
long-term Property performance. Second, to the extent NOIs increase, the Company
benefits from increased cash flow from operation of the Wholly Owned Properties
and, generally, from increased interest income from the Syndicated Partnerships.
The Company earns mortgage restructuring fees for successful refinancing efforts
on behalf of the Syndicated Partnerships.
In 1996, the Company refinanced (i) 98 Property mortgages (with a total
principal amount of $115.4 million) through an affiliate of PaineWebber
Incorporated (ii) 21 Property mortgages (with a total principal amount of $26.1
million) through First Union Capital Markets Group, and (iii) five Property
mortgages (with a total principal amount of $5.4 million) through Donaldson,
Lufkin & Jenrette Securities Corporation. These refinancings reduced annual
Property debt service requirements, including B Note cash flow payments, by $1.3
million and funded escrows in the aggregate amount of $4.2 million.
The refinancing transactions mentioned above eliminated B Notes with
principal balances amounting to $1.2 million on six Wholly Owned Properties and
$3.9 million on 21 Syndicated Partnerships. During 1996, excess cash flow at the
Property level applied to these eliminated B Notes amounted to approximately
$98,000 and $338,000 on the Wholly Owned Properties and the Syndicated
Partnerships, respectively. Approximately $255,000 of principal payments were
made on B Notes of Wholly Owned Properties which remained outstanding at
December 31, 1996. Approximately $1.1 million of principal payments were made on
B Notes of Syndicated Partnerships which remained outstanding at December 31,
1996.
As of December 31, 1996, more than 83% of the mortgage loans on the
Properties had scheduled maturities beyond December 31, 1999. This represents
approximately 82% of the mortgage loans to the Syndicated Partnerships and
approximately 89% of the mortgage loans to the Wholly Owned Properties.
14
<PAGE>
15
Non-Core Assets
The Company also owns or holds an ownership interest in a small number of
properties and parcels of land (the "Non-Core Assets"). The Company intends to
dispose of these assets on the best terms it can obtain. In 1996, the Company
recognized approximately $963,000 from the sale of Non-Core Assets. The Company
does not expect the sale of Non-Core Assets to be a continuing source of
revenue, as a minimal number of Non-Core Assets remain to be sold.
COMPETITION
Lexford competes nationally for management contracts, and locally for
apartment community residents. The Company believes that the property management
business continues to follow the consolidation trend of the real estate industry
in general.
Competition for Apartment Residents
Competition for residents at apartment communities is subject to the
condition and pricing of individual units, local market conditions, the location
of the apartment community, the apartment community owner's capitalization and
other factors. Lexford's portfolio of managed properties is spread over a large
geographic area and, therefore, not subject to any one set of local economic
circumstances. Additionally, the Company believes that Lexford benefits from
managing a diverse portfolio that includes luxury apartments in major markets as
well as affordable apartments in secondary and tertiary markets.
To remain competitive and provide opportunities for increases in rental
rates, the Company continues to invest in improvements to the Properties. The
following table displays Property improvement expenditures for the years 1994
through 1996 for both Wholly Owned Properties and Syndicated Partnerships. The
improvements were funded primarily by escrows established under the terms of
agreements for refinanced mortgage loans entered into since January 1, 1994. The
Company expects that these investments in the Properties will increase their
value. The Company will continue to address capital improvements and routine
maintenance requirements in future years.
Major Maintenance by Year (000s omitted)
-------------------------------------------------------
1996 1995 1994
---------------- ---------------- -----------------
Major Maintenance...... $13,122 $19,422 $13,514
Capital Improvements... 3,935 N/A N/A
---------------- ---------------- -----------------
$17,057 $19,422 $13,514
================ ================ =================
Major Maintenance expenditures are typically concentrated in years
immediately following mortgage refinancings due to requirements of mortgage
lenders. The 1996 activity declined due to a "trailing off" of expenditures
related to properties refinanced in 1994 and 1995. Reserves for major
maintenance established in the 1996 refinancing program will be expended
primarily in 1997. These expenditures, combined with termite repairs funded from
the proceeds of the termite litigation, are expected to reverse, at least for
1997, the downward expenditure trend experienced in 1996.
Competition for Management Contracts
Lexford competes with numerous other fee based property managers for
third-party management contracts. Competition in this arena is keen, as well as
highly fragmented, according to geographic region and property type. The Company
is Lexford's largest client, by virtue of the number of apartment communities
15
<PAGE>
16
controlled by the Company. These contracts provide a base that will remain
stable as Lexford seeks to acquire additional management contracts from
third-party owners.
Although there can be no assurance, the Company believes that Lexford's
experience and track record with respect to financial controls, quality service,
lower operating costs and emphasis on employee training are competitive
advantages. The Company also believes that its ability to co-invest with owners
or developers of multi-family real estate may provide opportunities to control
additional apartment communities.
CORPORATE STRATEGY
The Company's overall business objective is to maximize the total return to
shareholders and investors through increases in the value of the Company's
Properties, cash flows and earnings. The Company believes that this objective is
best accomplished by providing high-quality services to owners of real estate
and to residents of apartment communities. The Company currently offers property
management, ancillary and investment management services; it intends to improve
margins from, and participation in, these services as well as to explore
opportunities to offer additional services.
Lexford will strive to expand its business by soliciting additional
fee-based contracts for providing management and other services to multi-family
communities. To that end, Lexford plans to implement an advertising and
promotional campaign to increase its visibility, and to devote additional
resources to improve and expand its marketing efforts. Lexford's growth strategy
will be primarily targeted at regions in which it has properties under
management, so that economies of scale may be realized. Lexford will seek to
expand into regions where large congregations of apartments are located, and
where it believes there are opportunities for future growth.
With respect to apartment communities in which it has an ownership
interest, the Company intends to continue its conservative financial strategies,
including funding reserves of at least $300 per unit annually for capital
improvements, and seeking opportunities for refinancing when improved terms can
be achieved. The Company also intends to carefully evaluate return on investment
from the Properties with the goal of disposing of under-performing or
non-performing Properties, and replacing them with assets from which it can
achieve higher investment returns.
The Company also plans to invest in technology to enhance the capabilities
of both Lexford and the Investment Management division. In 1996, the Company
invested in new hardware and software at its corporate headquarters to improve
processing and reporting capabilities. The Company plans to continue this
investment by migrating computer technology to the Properties through the second
quarter of 1998 (SEE ITEM 7: "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" -- LIQUIDITY AND CAPITAL RESOURCES).
ITEM 2. PROPERTIES
----------
The Company maintains ownership interests in the Wholly Owned Properties
and the Syndicated Partnerships (SEE ITEM 1. "BUSINESS" - INVESTMENT
MANAGEMENT).
The Company's corporate headquarters are located in a 52,168 square-foot,
single-story office building at 6954 Americana Parkway, in suburban Columbus,
Ohio. The Company entered into a lease for the building with Americana
Investment Company (an entity affiliated with an outside director of the Company
- - SEE PART II ITEM 13: "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS") in late
1992. Management believes that the lease terms are competitive with commercial
lease rates in the suburban Columbus market.
Lexford's corporate headquarters are located in a 15,185 square-foot suite
of offices located in an office park at 8615 Freeport Parkway in suburban
16
<PAGE>
17
Dallas, Texas. Lexford entered into a lease for the office suite in 1993. In
addition to the corporate headquarters, Lexford leases regional operations
offices in Orlando, Florida; Seattle, Washington; and in Houston and San
Antonio, Texas.
ITEM 3. LEGAL PROCEEDINGS
-----------------
The Company reached a settlement in THE ESTATE OF HAROLD MURPHY, ET AL V.
CARDINAL REALTY SERVICES, INC. ET AL., pending in the United States District
Court for the Southern District of Indiana. The settlement resulted in the
judgment entered against the Company being vacated, the withdrawal of the
pending action and a release of all claims against the Company in consideration
of the Company's payment of $370,000 to the Plaintiffs. Pursuant to the terms of
the proposed settlement, there was no admission of liability by the Company. The
$370,000 settlement amount was paid in the second quarter of 1996.
The Company reached a settlement in CARDINAL INDUSTRIES, INC. V. NATIONAL
UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA ET AL., pending in the United
States District Court for the Southern District of Ohio, Eastern Division. The
settlement provided for a gross payment of $7.5 million to the Company, for the
benefit of the affected Properties, and certain other parties to be paid in two
installments. The first installment of $4.0 million was received in October
1996, with the balance received in November 1996. A large portion of the
settlement payments was paid to the Company's attorneys in the case (who handled
the case on a contingency fee basis). The settlement provides for the release of
all claims between the Company and National Union Fire Insurance Company.
Pursuant to the terms of the settlement, there was no admission of liability by
either party. The settlement funds are being held by the Company, pending the
finalization of an allocation of proceeds to the affected Properties.
On March 7, 1996, the Company filed suit against Hartford Fire Insurance
Company ("Hartford") in the United States District Court for the Middle District
of Florida, in a case captioned CARDINAL REALTY SERVICES, INC. V. HARTFORD FIRE
INSURANCE CO., Case No. 96-458-CIV T-24A. In that case, the Company seeks to
recover from Hartford, pursuant to an excess property insurance policy issued to
the Company by Hartford, for termite-related losses at approximately 150
Properties in which the Company holds an interest. The termite related losses
are the same as those which formed the object matter of the NATIONAL UNION
litigation. Hartford's insurance policy provides coverage for such losses to the
extent they exceed $25 million. The parties are presently engaged in the
discovery process, and a trial has been scheduled for September 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None
17
<PAGE>
18
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
---------------------------------------------------------------------
Effective March 9, 1995, the Company commenced trading of its Common Stock
on the Nasdaq National Market tier of the Nasdaq Stock Market under the symbol
"CRSI". Prior to this date, the Company's Common Stock traded on the OTC
Bulletin Board as "CNRV". On December 31, 1996, there were approximately 1,431
registered holders of the Company's Common Stock. The following table sets forth
the high and low bid prices of the Common Stock for the periods indicated. These
over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.
1996 1995
----------------------- ---------------------
High Low High Low
---------- ------------ ----------- ---------
First Quarter........... $18.75 $17.50 $13.75 $10.50
Second Quarter.......... 21.75 17.50 18.00 12.75
Third Quarter........... 20.75 18.50 18.50 16.88
Fourth Quarter.......... 21.25 19.38 19.75 16.00
The Company's transfer agent is:
The Huntington National Bank
Trust Department
The Huntington Center
Attention: HC 1112
Columbus, Ohio 43287
The Company has paid no dividends since it became a public reporting
company. Until August 1995, the Company's ability to pay dividends was subject
to a prohibition contained in its financing arrangements with The Huntington
National Bank. The terms of the Company's current credit facility provided by
The Provident Bank no longer restrict dividends. (SEE ITEM 7 - "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS"--"Liquidity and Capital Resources").
In connection with its acquisition of Lexford on August 1, 1996, the
Company issued 700,000 shares of its Common Stock to the former shareholders of
Lexford Properties, Inc. as merger consideration for the cancellation of all the
issued and outstanding shares of capital stock of Lexford Properties, Inc.
450,000 shares of Common Stock issued to the former shareholders of Lexford
Properties, Inc. are subject to forfeiture, in whole or in part, in the event
that Lexford fails to produce net income from property management operations in
sufficient amounts in the 1997, 1998 or 1999 fiscal years.
During 1996, the Company issued 30,000 shares of restricted Common Stock
and 8,750 shares of Common Stock underlying matching stock grants to The
Provident Bank, as trustee (the "Trustee") of the Cardinal Realty Services, Inc.
Executive Deferred Compensation Rabbi Trust for the benefit of certain executive
officers of the Company. (SEE PART III, ITEM 11 "EXECUTIVE COMPENSATION - (F)
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT").
18
<PAGE>
19
All of the shares of Common Stock issued to the former shareholders of
Lexford Properties, Inc., as well as to the trustee, were issued without
registration under the Securities Act of 1933, as amended (the "Act") based upon
the Company's claim (on account of the private and limited nature of the
issuances) to the exemption from registration provided under Section 4(2) of the
Act.
ITEM 6: SELECTED FINANCIAL DATA
-----------------------
The information below should be read in conjunction with the CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO AND ITEM 7 - "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS".
The net income previously reported in the 1994 and 1993 Consolidated
Statements of Income has been adjusted in order to comply with Statement of
Position 90-7 "Reorganization Under the Bankruptcy Code" pertaining to
accounting for deferred income taxes. The restatement involved a change in
accounting for benefits realized from the Company's net operating loss
carryforwards generated prior to its emergence from bankruptcy proceedings
("Pre-Reorganization NOLs"). The financial statements for the years 1994 and
1993 have been adjusted to reflect the benefits from net operating loss
carryforwards as a credit to Additional Paid-in Capital, rather than reflecting
such benefits as a reduction in income tax expense reported for financial
statement purposes. In the future, such benefits will be applied to Additional
Paid-in Capital until the Pre-Reorganization NOLs and other tax benefits have
been fully utilized. The adjustment does not affect the Company's cash flows or
total shareholders' equity (SEE NOTES 1 AND 10 TO NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS).
The unaudited tables set forth below provide a variety of statistical
information about the Company. The Company believes that earnings before
interest, income taxes, depreciation, amortization and extraordinary items
("EBITDA"), EBITDA adjusted for non recurring items ("Recurring EBITDA") and
Recurring EBITDA less interest on mortgage loans secured by the Wholly Owned
Properties ("Adjusted EBITDA") are significant indicators of the strength of its
results. EBITDA is a measure of a company's ability to generate cash to service
its obligations, including debt service obligations, and to finance capital and
other expenditures, including expenditures for acquisitions. EBITDA does not
represent cash flow as defined by generally accepted accounting principles and
does not necessarily represent amounts of cash available to fund the Company's
cash requirements.
19
<PAGE>
20
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1996(1) 1995 1994 1993
---------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Operating Revenue.....................$ 65,300,990 $ 23,676,429 $ 22,600,025 $ 16,064,076
================ ================ ================== ================
Income before Extraordinary Item......$ 5,370,230 $ 4,292,713 $ 3,943,943 $ 229,049
Extraordinary Item....................$ (1,614,356) $ 804,022 $ 3,155,901 $ 1,050,086
---------------- ---------------- ------------------ ----------------
Net Income ...........................$ 3,755,874 $ 5,096,735 $ 7,099,844 $ 1,279,135
================ ================ ================== ================
EBITDA(2).............................$ 29,530,914 $ 24,599,501 $ 24,752,196 $ 19,887,705
================ ================ ================== ================
Adjusted EBITDA(2)....................$ 11,990,697 $ 8,212,539 $ 6,850,341 $ 4,189,385
================ ================ ================== ================
Income Per Common Share:
Income before Extraordinary Item.... $1.37 $1.11 $1.02 $0.06
Extraordinary Item.................. (0.41) 0.21 0.82 0.27
---------------- ---------------- ------------------ ----------------
Net Income.......................... $0.96 $1.32 $1.84 $0.33
================ ================ ================== ================
Balance Sheet Data: (At period end)
Total Assets..........................$ 245,367,779 $ 239,398,900 $ 236,729,107 $ 243,969,706
Long-Term Debt........................ 163,319,285 170,111,869 168,159,368 179,816,494
Shareholders' Equity.................. 62,509,178 51,246,094 43,248,143 31,684,299
<FN>
(1) The Company, during 1995 and prior years, classified the Wholly Owned
Properties as Held for Sale. While the Wholly Owned Properties were
Held for Sale, the results of operations from the Wholly Owned
Properties were credited to the carrying value of the real estate and
no revenues, expenses or depreciation were included in the
consolidated statements of income. Commencing in 1996, the Company
changed the classification of the Wholly Owned Properties and fully
consolidated the operations of the Wholly Owned Properties in the
Company's Statement of Income (SEE NOTES 1 AND 2 TO NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS).
(2) Adjusted EBITDA for the years ended December 31, 1995, 1994 and 1993
includes the funds from operations of the Wholly Owned Properties
during the period Held for Sale (SEE ITEM 1 - "BUSINESS - FUNDS FROM
OPERATIONS").
</FN>
</TABLE>
20
<PAGE>
21
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
INTRODUCTION
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto (SEE ITEM 1 - "BUSINESS" AND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
The financial statements for the years ended December 31, 1995 and 1994 do
not include the results of operations (revenues or expenses) attributable to the
Wholly Owned Properties previously classified as "Real Estate Assets Held for
Sale". Commencing January 1, 1996 the Results of Operations, including
depreciation of the Wholly Owned Properties, have been included in the
Consolidated Statements of Income. Therefore, the Consolidated Statement of
Income for the year ended December 31, 1996 is not comparable to the
Consolidated Statements of Income for the years ended December 31, 1995 and
1994.
In order to facilitate the comparison of operations in 1996 to prior years,
the following "pro forma" Income Statements (the "Pro Forma Income Statements")
has been prepared for the year ended December 31, 1995 as if the Wholly Owned
Properties were previously consolidated. All intercompany transactions have been
eliminated. Depreciation expense for the Wholly Owned Properties has been
estimated for 1995 (SEE NOTES 1 AND 2 TO NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS).
The following discussion of Results of Operations for the year ended
December 31, 1996 as compared to 1995 is based upon the Pro Forma Income
Statement.
<TABLE>
<CAPTION>
Unaudited
Pro Forma
1996 1995
-------------- -------------
Revenues:
<S> <C> <C>
Rental and Other Operating Real Estate Revenues......... $41,276,684 $39,375,333
Fee Based............................................... 13,651,042 11,803,329
Interest, Principally from Syndicated Partnerships...... 8,897,233 4,099,329
Income from Disposal of Non-Core Assets-Net............. 962,761 3,408,379
Other................................................... 513,270 737,571
------------- -------------
65,300,990 59,423,941
------------- -------------
Expenses:
Rental Operating........................................ 21,129,433 21,977,790
Fee Based............................................... 9,366,777 6,910,228
Administration.......................................... 5,030,967 4,399,349
Restructure Costs/Tender Offer Costs ................... 242,899 1,537,073
Interest - Wholly Owned Property Debt................... 14,131,780 13,549,258
Interest - Corporate Debt............................... 1,098,333 1,522,087
Depreciation and Amortization........................... 5,514,571 5,261,181
------------- -------------
56,514,760 55,156,966
------------- -------------
Income Before Income Taxes and Extraordinary Item........ 8,786,230 4,266,975
Provision for Income Taxes .............................. 3,416,000 1,664,000
------------- -------------
Income before Extraordinary Item......................... 5,370,230 2,602,975
Extraordinary Item, net of Income Taxes ................. (1,614,356) 804,022
------------- -------------
Net Income............................................... $3,755,874 $3,406,997
============= =============
</TABLE>
21
<PAGE>
22
<TABLE>
<CAPTION>
Unaudited
Pro Forma
1996 1995
-------------- -------------
<S> <C> <C>
EBITDA (Unaudited)..................................... $29,530,914 $24,599,501
============== ==============
Adjusted EBITDA (Recurring EBITDA reduced by
interest on Wholly Owned Property Debt) (Unaudited). $11,990,697 $8,212,539
============== ==============
Net Income per Common Share:
Income Before Extraordinary Item....................... $1.37 $0.67
Extraordinary Item..................................... (0.41) 0.21
-------------- --------------
Net Income............................................. $0.96 $0.88
============== ==============
</TABLE>
RESULTS OF OPERATIONS
Comparison of Results of Operations for the Years ended December 31, 1996 and
Pro forma 1995
Rental and Other Operating Real Estate Revenues are derived from the Wholly
Owned Properties which are apartment communities that comprise the Company's
Operating Real Estate Assets. Revenues increased $1.9 million, or 4.8%, in 1996
as compared to 1995. The increase was primarily due to the increase in average
rent collected from $366 in 1995 to $387 in 1996. The average economic occupancy
of the 108 Wholly Owned Properties in operation at all times during 1996 and
1995 was 92.5% in 1996 compared to 91.8% in 1995. Economic occupancy is defined
as the amount of revenue collected from residents as a percentage of the revenue
a property could generate if full rents for all units were collected.
Fee Based Revenues are comprised of Lexford and Investment Management
revenues generated from services provided to Properties and residents at the
Properties. Property Management Services revenues principally relate to property
management and accounting services provided to the Properties. Ancillary
Services revenues consist principally of revenue generated from the sale of
replacement and maintenance material to the Properties. In addition, Ancillary
Services revenues include revenue generated from furniture leasing and renters
insurance services provided to residents. Investment Management revenues consist
of partnership administration fees as well as loan refinancing and restructuring
fees.
The following are the major components of Lexford Revenues and Investment
Management Revenues (unaudited) for 1996 as compared to pro forma 1995:
22
<PAGE>
23
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Lexford:
Property Management Services:
Property Management and Accounting Services -- Controlled ............ $ 7,782,722 $7,414,992
Property Management and Accounting Services -- Third Party ........... 2,135,429 0
Other Management Service Fee Revenues. ............................... 1,399,742 1,497,530
Ancillary Services:
Furniture Leasing and Renters Insurance .............................. 403,704 290,937
Replacement and Maintenance Material Revenues-net .................... 45,676 532,315
--------------- ---------------
Total Management Services Revenue......................................... 11,767,273 9,735,774
--------------- ---------------
Investment Management:
Partnership Administration & Other fees .............................. 1,131,775 1,181,540
Loan Refinancing and Restructuring Fees .............................. 751,994 886,015
--------------- ---------------
Total Investment Management Revenues ..................................... 1,883,769 2,067,555
--------------- ---------------
Total Fee Based Revenues.................................................. $13,651,042 $11,803,329
=============== ===============
</TABLE>
Fee Based Revenues increased approximately $1.8 million, or 15.6%, in 1996
as compared to 1995. The increase was primarily due to the acquisition of
Lexford Properties, a third party property management company, which generated
$2.1 million in Fee Revenue since its acquisition on August 1, 1996 (SEE NOTE 1
TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - "LEXFORD ACQUISITION"). The
increase in property management revenues was offset by an approximately $487,000
decrease in replacement and maintenance material sales to Syndicated
Partnerships. The decline in replacement and maintenance material sales occurred
as the Company transitioned from a warehouse operation to a coordinated buying
group for replacement and maintenance material. Revenue in the future will be
derived from a portion of the volume discounts generated by the property
purchases.
Fee Based Revenues are dependent to a certain extent on the financial
condition of the Properties owned and managed by the Company and the Company's
ability to retain its ownership interests. Loss of these interests, due to an
increase in interest rates or an inability to refinance matured loans, could
have a material adverse impact on Fee Based Revenues and the financial condition
of the Company. Although there can be no assurance, management does not
currently foresee any material loss of ownership interests in the Properties in
1997 that would adversely affect the Company's Fee Based Revenues. In addition,
Lexford derives its third party property management revenues from 30 day
cancelable contracts. Therefore, the amount of revenue generated from third
party management contracts may be subject to significant fluctuation from period
to period. Lexford, for example, in early 1997 lost the management of
approximately 3,000 units in a portfolio involved in bankruptcy proceedings
which resulted in a change of control of the ownership of these units.
Fee Based Revenues are also directly related to the occupancy and level of
rents collected at the properties managed by the Company. For the past two years
the Company has maintained occupancy, on average, above 90% at the properties
managed by the Company. The Company's ability to obtain rental increases and
maintain occupancy are highly dependent upon market conditions, the physical
condition of the properties and the competitive environments affecting such
properties.
Interest Income increased $4.8 million or 117% in 1996 compared to 1995.
Interest Income is primarily derived from the interest collected or accrued on
the recorded value of interests in, and receivables from, Syndicated
Partnerships. (SEE NOTE 3 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
Approximately $1.9 million of the increase was generated from the excess
proceeds derived from refinancing of Syndicated Partnerships (SEE LIQUIDITY AND
23
<PAGE>
24
CAPITAL RESOURCES -- FINANCING AND DEBT RESTRUCTURING OF THE PROPERTIES).
Although the interest income generated from excess refinance proceeds is not
recurring, Interest Income may be favorably impacted in the future by the lower
debt service as a result of the refinancing transactions completed in 1996. The
balance of the increase was a result of improved cash flow due to increased
operating performance of the Syndicated Partnerships (a same unit 7.9% increase
in net operating income in 1996 as compared to 1995) and lower debt service
requirements on mortgage debt refinanced in prior years. Although there can be
no assurance, Interest Income should continue to be favorably impacted in the
future from the improved cash flow on the Syndicated Partnerships generated from
lower debt service requirements and increases in operating income.
Income from Disposal of Non-Core Assets -- Net, decreased approximately
$2.4 million in 1996 as compared to 1995. This income is derived from the
proceeds of the sale of Non-Core Assets and the recovery of investor notes
receivables in excess of the aggregate recorded value of these assets. During
1994 the Company recovered the entire recorded value of these assets and, as a
result, began recognizing the proceeds, net of collection and closing costs, as
income. Additional income from the disposal of Non-Core Assets may be recognized
in the future although it is not a significant long term source of revenue for
the Company.
Other Income decreased approximately $224,000 in 1996 as compared to 1995.
The decrease was principally due to income in 1995 from the recovery of trade
accounts receivable which had previously been written off.
Rental Operating Expenses decreased approximately $848,000, or 3.8%, in
1996 as compared to 1995. The decrease was primarily due to the implementation
in 1996 of a capitalization program which resulted in the capitalization of
major building exterior improvements. Previously all items were expensed. In
1996 approximately $700,000 of improvements were capitalized that would have
been expensed in prior years. In addition, major maintenance expense decreased
approximately $487,000 in 1996 as compared to 1995. The decrease in 1996
primarily related to major maintenance on Wholly Owned Properties refinanced in
1995 and 1994. Reserves for major maintenance established in the 1996
refinancing program will be expended in 1997 and reverse the decrease
experienced in 1996.
Fee Based Expenses increased approximately $2.5 million in 1996 as compared
to 1995. Approximately $2.0 million of the increase was related to the
third-party management operation of Lexford, which was acquired effective August
1, 1996.
Administration Expenses increased approximately $632,000 in 1996 compared
to 1995. The increase was primarily due to bonuses payable to employees pursuant
to the Company's 1996 Incentive Compensation Plan. The incentive compensation is
based upon certain increases in Company profitability. The percentage increase
used as a measurement for the majority of the incentive compensation is computed
net of the cost of such plan. The increase in incentive compensation in 1996
compared to 1995 is reflective of the significant increases in profitability
achieved in 1996 compared to 1995.
Restructuring Costs in 1996 of $242,899 related to realignments to the
Company's organization to eliminate overlapping responsibilities. The
restructuring in 1996 was a follow up to the restructuring costs incurred in
1995 of $1.5 million. The restructuring costs are primarily comprised of
severance and separation costs. Management anticipates that the restructurings
completed in 1995 and 1996 should result in annual savings in excess of $1.0
million, primarily related to reductions in payroll and related fringe benefit
costs.
Interest Expense on mortgages on the Wholly Owned Properties increased
approximately $582,000 in 1996 as compared to 1995. The increase in interest
expense was due to the refinancing transactions completed in 1996 and 1995.
Although the overall contractual interest rates decreased, interest expense
increased, due to the impact of "Fresh Start" reporting with effective interest
rates applied to the Carrying Value of the mortgages. Interest expense on the
Company's corporate lines of credit decreased approximately $424,000 in 1996
compared to 1995. The decrease is due to lower outstanding balances on the
lines, and the refinancing of the Company's corporate credit lines in August
1995 at a more favorable interest rates (SEE "LIQUIDITY AND CAPITAL RESOURCES").
24
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25
Depreciation and Amortization Expense increased approximately $253,000 in
1996 as compared to 1995. The increase is primarily due to amortization expense
related to loan origination costs capitalized in connection with the refinancing
of corporate debt and mortgages on the Wholly Owned Properties, combined with
amortization of management contracts and goodwill associated with the Lexford
acquisition.
Income before Extraordinary Item increased from $2.6 million in 1995 to
$5.4 million in 1996. The Extraordinary charge of $1.6 million, net of taxes was
a result of mortgage debt refinancing on certain Wholly Owned Properties (SEE
NOTE 6 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND "LIQUIDITY AND
CAPITAL RESOURCES"--FINANCING AND DEBT RESTRUCTURING OF THE PROPERTIES). The
extraordinary gain of $804,000 recognized in 1995 was due to debt forgiveness
generated from the debt restructuring and refinancing of mortgages on Wholly
Owned Properties. Net income increased from $3.4 million in 1995 to $3.8 million
in 1996.
The financial position of the Company may be impacted by the availability
to the Company of certain tax benefits, such as net operating loss carryforwards
and other tax attributes. To the extent all or a portion of the Company's tax
attributes are unavailable to offset taxable income, the cash flow of the
Company could be materially impacted (SEE NOTE 10 TO NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS).
Comparison of Results of Operations for the Years ended December 31, 1995 and
1994
Fee Based Revenues are comprised of Management Services and Investment
Management revenues generated from services provided to Properties and residents
of the apartment communities. The following are the major components of
Management Services Revenues and Investment Management Revenues for 1995 as
compared to 1994:
<TABLE>
<CAPTION>
1995 1994
-------------------- ------------------
<S> <C> <C>
Management Services:
Property Management Services:
Property Management and Accounting Services -- Controlled... $ 9,844,330 $ 9,564,710
Other Management Service fee revenues....................... 1,748,079 1,679,888
Ancillary Services:
Furniture Leasing and Renters Insurance..................... 296,203 255,942
Replacement and Maintenance Material revenues--net.......... 740,279 577,074
-------------------- ------------------
Total Management Services Revenues............................... 12,628,891 12,077,614
-------------------- ------------------
Investment Management:
Partnership Administration & Other fees........................ 1,573,693 1,686,877
Loan Refinancing and Restructuring Fees........................ 966,398 1,514,027
-------------------- ------------------
Total Investment Management Revenues............................. 2,540,091 3,200,904
-------------------- ------------------
Total Fee Based Revenues......................................... $ 15,168,982 $ 15,278,518
==================== ==================
</TABLE>
Fee Based Revenues decreased approximately $110,000 in 1995 as compared to
1994, due to a decrease in Investment Management revenues of approximately
$661,000, which was partially offset by increases in Property Management
Services and Ancillary Services Revenues of approximately $348,000 and $203,000,
respectively. The decrease in Investment Management revenues was principally due
to a decrease of approximately $548,000 in loan refinancing and restructuring
fees in 1995 as compared to 1994. Loan refinancing and restructuring fees are
subject to significant fluctuation from period to period based upon the volume
of loans maturing in a given year, and a property owner's ability to refinance
25
<PAGE>
26
based on the current interest rate environment. The balance of the decrease in
Investment Management revenues was due to fees earned in 1994 related to
bankruptcy services provided to properties in Chapter 11 bankruptcy proceedings.
The increase in Property Management Services revenues was due to an increase in
management and accounting services fees of approximately $280,000. The increase
was primarily due to an increase in the number of Properties managed after
management of six properties was returned to the Company due to the cancellation
of a third party management contract in the third quarter of 1995. The aggregate
increase in Ancillary Services revenues of approximately $203,000 was
principally due to an increase in replacement and maintenance material sales to
properties. The increased sales were attributable to the deferred maintenance
escrow funds established with the refinancing and restructuring of mortgage debt
on a significant number of the Properties in 1994 and 1995.
Interest Income increased $1.7 million in 1995 as compared to 1994.
Interest Income is primarily derived from the interest collected or accrued on
the recorded value of interests in, and receivables from, Syndicated
Partnerships. (SEE NOTE 3 TO NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS).
The increase in Interest Income was due to increased cash flow from the
Syndicated Partnerships primarily as a result of lower debt service requirements
on refinanced or restructured mortgage debt.
Income from Disposal of Non-Core Assets -- Net increased approximately
$219,000 in 1995 as compared to 1994. This income is derived from the proceeds
of the sale of Non-Core Assets and the recovery of investor notes receivable in
excess of the aggregate recorded value of these assets. During 1994 the Company
recovered the entire recorded value of these assets and, as a result, began
recognizing the proceeds, net of collection and closing costs, as income.
Other Income decreased approximately $692,000 in 1995 as compared to 1994.
The decrease was principally due to the settlement of a pending claim in 1994.
The settlement resulted in a release of an accrued liability of approximately
$726,000 in exchange for the Company's dismissal of a preference action.
Fee Based Expenses decreased approximately $336,000 in 1995 as compared to
1994. The decrease in Fee Based Expenses reflects the staff reductions and
realignments implemented by the Company in 1993 and 1994.
Administration Expenses increased approximately $406,000 in 1995 as
compared to 1994. The increase was primarily due to the recording of a
litigation reserve in the fourth quarter of 1995. The reserves were established
for ongoing and potential legal and litigation costs involving the Company.
Administration Expenses also increased in 1995 due to additional corporate
governance costs and expenses associated with the registration of the Company's
Common Stock on the Nasdaq National Market tier of the Nasdaq Stock Market.
Restructuring Costs of $1.5 million were incurred in 1995 as a charge
related to the corporate restructuring implemented at the end of 1995 which
aligned the Company's organization structure with current and future business
goals. The $1.5 million charge is primarily comprised of severance and
separation costs.
Interest Expense decreased approximately $121,000 in 1995 as compared to
1994. The decrease was due to a reduction in the average debt outstanding of
approximately $2.0 million in 1995 versus 1994. In addition, in August 1995, the
Company obtained more favorable financing terms on its corporate debt by
negotiating a variable interest rate with a new lender, The Provident Bank (the
"Bank"), at the Bank's prime rate of interest minus 1.0% as compared to a
previous variable interest rate at the Huntington National Bank's prime rate of
interest plus 0.5%. These favorable factors were partially offset by an increase
in the prime interest rate charged by most lenders in 1995. The prime interest
rate charged by the Company's lender ranged from 6.0% to 8.5% in 1994 as
compared to a range of 8.5% to 9.0% in 1995 (SEE LIQUIDITY AND CAPITAL
RESOURCES).
Depreciation Expense increased approximately $90,000 due to depreciation on
capital improvements undertaken at the end of 1994 and throughout 1995.
26
<PAGE>
27
Income before Extraordinary Item. As a result of the approximately $1.1
million aggregate increase in revenues less an increase in expenses and taxes of
approximately $728,000, Income before Extraordinary Item improved from $3.9
million in 1994 to $4.3 million in 1995. The extraordinary gain, due to debt
forgiveness generated from the debt restructuring and refinancing on Wholly
Owned Properties, was $804,000 in 1995 versus $3.2 million in 1994. Net Income
amounted to $5.1 million in 1995 as compared to $7.1 million in 1994.
Earnings before Interest, Taxes, Depreciation and Amortization
The Company believes that earnings before interest, income taxes,
depreciation, amortization and extraordinary items ("EBITDA"), Recurring EBITDA
and Adjusted EBITDA are significant indicators of the strength of its results.
EBITDA is a measure of a Company's ability to generate cash to service its
obligations, including debt service obligation, and to finance capital and other
expenditures, including expenditures for acquisitions. EBITDA does not represent
cash flow as defined by Generally Accepted Accounting Principles ("GAAP") and
does not necessarily represent amounts of cash available to fund the Company's
cash requirements. Unaudited EBITDA and the computation of Adjusted EBITDA for
the years ended December 31, 1996, 1995 and 1994 is as follows: (000s omitted)
<TABLE>
<CAPTION>
Pro Forma
-------------------------------
1996 1995 1994
-------------- --------------- --------------
<S> <C> <C> <C>
EBITDA .............................................. $29,531 $24,600 $24,752
- ------ -------------- --------------- --------------
Interest Income derived from refinance proceeds . (1,936) 0 0
Income from Disposal of Non Core Assets.......... (963) (3,408) (3,189)
Other Income..................................... 0 0 (726)
Loan Fees........................................ (752) (966) (1,514)
Restructure/Tender Offer Costs................... 243 1,537 977
-------------- --------------- --------------
Recurring EBITDA..................................... 26,123 21,763 20,300
- ---------------- -------------- --------------- --------------
Interest on Wholly Owned Properties.............. (14,132) (13,549) (13,450)
-------------- --------------- --------------
Adjusted EBITDA...................................... $11,991 $ 8,214 $ 6,850
- --------------- ============== =============== ==============
</TABLE>
EBITDA increased $4.9 million, or 20.0%, and Adjusted EBITDA increased $3.8
million, or 46.0%, in 1996 as compared to 1995. EBITDA decreased $152,000, or
1%; however, Adjusted EBITDA increased $1.4 million, or 19.9%, in 1995 as
compared to 1994.
LIQUIDITY AND CAPITAL RESOURCES
The following discussion regarding liquidity and capital resources should
be read in conjunction with the Company's Consolidated Balance Sheets as of
December 31, 1996 and 1995 and the Consolidated Statements of Cash Flows for the
years ended December 31, 1996, 1995 and 1994.
The principal sources of liquidity for the Company are cash flow from its
operations and borrowing available under the Company's credit facility. The
Company's Net Cash Provided by Operating Activities has increased significantly
over the past three years, from approximately $1.0 million in 1994; to
approximately $5.6 million in 1995; to approximately $12.7 million in 1996.
27
<PAGE>
28
Increases in Cash Received from Interests in and Receivables from Syndicated
Partnerships has been a major factor in such increase. Cash Received from
Interests in and Receivables from Syndicated Partnerships, which is primarily
comprised of payments of accrued interest, increased 82.7%, or $4.1 million, in
1996 as compared to 1995 and 98.5%, or $2.4 million, in 1995 as compared to
1994. In 1996, 294 Syndicated Partnerships provided operating cash flow to the
Company, as compared to 220 in 1995 and 160 in 1994.
The increase in Net Cash Provided by Operating Activities was also due to
$4.5 million of operating cash flow from the Wholly Owned Properties. This
operating cash flow was formerly treated as cash flow from investing activity
while the Wholly Owned Properties were classified as "Real Estate Assets Held
for Sale" (SEE NOTES 1 AND 2 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS).
The other factors impacting the Company's cash flow in 1996, 1995 and 1994
are discussed in "Results from Operations" and "Financing and Debt Restructuring
of the Properties".
The Company anticipates that cash flow from its operations and borrowings
available under the Company's credit facility will be adequate to meet the
reasonably foreseeable capital and liquidity needs of the Company. If the
Company is successful in its future growth plans, it may be necessary to seek
additional capital sources through other debt or equity sources (SEE ITEM 1-
"BUSINESS").
In August 1995, The Provident Bank (the "Bank") and the Company closed on a
new credit facility that retired the Company's credit facility with The
Huntington National Bank ("HNB") as well as provided additional borrowing
capacity with more flexible terms. The new credit facility has lower interest
rates than the previous facility with HNB and also reduced or eliminated certain
restrictive covenants.
The new credit facility provides credit up to $32.0 million, and is
comprised of: a $3.0 million revolving line of credit for operating needs
subject to annual review and extension by the Bank; a $7.0 million line of
credit for acquisitions and Property debt restructuring (the "Acquisition Line")
due in six years with interest only, payable in the first year; a $22.0 million
reducing balance line of credit (the "Reducing Line") due in six years with
interest, only, payable during the first year (collectively, the "Loans"). The
Reducing Line was used to retire HNB credit facility. The credit facility
provided that the interest rate on the Loans would be the Bank's prime rate of
interest minus 1%; however, in February 1996, the Company entered into an
agreement with the Bank to fix the interest rate on the Acquisition Line at
7.25% with principal amortization beginning in March 1996 in 60 equal monthly
installments of principal and interest. Excess corporate cash is applied to pay
down the Reducing Line and reborrowed as needed (SEE NOTE 4 TO NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS).
In July 1996, the Company received a commitment letter from the Bank for an
additional $10.0 million line of credit. The new line will bear interest at the
Bank's prime rate of interest minus 1% with interest only during the first year,
and will be due in six years. The Company did not draw on this line in 1996. On
December 31, 1996, including the $10.0 million commitment, the Company had
unrestricted credit availability of approximately $25.4 million.
In addition, all of the Company and the majority of Property bank accounts
are maintained at the Bank. The banking relationship has increased cash flow at
the Properties as a result of reduced service charges and increased interest
income on the Property bank account balances. The Company may benefit from a
portion of the improved cash flow at the Properties.
Presently, the Company plans to finance its working capital needs from cash
flow and through borrowing under its credit facility. Although it is anticipated
that the Company will have access to sufficient funds to meet its requirements,
if opportunities develop on favorable terms for additional mortgage
restructuring, or acquisitions, the Company may seek alternative outside debt or
equity sources to fund such activities. In addition, any significant decrease or
increase in interest rates will affect the Company's earnings and cash flows
favorably or unfavorably, respectively.
28
<PAGE>
29
In November 1995, the shareholders of the Company approved an increase in
the number of authorized shares of Common Stock from 4,500,000 to 13,500,000 and
also authorized 1,500,000 shares of "Blank Check" Preferred Stock. The Company
has no current commitments or arrangements which would require the issuance of a
material number of additional shares. The Company sought the increase in
authorized shares to provide an additional source of capital and provide greater
flexibility in structuring potential transactions, such as the Lexford
acquisition.
The Company's capital expenditures for 1996 amounted to approximately
$423,000 funded from cash flow and the Company's credit facility. The Company
anticipates that its capital needs in the future can be satisfied out of cash
flow or the Company's credit facility. The Company currently forecasts capital
expenditures of approximately $400,000 in 1997, principally for enhanced
computer system hardware and software. The Company is currently implementing new
software systems in order to obtain optimal efficiencies from technology.
Improvement and Replacement Expense for the Wholly Owned Properties was
$2.8 million and capital expenditures amounted to approximately $682,000 during
1996. Improvement and Replacement Expense was funded from Wholly Owned Property
cash flow and maintenance escrow funds. The 1997 combined budget for improvement
and replacement expense and capital expenditures for the Wholly Owned Properties
is anticipated to be $4.5 million.
Lexford Acquisition
Effective August 1, 1996, the Company acquired Lexford, a privately held,
third-party multi-family management company headquartered in Dallas, Texas (SEE
NOTE 1 - BUSINESS - MANAGEMENT SERVICES OF NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS). The acquisition added approximately 22,000 apartment units to the
Company's management portfolio which totals 55,397 units at December 31, 1996.
Based on 1997 rankings by the National Multi Housing Council, Lexford has become
the nation's ninth largest manager of multi-family real estate. The Company
intends to maintain Lexford's Dallas office as headquarters for its combined
property management business, which will be conducted under the Lexford name.
To acquire Lexford, the Company issued 700,000 shares of Common Stock
valued, for acquisition purposes, at $20 per share representing a maximum
purchase price of $14 million. Approximately $9 million of the purchase price
(450,000 shares) is subject to forfeiture in the event the Company's combined
property management operations do not achieve certain profitability criteria.
Lexford shareholders received 250,000 shares of the Company's Common Stock free
of contingencies. The remaining 450,000 contingent shares will cease to be
subject to risk of forfeiture if and when specified increases in the
profitability of the Company's property management operations are achieved
during the three full fiscal years following the merger (i.e. on or before the
end of the Company's 1999 fiscal year). If, during the specified period, profit
from property management operations increases $1.8 million or more from 1995
levels, the former Lexford shareholders would own 150,000 of the contingent
shares free of contingencies, and if the increase is $4.0 million or more from
1995 levels, the former Lexford shareholders would own the entire 700,000 shares
free of contingencies, or approximately 15.4% of the Company's shares
outstanding as of December 31, 1996.
29
<PAGE>
30
Selected pro forma, unaudited financial information relating to Lexford
third party management operations for the years ended December 31, 1996 and
1995, is as follows:
Lexford Pro Forma
Year Ended December 31,
--------------------------------------------------
1996 1995
---------------------- ------------------------
Fee Based Revenues......... $5,588,563 $4,685,735
---------------------- ------------------------
Fee Based Expenses......... 4,781,933 4,027,520
Interest Expense........... 61,507 73,879
---------------------- ------------------------
4,843,440 4,101,399
---------------------- ------------------------
Income Before Taxes........ 745,123 584,336
---------------------- ------------------------
EBITDA..................... $806,630 $658,215
======================= ========================
The acquisition of Lexford was accounted for as a purchase, with a portion
of the purchase price, ($1.6 million), assigned to the value of the Lexford
management contracts, and the balance ($3.9 million) assigned to the value of
the "Lexford" name and goodwill (to the extent that the purchase price exceeds
the fair market value of Lexford's net tangible assets). The portion of the
purchase subject to forfeiture (450,000 shares or $9.0 million) will not be
recorded until the shares become free of contingencies.
Financing and Debt Restructuring of the Properties
In 1996 the Company refinanced first mortgages on 125 Properties comprised
of 35 Wholly Owned Properties (SEE NOTE 6 OF NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS) and 90 Syndicated Partnerships. The new mortgages on 98 Properties
were financed through PaineWebber Incorporated ("PaineWebber"); the mortgages on
21 Properties were financed through First Union Capital Markets Group ("First
Union"); the mortgages on five Properties were financed through Donaldson,
Lufkin & Jenrette Securities Corporation; and the mortgage on one Property was
financed with the Department of Housing and Urban Development ("HUD"). The new
PaineWebber mortgages on the 26 Wholly Owned Properties have fixed interest
rates of 8.8% with a 30 year principal amortization and a 10 year maturity, and
the 72 Syndicated Partnerships have fixed interest rates from 8.8% to 9.0 % with
a 25 year principal amortization schedule beginning in year four, and a 10 year
maturity. The new First Union mortgages have fixed interest rates ranging from
8.0% to 9.1% with a 25 year principal amortization and a 10 year maturity. The
other mortgages refinanced in 1996 have terms similar to the First Union
mortgages. While the PaineWebber mortgages secured by the Wholly Owned
Properties are cross collateralized and cross defaulted, all of the mortgage
loans are without recourse to the Company.
Aggregate mortgage debt, and related interest on the 35 Wholly Owned
Properties with a contractual balance of $46.8 million and a carrying value of
$45.6 million was refinanced with mortgage debt having a carrying and
contractual balance of $47.8 million. A fourth quarter extraordinary non cash
charge of $1.6 million was triggered by the mortgage debt refinancing on certain
Wholly Owned Properties. The charge occurred related to Properties that had a
carrying value (recorded in 1992 under the "Fresh Start" accounting method upon
confirmation of the bankruptcy plan of reorganization of the Company's
predecessor) less than the unpaid contractual balance of the mortgage loan at
such time. Generally Accepted Accounting Principles required the Company to
record the charge upon refinancing the prior mortgage as the previous lender was
repaid at the contractual balance. Additional extraordinary charges may occur in
the future on Wholly Owned Properties with contractual mortgage debt in excess
of the "Fresh Start" carrying value. The required annual debt service on the
Wholly Owned Properties refinanced in 1996 decreased by approximately $300,000
30
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31
with the Company investing $1.1 million, net of excess proceeds from refinancing
certain Wholly Owned Properties. In addition, $1.2 million of cash flow
secondary mortgages ("B Notes") on six Wholly Owned Properties were refinanced
in 1996. The B Notes previously required 100% of the excess cash flow to be
applied to the principal. In 1996 the excess cash flow applied to these B Notes
amounted to approximately $98,000.
Aggregate mortgage debt, and related interest, on the 90 Syndicated
Partnerships with a balance of $95.2 million was refinanced with mortgage debt
totaling $101.7 million. The Company advanced $5.6 million to certain Syndicated
Partnerships to facilitate the refinancing (debited to Interests in and
Receivables from Syndicated Partnerships), but received excess proceeds of $5.0
million from the refinancing of other Syndicated Partnerships. The required
annual debt service on the Syndicated Partnerships will decrease approximately
$600,000 per year for the first three years. In addition, $3.9 million of B
Notes on 21 Syndicated Partnerships were refinanced in 1996. In 1996, excess
cash flow applied to these B Notes amounted to approximately $338,000. Although
there can be no assurance, management anticipates that cash distributions to the
Company will increase from these Syndicated Partnerships due to the lower debt
service requirements and the elimination of the B Notes. Increased cash flow at
the Syndicated Partnerships, if it occurs, may enhance recovery of Interests in
and Receivables from Syndicated Partnerships, including Interest Income, to the
Company in the future.
During 1996 the Company granted deeds in lieu of foreclosure to the
mortgagees of three Wholly Owned Properties. No significant gain or loss was
recognized on these transactions because the assets and the non recourse
mortgages on each of these Wholly Owned Properties had been recorded in equal
amounts.
In June 1995, the Company purchased mortgages amounting to $8.8 million in
the aggregate, related to one Syndicated Partnership and four Wholly Owned
Properties, financed with a $7.8 million note payable. As of June 30, 1996, the
Company had obtained permanent non-recourse mortgages on these five Properties.
The proceeds of the refinancing were applied to the Company's note payable.
31
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32
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
Not applicable.
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
--------------------------------------------------
(a) DIRECTORS
The Board of Directors ("Board") of the Company consists of nine
members. The Company's Regulations classify the directors into three
classes, with the directors in each class serving for three year terms
and until their successors are elected. The terms of the directors
listed below will expire at the 1997, 1998 and 1999 annual meetings of
the Company's shareholders, respectively, as indicated below.
CLASS II DIRECTORS SERVING UNTIL THE 1997 ANNUAL MEETING
Has Served as Principal Occupation
Name Age Director Since and Business Experience
- ------------ -------- ---------------- ---------------------------------------
Joseph E. 64 1992 A corporate financial consultant, Mr.
Madigan Madigan also is a Director of Cooker
Restaurant Corp., Skyline Chili, Inc.,
VOCA Corporation and The Frank Gates
Service Company. Mr. Madigan currently
serves as Chairman of the Company's
Board of Directors and served as Acting
Chief Executive Officer of the Company
from June 13, 1995 to December 1, 1995.
Mr. Madigan was Executive Vice
President, Chief Financial Officer and
Director of Wendy's International, Inc.
from 1980 through 1987. He was Treasurer
and Vice President of Borden, Inc.
between 1968 and 1980. Mr. Madigan is
also a former Trustee of Excelsior
Income Shares, Inc., a closed-end income
fund, and NCC Funds, a Cleveland-based
closed-end investment fund.
George J. 61 1992 President of Allstate Development
Neilan Company, and has been involved in land
acquisition and development in the
Charleston, West Virginia area since
1982. He also maintains an intellectual
property legal practice in South
Charleston, West Virginia.
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33
Has Served as Principal Occupation
Name Age Director Since and Business Experience
- ------------ -------- ---------------- ---------------------------------------
Glenn C. 39 1992 Senior Vice President of Brown, Gibbons,
Pollack Lang & Company, L.P., an investment
banking firm located in Cleveland, Ohio,
since January 6, 1997. Mr. Pollack
served as President of Zeus Advisors,
Inc., a consulting firm located in
Cleveland, Ohio, from November 1994 to
December 1996. From September 1989 to
October 1994, Mr. Pollack was Chief
Executive Officer of A & W Foods, Inc.,
a regional food distributor. Mr. Pollack
was a senior manager in the Corporate
Strategies Group at the Cleveland Office
of Price Waterhouse in 1988 and 1989,
and served in a similar capacity from
1984 to 1988 with Siedmann & Associates,
a Cleveland-based consulting firm.
CLASS III DIRECTORS SERVING UNTIL THE 1998 ANNUAL MEETING
Has Served as Principal Occupation
Name Age Director Since and Business Experience
- ------------ -------- ---------------- ---------------------------------------
John B. 39 1995 President and Chief Executive Officer of
Bartling, Jr. the Company since December 1, 1995. From
April 1993 until December 1995, Mr.
Bartling was a Director in the Real
Estate Products Group of CS First
Boston, an investment banking firm. He
was an executive officer of NHP, Inc., a
company specializing in the development,
ownership and management of real estate
assets, from June 1987 to April 1993. In
addition, Mr. Bartling served as
Executive Vice President of NHP Real
Estate Corp., NHP Capital Corp. and NHP
Servicing Inc., wholly owned
subsidiaries of NHP, Inc., from 1991 to
April 1993.
George R. 69 1992 Chairman of the Board and past President
Oberer, Sr. and CEO of Oberer Development Company
since the early 1970s. He was President
of the predecessor corporation, Oberer
Construction Company, since 1953. Mr.
Oberer is President and CEO of Gold Key
Realty Company. Oberer Development
Company and Gold Key Realty Company are
engaged in real estate development and
management, respectively.
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34
Has Served as Principal Occupation
Name Age Director Since and Business Experience
- ------------ -------- ---------------- ---------------------------------------
Robert J. 61 1992 A central Ohio real estate developer,
Weiler Mr. Weiler joined The Robert Weiler
Company in 1957 and has been Chairman of
the Board since 1987. A real estate
consultant since 1970, Mr. Weiler also
is a licensed real estate appraiser and
a member of the Appraisal Institute,
having served as President of the Ohio
Chapter. He was a Director of the
National and Ohio Association of
Realtors and is a past President of the
Columbus Board of Realtors. Formerly, he
was a Director of Main Federal, Freedom
Federal and Buckeye Federal Savings &
Loan.
CLASS I DIRECTORS SERVING UNTIL THE 1999 ANNUAL MEETING
Has Served as Principal Occupation
Name Age Director Since and Business Experience
- ------------ -------- ---------------- ---------------------------------------
Robert V. 49 1992 President of RVG Management &
Gothier, Sr. Development Company, a manager and
developer of residential and commercial
properties, since 1976 and general
partner of Rostan Associates, a real
estate holding company associated with
RVG Management and Development Company,
since 1986. Mr. Gothier also is a member
of the Harrisburg Board of Realtors and
the legislative board of the
Pennsylvania Manufactured Home
Association.
H. Jeffrey 42 1992 Partner in the law firm of Benesch,
Schwartz Friedlander, Coplan & Aronoff LLP
("BFCA") since 1988 and Chairman of the
firm's Bankruptcy and Commercial
Department. Prior to joining BFCA, Mr.
Schwartz was a law clerk to the
Honorable William J. O'Neill, United
States Bankruptcy Court for the Northern
District of Ohio, from 1982 to 1983 and
to the Honorable Joseph T. Molitoris,
United States Bankruptcy Court for the
Northern District of Ohio from 1980 to
1982. Mr. Schwartz is a faculty member
of the Bankruptcy Litigation Institute,
has written numerous articles on
bankruptcy law and is the former
Chairman of the Section of Bankruptcy
and Commercial Law of the Cleveland Bar
Association.
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35
Has Served as Principal Occupation
Name Age Director Since and Business Experience
- ------------ -------- ---------------- ---------------------------------------
Gerald K. 60 1992 President of Craig Capital Co., a
Wedren Washington, D.C.-based merger and
acquisition firm, since 1973. Mr. Wedren
has been Managing Partner of Tavern Real
Estate Limited Partnership and Wedren
Associates, which own and lease
properties in the Washington and
Baltimore area, since 1988. Mr. Wedren
was President of G.E.W., Inc., an owner
of fast food restaurants, from 1981 to
1988; was of counsel with the Columbus
law firm of Brownfield, Bowen, Bally &
Sturtz from 1973 to 1981; and was Acting
Director of the Department of Commerce
and Commissioner of Securities for the
State of Ohio in 1971 and 1972. He is a
Director of Marwed Corporation and
Tavern Realty Co.
(b) EXECUTIVE OFFICERS
In addition to John B. Bartling, Jr., Chief Executive Officer and President
and a director of the Company, listed below are the executive officers of the
Company as of March 28, 1997. Each executive officer will serve until his or her
successor is selected by the Board or until his or her earlier resignation or
removal. There are no family relationships among these officers.
Principal Occupation During the
Name Age Past Five or More Years
- ----------------------- ---------- ------------------------------------------
Mark D. Thompson 39 Chief Financial Officer and Executive
Vice President of the Company since
October 31, 1996. Prior to that time,
Mr. Thompson was Executive Vice
President of Corporate Acquisitions of
the Company since April 1, 1996. Mr.
Thompson was a partner in the law firm
of McDonald, Hopkins, Burke & Haber from
January 1995 to such time. Prior to that
time, Mr. Thompson was an associate and
partner in the law firm of Benesch,
Friedlander, Coplan & Aronoff LLP from
January 1985 and October 1992,
respectively.
Patrick M. Holder 49 Executive Vice President of the Company
since December 20, 1996 and President of
Lexford Properties, Inc., a wholly owned
subsidiary of the Company, since August
1, 1996. Mr. Holder was President of
Lexford Partners, a property management
firm, from 1988 to July 31, 1996. Mr.
Holder previously served as President of
Brentwood Properties from 1987 to 1988.
Paul R. Selid 34 Senior Vice President of the Company
since April 15, 1996. Prior to that
time, Mr. Selid was Vice President of
Acquisitions of NHP, Inc. since December
1994. Mr. Selid also served as Vice
President of Asset Management &
Underwriting of NHP, Inc. from September
1992 to December 1994. Mr. Selid
previously served as Vice President of
Finance of Hall Financial Group, Inc.
from January 1990 to September 1992.
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<PAGE>
36
Principal Occupation During the
Name Age Past Five or More Years
- ----------------------- ---------- ------------------------------------------
Michele R. Souder 35 Vice President of the Company since
January 16, 1996 and Chief Financial
Officer of Lexford Properties, Inc., a
wholly owned subsidiary of the Company,
since November 1, 1996. Prior to that
time, Ms. Souder was Director of Audit
of the Company since August 1993. From
October 1992 to August 1993, she served
as an Associate in the Turnaround and
Crisis Management division of Jay Alix &
Associates, a management consulting
firm. She previously served in various
positions as Portfolio Analyst, Product
Manager and Manager of Asset Management
of the Company, from July 1987 to
October 1992.
Ronald P. Koegler 44 Vice President and Controller of the
Company since December 20, 1996. Mr.
Koegler served as Vice President and
Treasurer of the Company from January
16, 1996 to December 20, 1996. Prior to
that time, Mr. Koegler was Controller of
the Company since April 1992. He served
as Assistant Controller of the Company
from October 1989 to April 1992. Mr.
Koegler holds a B.S.B.A. degree in
accounting from The Ohio State
University, where he graduated Summa Cum
Laude.
Michael F. Sosh 35 Vice President and Treasurer of the
Company since January 9, 1997. Prior to
that time, Mr. Sosh served as Divisional
Vice President and Assistant Treasurer
of The Bon-Ton Stores, Inc. since March
1995. He previously served as Manager of
Financial Planning and Financial Analyst
of The Bon- Ton Stores, Inc. from 1987
to 1995. Mr. Sosh was a banking officer
with Meridian Bancorp, Inc. from 1983 to
1987.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the Company's Common Stock, to
file initial statements of beneficial ownership (Form 3), and statements of
changes in beneficial ownership (Forms 4 or 5) of Common Stock of the Company
with the Securities and Exchange Commission (the "SEC"). Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all such forms they file.
To the Company's knowledge, based on its review of the copies of such forms
received by it, or written representations from certain reporting persons that
no additional forms were required for those persons, the Company believes that
during the previous fiscal year, all filing requirements applicable to its
officers, directors, and greater than 10% beneficial owners were complied with.
(c) CERTAIN SIGNIFICANT EMPLOYEES
In addition to the executive officers named above, listed below are certain
officers of the Company and its wholly owned subsidiary, Lexford Properties,
Inc., as of March 28, 1997. Each officer will serve until his or her successor
is selected by the Board or until his or her earlier resignation or removal.
There are no family relationships among these officers.
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<PAGE>
37
Principal Occupation During the
Name Age Past Five or More Years
- ----------------------- ---------- ------------------------------------------
Annette Hoover 68 Vice President of Lexford Properties,
Inc., a wholly owned subsidiary of the
Company, since August 1, 1996. From 1988
to August 1996, Ms. Hoover was Vice
President of Lexford Partners, a
property management firm.
Bruce P. Woodward 45 Vice President of Lexford Properties,
Inc., a wholly owned subsidiary of the
Company, since August 1, 1996. From 1988
to August 1996, Mr. Woodward was Vice
President of Lexford Partners, a
property management firm.
James D. Alexander 47 Vice President of Lexford Properties,
Inc., a wholly owned subsidiary of the
Company, since August 1, 1996. From
February 1992 to August 1996, Mr.
Alexander was Vice President of Lexford
Partners, a property management firm.
From May 1988 to February 1992, Mr.
Alexander served as Executive Vice
President and Director of Portfolio
Management at Southwest Savings Bank,
where he handled asset management and
marketing services for the bank's $3
billion real estate portfolio.
Peggy C. Smith 45 Vice President of the Company since
December 20, 1996 and Vice President of
Lexford Properties, Inc., a wholly owned
subsidiary of the Company, since August
1, 1996. From 1988 to August 1996, Ms.
Smith was Vice President of Lexford
Partners, a property management firm.
Thomas Trubiana 45 Vice President of Lexford Properties,
Inc., a wholly owned subsidiary of the
Company, since August 1, 1996. Mr.
Trubiana served as Vice President of the
Company from 1988 to 1996. Prior to
joining the Company, Mr. Trubiana was
Regional Manager and Director of
Development with Allen & O'Hara, Inc., a
real estate development and management
firm, from 1982 to 1987.
Dain C. Akin 44 Vice President and Acting General
Counsel of the Company since March 18,
1996. From February 1992 to March 1996,
Mr. Akin served as Director of Tax of
the Company.
Jeffrey D. Meyer 31 Secretary and Associate General Counsel
of the Company since February 26, 1996.
Mr. Meyer was an associate in the law
firm of Benesch, Friedlander, Coplan and
Aronoff LLP from May 1992 to February
1996.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
(a) SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned by the Company's
Chief Executive Officer during 1996 and the other four most highly compensated
executive officers (and two additional individuals for whom disclosure would
have been provided but for the fact such individuals were not serving as
executive officers at the end of the last completed fiscal year) for services
rendered in all capacities to the Company during 1996 as well as 1995 and 1994,
where applicable.
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38
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
| | | | Long-Term Compensation | |
| | | Annual Compensation | Awards | |
| | | ------------------------------------------------------------------| |
| | | | | Other | | Securities| |
| | | | | Annual | Restricted | Under- | |
| | | | | Compen- | Stock | Lying | LTIP | All Other
|Name and | | Salary | Bonus(es) | sation | Award(s) | Options | Payouts |Compensation
|Principal Position | Year | ($) | ($) | ($) | ($) | (#) | ($) | ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John B. Bartling, Jr. 1996 $285,000 $171,000(1) $503,800(2) $402,188(3) 20,000(4) -- $7,371(5)
Chief Executive Officer and 1995 $23,750(6) -- $13,250(7) -- -- -- --
President 1994 -- -- -- -- -- -- --
Mark D. Thompson 1996 $127,885(8) $157,491(9) $216,635(10) $136,875(11) 12,500(12) -- $934(13)
Chief Financial Officer and 1995 -- -- -- -- -- -- --
Executive Vice President 1994 -- -- -- -- -- -- --
Paul R. Selid 1996 $86,538(14) $112,500(15) $137,163(16) -- 12,500(17) -- $3,576(18)
Senior Vice President 1995 -- -- -- -- -- -- --
1994 -- -- -- -- -- -- --
Michele R. Souder 1996 $100,245 $45,110(19) -- -- 2,500(20) -- $2,600(21)
Vice President and Chief 1995 $77,476 $15,037(22) -- -- -- -- $2,140(21)
Financial Officer of Lexford 1994 $77,025 $7,500(23) -- $ 39,500(24) -- -- $1,949(21)
Properties, Inc.
Ronald P. Koegler 1996 $84,492 $38,250(19) -- -- 2,500(25) -- $6,218(26)
Vice President 1995 $75,194 $15,450(22) -- -- -- -- $5,603(26)
and Controller 1994 $71,655 $10,100(23) -- $23,250(27) -- -- $3,860(26)
David P. Blackmore 1996 $130,668(28) $84,012(29) -- -- -- -- $20,543(30)
Former Chief Financial Officer 1995 $116,730 $117,096(22) -- -- -- -- $3,197(31)
and Executive Vice President 1994 $107,214 $76,000(23) -- $29,868(32) -- -- $3,022(31)
Michael F. Carbone 1996 $205,905(33) $102,953(34) -- -- -- -- $578,138(35)
Former Chief Financial Officer 1995 $201,643 (36) $6,000(37) -- -- -- $7,314(38)
and Vice President 1994 $191,322 $155,500(23) $6,000(37) $6,288(39) -- -- $4,112(38)
- ------------------
<FN>
(1) This amount includes a cash bonus for 1996 paid in 1997 in the amount of
$27,862. This amount also includes an award of 6,940 shares of Common Stock
as a stock bonus for 1996 granted in 1997. The value of the stock bonus was
determined by multiplying the number of shares subject to this grant by the
closing price of the Common Stock at fiscal year-end, which was $20.625.
(2) This amount includes an award of 10,000 shares of restricted Common Stock
in 1997 pursuant to the terms of Mr. Bartling's Employment Agreement with
the Company, which states that Mr. Bartling will receive one share of
Common Stock for each share of Common Stock purchased by him, up to a
maximum of 10,000 shares. The value of 5,000 shares subject to this award
was determined by multiplying such shares by the closing price of the
Common Stock on June 10, 1996, the date of his matching purchase, which was
$19.875. In addition, pursuant to an amendment to Mr. Bartling's Employment
Agreement, Mr. Bartling elected to receive shares of Common Stock in lieu
of cash bonus compensation otherwise payable to him on account of the
Company's 1996 fiscal year. The shares of Common Stock were issued based on
a valuation of $20.625 per share, being the closing price of the Common
Stock on December 31, 1996. The shares issued to Mr. Bartling pursuant to
this election qualified as shares purchased for the grant of matching stock
and accordingly the value of these 5,000 shares of matching stock was
determined by multiplying such shares by the closing price of the Common
Stock on December 31, 1996, the date applicable to such qualified matching
purchase, which was $20.625. Mr. Bartling elected to contribute the shares
subject to each of the foregoing grants to the Cardinal Realty Services,
Inc. Executive Deferred Compensation Rabbi Trust. This amount also includes
(a) payments of $12,500 per month from January 1, 1996 to November 30, 1996
for Mr. Bartling's relocation and temporary living expenses, as well as a
payment of $154,800 to compensate Mr. Bartling for any taxes relating to
such monthly payments, and (b) a car allowance of $750 per month.
(3) Mr. Bartling received an award of 22,500 shares of restricted Common Stock
on April 5, 1996, one-third of which vest on the third, fourth and fifth
anniversaries of such date. The value of this award was determined by
multiplying the number of shares subject to this grant by the closing price
of the Common Stock on April 5, 1996, $17.875. The value of this award at
the end of the 1996 fiscal year was $464,063 based on the fiscal year-end
38
<PAGE>
39
price of $20.625 per share. Mr. Bartling is entitled to receive dividends,
if paid, on this restricted Common Stock as and when such stock vests.
(4) Mr. Bartling received an option to purchase 20,000 shares of Common Stock
at $17.875 per share on April 5, 1996, one-fourth of which vest on the
second, third, fourth and fifth anniversaries of the date of grant.
(5) Includes the Company's payment of a premium in the amount of $1,190 for a
term life insurance policy with a death benefit of $2,000,000 and the
Company's portion of the cost of group term life insurance, health
insurance and disability insurance paid on behalf of Mr. Bartling in the
aggregate amount of $6,181.
(6) Salary for the period from December 1, 1995, when Mr. Bartling commenced
his employment with the Company, to December 31, 1995.
(7) Includes a payment of $12,500, which sum was required to be paid monthly
from December 1, 1995 to November 30, 1996 for Mr. Bartling's relocation
and temporary living expenses, and (b) a car allowance of $750 for the
month of December, 1995.
(8) Salary for the period from April 1, 1996, when Mr. Thompson commenced his
employment with the Company, to December 31, 1996.
(9) This amount includes a cash bonus for 1996 paid in 1997 in the amount of
$27,203. This amount also includes an award of 6,317 shares of Common Stock
as a stock bonus for 1996 granted in 1997. The value of the stock bonus was
determined by multiplying the number of shares subject to this grant by the
closing price of the Common Stock at fiscal year-end, which was $20.625.
(10) Includes an award of 5,000 shares of Common Stock in 1997 pursuant to the
terms of Mr. Thompson's Employment Agreement with the Company, which states
that Mr. Thompson will receive one share of Common Stock for each share of
Common Stock purchased by him, up to a maximum of 5,000 shares. The value
of 2,500 shares subject to this award was determined by multiplying such
shares by the closing price of the Common Stock on June 10, 1996, the date
of his matching purchase, which was $19.875. In addition, pursuant to an
amendment to Mr. Thompson's Employment Agreement, Mr. Thompson elected to
receive shares of Common Stock in lieu of cash bonus compensation otherwise
payable to him on account of the Company's 1996 fiscal year. The shares of
Common Stock were issued based on a valuation of $20.625 per share, being
the closing price of the Common Stock on December 31, 1996. The shares
issued to Mr. Thompson pursuant to this election qualified as shares
purchased for the grant of matching stock and accordingly the value of
these 2,500 shares of matching stock was determined by multiplying such
shares by the closing price of the Common Stock on December 31, 1996, the
date applicable to such qualified matching purchase, which was $20.625. Mr.
Thompson elected to contribute the shares subject to each of the foregoing
grants to the Cardinal Realty Services, Inc. Executive Deferred
Compensation Rabbi Trust. This amount also includes a relocation bonus of
$60,000 paid in 1997 for moving his principal residence to Columbus, Ohio,
as well as payment of $55,385 to compensate Mr. Thompson for any taxes
relating to such relocation bonus.
(11) Mr. Thompson received an award of 7,500 shares of restricted Common Stock
on April 15, 1996, one-third of which vests on the third, fourth and fifth
anniversaries of such date. The value of this award was determined by
multiplying the number of shares subject to this grant by the closing price
of the Common Stock on April 15, 1996, $18.25. The value of this award at
the end of the 1996 fiscal year was $154,688 based on the fiscal year-end
price of $20.625 per share. Mr. Thompson is entitled to receive dividends,
if paid, on the Common Stock as and when such stock vests.
(12) Mr. Thompson received an option to purchase 12,500 shares of Common Stock
at $17.625 per share on April 1, 1996, one-fifth of which vest on the
first, second, third, fourth and fifth anniversaries of the date of grant.
(13) Includes the Company's portion of the cost of group term life insurance and
disability insurance paid on behalf of Mr. Thompson in the aggregate amount
of $934.
(14) Salary for the period from April 15, 1996, when Mr. Selid commenced his
employment with the Company, to December 31, 1996.
(15) This amount includes a cash bonus for 1996 paid in 1997 in the amount of
$27,484. This amount also includes an award of 4,122 shares of Common Stock
as a stock bonus for 1996 granted in 1997. The value of the stock bonus was
determined by multiplying the number of shares subject to this grant by the
closing price of the Common Stock at fiscal year-end, which was $20.625.
39
<PAGE>
40
(16) This amount includes an award of 2,500 shares of Common Stock in 1997
pursuant to the terms of Mr. Selid's Employment Agreement with the Company,
which states that Mr. Selid will receive one share of Common Stock for each
share of Common Stock purchased by him, up to a maximum of 2,500 shares.
The value of 1,250 shares subject to this award was determined by
multiplying such shares by the closing price of the Common Stock on June
10, 1996, the date of his matching purchase, which was $19.875. In
addition, pursuant to an amendment to Mr. Selid's Employment Agreement, Mr.
Selid elected to receive shares of Common Stock in lieu of cash bonus
compensation otherwise payable to him on account of the Company's 1996
fiscal year. The shares of Common Stock were issued based on a valuation of
$20.625 per share, being the closing price of the Common Stock on December
31, 1996. The shares issued to Mr. Selid pursuant to this election
qualified as shares purchased for the grant of matching stock and
accordingly the value of these 1,250 shares of matching stock was
determined by multiplying such shares by the closing price of the Common
Stock on December 31, 1996, the date applicable to such qualified matching
purchase, which was $20.625. Mr. Selid elected to contribute the shares
subject to each of the foregoing grants to the Cardinal Realty Services,
Inc. Executive Deferred Compensation Rabbi Trust. This amount also includes
payments aggregating $45,000 pursuant to the terms of Mr. Selid's
Employment Agreement, all of which sums were paid to Mr. Selid during 1996
for Mr. Selid's relocation and temporary living expenses, as well as a
payment of $41,538 to compensate Mr. Selid for income taxes relating to
such payments.
(17) Mr. Selid received an option to purchase 12,500 shares of Common Stock at
$18.25 per share on April 15, 1996, one-fifth of which vest on the first,
second, third, fourth and fifth anniversaries of the date of grant.
(18) Includes the Company's portion of the cost of group term life insurance,
health insurance and disability insurance paid on behalf of Mr. Selid in
the aggregate amount of $3,576.
(19) Cash bonus for 1996 paid in 1997.
(20) Ms. Souder received an option to purchase 2,500 shares of Common Stock at
$19.25 per share on June 27, 1996, one-third of which vest on the first,
second and third anniversaries of the date of grant.
(21) Includes the Company's portion of the cost of group term life insurance,
health insurance and disability insurance paid on behalf of Ms. Souder.
(22) Cash bonus for 1995 paid in 1996.
(23) Cash bonus for 1994 paid in 1995.
(24) Ms. Souder received an award of 3,000 shares of restricted Common Stock on
February 24, 1994, one-third of which vested on the first, second and third
anniversaries of such date. The value of this award was determined by
multiplying the number of shares subject to this grant by $8.00 being the
bid price of the Common Stock in the Over The Counter market on February
24, 1994. Ms. Souder also received an award of 1,000 shares of restricted
Common Stock on October 11, 1994, one-third of which vested on the first,
second and third anniversaries of such date. The value of this award was
determined by multiplying the number of shares subject to this grant by
$15.50 being the bid price of the Common Stock in the Over The Counter
market on October 11, 1994.
(25) Mr. Koegler received an option to purchase 2,500 shares of Common Stock at
$19.25 per share on June 27, 1996, one-third of which vest on the first,
second and third anniversaries of the date of grant.
(26) Includes the Company's portion of the cost of group term life insurance,
health insurance and disability insurance paid on behalf of Mr. Koegler.
(27) Mr. Koegler received an award of 1,500 shares of restricted Common Stock on
October 11, 1994, one-third of which vested on the first, second and third
anniversaries of such date. The value of this award was determined by
multiplying the number of shares subject to this grant by $15.50 being the
bid price of the Common Stock in the Over The Counter market on October 11,
1994.
(28) Salary for the period from January 1, 1995 to October 31, 1996, the
effective date of Mr. Blackmore's resignation.
(29) This amount includes a cash bonus for 1996 paid in 1997 in the amount of
$37,338. This amount also includes an award of 2,263 shares of Common Stock
as a stock bonus for 1996 granted in 1997. The value of the stock bonus was
40
<PAGE>
41
determined by multiplying the number of shares subject to this grant by the
closing price of the Common Stock at fiscal year-end, which was $20.625.
(30) Includes the Company's portion of the cost of group term life insurance,
health insurance and disability insurance paid on behalf of Mr. Blackmore
and the Company's matching contribution, in the form of the Company's
Common Stock, made pursuant to Mr. Blackmore's contribution in the
Company's 401(k) Savings Plan in the aggregate amount of $3,238. This
amount also includes $17,305 paid to Mr. Blackmore in 1996 pursuant to the
terms of Mr. Blackmore's Severance Agreement and Mutual Release and
Consulting Agreement with the Company (See "Termination of Employment of
Certain Executive Officers").
(31) Includes the Company's portion of the cost of group term life insurance,
health insurance and disability insurance paid on behalf of Mr. Blackmore
and the Company's matching contribution, in the form of the Company's
Common Stock, made pursuant to Mr. Blackmore's contribution in the
Company's 401(k) Savings Plan.
(32) Mr. Blackmore received an award of deferred Common Stock equal to 0.19% of
the Company's Total Committed Equity. The value of the award was estimated
based on (a) a projection as to the number of shares of Common Stock that
management believed would be issued pursuant to the Plan of Reorganization
and (b) a per share valuation of the Common Stock based on the estimated
value of the Common Stock of $3.93 per share, the value upon which issuance
of the Deferred Stock was contingent at the date of grant. Mr. Blackmore
received approximately 7,600 shares of Deferred Stock. Mr. Blackmore is
fully vested in the Deferred Stock. In the event the Company were to
declare a dividend on its Common Stock, the dividend would be paid on the
Deferred Stock awarded to Mr. Blackmore.
(33) See "Termination of Employment of Certain Executive Officers".
(34) Cash bonus for 1996 paid in 1997. See "Termination of Employment of Certain
Executive Officers".
(35) Includes the Company's portion of the cost of group term life insurance,
health insurance and disability insurance paid on behalf of Mr. Carbone.
This amount also includes severance payments of $427,953 and consulting
fees of $150,000 (See "Termination of Employment of Certain Executive
Officers").
(36) See "Termination of Employment of Certain Executive Officers".
(37) Includes car allowance of $500 per month.
(38) Includes the Company's portion of the cost of group term life insurance,
health insurance and disability insurance. Also includes the Company's
matching contribution, in the form of the Company's Common Stock, made
pursuant to Mr. Carbone's participation in the Company's 401(k) Savings
Plan.
(39) Mr. Carbone received an award of deferred Common Stock equal to 0.04% of
the Company's Total Committed Equity. The value of the award was estimated
based on (a) a projection as to the number of shares of Common Stock that
management believed would be issued pursuant to the Plan of Reorganization
and (b) a per share valuation of the Common Stock based on the estimated
value of the Common Stock of $3.93 per share, the value upon which issuance
of the Deferred Stock was contingent at the date of grant. Mr. Carbone
received approximately 1,600 shares of Deferred Stock. Mr. Carbone is fully
vested in the Deferred Stock. In the event the Company were to declare a
dividend on its Common Stock, the dividend would be paid on the Deferred
Stock awarded to Mr. Carbone.
</FN>
</TABLE>
41
<PAGE>
42
(b) STOCK OPTIONS GRANTS TABLE
The following table sets forth the information noted for all grants
of stock options to each of the executive officers named in the Summary
Compensation Table during 1996:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
| | | Potential Realizable |
| | | Value at Assumed Annual |
| | | Rates of Stock Price |
| | Individual Grants | Appreciation For Option Term|
|----------------------------------------------------------------------------------------------------------------------|
| | Number of | | | | | |
| | Securities |Percent of Total | | | | |
| | underlying | Options Granted | Exercise of | | | |
| | Options | to Employees in | Base Price |Expiration| | |
| Name | Granted (#) | Fiscal Year | ($/Sh) | Date | 5% ($) | 10% ($) |
|----------------------------------------------------------------------------------------------------------------------|
<S> <C> <C> <C> <C> <C> <C>
John B. Bartling, Jr.,
Chief Executive Officer 20,000(1) 33% $17.875 4/5/06 $224,830 $569,763
and President............
Mark D. Thompson, Chief
Financial Officer and 12,500(2) 21% $17.625 4/1/06 $138,553 $351,121
Executive Vice President.
Paul R. Selid, 12,500(3) 21% $18.25 4/15/06 $143,467 $363,572
Senior Vice President....
Michele R. Souder, 2,500(4) 4% $19.25 6/27/06 $30,266 $76,699
Vice President...........
Ronald P. Koegler,
Vice President and 2,500(5) 4% $19.25 6/27/06 $30,266 $76,699
Controller...............
David P. Blackmore,
Former Chief Financial
Officer and Executive -- -- -- -- -- --
Vice President...........
Michael F. Carbone,
Former Chief Financial
Officer and Vice -- -- -- -- -- --
President................
- ------------------
<FN>
(1) Mr. Bartling received an option to purchase 20,000 shares of Common Stock
with an exercise price of $17.875 per share on April 5, 1996, one-fourth of
which vest on the second, third, fourth and fifth anniversaries of the date
of grant.
(2) Mr. Thompson received an option to purchase 12,500 shares of Common Stock
with an exercise price of $17.625 per share on April 1, 1996, one-fifth of
which vest on the first, second, third, fourth and fifth anniversaries of
the date of grant.
(3) Mr. Selid received an option to purchase 12,500 shares of Common Stock with
an exercise price of $18.25 per share on April 15, 1996, one-fifth of which
vest on the first, second, third, fourth and fifth anniversaries of the
date of grant.
(4) Ms. Souder received an option to purchase 2,500 shares of Common Stock with
an exercise price of $19.25 per share on June 27, 1996, one-third of which
vest on the first, second and third anniversaries of the date of grant.
42
<PAGE>
43
(5) Mr. Koegler received an option to purchase 2,500 shares of Common Stock
with an exercise price of $19.25 per share on June 27, 1996, one-third of
which vest on the first, second and third anniversaries of the date of
grant.
</FN>
</TABLE>
(c) STOCK OPTIONS VALUE TABLE
The following table sets forth the fiscal year-end value of unexercised
stock options for each of the executive officers named in the Summary
Compensation Table for the 1996 fiscal year.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END
SHARES VALUE (#) ($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE (1)
- -------------------------------------- ---------------- ---------------- ---------------------------- ---------------------------
<S> <C> <C> <C> <C>
John B. Bartling, Jr., Chief 0 Exercisable/ N/A Exercisable/
Executive Officer and President...... 0 0 20,000 Unexercisable(1) $55,000 Unexercisable(2)
Mark D. Thompson, Chief Financial 0 Exercisable/ N/A Exercisable/
Officer and Executive Vice President.. 0 0 12,500 Unexercisable(3) $37,500 Unexercisable(4)
Paul R. Selid, 0 Exercisable/ N/A Exercisable/
Senior Vice President................. 0 0 12,500 Unexercisable(5) $29,688 Unexercisable(6)
Michele R. Souder 0 Exercisable/ N/A Exercisable/
Vice President........................ 0 0 2,500 Unexercisable(7) $3,438 Unexercisable(8)
Ronald P. Koegler 0 Exercisable/ N/A Exercisable/
Vice President and Controller......... 0 0 2,500 Unexercisable(9) $3,438 Unexercisable(10)
David P. Blackmore, Former Chief
Financial Officer and Executive Vice
President............................. 4,378 $78,804(11) N/A N/A
Michael F. Carbone, Former Chief
Financial Officer..................... 0 0 N/A N/A
- ------------------
<FN>
(1) Mr. Bartling received an option to purchase 20,000 shares of Common Stock
with an exercise price of $17.875 per share on April 5, 1996, one-fourth of
which vest on the second, third, fourth and fifth anniversaries of the date
of grant.
(2) The value of the stock option was calculated by multiplying the number of
underlying securities by the difference between (a) $20.625 per share being
the closing price of the Common Stock at fiscal year-end on the Nasdaq
National Market tier of the Nasdaq Stock Market, and (b) the exercise price
of the option, $17.875 per share.
(3) Mr. Thompson received an option to purchase 12,500 shares of Common Stock
with an exercise price of $17.625 per share on April 1, 1996, one-fifth of
which vest on the first, second, third, fourth and fifth anniversaries of
the date of grant.
(4) The value of the stock option was calculated by multiplying the number of
underlying securities by the difference between (a) $20.625 per share being
the closing price of the Common Stock at fiscal year-end on the Nasdaq
National Market tier of the Nasdaq Stock Market, and (b) the exercise price
of the options, $17.625 per share.
(5) Mr. Selid received an option to purchase 12,500 shares of Common Stock with
an exercise price of $18.25 per share on April 15, 1996, one-fifth of which
vest on the first, second, third, fourth and fifth anniversaries of the
date of grant.
(6) The value of the stock option was calculated by multiplying the number of
underlying securities by the difference between (a) $20.625 per share being
the closing price of the Common Stock at fiscal year-end on the Nasdaq
43
<PAGE>
44
National Market tier of the Nasdaq Stock Market, and (b) the exercise price
of the options, $18.25 per share.
(7) Ms. Souder received an option to purchase 2,500 shares of Common Stock with
an exercise price of $19.25 per share on June 27, 1996, one-third of which
vest on the first, second and third anniversaries of the date of grant.
(8) The value of the stock option was calculated by multiplying the number of
underlying securities by the difference between (a) $20.625 per share being
the closing price of the Common Stock at fiscal year-end on the Nasdaq
National Market tier of the Nasdaq Stock Market, and (b) the exercise price
of the option, $19.25 per share.
(9) Mr. Koegler received an option to purchase 2,500 shares of Common Stock
with an exercise price of $19.25 per share on June 27, 1996, one-third of
which vest on the first, second and third anniversaries of the date of
grant.
(10) The value of the stock option was calculated by multiplying the number of
underlying securities by the difference between (a) $20.625 per share being
the closing price of the Common Stock at fiscal year-end on the Nasdaq
National Market tier of the Nasdaq Stock Market, and (b) the exercise price
of the option, $19.25 per share.
(11) On September 11, 1992, Mr. Blackmore was granted a stock option to purchase
4,378 shares of Common Stock with an exercise price of $1.42 per share. On
October 23, 1996, Mr. Blackmore exercised his option to purchase such
shares. The value of this exercise was determined by multiplying the number
of shares subject to this stock option by $19.88, being the closing price
of the Common Stock on October 23, 1996.
</FN>
</TABLE>
(d) LONG-TERM INCENTIVE PLANS TABLE
The following table sets forth the information noted for all long-term
incentive plans awards granted to each of the executive officers named in the
Summary Compensation Table during 1996:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
| | Perform- |
| | ance or Other | Estimated Future Payouts Under Non-Stock Price-Based Plans
| Number of | Period Until |--------------------------------------------------------------
| Shares | Maturation | Threshold | Target | Maximum
Name | (#) | Payout | ($ or #) | ($ or #) | ($ or #)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John B. Bartling, Jr., Chief 20,000(1) (1) 0 shares (1) 20,000 shares (1) 20,000 shares (1)
Executive Officer and President.
Mark D. Thompson, Chief
Financial Officer and Executive 9,000(2) (2) 0 shares (2) 9,000 shares (2) 9,000 shares (2)
Vice President..................
Paul R. Selid, 9,000(2) (2) 0 shares (2) 9,000 shares (2) 9,000 shares (2)
Senior Vice President...........
Michele R. Souder -- N/A N/A N/A N/A
Vice President..................
Ronald P. Koegler -- N/A N/A N/A N/A
Vice President and Controller...
David P. Blackmore
Former Chief Financial Officer -- N/A N/A N/A N/A
and Executive Vice President ...
Michael F. Carbone
Former Chief Financial Officer -- N/A N/A N/A N/A
and Vice President ............
- ------------------
<FN>
(1) Mr. Bartling received an award of the right to receive 20,000 deferred
shares of Common Stock on April 5, 1996, providing that so long as Mr.
Bartling remains in the employ of the Company, one-third of such shares
will be earned and will be issued when the average number of issued and
44
<PAGE>
45
outstanding shares of Common Stock over ten consecutive trading days
multiplied by the average closing price of the Common Stock on the Nasdaq
National Market tier of the Nasdaq Stock Market over such period (or if the
Common Stock is not listed or admitted to trading on such exchange, the
principal securities exchange on which the Common Stock is listed or
admitted to trading) plus the liquidation value of all issued and
outstanding preferred stock of the Company ("Market Capitalization"),
exceeds $90 million, one-third of which shall vest when the Market
Capitalization exceeds $120 million, and the final one-third of which shall
vest when the Market Capitalization exceeds $150 million. The terms of the
deferred shares provide for acceleration upon a change of control of the
Company or the termination of Mr. Bartling's employment other than for
cause. The shares, if earned, will be contributed to the Cardinal Realty
Services, Inc. Executive Deferred Compensation Rabbi Trust.
(2) Mr. Thompson and Mr. Selid each received an award of the right to receive
9,000 deferred shares of Common Stock on April 15, 1996, providing that so
long as Mr. Thompson and Mr. Selid remain in the employ of the Company
one-third of such shares will be earned and will be issued when the average
number of issued and outstanding shares of Common Stock over 90 consecutive
trading days multiplied by the average closing price of the Common Stock on
the Nasdaq National Market tier of the Nasdaq Stock Market over such
period (or if the Common Stock is not listed or admitted to trading on such
exchange, the principal securities exchange on which the Common Stock is
listed or admitted to trading) plus the liquidation value of all issued and
outstanding preferred stock of the Company ("Market Capitalization"),
exceeds $90 million, one-third of which shall vest when the Market
Capitalization exceeds $120 million, and the final one- third of which
shall vest when the Market Capitalization exceeds $150 million. The terms
of the deferred shares provide for acceleration upon a change of control of
the Company or the termination of Mr. Thompson's and Mr. Selid's employment
other than for cause. The shares, if earned, will be contributed to the
Cardinal Realty Services, Inc. Executive Deferred Compensation Rabbi Trust
</FN>
</TABLE>
(e) DIRECTOR COMPENSATION
Each director of the Company who is not an employee of the Company is paid
an annual retainer fee of $15,000, plus (a) meeting fees of $1,000 for
attendance at each meeting of the Board and (b) $750 for each committee meeting
that occurs on a date when the full Board does not meet. Pursuant to the
Company's 1992 Incentive Equity Plan, as amended (the "Incentive Equity Plan"),
each member of the Board who was not employed by the Company was granted, at the
commencement of the director's term, a stock option to purchase shares of the
Company's Common Stock representing 0.1875% of the Company's "Total Committed
Equity", subject to certain vesting requirements (all of which have been
satisfied), which was subsequently calculated to be an option to purchase 7,500
shares of the Company's Common Stock for each director. The foregoing stock
options expire on September 19, 2002. "Total Committed Equity" is defined in the
Incentive Equity Plan as the total number of shares of the Company's Common
Stock (a) issued upon the allowance of claims (as defined in Section 101(5) of
the Bankruptcy Code) pursuant to the Third Amended Plan of Reorganization of the
Company and its substantively consolidated subsidiaries (the "Plan of
Reorganization") that was confirmed by the United States Bankruptcy Court for
the Southern District of Ohio, Eastern Division (the "Bankruptcy Court") on
August 26, 1992 and became effective on September 11, 1992 (the "Effective
Date") and (b) issued or reserved for issuance under the Incentive Equity Plan
as of September 11, 1992. In addition, each director was granted on November 30,
1995 and May 23, 1996, and will be granted annually on the day after the
Company's Annual Meeting of Shareholders, so long as each director remains a
director of the Company, an option to purchase 2,000 shares of the Company's
Common Stock with an exercise price equal to the fair market value on the date
of the grant a ten year term from date of grant and a vesting period of the
lesser of one year or the period from the date of the grant to the next annual
meeting of shareholders.
At the Company's annual shareholders meeting held on May 22, 1996, the
shareholders approved the Company's Non-Employee Director Restricted Stock Plan
(the "Directors Restricted Stock Plan"). Under the terms of the Directors
Restricted Stock Plan, each non-employee director of the Company may elect to
receive shares of the Company's Common Stock in lieu of cash directors fees
otherwise payable to him. The Company has reserved 50,000 shares for issuance
under the Directors Restricted Stock Plan and is also authorized to purchase
shares of the Company's Common Stock on the open market or in private
transactions in order to provide for the payment of shares of Common Stock to
non-employee directors under the Directors Restricted Stock Plan. Each
non-employee director who participates in the Directors Restricted Stock Plan
receives shares of restricted Common Stock in lieu of cash compensation with the
shares paid to such director being valued at a 20% discount from their fair
45
<PAGE>
46
market value on the date of payment. Shares of restricted Common Stock issued or
paid to directors under the Directors Restricted Stock Plan have a restriction
period of 3 years. The director may not sell, exchange, transfer, pledge,
hypothecate, assign or otherwise dispose of the shares during the restriction
period, except by bequest pursuant to a will or by intestacy. All restrictions
will lapse and the holder of the restricted Common Stock will be entitled to
receipt of the shares following the earliest of (a) 3 years from the date of the
issuance or payment of the restricted Common Stock to the holder; (b) the date
of the holder's death or disability; (c) the date the holder, after being
nominated by the Board, is not elected by the shareholders in an election for
the Board; or (d) the date on which the Board determines that the holder will
not be nominated for election to the Board. Shares of the restricted Common
Stock will be forfeited to the Company in the event that, during the restriction
period, the holder (a) resigns (other than by reason of disability) or is
dismissed for cause from the Board during his elected term as a director; (b)
declines to stand for an election to the Board after having been nominated by
the Board; or (c) sells, exchanges, transfers, pledges, hypothecates, assigns or
otherwise attempts to dispose of shares of restricted Common Stock except by
bequest pursuant to a will or intestacy. As of the end of the Company's 1996
fiscal year, each non- employee director had elected to participate in the
Directors Restricted Stock Plan by electing to receive shares of restricted
Common Stock in lieu of a percentage of directors fees otherwise payable in
cash, such elective percentages ranging from 25% to 100% of directors fees.
(f) EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT
John B. Bartling, Jr. Employment Agreement
------------------------------------------
The Company and Mr. Bartling entered into an employment agreement, dated as
of December 1, 1995 (the "Bartling Employment Agreement") for an original term
through December 31, 1998 and an annual base salary of $285,000 ("Bartling's
Base Salary"), plus an annual cash bonus of 2% of Bartling's Base Salary for
each 1% increase in the Company's recurring earnings before interest (other than
interest paid on mortgage loans secured by the Company's Wholly Owned
Properties), taxes, depreciation and amortization determined in accordance with
generally accepted accounting principles without regard to extraordinary gains
or losses ("Adjusted EBITDA") from the previous fiscal year's Adjusted EBITDA,
limited to 60% of Bartling's Base Salary.
Under the terms of the Bartling Employment Agreement, the Company granted
Mr. Bartling (i) 22,500 shares of Restricted Stock (see footnote 3 of the
Summary Compensation Table), (ii) the right to receive up to 20,000 deferred
shares of Restricted Stock (see footnote 1 of the Long-Term Incentive Plans
Table), (iii) one share of the Company's Common Stock, at no additional cost to
him, for each share of the Company's Common Stock purchased by Mr. Bartling in
1996 up to a maximum of 10,000 shares (the "Bartling Matching Shares"), and (iv)
options to purchase 20,000 shares of the Company's Common Stock (see footnote 1
of the Stock Options Grants Table).
The Bartling Employment Agreement was amended effective as of December 20,
1996 to provide that Mr. Bartling could elect to receive shares of the Company's
Common Stock in lieu of his cash bonus earned in 1996. Shares of Common Stock
made subject to such election would be valued at the December 31, 1996 closing
price for the Company's Common Stock. Such amendment further provided that any
such shares which Mr. Bartling might elect to receive in lieu of his cash bonus
earned for 1996 would qualify for the grant of the 5,000 Bartling Matching
Shares not yet awarded to Mr. Bartling as of such date. In March, 1997, Mr.
Bartling elected to receive 6,940 shares in lieu of a portion of his 1996 cash
bonus (see footnote 1 of the Summary Compensation Table). Accordingly, pursuant
to Mr. Bartling's election, Mr. Bartling was entitled to receive the balance of
the 5,000 Bartling Matching Shares not yet awarded to him as of such date.
Upon termination of Mr. Bartling's employment without cause, Mr. Bartling
would be entitled to receive: (i) any of Bartling's Base Salary, and any other
benefits due him under the Bartling Employment Agreement, payable for the
remaining period of the original term or any extension thereof; (ii) the cash
bonus, if any, applicable to the fiscal year in which such termination without
cause occurs; and (iii) all of the shares of Restricted Stock, all shares of
deferred Common Stock (whether or not any of the Market Capitalization targets
are then met) and stock options, fully vested, and otherwise free of any
forfeiture provisions or other restrictions imposed under the documents
evidencing such awards, except for any restrictions or limitations imposed by
applicable state and federal securities laws and regulations.
Furthermore, in the event the Company's Market Capitalization exceeds $150
million or there is a change in control of the Company, the vesting of all
Restricted Stock and stock options awarded to Mr. Bartling will be accelerated.
The Bartling Employment Agreement and related Award Agreements were amended
to permit Mr. Bartling to defer the receipt of all shares of the Company's
Common Stock which would otherwise be payable to him under the terms of the
46
<PAGE>
47
Bartling Employment Agreement and the related Award Agreements. Pursuant to
these amendments made in conjunction with the adoption of the Cardinal Realty
Services, Inc. Executive Deferred Compensation Plan, all such shares of Common
Stock have been or will be issued for the benefit of Mr. Bartling to The
Provident Bank as Trustee (the "Trustee") of the Cardinal Realty Services, Inc.
Executive Deferred Compensation Rabbi Trust.
The Bartling Employment Agreement has been further amended effective as of
January 1, 1997 to increase Mr. Bartling's base salary to $340,000; $298,750 of
which is payable in cash and the balance is payable in the form of 2,000 shares
of the Company's Common Stock (valued at $20.625 per share, being the closing
price of the Company's Common Stock on December 31, 1996) issuable to the
Trustee for Mr. Bartling's benefit.
Mark D. Thompson Employment Agreement
-------------------------------------
The Company and Mr. Thompson entered into an employment agreement, dated as
of April 1, 1996 (the "Thompson Employment Agreement") for an original term
through April 14, 1997 and an annual base salary of $175,000 ("Thompson's Base
Salary"), plus bonuses under the Company's Incentive Compensation Plan for its
1996 fiscal year, under which Mr. Thompson will receive a cash bonus of up to
60% of Thompson's Base Salary based on incremental increases in the Company's
Adjusted EBITDA from the previous fiscal year's Adjusted EBITDA.
Under the terms of the Thompson Employment Agreement and the Incentive
Equity Plan, the Company granted Mr. Thompson 7,500 shares of Restricted Stock
(see footnote 11 of the Summary Compensation Table), (ii) the right to receive
up to 9,000 deferred shares of Restricted Stock (see footnote 2 of the Long-Term
Incentive Plans Table), (iii) one share of the Company's Common Stock, at no
additional cost to him, for each share of the Company's Common Stock purchased
by Mr. Thompson in 1996 up to a maximum of 5,000 shares (the "Thompson Matching
Shares"), and (iv) options to purchase 12,500 shares of the Company's Common
Stock (see footnote 2 of the Stock Options Grants Table).
The Thompson Employment Agreement was amended effective as of December 20,
1996 to provide that Mr. Thompson could elect to receive shares of the Company's
Common Stock in lieu of his cash bonus earned in 1996. Shares of Common Stock
made subject to such election would be valued at the December 31, 1996 closing
price for the Company's Common Stock. Such amendment further provided that any
such shares which Mr. Thompson might elect to receive in lieu of his cash bonus
earned for 1996 would qualify for the grant of the 2,500 Thompson Matching
Shares not yet awarded to Mr. Thompson as of such date. In March, 1997, Mr.
Thompson elected to receive 3,772 shares in lieu of a portion of his 1996 cash
bonus (see footnote 8 of the Summary Compensation Table). Accordingly, pursuant
to Mr. Thompson's election, Mr. Thompson was entitled to receive the balance of
the 2,500 Thompson Matching Shares not yet awarded to him as of such date.
Upon termination of Mr. Thompson's employment without cause, Mr. Thompson
would be entitled to receive: (i) any of Thompson's Base Salary, and any other
benefits due him under the Thompson Employment Agreement, payable for the
remaining period of the original term, if any, plus the immediately succeeding
nine months; (ii) a prorated portion of the cash bonus, if any, applicable to
the fiscal year in which such termination without cause occurs; and (iii) all of
the shares of Restricted Stock (other than those shares of Restricted Stock
based on Market Capitalization which have not theretofore vested) and stock
options, fully vested, and otherwise free of any forfeiture provisions or other
restrictions imposed under the documents evidencing such awards, except for any
restrictions or limitations imposed by applicable state and federal securities
laws and regulations.
Furthermore, in the event the Company's Market Capitalization exceeds $150
million or there is a change in control of the Company, the vesting of all
Restricted Stock and stock options awarded to Mr. Thompson will be accelerated.
The Thompson Employment Agreement and related Award Agreements were amended
to permit Mr. Thompson to defer the receipt of all shares of the Company's
Common Stock which would otherwise be payable to him under the terms of the
Thompson Employment Agreement and the related Award Agreements. Pursuant to
these amendments made in conjunction with the adoption of the Cardinal Realty
Services, Inc. Executive Deferred Compensation Plan, all such shares of Common
Stock have been or will be issued for the benefit of Mr. Thompson to The
Provident Bank as Trustee (the "Trustee") of the Cardinal Realty Services, Inc.
Executive Deferred Compensation Rabbi Trust.
47
<PAGE>
48
The Thompson Employment Agreement has been further amended effective as of
January 1, 1997 to increase Mr. Thompson's base salary to $230,000, of which
$200,000 is payable in cash and the balance is payable in the form of 1,455
shares of the Company's Common Stock (valued at $20.625 per share, being the
closing price of the Company's Common Stock on December 31, 1996) issuable to
the Trustee for Mr. Thompson's benefit.
Paul R. Selid Employment Agreement
----------------------------------
The Company and Mr. Selid entered into an employment agreement, dated as of
April 15, 1996 (the "Selid Employment Agreement") for an original term through
April 14, 1997 and an annual base salary of $125,000 ("Selid's Base Salary"),
plus bonuses under the Company's Incentive Compensation Plan for its 1996 fiscal
year, under which Mr. Selid will receive a cash bonus of up to 60% of Selid's
Base Salary based on incremental increases in the Company's return on investment
percentage ("ROI") from the previous fiscal year's ROI.
Under the terms of the Selid Employment Agreement and the Incentive Equity
Plan, the Company granted Mr. Selid (i) the right to receive up to 9,000
deferred shares of Restricted Stock (see footnote 2 of the Long-Term Incentive
Plans Table), (ii) one share of the Company's Common Stock, at no additional
cost to him, for each share of the Company's Common Stock purchased by Mr. Selid
in 1996 up to a maximum of 2,500 shares (the "Selid Matching Shares"), and (iii)
options to purchase 12,500 shares of the Company's Common Stock (see footnote 3
of the Stock Options Grants Table).
The Selid Employment Agreement was amended effective as of December 20,
1996 to provide that Mr. Selid could elect to receive shares of the Company's
Common Stock in lieu of his cash bonus earned in 1996. Shares of Common Stock
made subject to such election would be valued at the December 31, 1996 closing
price for the Company's Common Stock. Such amendment further provided that any
such shares which Mr. Selid might elect to receive in lieu of his cash bonus
earned for 1996 would qualify for the grant of the 1,250 Selid Matching Shares
not yet awarded to Mr. Selid as of such date. In March, 1997, Mr. Selid elected
to receive 2,304 shares in lieu of a portion of his 1996 cash bonus (see
footnote 15 of the Summary Compensation Table). Accordingly, pursuant to Mr.
Selid's election, Mr. Selid was entitled to receive the balance of the 1,250
Selid Matching Shares not yet awarded to him as of such date.
Upon termination of Mr. Selid's employment without cause, Mr. Selid would
be entitled to receive: (i) any of Selid's Base Salary, and any other benefits
due him under the Selid Employment Agreement, payable for the remaining period
of the original term, if any, plus the immediately succeeding nine months; (ii)
a prorated portion of the cash bonus, if any, applicable to the fiscal year in
which such termination without cause occurs; and (iii) all of the stock options,
fully vested, and otherwise free of any forfeiture provisions or other
restrictions imposed under the documents evidencing such awards, except for any
restrictions or limitations imposed by applicable state and federal securities
laws and regulations.
Furthermore, in the event the Company's Market Capitalization exceeds $150
million or there is a change in control of the Company, the vesting of all
Restricted Stock and stock options awarded to Mr. Selid will be accelerated.
The Selid Employment Agreement and related Award Agreements were amended to
permit Mr. Selid to defer the receipt of all shares of the Company's Common
Stock which would otherwise be payable to him under the terms of the Selid
Employment Agreement and the related Award Agreements. Pursuant to these
amendments made in conjunction with the adoption of the Cardinal Realty
Services, Inc. Executive Deferred Compensation Plan, all such shares of Common
Stock have been or will be issued for the benefit of Mr. Selid to The Provident
Bank as Trustee of the Cardinal Realty Services, Inc. Executive Deferred
Compensation Rabbi Trust.
Termination of Employment of Certain Executive Officers
-------------------------------------------------------
Michael F. Carbone resigned as Vice President and Chief Financial Officer
of the Company effective as of January 16, 1996 and entered into a Severance
Agreement and Mutual Release (the "Carbone Severance Agreement") and a
consulting agreement (the "Carbone Consulting Agreement") each dated as of
January 16, 1996. The Carbone Severance Agreement provided that Mr. Carbone
would receive (i) regular payments of base annual compensation through December
48
<PAGE>
49
31, 1996; (ii) a cash bonus equal to 50% of his annual base salary (being a cash
payment of $102,952.50); and (iii) an additional cash bonus in the amount of
$325,000 in compromise of any and all disputes regarding cash bonuses earned or
to be earned for fiscal years 1995 and 1996. In addition, in consideration of
Mr. Carbone's release of any and all claims against the Company, his irrevocable
proxy and covenants of confidentiality and cooperation, Mr. Carbone received a
cash payment of $102,952.50 and a tax loan to cover his income tax obligations
incurred as a result of the exercise of his stock options. The Carbone
Consulting Agreement provides that Mr. Carbone will provide financial and
business consulting services as requested by the Company for up to 12 hours per
month during the one year period beginning June 1, 1996 and in consideration
therefor, Mr. Carbone received a payment in the amount of $150,000. The Carbone
Consulting Agreement also provides that Mr. Carbone will be entitled to an
incentive fee (at market rates to be agreed upon between the Company and Mr.
Carbone) in consideration for any financings obtained by the Company from
financing sources solicited by Mr. Carbone on the Company's behalf; provided
that the financings are completed within one year following the completion of
the term of consulting services. In consideration of the Carbone Consulting and
Carbone Severance Agreements, Mr. Carbone granted the Company's nominees an
irrevocable proxy for the voting of all shares of the Company's Common Stock
held by him over a specified period of time ending not later than July 1, 1999,
or if later, the date of final adjournment of the Company's 1999 annual
shareholders meeting.
David P. Blackmore resigned as Chief Financial Officer and Executive Vice
President of the Company effective October 31, 1996 and entered into a Severance
Agreement and Mutual Release (the "Blackmore Severance Agreement") and a
Consulting Agreement (the "Blackmore Consulting Agreement") with the Company
each dated as of September 4, 1996. The Blackmore Severance Agreement provided
that Mr. Blackmore would receive (i) a payment in the amount of $112,500 payable
over nine months representing a bonus for Mr. Blackmore's prior services as an
executive officer of the Company, (ii) 83 1/3% of the cash bonus and stock bonus
he would otherwise have been entitled to receive pursuant to the Company's 1996
Incentive Compensation Plan (which, based upon the Company's fiscal year 1996
results amounted to $37,338 in cash and 2,263 shares of Common Stock valued at
$20.625 per share), (iii) an award of an additional 2,000 shares of Common Stock
issued in conjunction with the payment of the cash bonus and stock bonus and
(iv) executive outplacement services and certain other benefits. The Blackmore
Consulting Agreement provided that Mr. Blackmore would receive the sum of
$50,000 either in a lump sum or payable over nine months, which amount is being
paid over nine months. In consideration of the Blackmore Severance and Blackmore
Consulting Agreements, Mr. Blackmore granted the Company's nominees an
irrevocable proxy for the voting of all shares of the Company's Common Stock
held by him over a specified period of time ending not later than July 1, 1999,
or if later, the date of final adjournment of the Company's 1999 annual
shareholders meeting. The Company also agreed to provide Mr. Blackmore with a
tax loan to cover his tax obligations incurred as a result of the exercise of
his stock options.
The Company currently maintains a policy of providing its executive
officers with nine months of their base salary in the event of a termination of
their employment without cause.
(g) COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following Report of the Compensation Committee and the Performance
Graph included in this Form 10-K shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this Form 10-K
into any filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent the Company specifically
incorporates this Report or the Performance Graph by reference therein, and
shall not be deemed soliciting material or otherwise deemed filed under either
of such Acts.
The Compensation Committee administers the Company's various compensation
plans and reviews and recommends to the Board of Directors compensation levels
for executive officers, evaluates executive management's performance and
considers executive management succession and related matters. The Compensation
Committee is composed exclusively of independent, non-employee directors.
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Philosophy of Compensation Committee
The Compensation Committee believes that executive compensation should
reflect the value created for the Company's shareholders while supporting the
Company's long-term strategic goals. It is the belief of the Compensation
Committee that executive compensation should serve to:
o reward individuals for significant contribution to the Company's
success;
o align the interests of executives with those of the Company's
long-term investors;
o retain, motivate and attract qualified executives; and
o provide incentives to executives to achieve strategic objectives in a
manner consistent with the Company's values.
Executive Officer Compensation
Individual executive officer compensation consists of three components:
base salary, annual cash and stock incentive bonuses and long-term equity
incentives. Each component will be discussed below.
In 1996, the Company through the efforts of its Chief Executive Officer and
the Compensation Committee, retained an entirely new group of executive
officers, some of whom were newly hired by the Company and others of whom
received promotions based upon their prior superior performance in non-executive
officer positions with the Company. In 1996, the Company also accepted the
resignations of, and negotiated severance agreements with, all former executive
officers (other than its Chief Executive Officer whose term of employment
commenced only on December 1, 1995). In addition, in 1996 the Company acquired
Lexford Properties which now, as the Company's wholly owned subsidiary, performs
all of the Company's fee based property management services. An integral part of
the negotiation of the Company's acquisition of Lexford Properties was the
structuring negotiation and documentation of terms of employment between Lexford
Properties, Inc. and the former equity owners of Lexford Properties engaged in
the active management of that entity, including, without limitation, Patrick M.
Holder who is now an executive officer of the Company. In determining the annual
salaries of each new executive officer and significant employee retained or
promoted during 1996, the Compensation Committee retained a nationally
recognized executive compensation and benefits consultant in order to obtain and
benefit from its advice and assistance concerning appropriate levels of
executive compensation and information regarding compensation trends and levels
of compensation paid by comparable companies participating in the multi-family
residential real estate industry generally. The Compensation Committee met
several times in 1996 and thoroughly deliberated the complete compensation
packages payable to each such newly retained or promoted executive officer and
significant employee.
Salaries for executive officers are reviewed by the Compensation Committee
on an annual basis and may be increased based on (a) individual performance and
contribution and (b) increases in competitive pay levels.
The Compensation Committee believes that the compensation packages agreed
to with its executive officers and other significant employees genuinely
preserves its philosophical objectives by placing significant emphasis on the
latter two components of the Compensation Committee's stated compensation
components, namely, annual cash and stock incentive bonus and long term equity
incentives. In this regard, the Company's compensation arrangements are weighted
heavily towards incentive bonuses based upon the Company's financial performance
measured in terms of its earnings before interest, taxes, depreciation, and
amortization without regard to extraordinary gains or losses ("Adjusted EBITDA")
and awards of restricted stock which will vest on the basis of growth in the
Company's market capitalization. It should be noted that the Compensation
Committee, in consultation with the full Board, the Company's Chief Executive
and Financial Officers and industry analysts, continued to refine the best
measure of the Company's growth in financial results from period to period
during 1996. The Company announced the results of these deliberations in its
Form 10-Q for the nine months ended September 30, 1996 by stating that Adjusted
EBITDA represented, in the Company's view, the best measure of recurring
financial performance from period to period. These analyses and definitive
results represented in the opinion of the Compensation Committee, the full Board
and Company's management, a definitive departure from emphasizing non-recurring
gains and income from the sale of non-core assets thereby re-defining the
Company as a growth company with the goal of expanding its business, operations,
revenues, assets and profits. In addition, in 1996, the Compensation Committee
continued its expanding emphasis on stressing compensation of management in the
50
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51
form of management's equity ownership in the Company as the best means of
aligning the long-term goals of management with the long-terms goals of the
Company's shareholders. A significant portion of management's compensation takes
the form of equity ownership in the Company. In this way, the Compensation
Committee believes that Mr. Bartling's Chief Executive Officer compensation
package and the compensation packages of the Company's other executive officers
implements its goal of aligning his interests with those of the Company's
long-term investors.
The Compensation Committee has confirmed that all base salaries for the
Company's executive officers, including Mr. Bartling's base compensation, are
reasonable and competitive, based upon the surveys compiled by management, as
well as the advice and consultation of the representatives of the consulting
firm.
Management Incentive Plan
Annual bonuses for the executive officers on account of the Company's 1996
fiscal year were governed by the Company's 1996 Incentive Compensation Plan (the
"Incentive Compensation Plan"), which was specifically designed to link
executive compensation to the Company's achieving certain operating goals and
exceeding certain projected increases in specific financial measures applicable
to the specific role in which each executive officer (and each other employee of
the Company participating in the Incentive Compensation Plan) is engaged. The
financial measures include Adjusted EBIDTA for the Company's Chief Executive
Officer and senior financial and legal officers, net income from property
management for the Company's property management employees, and return on equity
for the Company's Investment Management division employees (i.e., those
employees committed to maximizing the Company's return on its investments in
real property assets). Under the terms of the Incentive Compensation Plan, upon
achieving increases in the designated financial performance measure when
compared to the Company's 1995 results, the executive officers and other
participating employees are entitled to certain cash and stock awards.
As discussed above and disclosed elsewhere in this Form 10-K, a significant
part of Mr. Bartling's compensation package includes the award of the aggregate
of 42,500 shares of restricted stock which will vest in part based upon Mr.
Bartling's continued employment and in part upon increases in the Company's
market capitalization as well as the award of stock options and matching stock.
These awards were provided for in Mr. Bartling's Employment Agreement, which
became effective on December 1, 1995, while the shares of restricted stock as
well as the stock option award were issued on April 5, 1996. Similar awards,
albeit in lesser amounts, were granted to the Company's new Executive Vice
President and Chief Financial Officer and Senior Vice President when such
executive officers were retained in April 1996.
Deductibility
The Company intends, to the extent practicable, to preserve the
deductibility under the Internal Revenue Code of compensation paid to its
executive officers, while maintaining compensation programs that will attract
and retain its executives in a competitive environment; provided, that, in light
of the Company's ability to offset current income taxes through the utilization
of net operating loss carry forwards and passive activity loss carry forwards,
the Compensation Committee will consider facilitating executives' ability to
defer taxable incentive compensation (thereby also deferring, but not reducing,
the Company's deductibility of such items). In keeping with this philosophy to
provide for maximizing compensation payable in the form of the Company's Common
Stock, as well as to provide its executives with the ability to defer taxable
incentive compensation, the Company adopted its Executive Deferred Compensation
Plan and Executive Deferred Compensation Rabbi Trust in 1996. Pursuant to the
Executive Deferred Compensation Plan, the Company's highly compensated executive
officers can elect to direct the Company to issue any shares of the Company's
Common Stock to The Provident Bank, as Trustee under the Executive Deferred
Compensation Rabbi Trust, rather than directly to the employee otherwise
entitled to receive the shares of Common Stock, thereby deferring the
recognition of taxable income for federal income tax purposes. The Company
believes that, for the foreseeable future, this practice will not otherwise
result in increased income tax liability to the Company due to the availability
of net operating and passive activity loss carry forwards for federal income tax
purposes.
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52
Conclusion
In conclusion, the Compensation Committee will enable the Company to retain
highly qualified executive management and motivate its officers with respect to
the attainment of important goals and objectives. The Compensation Committee
believes the focus on Common Stock ownership by the executive officers and other
long-term stock programs has aligned and will continue to align the interests of
management with the interests of shareholders of the Company. The Compensation
Committee further believes that its continuing efforts to refine the best
measures of the Company's long-term growth and improving financial results are
reflected in the terms of the 1996 Incentive Compensation Plan and will continue
to be reflected in future management incentive programs.
The Compensation Committee of the Board of Directors
Glenn C. Pollack, Chairman
George R. Oberer, Sr.
Gerald E. Wedren
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53
(h) PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Company's Common Stock, to that of the Dow Jones Real Estate Investment Index
and the Dow Jones Market Index. In calculating cumulative total shareholder
return, reinvestment of dividends is assumed. This graph is shown for the four
full fiscal years in which the Company's Common Stock (Nasdaq: CRSI) has been
registered under the Securities Exchange Act of 1934, as amended. [GRAPHIC
OMITTED]
VALUE OF $100 INVESTED AT 12/31/92
- --------------------------------------------------------------------------------
| 12/31/92 | 12/31/93 | 12/31/94 | 12/31/95 | 12/31/96
- ----------------------|----------|----------|-----------|------------|----------
CRSI Market Value | 100 | 250 | 350 | 583 | 687
- ----------------------|----------|----------|-----------|------------|----------
Dow Jones Real Estate | 100 | 112 | 103 | 121 | 150
- ----------------------|----------|----------|-----------|------------|----------
Dow Jones Equity Mkt | 100 | 107 | 104 | 139 | 167
- --------------------------------------------------------------------------------
53
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54
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN PERSONS
On March 26, 1997, the Company had outstanding 4,445,531 shares of Common
Stock. The following table sets forth the information as of March 26, 1997
regarding Common Stock owned beneficially by (a) each person known by the
Company to own beneficially more than 5% of the Company's outstanding Common
Stock, (b) each director of the Company and executive officer named in the
Summary Compensation table above and (c) all present executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENTAGE OF
BENEFICIAL OWNER OWNERSHIP(1) COMMON STOCK(1)
- --------------------------------------------- ------------------------ ----------------
<S> <C> <C> <C>
Bank of America National 513,929 11.56%
Trust & Savings Association
333 South Hope Street
Los Angeles, CA 90071
Directors and Executive Officers Named
in "Summary Compensation Table"
John B. Bartling, Jr. 64,940 (2) 1.46%
Mark D. Thompson 33,181 (3) *
Paul R. Selid 19,372 (4) *
Michele R. Souder 4,185 (5) *
Ronald P. Koegler 6,399 (6) *
David P. Blackmore 41,914 (7) *
Michael F. Carbone 50,726 (8) 1.14%
Robert V. Gothier, Sr. 14,185 (9)(10) *
Joseph E. Madigan 15,079 (9)(11) *
George J. Neilan 10,962 (9)(12) *
George R. Oberer, Sr. 31,579 (9)(13) *
Glenn C. Pollack 14,302 (9)(14) *
H. Jeffrey Schwartz 21,945 (9)(15) *
Gerald E. Wedren 11,291 (9)(16) *
Robert J. Weiler 47,589 (9)(17) 1.07%
All present executive officers and directors 472,000 (18) 10.41%
of the Company as a group (15 persons not
including Messrs. Blackmore and Carbone)
- ------------------
* Less than one percent (1%)
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55
<FN>
(1) The shares and percentages of Common Stock indicated in the table are based
on 4,445,531 issued and outstanding shares of Common Stock; provided,
however, that in the event that the number of shares beneficially owned by
a named individual or group includes the shares as to which the named
person or group has the right to acquire beneficial ownership on or before
May 25, 1997, then in such event, in calculating the percentages shown, the
number of the Company's issued and outstanding shares of Common Stock is
increased by a similar number of shares.
(2) Mr. Bartling received awards of restricted Common Stock in the aggregate of
54,440 shares under his Employment Agreement and related Award Agreements
with the Company (see footnotes 2 and 3 to the Summary Compensation Table
and footnote 1 to the Long-Term Incentive Plans Table). This amount also
includes 10,000 shares purchased by Mr. Bartling. This amount also includes
500 shares of Common Stock to be granted to Mr. Bartling for the first
quarter of the 1997 fiscal year in lieu of an increase in base
compensation, which is calculated based on the closing price of the Common
Stock on December 31, 1996, which was $20.625.
(3) Mr. Thompson received awards of restricted Common Stock in the aggregate of
25,681 shares under the his Employment Agreement and related Award
Agreements with the Company (see footnotes 10 and 11 to the Summary
Compensation Table and footnote 2 to the Long-Term Incentive Plans Table).
This amount includes 5,000 shares purchased by Mr. Thompson. This amount
also includes 364 shares of Common Stock to be granted to Mr. Thompson for
the first quarter of the 1997 fiscal year in lieu of an increase in base
compensation, which is calculated based on the closing price of the Common
Stock on December 31, 1996, which was $20.625. This amount also includes
2,500 currently exercisable shares subject to an option to purchase 12,500
shares which vests over five years.
(4) Mr. Selid received awards of restricted Common Stock in the aggregate of
14,372 shares under the Incentive Equity Plan (see footnote 16 to the
Summary Compensation Table and footnote 2 to the Long-Term Incentive Plans
Table). This amount includes 2,500 shares purchased by Mr. Selid. This
amount also includes 2,500 currently exercisable shares subject to an
option to purchase 12,500 shares which vests over five years.
(5) Ms. Souder received awards of restricted Common Stock in the aggregate of
4,000 shares under the Incentive Equity Plan (see footnote 24 to the
Summary Compensation Table). This amount also includes 185 shares of Common
Stock to be granted to Ms. Souder for the first quarter of the 1997 fiscal
year in lieu of an increase in base compensation, which is calculated based
on the closing price of the Common Stock on December 31, 1996, which was
$20.625.
(6) Mr. Koegler received 5,510 shares of Restricted Stock under the Incentive
Equity Plan, 4,500 shares of which are currently exercisable. Mr. Koegler
received a currently exercisable option to purchase 1,355 shares of Common
Stock pursuant to the Trustee's Second Employee Retention Plan which was
approved by the Bankruptcy Court during the Company's bankruptcy
proceedings. Mr. Koegler's account is allocated with approximately 343
shares of Common Stock pursuant to his participation in the Company's
401(k) Plan. This amount also includes 121 shares of Common Stock to be
granted to Mr. Koegler for the first quarter of the 1997 fiscal year in
lieu of an increase in base compensation, which is calculated based on the
closing price of the Common Stock on December 31, 1996, which was $20.625.
(7) Mr. Blackmore received 24,061 shares of Restricted Stock, which has vested
under the Incentive Equity Plan. Mr. Blackmore also received an award of
deferred Common Stock (the "Deferred Stock") under the Incentive Equity
Plan of 7,619 shares, contingent upon (i) the average price per share of
the Common Stock during the six-month period from March 11, 1995 to
September 11, 1995 being at least $3.93 and (ii) Mr. Blackmore being in the
employ of the Company on September 11, 1995. The Compensation Committee of
the Board of Directors accelerated the vesting of the Deferred Stock and
such shares were issued to Mr. Blackmore on January 18, 1995. Mr. Blackmore
also received stock option grants of 4,378 shares pursuant to the Trustee's
Second Employee Retention Plan which was approved by the Bankruptcy Court
during the Company's bankruptcy proceedings. Mr. Blackmore exercised such
option and retained these shares. Mr. Blackmore has been attributed with
1,758 shares of Common Stock pursuant to his participation in the Company's
401(k) plan. Mr. Blackmore also received 535 shares for an unsecured Claim
under the Plan of Reorganization. Mr. Blackmore purchased 1,300 shares of
Common Stock in April 1995. Mr. Blackmore sold 2,000 shares in January
1997. Mr. Blackmore has been attributed with 4,263 shares which he is to
receive pursuant to his Severance Agreement and Mutual Release with the
Company.
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56
(8) Mr. Carbone, the Company's former Chief Financial Officer and Vice
President, received an award of restricted Common Stock (the "Restricted
Stock") equal to 0.75% of the Company's Total Committed Equity under the
Incentive Equity Plan, estimated to be 30,076 shares of Restricted Stock.
Mr. Carbone received an award of deferred Common Stock (the "Deferred
Stock") equal to 0.04% of the Company's Total Committed Equity under the
Incentive Equity Plan, estimated to be 1,604 shares, contingent upon (i)
the average price per share of the Common Stock during the six-month period
from March 11, 1995 to September 11, 1995 being at least $3.93 and (ii) Mr.
Carbone being in the employ of the Company on September 11, 1995. The
Compensation Committee of the Board of Directors accelerated the vesting of
the Deferred Stock and such shares were issued to Mr. Carbone on January
18, 1995. Mr. Carbone has been attributed with 2,288 shares of Common Stock
pursuant to his participation in the Company's 401(k) Savings Plan in which
the Company matches a portion of an employee's contribution. InnVestors
Limited, of which Mr. Carbone was President and is a shareholder, received
14,758 shares of Common Stock for an unsecured Claim under the Plan of
Reorganization. Mr. Carbone also purchased 2,000 shares of Common Stock.
(9) Each non-employee director of the Company was granted a stock option to
purchase 7,500 shares of Common Stock equal to 0.1875% of the Company's
Total Committed Equity. The options are exercisable to the extent of 10% of
the shares of Common Stock covered by the grant after the optionee has
served continuously as a director of the Company for six months and to the
extent of an additional 10% of such shares after each of the next nine
successive six month periods of continuous service; therefore, 6,750 shares
of Common Stock underlying this stock option are attributable to each
non-employee director (except Mr. Gothier, who has exercised his option to
purchase 3,750 shares, leaving an option to purchase 3,000 shares
exercisable within 60 days), because such shares will be exercisable within
60 days based on the commencement of each director's term on September 11,
1992. In addition, on December 1, 1995, each director was granted an option
to purchase 2,000 shares of Common Stock, with an exercise price equal to
$17.25 and a vesting period of the earlier of one year or the period from
the date of the grant to the next annual meeting of shareholders. On May
23, 1996, each director was granted an option to purchase 2,000 shares of
Common Stock, with an exercise price of $21.25 and a vesting period of the
earlier of one year or the period from the date of the grant to the next
annual meeting of shareholders. All such shares underlying the foregoing
options are attributed to each non-employee director because such shares
are exercisable or will be exercisable within 60 days.
(10) This amount includes (a) 300 shares of Common Stock purchased by Mr.
Gothier through his Individual Retirement Account, (b) 2,375 shares of
Common Stock purchased by RVG Management and Development Company, of which
Mr. Gothier is President and a shareholder, (c) 760 shares of restricted
Common Stock granted to Mr. Gothier pursuant to his participation in the
Company's Non-Employee Director Restricted Stock Plan, in which he received
such shares in lieu of director's fees and (d) 3,750 shares purchased by
Mr. Gothier through the exercise of a stock option.
(11) Mr. Madigan received an award of restricted Common Stock on December 1,
1995 and December 1, 1996 (the "1996 Award"), each in the amount of 2,000
shares under the Incentive Equity Plan, each of which will vest equally
over a three year period from the date of grant. Mr. Madigan elected to
defer the receipt of the shares subject to the 1996 Award, which were
instead issued to the Cardinal Realty Service, Inc. Executive Deferred
Compensation Rabbi Trust. This amount also includes 329 shares of
restricted Common Stock granted to Mr. Madigan pursuant to his
participation in the Company's Non-Employee Director Restricted Stock Plan,
in which he received such shares in lieu of director's fees.
(12) This amount includes 212 shares of restricted Common Stock granted to Mr.
Neilan pursuant to his participation in the Company's Non-Employee Director
Restricted Stock Plan, in which he received such shares in lieu of
director's fees.
(13) This amount includes (a) 5,788 shares of Common Stock received by Oberer
Development Company, of which Mr. Oberer is President and a shareholder,
for an unsecured claim under the Company's Plan of Reorganization, (b)
14,000 shares of Common Stock held by Mr. Oberer, individually, and (c)
1,041 shares of restricted Common Stock granted to Mr. Oberer pursuant to
his participation in the Company's Non-Employee Director Restricted Stock
Plan, in which he received such shares in lieu of director's fees.
(14) This amount includes (a) 2,500 shares of Common Stock held by Mr. Pollack,
individually, and (b) 1,052 shares of restricted Common Stock granted to
Mr. Pollack pursuant to his participation in the Company's Non-Employee
Director Restricted Stock Plan, in which he received such shares in lieu of
director's fees.
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57
(15) This amount includes (a) 10,000 shares of Common Stock held by Mr.
Schwartz, individually, and (b) 1,195 shares of restricted Common Stock
granted to Mr. Schwartz pursuant to his participation in the Company's
Non-Employee Director Restricted Stock Plan, in which he received such
shares in lieu of director's fees.
(16) This amount includes 541 shares of restricted Common Stock granted to Mr.
Wedren pursuant to his participation in the Company's Non-Employee Director
Restricted Stock Plan, in which he received such shares in lieu of
director's fees.
(17) This amount includes (a) 36,000 shares of Common Stock held by Mr. Weiler's
wife and (b) 839 shares of restricted Common Stock granted to Mr. Weiler
pursuant to his participation in the Company's Non-Employee Director
Restricted Stock Plan, in which he received such shares in lieu of
director's fees.
(18) This amount includes shares individually held by the directors and
executive officers listed in this chart excluding Messrs. Blackmore and
Carbone, former executive officers. This amount also includes shares held
by or attributed to Patrick M. Holder and Michael F. Sosh, executive
officers of the Company. Mr. Holder received 175,000 shares of Restricted
Stock in connection with the Company's acquisition of Lexford Properties,
of which 125,000 shares are subject to forfeiture if the Company's net
income from property management operations does not achieve certain
specified increases during the three full fiscal years ending with the
Company's 1999 fiscal year.
</FN>
</TABLE>
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Joseph E. Madigan, Chairman of the Company's Board of Directors, received a
retainer in 1996 of $4,000 per month (which amount was increased in December
1996 to $5,000 per month). Mr. Madigan also received in December 1996, and will
receive annually during his tenure as chairman, an award of 2,000 shares of
restricted Common Stock, one-third of which shares vest annually over a three
year period.
H. Jeffrey Schwartz, director of the Company, is a partner in the law firm
of Benesch, Friedlander, Coplan & Aronoff LLP, which serves as outside legal
counsel to the Company.
Robert J. Weiler, a director of the Company, is a principal of Americana
Investment Company, the lessor of the building housing the Company's principal
executive offices. Mr. Weiler did not participate in the Company's decision to
relocate to the headquarters or in the lease negotiations. Management believes
that the lease terms for the Company's executive offices are competitive with
commercial lease rates in the Columbus, Ohio market. The annual lease payments
are as follows:
1997 (thru 10/31) $282,580 ($6.50/sq.ft.)
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a) Documents filed as part of this report:
1. Financial Statements: The Audited Consolidated Balance Sheets of
the Company and Subsidiaries as of December 31, 1996 and 1995,
and the related Consolidated Statements of Income, Shareholders'
Equity and Cash Flows of the Company and Subsidiaries for the
years ended December 31, 1996, 1995 and 1994.
2. Consolidated Financial Statement Schedules: (See the financial
statement schedules listed on Index to Consolidated Financial
Statement Schedules on Page F-1 of this report).
57
<PAGE>
58
3. Exhibits:
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) Documents filed as part of this report:
1. Financial Statements: The Audited
Consolidated Balance Sheets of the Company
and Subsidiaries as of December 31, 1996 and
1995, and the related Consolidated
Statements of Income, Shareholders' Equity
and Cash Flows of the Company and
Subsidiaries for the years ended December
31, 1996, 1995 and 1994.
2. Consolidated Financial Statement Schedules:
(See the financial statement schedules
listed on Index to Consolidated Financial
Statement Schedules on Page F-1 of this
report).
3. Exhibits:
EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE
2.1 Third Amended Disclosure Incorporated by
Statement Pursuant to reference to Exhibit
Section 1125 of Bankruptcy 2.1 to the
Code to Accompany Company's
the Plan of Reorganization Registration Statement
of Jay Alix, Chapter on Form 10 (the "Form
11 Trustee for Cardinal 10")
Industries, Inc. and its
Substantively Consolidated
Subsidiaries and
Third Amended Plan of
Reorganization of Jay
Alix, Chapter 11 Trustee,
for Cardinal Industries,
Inc. and its Substantively
Consolidated Subsidiaries
2.2 Findings of Fact, Conclusions Incorporated by
of Law and Order Confirming reference to Exhibit
Third Amended Plan of 2.2 to the Form 10
Reorganization of Jay Alix,
Chapter 11 Trustee,
for Cardinal Industries,
Inc. and its Substantively
Consolidated Subsidiaries
3.1 Amended and Restated Articles Incorporated by
of Incorporation filed reference to Exhibit
September 11, 1992 with the 3.1 to the Form 10
Ohio Secretary of State
of State
3.2 Certificate of Amendment to Incorporated by
the Articles of reference to Exhibit
Incorporation filed October 3.2 to the Form 10
27, 1992 with the
Ohio Secretary of State
3.3 Certificate of Amendment to Incorporated by reference to Exhibit
the Articles of 3.3 to the Company's Annual Report
Incorporation filed January on Form 10-K for the fiscal year ended
9, 1996 with the Ohio December 31, 1995
Secretary of State (the "1995 Form 10-K")
3.4 Amended Code of Regulations Incorporated by reference to Exhibit
3.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1993 (the "1993 Form
10-K")
4.1 Form of Common Stock Incorporated by reference to Exhibit
Certificate 4.1 to Form 10
58
<PAGE>
59
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE
10.1 Loan and Security Agreement, Incorporated by
dated as of August reference to Exhibit
11, 1995, between The 10.1 to the 1995 Form
Provident Bank and the 10-K
Company and certain of its
subsidiaries
10.2 Cognovit Promissory Note Incorporated by
dated August 11, 1995 reference to Exhibit
in the amount of $22,000,000 10.2 to the 1995 Form
issued by the 10-K
Company and certain of its
subsidiaries in favor of
The Provident Bank.
10.3 Cognovit Promissory Note Incorporated by
dated August 11, 1995 reference to Exhibit
in the amount of $3,000,000 10.3 to the 1995 Form
issued by the Company 10-K
and certain of its
subsidiaries in favor of The
Provident Bank.
10.4 Cognovit Promissory Note Incorporated by
dated August 11, 1995 reference to Exhibit
in the amount of $7,000,000 10.4 to the 1995 Form
issued by the Company 10-K
and certain of its
subsidiaries in favor of The
Provident Bank.
10.5 Agreement for Modification Incorporated by
of Management reference to Exhibit
Agreement dated as of August 10.5 to the 1995 Form
11, 1995 among 10-K
Cardinal Apartment
Management Group, Inc., the
Company and certain of its
subsidiaries
10.6 Assignment of Management Incorporated by
Contracts dated August reference to Exhibit
11, 1995 between Cardinal 10.6 to the 1995 Form
Apartment Management 10-K
Group, Inc. and The
Provident Bank
10.7 Stock Pledge Agreement dated Incorporated by
August 11, 1995 reference to Exhibit
between Cardinal Realty 10.7 to the 1995 Form
Services, Inc. and The 10-K
Provident Bank
10.8 Stock Pledge Agreement dated Incorporated by
August 11, 1995 reference to Exhibit
between Cardinal Industries 10.8 to the 1995 Form
of Texas, Inc. and The 10-K
Provident Bank
10.9 Stock Pledge Agreement dated Incorporated by
August 11, 1995 reference to Exhibit
between Cardinal Industries 10.9 to the 1995 Form
Development 10-K
Corporation and The
Provident Bank
10.10 Stock Pledge Agreement dated Incorporated by
August 11, 1995 reference to Exhibit
between Cardinal Realty 10.10 to the 1995
Company and The Form 10-K
Provident Bank
10.11 Limited Power of Attorney Incorporated by
dated August 11, 1995 reference to Exhibit
by certain subsidiaries of 10.11 to the 1995
the Company to the Form 10-K
Company
59
<PAGE>
60
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE
10.12 Limited Power of Attorney Incorporated by
dated August 11, 1995 reference to Exhibit
by the Company and certain 10.12 to the 1995
of its subsidiaries to Form 10-K
The Provident Bank
10.13 Waiver Agreement dated Incorporated by
August 11, 1995 among reference to Exhibit
The Provident Bank and the 10.13 to the 1995
Company and certain Form 10-K
of its subsidiaries
10.14 Post Closing Agreement dated Incorporated by
as of August 11, reference to Exhibit
1995 among The Provident 10.14 to the 1995
Bank and the Company Form 10-K
and certain of its
subsidiaries
10.15 Form of Management Agreement Incorporated by
between Cardinal reference to Exhibit
Apartment Management Group, 10.10 to the Form 10
Inc. and certain
Properties
10.16 Form of Management Agreement Incorporated by
between Cardinal reference to Exhibit
Apartment Management Group, 10.16 to the 1995
Inc. (which was Form 10-K
merged with and into the
Company) and certain of
the Properties (as amended
August 11, 1995)
10.17 Form of Partnership Asset Incorporated by
Management Agreement reference to Exhibit
between Cardinal Industries 10.11 to the Form 10
Services Corporation
and certain Properties
10.18 Form of Extended Partnership Incorporated by
Administration reference to Exhibit
Agreement between Cardinal 10.12 to the Form 10
Industries, Inc. and
certain Properties
10.19 Form of Agreement for Tax Incorporated by
Appeal Services reference to Exhibit
between the Company and 10.13 to the Form 10
certain Properties
10.20 Asset Purchase Agreement Incorporated by
dated April 24, 1991, reference to Exhibit
among Economy Lodging 10.14 to the Form 10
Systems, Inc., HMS
Property Management Group,
Inc., Cardinal
Industries, Inc. and
Cardinal Industries Services
Corporation
10.21 Lease, dated September 24, Incorporated by
1992, between the reference to Exhibit
Company and the Americana 10.15 to the Form 10
Investment Company
10.22 Term Lease Master Agreement Incorporated by
and Term Lease reference to Exhibit
Supplement, dated October 6, 10.16 to the Form 10
1992, between the Company and
IBM Credit Corporation
60
<PAGE>
61
10.23 Bankruptcy Court Orders, Incorporated by
entered June 28, 1990 reference to Exhibit
and July 27, 1990, approving 10.17 to the Form 10
Trustee's First Employee
Retention Plan
10.24 Bankruptcy Court Order, Incorporated by
entered April 3, 1992, reference to Exhibit
approving Trustee's Second 10.18 to the Form 10
Employee Retention
Plan
10.25 Description of Cash Bonus Incorporated by
Plan of the Company reference to Exhibit
10.28 to the Form 10
10.26 1992 Incentive Equity Plan Incorporated by
of the Company, as reference to Exhibit
amended (effective November 10.26 to the 1995
30, 1995) Form 10-K
10.27 Tax Obligation Loan Program Incorporated by
of the Company reference to Exhibit
10.30 to the Form 10
10.28 Form of Deferred Shares Incorporated by
Agreement for Employees reference to Exhibit
of the Company 10.31 to the Form 10
10.29 Form of Restricted Shares Incorporated by
Agreement for Key reference to Exhibit
Employees of the Company 10.32 to the Form 10
10.30 Form of Restricted Shares Incorporated by
Agreement for Executive reference to Exhibit
Officers of the Company 10.33 to the Form 10
10.31 Form of Non-Qualified Stock Incorporated by
Option Agreement for reference to Exhibit
Participants in Trustee's 10.33 to the Form 10
Employee Retention Plan
10.32 Form of Non-Qualified Stock Incorporated by
Option Agreement for reference to Exhibit
Non-Employee Directors 10.36 to the Form 10
10.33 Form of Indemnification Incorporated by
Agreement between the reference to Exhibit
Company and its officers and 10.37 to the Form 10
directors
10.34 Undeliverable Distributions Incorporated by
Trust dated as of reference to Exhibit
September 11, 1992, between 10.38 to the Form 10
The Company and
James H. Bownas, Trustee
10.35 401(k) Plan of the Company Incorporated by
reference to Exhibit
10.41 to the Form 10
10.36 Premium Finance Agreement Incorporated by
dated September 12, reference to Exhibit
1995 between the Company and 10.36 to the 1995
Transamerica Form 10-K
Insurance Finance Corporation
61
<PAGE>
62
10.37 Premium Finance Agreement Incorporated by
dated December 4, 1995 reference to Exhibit
between the Company and 10.37 to the 1995
First Premium Form 10-K
Services, Inc.
10.38 Employment Agreement dated Incorporated by
as of December 1, reference to Exhibit
1995 between the Company and 10.38 to the 1995
John B. Bartling, Form 10-K
Jr., President and Chief
Executive Officer of the
Company
10.39 Severance Agreement and Filed as an Exhibit
Mutual Release dated as to this Form 10-K
of September 4, 1996 between
the Company and
David P. Blackmore
10.40 Severance Agreement and Filed as an Exhibit
Mutual Release dated as to this Form 10-K
of January 16, 1996 between
the Company and
Michael F. Carbone
10.41 Assumption of Loan and Filed as an Exhibit
Security Agreement dated to this Form 10-K
as of February 26, 1997
between The Provident
Bank and
Lexford Properties, Inc.
11.1 Statement re: computation of See Index to
per share earnings Financial Information -
Note 1 in the Notes
to Consolidated
Financial Statements
21.1 Subsidiaries of The Company Filed as an Exhibit
to the 1995 Form 10-K
27 Financial Data Schedule Filed as an Exhibit
to this Form 10-K
99 Individual Property Filed as an Exhibit
Financial Information to this Form 10-K
Summary
62
<PAGE>
63
SIGNATURES
Pursuant to 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, hereunto duly authorized.
CARDINAL REALTY
SERVICES, INC.
(Registrant)
Date: March 28, 1997 By: /s/ John B. Bartling, Jr.
----------------------
John B. Bartling, Jr.,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- -----
/s/ Joseph E. Madigan Chairman of the Board March 28, 1997
- -----------------------------
Joseph E. Madigan
/s/ John B. Bartling, Jr. President, Chief Executive March 28, 1997
- ----------------------------- Officer and Director
John B. Bartling, Jr.
/s/ Mark D. Thompson Executive Vice President and March 28, 1997
- ----------------------------- Chief Financial Officer
Mark D. Thompson
/s/ Ronald P. Koegler Vice President and Controller March 28, 1997
- -----------------------------
Ronald P. Koegler
/s/ Robert V. Gothier, Sr. Director March 28, 1997
- -----------------------------
Robert V. Gothier, Sr.
/s/ George J. Neilan Director March 28, 1997
- -----------------------------
George J. Neilan
/s/ George R. Oberer, Sr. Director March 28, 1997
- -----------------------------
George R. Oberer, Sr.
/s/ Glenn C. Pollack Director March 28, 1997
- -----------------------------
Glenn C. Pollack
/s/ H. Jeffrey Schwartz Director March 28, 1997
- -----------------------------
H. Jeffrey Schwartz
/s/ Gerald E. Wedren Director March 28, 1997
- -----------------------------
Gerald E. Wedren
/s/ Robert J. Weiler Director March 28, 1997
- -----------------------------
Robert J. Weiler
63
<PAGE>
64
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
No annual report or proxy materials have been sent to the Registrant's
shareholders. An annual report and proxy materials are expected to be
distributed on or about May 15, 1997 to shareholders of record on or about May
13, 1997.
64
<PAGE>
65
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Audited Financial Information - Cardinal Realty Services, Inc. and Subsidiaries
Report of Independent Auditors............................................F-2
Consolidated Balance Sheets at December 31, 1996 and 1995.................F-3
Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994 ....................................F-4
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1996, 1995 and 1994 ........................F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 ..............................F-6 - F-7
Notes to Consolidated Financial Statements.........................F-8 - F-32
Consolidated Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts.....................F-33
Schedule III - Real Estate and Accumulated Depreciation......F-34 - F-40
All other schedules have been omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedules or because the information required is included in the consolidated
financial statements or notes thereafter.
F-1
<PAGE>
66
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Cardinal Realty Services, Inc.
We have audited the accompanying consolidated balance sheets of Cardinal Realty
Services, Inc. and subsidiaries as of December 31, 1996 and 1995 and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 1996. Our audits also
included the financial statement schedules listed in the accompanying index.
These financial statements and schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and schedules 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Cardinal Realty Services, Inc. and subsidiaries at December 31, 1996 and 1995,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
The Consolidated Financial Statements for 1994 have been restated to reflect the
changes with respect to income taxes as described in Note 1.
/s/ ERNST & YOUNG LLP
Columbus, Ohio
March 6, 1997
F-2
<PAGE>
67
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<CAPTION>
1996 1995
------------------ ------------------
ASSETS
<S> <C> <C>
Wholly Owned Properties (Notes 2 and 5):
Land.................................................................... $23,652,841 $24,082,635
Building and Improvements............................................... 137,917,083 140,251,420
------------------ ------------------
161,569,924 164,334,055
Accumulated Depreciation................................................ (4,478,379) 0
------------------ ------------------
157,091,545 164,334,055
Interests in and Receivables from Syndicated Partnerships (Notes 3 and 14) 54,610,421 52,591,444
Cash.................................................................... 3,593,121 2,751,986
Accounts Receivable, Affiliates ($4,089,328 and $3,935,466, net
of an allowance of $2,034,290 and $2,468,845, at December 31,
1996 and 1995, respectively), Residents and Officers (Note 14).......... 5,044,603 5,088,478
Furniture, Fixtures and Other, Net ....................................... 1,167,579 1,312,228
Funds Held in Escrow (Note 1)............................................. 14,011,013 9,390,610
Prepaids and Other (Note 1)............................................... 9,849,497 3,930,099
------------------ ------------------
$245,367,779 $239,398,900
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages, Term Debt and Other Notes Payable:
Non Recourse Mortgages on Wholly Owned Properties (Note 5).............. $148,056,017 $148,188,111
Term Debt (Note 4)...................................................... 15,118,048 20,470,205
Other Notes Payable (Note 7) ........................................... 145,220 1,453,553
------------------ ------------------
163,319,285 170,111,869
Accounts Payable.......................................................... 1,560,749 1,350,641
Accrued Interest, Real Estate and Other Taxes............................. 4,023,310 4,532,148
Other Accrued Expenses.................................................... 8,531,031 9,716,866
Other Liabilities (Note 8)................................................ 5,424,226 2,441,282
------------------ ------------------
Total Liabilities....................................................... 182,858,601 188,152,806
------------------ ------------------
Commitments and Contingencies (Notes 9, 10, 12)
Shareholders' Equity (Notes 1 and 9):
Preferred Stock, 1,500,000 shares authorized, unissued.................. 0 0
Common Stock, 13,500,000 shares authorized with no
stated value, 3,892,600 and 3,603,160 shares issued and
outstanding, at December 31, 1996 and 1995, respectively.............. 29,122,547 29,122,547
Additional Paid-in Capital.............................................. 15,968,426 8,461,216
Retained Earnings....................................................... 17,418,205 13,662,331
------------------ ------------------
62,509,178 51,246,094
------------------ ------------------
$245,367,779 $239,398,900
================== ==================
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</FN>
</TABLE>
F-3
<PAGE>
68
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
------------------- ------------------ ---------------
Revenues, primarily from Affiliates (Note 14):
<S> <C> <C> <C>
Rental and Other Revenues - Wholly Owned Properties (Note 2)............... $41,276,684
Fee Based.................................................................. 13,651,042 $15,168,982 $15,278,518
Interest, Principally from Syndicated Partnerships......................... 8,897,233 4,361,497 2,703,112
Income from Disposal of Non-Core Assets-Net................................ 962,761 3,408,379 3,189,067
Other...................................................................... 513,270 737,571 1,429,328
------------------- ------------------ ---------------
65,300,990 23,676,429 22,600,025
------------------- ------------------ ---------------
Expenses:
Rental Operating .......................................................... 21,129,433
Fee Based.................................................................. 9,366,777 8,667,358 9,003,485
Administration............................................................. 5,030,967 4,399,349 3,993,435
Restructure Costs in 1996 and 1995, Tender Offer costs in 1994 (Note 11)... 242,899 1,537,073 977,266
Interest - Wholly Owned Property Debt (Note 5)............................. 14,131,780 0 0
Interest - Corporate Debt.................................................. 1,098,333 1,522,087 1,643,368
Depreciation and Amortization (Note 2)..................................... 5,514,571 537,849 447,528
------------------- ------------------ ---------------
56,514,760 16,663,716 16,065,082
------------------- ------------------ ---------------
Income Before Income Taxes and Extraordinary Item............................. 8,786,230 7,012,713 6,534,943
Provision for Income Taxes (Notes 1 and 10):
Credited to Additional Paid-in Capital..................................... 3,166,000 2,356,000 2,390,000
Current.................................................................... 250,000 364,000 201,000
------------------- ------------------ ---------------
Income Before Extraordinary Item.............................................. 5,370,230 4,292,713 3,943,943
Extraordinary (Loss) / Gain, Net of Income Tax Benefit/(Provision) of
$1,015,000 in 1996 and ($510,000) and ($2,074,000), in 1995 and 1994,
respectively (Note 6)......................................................... (1,614,356) 804,022 3,155,901
------------------- ------------------ ---------------
Net Income.................................................................... $3,755,874 $5,096,735 $7,099,844
=================== ================== ===============
Net Income per Common Share:
Income before Extraordinary Item.......................................... $ 1.37 $ 1.11 $ 1.02
Extraordinary Item........................................................ (0.41) 0.21 0.82
------------------- ------------------ ---------------
Net Income................................................................ $ 0.96 $ 1.32 $ 1.84
=================== ================== ===============
Weighted Average Common Shares Outstanding................................... 3,933,000 3,850,000 3,850,000
=================== ================== ===============
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</FN>
</TABLE>
F-4
<PAGE>
69
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
Common Stock
--------------------------
Additional Retained
Shares Amount Paid-in Capital Earnings Total
------------ ------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994 .............................. 2,383,414 $29,122,547 $1,096,000 $1,465,752 $31,684,299
Shares issued in 1994, principally in connection with
claims resolution process (Note 1) .................. 1,161,509
Less: Treasury shares issued to wholly owned
partnerships and subsidiaries, and
unclaimed shares related to bankruptcy claims
(Note 1) ..................................... (136,296)
Credit from utilization of pre-confirmation tax
benefits (Note 10) ................................... 4,464,000 4,464,000
Net Income for the year ended December 31, 1994 ..... 7,099,844 7,099,844
-------------- ------------- --------------- --------------- ------------
Balance, December 31, 1994............................. 3,408,627 29,122,547 5,560,000 8,565,596 43,248,143
Shares issued in 1995, principally in connection with
the claims resolution process (Note 1) .............. 183,354
Exercise of options under Non-Qualified Stock Option
Plan (Note 9) ....................................... 15,303 35,216 35,216
Less: Treasury Shares Issued to wholly owned
partnerships and subsidiaries (Note 1) ....... (4,124)
Credit from utilization of pre-confirmation tax
benefits (Note 10) .................................. 2,866,000 2,866,000
Net Income for the year ended December 31, 1995...... 5,096,735 5,096,735
-------------- ------------- --------------- -------------- ---------------
Balance, December 31, 1995............................. 3,603,160 29,122,547 8,461,216 13,662,331 51,246,094
-------------- ------------- --------------- -------------- ---------------
Shares issued in 1996, in connection with the claims
resolution process (Note 1) ......................... 6,670
Shares issued in connection with Lexford Acquisition
(Note 1)............................................. 700,000 14,000,000 14,000,000
Contingent........................................ (450,000) (9,000,000) (9,000,000)
Exercise of options under Non-Qualified Stock Option
Plan (Note 9) ....................................... 34,308 61,671 61,671
Restricted stock compensation awards and Director
Restricted Stock Plan ............................... 325,869 325,869
Less: Treasury Shares primarily from the redemption
in 1996 of stock held by Syndicated Partnerships .... (1,538) (31,330) (31,330)
Credit from utilization of pre-confirmation tax
benefits (Note 10) .................................. 2,151,000 2,151,000
Net Income for the year ended December 31, 1996...... 3,755,874 3,755,874
-------------- ------------- --------------- -------------- ----------------
Balance, December 31, 1996............................. 3,892,600 $29,122,547 $15,968,426 $17,418,205 $62,509,178
============== ============= =============== ============== ================
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</FN>
</TABLE>
F-5
<PAGE>
70
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Cash flows provided by Operating activities:
Management and Investment Management activities:
Cash received from Fee Based activities...................................... $22,414,166 $22,173,861 $20,010,063
Cash received from Interests in and Receivables from Syndicated Partnerships. 9,074,008 4,965,246 2,500,272
Cash receipts -- other....................................................... 2,170,253 3,261,207 1,274,820
Cash paid to Vendors, Suppliers and Employees................................ (21,784,246) (21,784,640) (18,823,050)
Interest paid on Term Debt and Other Notes Payable........................... (1,147,593) (1,554,454) (1,602,080)
Income Taxes paid - City and State........................................... (239,145) (234,436) (146,172)
Taxes paid, other than Income Taxes.......................................... (76,575) (553,140) (530,793)
Payments related to non-recurring items...................................... (2,221,248) (705,075) (1,652,965)
----------------- ----------------- -----------------
8,189,620 5,568,569 1,030,095
----------------- ----------------- -----------------
Real Estate Asset activities:
Cash received from Rental activities......................................... 41,297,937 0 0
Cash paid on Rental activities............................................... (23,262,002) 0 0
Interest paid on Mortgages................................................... (13,517,318) 0 0
----------------- ----------------- -----------------
4,518,617 0 0
----------------- ----------------- -----------------
Net Cash provided by Operating activities....................................... 12,708,237 5,568,569 1,030,095
----------------- ----------------- -----------------
Cash Flow provided by/(used in) Investing activities:
Management and Investment Management activities:
Proceeds from sale of Non-Core Assets and Other............................ 1,016,334 3,787,441 8,036,470
Capital Expenditures....................................................... (422,853) (397,519) (152,959)
Repayment from/(Advances to) Syndicated Partnerships - net................. (2,556,807) (8,565,119) (1,361,547)
Acquisition of Real Estate Assets.......................................... 0 (1,864,736) 0
Real Estate Asset activities:
Net cash flow provided by/(used in) Rental activities during period Held
for Sale (net of Interest paid of $13,692,045 in 1995 and $11,618,952
in 1994) ................................................................ 0 3,037,826 (587,020)
Capitalized Refinancing Costs.............................................. (1,687,492) 0 0
Funding of Escrows......................................................... (41,279) 0 0
Capital Expenditures....................................................... (681,639) 0 0
----------------- ----------------- -----------------
Net Cash provided by/(used in) Investing activities............................. (4,373,736) (4,002,107) 5,934,944
----------------- ----------------- -----------------
Cash Flows (used in)/provided by Financing activities:
Management and Investment Management activities:
Proceeds from the exercise of Stock Options................................ 61,671 35,216 0
Redemption of Stock held by Syndicated Partnerships........................ (31,330) 0 0
Proceeds from Term Debt and Other.......................................... 0 21,000,505 0
Principal payments on Term Debt and Other.................................. (7,052,484) (21,859,553) (7,620,884)
Real Estate Asset activities:
Proceeds from Mortgage Debt................................................ 47,442,961 0 0
Payments on Mortgages - principal amortization............................. (2,139,137) (2,150,733) (1,279,985)
Payments on Mortgages - lump sum........................................... (45,775,047) (479,554) 0
----------------- ----------------- -----------------
Net Cash (used in)/provided by Financing activities:............................ (7,493,366) (3,454,119) (8,900,869)
----------------- ----------------- -----------------
Increase/(Decrease) in Cash..................................................... 841,135 (1,887,657) (1,935,830)
Cash at Beginning of Year....................................................... 2,751,986 4,639,643 6,575,473
----------------- ----------------- -----------------
Cash at End of Year............................................................. $3,593,121 $2,751,986 $4,639,643
================= ================= =================
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</FN>
</TABLE>
F-6
<PAGE>
71
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
-------------------- ------------------- ------------------
<S> <C> <C> <C>
Reconciliation of Net Income to Net Cash
Provided By Operating Activities:
Net Income........................................................ $3,755,874 $5,096,735 $7,099,844
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization................................. 5,514,571 537,849 447,528
Provision for Losses on Accounts Receivable................... (207,308) 412,794 1,461,869
Income from Disposal of Non-Core Assets ...................... (962,761) (3,408,379) (3,189,067)
(Gain) / Loss on Debt Restructuring........................... 2,629,356 (1,314,022) (5,229,901)
Provision for Income Taxes credited to Paid-in Capital........ 2,151,000 2,866,000 4,464,000
Changes in Operating Assets and Liabilities:
Interests in and Receivables from Syndicated Partnerships... 616,715 335,505 (322,143)
Accounts Receivable and Other............................... (4,339,533) (17,039) (3,375,941)
Funds Held in Escrow........................................ (4,857,423) 595,256 1,509,127
Accounts Payable and Other Liabilities...................... 8,407,746 463,870 (1,835,221)
-------------------- ------------------- ------------------
Net Cash Provided by Operating Activities........................... $12,708,237 $5,568,569 $1,030,095
==================== =================== ==================
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
In 1995, the Company acquired four apartment properties primarily financed with
$4,770,000 of first mortgages on the properties.
In June 1995, the Company purchased from a mortgage lender the non-recourse
mortgages on one Syndicated Partnership and four Wholly Owned Properties. The
mortgages totaled $8.8 million and were acquired for $7.8 million. The Company
financed the acquisition with a $7.8 million note payable to the mortgage
lender. The note was repaid in June 1996.
In 1996, the Company granted deeds in lieu of foreclosure to the mortgagee for
three Wholly Owned Properties. The properties had an aggregate carrying value of
$3.9 million. In 1995 and 1994 the Company granted deeds in lieu of foreclosure
to the mortgagees for certain Wholly Owned Properties. The properties had an
aggregate carrying value of $3.5 million and $3.6 million, respectively. No
significant gain or loss was recognized on these transactions because the assets
and the non-recourse mortgages on each of these Wholly Owned Properties had been
recorded in equal amounts.
Effective August 1, 1996, the Company acquired Lexford Properties, Inc. through
a merger with a wholly owned subsidiary of the Company. The Company issued
700,000 shares of its Common Stock (valued at $14,000,000) in consideration of
the acquisition; however 450,000 of the shares issued (valued at $9,000,000) are
subject to forfeiture, in whole or in part, if the Company's combined property
management operations fail to achieve certain profitability criteria on or
before the end of the Company's 1999 fiscal year.
In 1996, all interest incurred was expensed. In 1995 and 1994 the interest
incurred on the Wholly Owned Properties was capitalized as the properties were
Held for Sale, while interest on corporate term debt was expensed (Note 2).
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7
<PAGE>
72
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
--------
Cardinal Realty Services, Inc. and its subsidiaries (the "Company")
principal business is the ownership and management of multifamily
apartment properties. The Company is also involved in the acquisition
and redevelopment of multifamily apartment properties. The Company holds
an ownership interest in apartment communities either as (i) the sole
owner of various limited partnerships or subsidiaries which own
apartment communities (the "Wholly Owned Properties"), or (ii) the
general partner in various limited partnerships which own apartment
communities (the "Syndicated Partnerships"), collectively referred to as
the "Properties". With respect to the Syndicated Partnerships, the
Company retains a general partner interest ranging from 1.0% to 10.0%,
but typically 9.0% to 10.0%. The limited partnership interests are
substantially all owned by unrelated third party investors. The Company
also has receivables, typically in the form of second mortgages, from
the Syndicated Partnerships that generate a majority of the interest
income recognized by the Company.
The majority of the Properties are located in the midwest and southeast
United States, with the heaviest concentrations in Florida, Ohio,
Georgia, Indiana, Michigan and Kentucky. The typical Property averages
65 rental units which are located in multiple single story buildings
with studio, one and two bedroom apartments. All of the Properties have
non-recourse first mortgage indebtedness which is owed to financial
institutions. The Company is not dependent for its revenues on any
particular property and the loss of any property would not be material
to the Company's financial position. Geographic distribution of the
Properties also minimizes the Company's exposure to local economic
conditions.
The Company derives revenues from two core business activities: 1)
management of multifamily residential real property, including provision
of management services to owners of property in which the Company does
not have an ownership interest ("Management Services"); and 2)
activities related to the ownership of multifamily residential real
property (including provision of asset management services to passive
co-owners) ("Investment Management"). In December 1995, the Company
restructured along these business lines. The restructuring was
implemented, in part, to cause the Company and its management to focus
attention on these two distinct, yet complementary, business activities.
F-8
<PAGE>
73
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Management Services
-------------------
The Company's Management Services division is charged with the conduct
of the Company's property management business. The Company's property
management business involves all traditional elements of third party
property management including: day-to-day management and maintenance of
multi-family residential apartment properties, attracting and retaining
qualified residents, collecting rents and other receivables from
residents, providing cash management services for rental revenues,
security deposits, taxes and insurance and deferred maintenance escrows,
and compiling and furnishing information to property owners.
Effective August 1, 1996, the Company acquired Lexford Properties, Inc.
("Lexford") by merger of a wholly owned subsidiary of the Company with
and into Lexford. On that date, Lexford became a wholly owned subsidiary
of the Company. Lexford has been engaged in the business of third party
property management services to the owners of multifamily residential
real property since commencing business operations in June 1988. At the
time the Company acquired Lexford, Lexford managed approximately 22,000
apartment units for third party owners. The Company currently intends
that Lexford will continue to provide and expand its third party
property management services as well as oversee the operation of the
Company's Management Services division which managed approximately
34,000 units in 1996, including the Wholly Owned Properties.
Accordingly, the Company's property management business will be
conducted through its wholly owned subsidiary, Lexford Properties, Inc.
Management believes that the acquisition of Lexford has enhanced the
Company's property management capabilities and will facilitate the
Company's ability to acquire, as well as service, additional multifamily
residential properties in the future including properties not built by
the Company. (SEE "LEXFORD ACQUISITION").
The Company's Management Services division also operates an adjunct
business which the Company refers to as "Ancillary Services". The
Company's Ancillary Services includes the sale of parts and supplies to
both the Wholly Owned Properties and Syndicated Partnerships and also
the leasing of furniture and sale of renters insurance to residents at
the Properties. In June 1996, the Company announced realignments in its
organization. As part of this restructure, the Company contracted to out
source the parts and supply inventory previously handled internally by
the Company's Ancillary Services function. The Company completed the
transition to the out sourcing by the end of 1996. Thereafter, the
Company's Ancillary Services department will continue to provide
assistance to the Properties, in the acquisition of needed parts and
supplies and the management of a coordinated buying group obtaining
substantial volume discounts. In consideration of these services, the
Company will generate income by retaining some portion of discounts
earned.
F-9
<PAGE>
74
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Investment Management
---------------------
The objective of the Company's Investment Management division is to
maximize the value of its real estate holdings and its returns on real
estate investments. The Company performs these functions both with
respect to the Wholly Owned Properties as well as the Syndicated
Partnerships. The Company strives to obtain and maintain the best
available financing for the Properties and to maximize the Properties'
operating performance. The Company evaluates the performance of all real
estate holdings to identify investment requirements, under-performing
Properties or those that can be sold at an attractive price relative to
their performance.
The Company's Investment Management division acting in the Company's
capacity as general partner of the Syndicated Partnerships provides
asset management services to the Syndicated Partnerships. In addition,
the Company's Investment Management division performs the following
services for the accounts of the co-owners (limited partners) of the
Syndicated Partnerships: informational and financial reporting services
(including tax return preparation and provision of tax return
information to the limited partners) and capital and financial planning,
(including determination of reserves, funding of capital requirements
and administration of capital distributions to partners).
Fresh Start Accounting
----------------------
The Company adopted a method of accounting referred to as fresh start
("Fresh Start") reporting as of September 11, 1992 ("The Effective
Date") as a result of the Company's judicial plan of reorganization (the
"Plan of Reorganization"). The Company prepared financial statements on
the basis that a new reporting entity was created with assets and
liabilities recorded at their estimated fair values as of the Effective
Date. At the Effective Date, to the extent the non-recourse debt on
certain Wholly Owned assets exceeded the estimated fair value of the
Wholly Owned Property, the Company reduced the contractual amount of the
related non-recourse first mortgage debt by the amounts of the
deficiency (the "Mortgage Deficiencies"). The contractual mortgage
balance, net of any applicable Mortgage Deficiency, is referred to as
the "Carrying Value" of the mortgage.
Non-Core Assets
---------------
The Company also has interests in motel properties, vacant land, single
family homes, investor notes receivable and certain other assets
(collectively the "Non-Core Assets"). The Company valued these Non- Core
Assets, at the Effective Date, based on previous sales activity and
independent appraisals. In 1994, the Company recovered the entire
carrying value of the Non-Core Assets from the collection of receivables
and proceeds from disposal. The Company began recognizing income, net of
collection and closing costs, from the proceeds of disposal of these
Non-Core Assets once the carrying value was fully recovered. As of
December 31, 1996, the Company still has an ownership interest in
certain Non-Core Assets that may have potential value.
F-10
<PAGE>
75
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Lexford Acquisition
-------------------
Effective August 1, 1996 the Company acquired Lexford by way of a merger
(the "Lexford Merger") of a wholly owned subsidiary of the Company with
and into Lexford. The acquisition was accounted for as a purchase. The
terms of the Lexford Merger provided that the Company would succeed to
the ownership of all of the issued and outstanding stock of Lexford and
the shareholders of Lexford would receive 700,000 shares of restricted,
newly issued Common Stock. For purposes of the Lexford Merger, the
Common Stock was valued at $20 per share. Approximately $9.0 million, or
450,000 shares, of the purchase price is subject to forfeiture in whole
or in part in the event Lexford does not achieve certain profitability
criteria by December 31, 1999. These shares are held in escrow pending
release. At the time the shares subject to forfeiture are released
without contingency, the Company will record the additional purchase
price. The Lexford shareholders received 250,000 shares of Common Stock
free of contingencies.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those
estimates.
Long-Lived Assets -- FASB Statement No. 121
-------------------------------------------
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of, ("FASB 121") which requires
impairment losses to be recorded on long-lived assets used in
operations, when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. FASB 121 became effective
beginning fiscal year 1996. Management is not aware of any indicator
that would result in any significant impairment loss.
F-11
<PAGE>
76
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Fair Value of Financial Instruments
-----------------------------------
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of FASB
Statement No. 107, Disclosure About Fair Value of Financial Instruments.
The fair value of Cash and Funds Held in Escrow is equal to their
respective carrying amounts. For Interests in and Receivables from
Syndicated Partnerships the Company used the Fresh Start accounting
methodology used at the Effective Date to estimate the value at December
31, 1996 and 1995, which value approximated $133.4 million and $107.6
million, respectively. Such methodology is generally based on estimates
of the fair market value of the apartment communities owned by the
Syndicated Partnerships, less related indebtedness. The Interests in and
Receivables from Syndicated Partnerships substantially consist of second
mortgage loans receivable, whose ultimate repayment is subject to a
number of variables, including the performance and value of the
underlying real estate property and the ultimate timing of repayments of
the receivables. Considerable judgment is required in the interpretation
of market data to develop estimates of fair value, accordingly, the
estimates are not necessarily indicative of the amounts that could be
realized or would be paid in a current market exchange. The effect of
using different market assumptions and/or estimation methodologies may
be material to the estimated fair value amounts (See Note 3).
The carrying value of the amounts comprising the Company's term debt and
other notes payable as described in Notes 3 and 7 approximate their fair
value.
As further described in Note 5, at December 31, 1996 the Company's
mortgages on Wholly Owned Properties in the amount of $148.1 million had
contractual balances totaling $157.4 million. Interest rates on the
mortgages ranged from 7.0% to 10.0% with rates being fixed on
approximately $144.2 million of the contractual balances. In addition,
mortgages with a contractual and carrying value of $4.8 million had
matured as of December 31, 1996 (See Note 5). Management believes that
using the Company's incremental borrowing rate to estimate fair value of
the mortgages is not appropriate and, because of excessive costs,
considers estimates of fair value to otherwise be impracticable.
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of Cardinal
Realty Services, Inc. and its wholly owned subsidiaries, including
Wholly Owned Properties. All significant intercompany balances and
transactions (except for Fee Based Revenues and related expenses
generated from Wholly Owned Properties in 1995 and 1994) have been
eliminated in consolidation. Total Revenues from Wholly Owned Properties
(during the period such properties were held for sale) amounted to $3.6
million and $3.4 million for the years ended December 31, 1995 and 1994,
respectively. Any gross profit on such revenues has been eliminated in
consolidation (See Note 2).
Reclassification
----------------
Certain reclassifications have been made in the Consolidated Financial
Statements resulting from changes in classification of Wholly Owned
Properties in 1996 previously Held for Sale or to provide comparable
information in the Consolidated Statements of Income and Cash Flows.
These reclassifications had no effect on shareholders' equity.
F-12
<PAGE>
77
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Restatement
-----------
The net income previously reported in the 1994 Consolidated Statements
of Income has been adjusted in order to comply with Statement of
Position ("SOP") 90-7 "Reorganization Under the Bankruptcy Code"
pertaining to accounting for deferred income taxes. SOP 90-7 requires
that benefits realized from pre-confirmation net operating loss
carryforwards be reported as an increase to Additional Paid-in Capital.
The Company reported net income but was not required to pay taxes on
such income as the result of having the benefit of deductions for tax
purposes including net operating loss carryforwards to offset the
income. The financial statements as adjusted, reflect a non-cash charge
in the form of a tax provision in the Consolidated Statements of Income.
The valuation reserve against net deferred tax assets has been reduced
by an amount equivalent to the non-cash charge with a corresponding
increase being made to Additional Paid-in Capital. The adjustment does
not affect the Company's cash flows or total shareholders' equity. The
effect of the adjustment is as follows:
<TABLE>
<CAPTION>
As Adjustment
Previously for Tax As
Reported Provision Adjusted
--------------------- ---------------------- -------------------
<S> <C> <C> <C>
1994
- ----
Income before Extraordinary Gain $ 6,333,943 $ (2,390,000) $ 3,943,943
Extraordinary Gain 5,229,901 (2,074,000) 3,155,901
--------------------- ---------------------- -------------------
Net Income $ 11,563,844 $ (4,464,000) $ 7,099,844
===================== ====================== ===================
Per Share of Common Stock: 1
1994
- ----
Income before Extraordinary Gain $1.64 ($0.62) $1.02
Extraordinary Gain 1.36 (0.54) 0.82
--------------------- ---------------------- -------------------
Net Income $3.00 ($1.16) $1.84
===================== ====================== ===================
<FN>
1 Per share amounts have been restated to reflect the completion of the claims
resolution process for the issuance of common stock.
</FN>
</TABLE>
F-13
<PAGE>
78
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Wholly Owned Properties (previously Held for Sale)
--------------------------------------------------
During 1995 and prior years, the Company classified the Wholly Owned
Properties as Held for Sale. However, based upon mortgage debt that has
since been restructured with favorable amortization terms, combined with
improved net operating income and cash flow performance, management
decided to retain the Wholly Owned Properties for investment. Therefore,
commencing January 1, 1996, the Company changed the classification of
the Wholly Owned Properties and discontinued the Held for Sale
accounting treatment. The Wholly Owned Properties are depreciated over
their estimated remaining useful lives, typically approximately 30
years, using the straight-line method for financial reporting purposes
and tax purposes. The Company expensed all interior replacement costs
and capitalized major building exterior improvements (See Note 2).
Interests in and Receivables from Syndicated Partnerships
---------------------------------------------------------
The carrying value of the interests in and receivables from Syndicated
Partnerships represents the allocation of the estimated fair value of
the assets as of the Effective Date and, as described in Note 3, the
face amounts of the receivables are significantly more than recorded
amounts. These receivables generally include long-term second mortgages
and other receivables. In addition, subsequent to the Effective Date,
the Company has made advances to the Syndicated partnerships. These
advances primarily relate to supplemental funding for refinancing
transactions, and bear interest at prime plus one percent. Interest is
accrued on the recorded values of the second mortgages and certain of
the other receivables based upon contractual interest rates, and
allowances are provided for estimated uncollectible interest based upon
the underlying properties' net cash flow. In certain instances, cash
flow received in excess of accrued second mortgage interest on the
recorded values of the second mortgages is recorded as income. The
Company is also entitled to receive incentive management fees and
supplemental second mortgage interest based upon certain levels of cash
flow of certain of the underlying properties. Also, in the event the
underlying properties are sold or refinanced, the Company is generally
entitled to a participation interest in the net proceeds, as a general
partner and/or a second mortgage holder. The Company accounts for its
general partner interests by the cost method; no significant recorded
value has been ascribed to these interests arising prior to the
Effective Date. The realization of the interests in and receivables from
Syndicated Partnerships is dependent on the future operating performance
of the Syndicated Partnerships.
F-14
<PAGE>
79
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Cash
----
Operating cash as of December 31, 1996 and 1995 is comprised of $3.3
million and $2.7 million respectively, related to Wholly Owned
Properties which is held in separate property bank accounts and
approximately $270,000 and $52,000 in corporate funds, respectively. The
majority of excess corporate cash is applied to the corporate term debt
and reborrowed as needed.
Furniture, Fixtures and Other, Net
----------------------------------
Furniture and fixtures are recorded at cost. Furniture and fixtures are
depreciated over their estimated useful lives using the straight-line
method for financial reporting purposes and various accelerated or
straight-line methods for income tax purposes.
Funds Held in Escrow
--------------------
The amounts at December 31, 1996 and 1995 include funds of $7.0 million
and $7.1 million, respectively, escrowed by Wholly Owned Properties for
improvements and deferred maintenance, real estate taxes, insurance and
resident security deposits. In addition, the Company is holding $3.0
million and $2.3 million, at December 31, 1996 and 1995, respectively,
as funds held primarily for payment of insurance premiums which are
collected on behalf of the Properties. At December 31, 1996 the
Company's funds held in escrow also includes $4.0 million of funds
received from the settlement of termite litigation. The funds are being
held pending the finalization of an allocation of proceeds to the
affected properties. Applicable corresponding liabilities have been
recorded at December 31, 1996 and 1995.
Prepaids and Other Assets
-------------------------
Prepaids and Other Assets as of December 31, 1996 and 1995 is comprised
of the following:
<TABLE>
<CAPTION>
1996 1995
------------------ ----------------
<S> <C> <C>
Corporate:
- ----------
Acquired Management Contracts, net of amortization of $67,219 $ 1,546,041 $ 0
Goodwill, net of amortization of $62,409 3,797,323 0
Inventory 0 455,083
Other 952,637 987,522
Wholly Owned Properties:
- ------------------------
Capitalized Refinancing Costs 2,721,365 1,370,638
Prepaid Insurance, Taxes and Other 832,131 1,116,856
------------------ ----------------
$ 9,849,497 $ 3,930,099
================== ================
</TABLE>
F-15
<PAGE>
80
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 1: BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
The management contracts purchased with the Lexford Acquisition are
being amortized on the straight line basis over 10 years. The Goodwill
related to the Lexford acquisition is being amortized on the straight
line basis over 25 years. The capitalized refinancing costs are
associated with the refinancing of the mortgages on the Wholly Owned
Properties. The costs are being amortized over six to ten years based
upon the maturity of the new loans.
Net Income Per Share
--------------------
Net income per share is computed based on the total weighted average
number of shares of the Company's Common Stock, without par value
("Common Stock"), outstanding during the period and those contingent
shares estimated to be issued to officers, employees and directors in
accordance with the Company's 1992 Incentive Equity Plan, as amended
(the "Incentive Equity Plan"). In August 1996, the Company issued
700,000 shares of Common Stock in connection with the Lexford merger,
450,000 shares of which remain subject to forfeiture in whole or in
part. The 450,000 shares subject to forfeiture are excluded from the
weighted average shares outstanding because the shares are not dilutive.
The weighted average shares outstanding, as of December 31, 1996, was
approximately 3,933,000, (less 210,000 treasury shares) including
approximately 244,000 estimated to be issued in the future pursuant to
the Incentive Equity Plan. As of December 31, 1995 and 1994 the weighted
average shares outstanding was approximately 3,850,000 shares. In
November 1995, the shareholders of the Company approved an increase in
the number of authorized shares of Common Stock of the Company from
4,500,000 to 13,500,000 and also authorized 1,500,000 shares of "Blank
Check" Preferred Stock. The Company currently has no commitments or
arrangements which would require the issuance of additional shares.
Treasury shares include approximately 70,000 shares issued to Wholly
Owned Properties and subsidiaries as part of the Company's plan of
reorganization. In addition, approximately 126,000 unclaimed shares,
related to stock issued for prepetition unsecured claims, have been
converted to treasury shares. The Plan of Reorganization provided that
all stock issued, but not deliverable, to any unsecured creditor, be
held in trust for a period of two years from the Effective Date, at
which time such stock would either be canceled or revert to the Company
as treasury shares at the Company's discretion. The Company elected to
treat undeliverable stock as treasury shares.
F-16
<PAGE>
81
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 2: WHOLLY OWNED PROPERTIES
During 1995 and prior years, the Company had attempted to market and
sell the Wholly Owned Properties and classified the Wholly Owned
Properties as Held for Sale. While the Wholly Owned Properties were held
for sale, the results of operations from the Wholly Owned Properties
were credited to the carrying value of the real estate and no revenues,
operating expenses or depreciation were included in the Consolidated
Statements of Income. Cash flows from the Wholly Owned Properties prior
to 1996 were classified as Cash Flow Provided by Investing Activities.
Commencing January 1, 1996, based upon management's decision to retain
the Wholly Owned Properties for investment, the operations, including a
provision for depreciation, of the Wholly Owned Properties have been
fully consolidated in the Company's Statements of Income. Further, the
cash flows of the Wholly Owned Properties have been reclassified as Cash
Flows Provided by Operating Activities. The Company will continue to
monitor and evaluate any changes in circumstances and/or economic
conditions affecting its investment in the Wholly Owned Properties. The
Company is currently analyzing alternatives for its majority interest in
the Wholly Owned Properties, which may include a disposition to third
parties resulting in deconsolidation of the entities.
The number of Wholly Owned Properties by year is as follows:
1996 1995 1994
-------------- --------------- -------------
Beginning of Year 116 116 120
Acquisitions 1 4 0
Disposals (4) (2) (2)
Properties Combined 0 (2) (2)
-------------- --------------- -------------
End of Year 113 116 116
============== =============== =============
F-17
<PAGE>
82
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 2: WHOLLY OWNED PROPERTIES (cont'd)
Condensed combined balance sheets, with intercompany payables and
receivables eliminated, of the Company's Wholly Owned Properties as of
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ----------------------
<S> <C> <C>
ASSETS
Net Operating Real Estate Assets (Held for Sale in 1995) $157,091,545 $173,064,441
Less: Cumulative Income Related to Wholly Owned Properties
from the Effective Date to December 31, 1995 0 (8,730,386)
--------------------- ----------------------
157,091,545 164,334,055
Cash 3,322,494 2,699,924
Accounts Receivable 324,772 1,043,069
Funds Held in Escrow 6,980,142 7,097,162
Prepaids and Other 3,553,497 2,487,494
--------------------- ----------------------
$171,272,450 $177,661,704
===================== ======================
LIABILITIES AND EQUITY
Non Recourse Mortgages Payable:
Contractual $157,381,603 $163,812,985
Mortgage Deficiency (9,325,586) (15,624,874)
--------------------- ----------------------
148,056,017 148,188,111
Accounts Payable 1,160,426 953,076
Accrued Interest and Real Estate Taxes 2,961,795 3,577,547
Other Accrued Expenses 1,337,083 1,315,132
Other Liabilities 683,202 1,094,800
--------------------- ----------------------
154,198,523 155,128,666
Equity 17,073,927 22,533,038
--------------------- ----------------------
$171,272,450 $177,661,704
===================== ======================
</TABLE>
F-18
<PAGE>
83
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 2: WHOLLY OWNED PROPERTIES (cont'd)
Condensed consolidated statements of income of the Wholly Owned
Properties while Held for Sale, including intercompany expenses, for the
years ended December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
------------------- -----------------
<S> <C> <C>
Rental Revenues $40,000,678 $38,773,604
Operating Expenses (18,691,062) (17,651,516)
------------------- -----------------
Net Operating Income 21,309,616 21,122,088
Improvements and Replacement Expense (2,213,586) (2,579,321)
Improvements and Replacement Expense
funded from Escrows (1,746,156) (334,574)
Interest Expense (contractual interest of approximately
$14,562,000 and $15,312,000, respectively) (13,549,258) (13,450,027)
Other Expenses (1,464,630) (1,564,481)
Reorganization Expenses (96,227) (517,354)
------------------- -----------------
Income, less expenses, excluding depreciation $2,239,759 $2,676,331
=================== =================
</TABLE>
Revenues from rental of apartment units is recognized ratably over the
term of the related operating leases, which are generally for a period
of one year or less.
NOTE 3: INTERESTS IN AND RECEIVABLES FROM SYNDICATED PARTNERSHIPS
The Interests in and Receivables from Syndicated Partnerships net of
reserves of $2.3 million and $1.9 million, respectively, are comprised
of the following major components:
<TABLE>
<CAPTION>
1996 1995
--------------------- ----------------------
<S> <C> <C>
Second Mortgage Notes $36,450,176 $37,402,604
Advances, since the Effective Date 14,271,906 10,714,680
Other, including accrued interest 3,888,339 4,474,160
--------------------- ----------------------
$54,610,421 $52,591,444
===================== ======================
</TABLE>
The majority of second mortgage notes bear interest at 6%. Interest
income is accrued based upon the Fresh Start value of the second
mortgage notes, as described in Note 1. Advances made to Syndicated
Partnerships since the Effective Date primarily were for supplemental
financing for the debt restructuring or refinancing transactions as
described in Note 6. These advances currently bear interest at prime
plus 1%. At December 31, 1996 and 1995, the contractual value of the
Company's interest in second mortgages, advances and other receivables,
including related interest, amounted to $238.9 million and $237.1
million, respectively. There can be no assurance that the Company will
collect any amounts above the carrying value of these receivables.
F-19
<PAGE>
84
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 4: CORPORATE TERM DEBT
In August 1995 the Company closed a loan agreement with The Provident
Bank (the "Bank") which provided a new $32.0 million credit facility for
the Company. The new credit facility retired the previous corporate
credit facility with The Huntington National Bank ("HNB"). During 1995,
the variable interest rates on the HNB debt ranged from 9.0% to 10.0%
with fixed rates of 5.54% to 6.03%. At the time of refinancing,
approximately $6.5 million of the HNB facility was subject to a fixed
interest rate of 6.03% with an overall weighted average rate on the
total HNB credit facility of 8.25%
The bank credit facility is comprised of three separate lines of credit,
two of the lines bear interest at the Bank's prime rate of interest
minus 1% and the third line at 7.25% fixed. During 1996, the variable
interest rate on the Bank debt was 7.25%. The loans are secured by all
assets of the Company.
The credit facility was comprised of the following terms and balances at
December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------------------ ------------------
<S> <C> <C>
Acquisition revolving line (the "Acquisition Line I"), credit facility
for $7.0 million, with variable interest rate converted in February
1996, to fixed interest rate of 7.25%, due in March 2001, with monthly
installments of principal and interest due of $139,435 with no further
credit availability on this line $6,007,232 $7,000,000
Working capital revolving credit facility (the "Working Capital Line"),
maximum credit facility of $3.0 million, due in August 1997, subject to
annual renewal by the Bank 0 0
Reducing balance revolving line (the "Reducing Line"), maximum credit
facility of $22.0 million, due in August 2001, with quarterly reductions
in available credit of $750,000 commencing in October 1996 9,110,816 13,470,205
------------------ ------------------
$15,118,048 $20,470,205
================== ==================
</TABLE>
Borrowings under the Working Capital Line will amortize over 36 months
if the Bank does not renew the facility when due in August 1997. The
Acquisition Line is subject to annual renewal and is restricted to
provide funds for the acquisition of, or refinancing/restructuring of
mortgages on affiliated properties. The Reducing Line was used to retire
the HNB credit facility.
In July 1996, the Company received a commitment letter from the Bank for
a new $10.0 million Acquisition Line (the "Acquisition Line II) of
credit generally under the same terms as the existing facility. The
Company's capital requirements in 1996 did not require the Company to
access this new facility.
At December 31, 1996 the Company had unrestricted credit availability of
approximately $25.4 million, inclusive of the new $10.0 million
commitment from the Bank, but excluding credit availability restricted
for approximately $767,000 of unfunded letters of credit. At December
31, 1995, the Company had $10.7 million available for future credit
which excluded $829,000 of availability restricted for specific credit
needs.
F-20
<PAGE>
85
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 4: CORPORATE TERM DEBT (cont'd)
The Company's minimum annual long term debt maturities following
December 31, 1996 are:
1997 $ 4,285,595
1998 4,376,035
1999 4,479,181
2000 1,700,874
2001 276,363
-------------------
$ 15,118,048
===================
NOTE 5: NON RECOURSE MORTGAGES ON WHOLLY OWNED PROPERTIES
In connection with Fresh Start reporting as further described in Note 1,
mortgages on real estate assets have been restated to their estimated
fair value as of the Effective Date. The contractual principal balances
of the mortgages on Real Estate Assets exceed the carrying values by
$9.3 million and $15.6 million at December 31, 1996 and 1995,
respectively. The mortgages are non-recourse and are collateralized by
real estate properties and are payable over periods through 2006. At
December 31, 1996 contractual interest rates ranged from 7.0% to 10.0%
with fixed rates on approximately $144.2 million of the outstanding
contractual mortgage balances. Interest expense is recorded using the
effective interest method based upon the carrying value of the mortgage
debt. The weighted average effective interest rate was 9.0% at December
31, 1996. The weighted average contractual interest rate and term to
maturity on the mortgages on Real Estate Assets, excluding matured
loans, was 8.7% and 7.1 years at December 31, 1996. Annual debt service
requirement was $15.7 million at December 31, 1996. In addition, 15
Wholly Owned Properties have secondary mortgage debt totaling $2.9
million that requires the application of all excess cash flow from
operations to be applied to the outstanding principal on such debt. The
range of interest rates and related carrying amounts of mortgages
payable at December 31, 1996 is as follows:
Contractual Contractual Carrying
Rate Balance Value
- ------------------------- ----------------------- -----------------------
Less than 8.0% $ 15,339,067 $ 13,042,258
8.0% - 9.0% 127,440,097 121,908,563
More than 9.0% 14,602,439 13,105,196
----------------------- -----------------------
$ 157,381,603 $ 148,056,017
======================= =======================
At December 31, 1996, four Wholly Owned Properties had mortgage loans
which had matured with an aggregate contractual and carrying value of
$4.8 million. The Company will either refinance the mortgages or deed
the property to the lender depending upon the outcome of negotiations
with the respective lenders.
Minimum estimated repayment requirements of mortgages for the next five
years based upon the contractual principal balances, exclusive of those
mortgages which have matured, are as follows:
F-21
<PAGE>
86
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 5: NON RECOURSE MORTGAGES ON WHOLLY OWNED PROPERTIES (cont'd)
Contractual
Amounts
---------------------
1997 $ 3,055,003
1998 8,961,786
1999 6,572,553
2000 6,574,634
2001 22,371,767
Thereafter 109,845,860
---------------------
$ 157,381,603
=====================
NOTE 6: REFINANCED MORTGAGE DEBT
In 1996, the Company refinanced the mortgage and related interest debt
on 35 Wholly Owned Properties. Mortgage and related interest debt with a
contractual balance of $46.8 million and a Carrying Value of $45.6
million was refinanced with new carrying value and contractual mortgage
debt of $47.8 million. The new mortgages carry a weighted average fixed
interest rate of 8.8%, 25 to 30 year amortization and typically, a 10
year maturity. Annual debt service requirements decreased from $4.9
million to $4.6 million. In these transactions, cash flow secondary
mortgages ("B Notes") on six properties were refinanced. These "B Notes"
required 100% of excess cash flow from operations of the properties to
be applied to the principal outstanding on the B Notes. In 1996 the
excess cash flow applied to the B Notes on these six properties amounted
to approximately $98,000. The Wholly Owned Properties incurred loan
origination costs of $1.7 million which have been capitalized and are
being amortized over the maturity term of the new mortgages. The Company
provided net funding of $1.1 million to complete these transactions.
A fourth quarter 1996 extraordinary non-cash charge of $1.6 million, net
of tax benefits, resulted from mortgage debt refinancing on certain of
the above Wholly Owned Properties. The repayment of the existing
mortgage at the contractual balance was possible due to the improvements
in performance resulting in the increased value of certain properties to
levels in excess of the carrying value established on the Effective
Date. The charge arose from those mortgages repaid from refinance
proceeds at the contractual balance which exceeded the Carrying Value of
the mortgage. (Note 1).
The Company also completed the refinancing of mortgage and related
interest debt of $95.3 million on 90 Syndicated Partnerships. The
Company provided net advances to Syndicated Partnerships of
approximately $600,000 to facilitate these transactions. Annual debt
service requirements decreased, in the aggregate, approximately $626,000
per year. The new mortgages on 72 Syndicated Partnerships are interest
only for three years; after the third year the annual debt service
reduction will be offset by the commencement of principal amortization.
F-22
<PAGE>
87
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 6: REFINANCED MORTGAGE DEBT (cont'd)
The refinancing on the Syndicated Partnerships generated loan fee
revenue of approximately $752,000 in 1996 as compared to $886,000 and
$1.3 million in 1995 and 1994, respectively. The fees were based upon a
graduated percentage of the new loan amounts.
In 1995 and 1994, the Company completed modification or refinancing
transactions on Wholly Owned Properties and Syndicated Partnerships
which resulted in an extraordinary gain on discharge of indebtedness on
the Wholly Owned Properties, net of closing costs reserves and taxes, of
approximately $804,000 and $3.2 million, respectively.
NOTE 7: OTHER NOTES PAYABLE
In June 1995, the Company purchased from a mortgage lender the mortgages
on one Syndicated Partnership and four Wholly Owned Properties for $7.8
million. The Company, on an interim basis, financed the purchase of the
mortgages with a promissory note payable to the mortgage lender.
Approximately $1.2 million of the $7.8 million note payable relates to a
Syndicated Partnership and was classified with other notes payable at
December 31, 1995. The balance of the note payable relates to Wholly
Owned Properties and was classified with mortgages on Wholly Owned
Properties at December 31, 1995. The note was repaid from the proceeds
of permanent non recourse financing on the Properties in 1996.
The remaining $145,220 of Other Notes Payable consists of obligations
which are payable through 1997, bear interest at approximately 9.0% and
are secured by equipment and other collateral.
NOTE 8: OTHER LIABILITIES
Other Liabilities at December 31, 1996 and 1995 consists of
approximately $683,000 and $964,000, respectively, of liabilities of the
Wholly Owned Properties and $4.7 million and $1.3 million, respectively,
of obligations of the Company. The Other Liabilities of the Wholly Owned
Properties at December 31, 1996 consists principally of general
operating accruals and obligations of the properties. The Company's
Other Liabilities includes $3.4 million due to Syndicated Partnerships
related to a litigation settlement to be funded from restricted cash
held in escrow (See Note 1). The remaining other liabilities principally
relate to obligations from the Company's Plan of Reorganization.
In 1994, the Company settled a pending claim in its bankruptcy case
which resulted in a reduction of a recorded liability of approximately
$726,000 in exchange for the Company's dismissal of a bankruptcy
preference action against an insurance company and an insurance broker.
The income recognized due to the release of the liability is reflected
in Other Income.
F-23
<PAGE>
88
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 9: INCENTIVE COMPENSATION PLAN
The Company's 1992 Incentive Equity Plan which benefits its officers,
key employees and non-employee directors, was established as of the
Effective Date of the Company's Plan of Reorganization. Under this plan
approximately 481,200 shares are available for awards of stock options
and restricted stock. In addition to the Incentive Equity Plan, as of
the Effective Date, the bankruptcy trustee awarded options to purchase
approximately 36,000 shares to certain key employees under an employee
retention plan. Since the shares included in the 1992 Incentive Equity
Plan and the trustee awarded options were provided in the Plan of
Reorganization, the shares have been deemed awarded prior to the
Effective Date with no compensation expense recorded for periods
subsequent to the Effective Date. In November 1995, the Board of
Directors adopted and the shareholders approved an amendment to the
Incentive Equity Plan (the "Plan Amendment"). The Plan Amendment
provided for an additional 200,000 shares of Common Stock to be
available for the granting of future awards for officers and key
employees. In addition, the Plan Amendment provides for 50,000 shares of
Common Stock to be available for the granting of stock options to
non-employee directors. Awards of shares provided in the Plan Amendment,
depending on the nature of the award, may be reflected as compensation.
The shares of stock available for future awards may be awarded at the
discretion of the Company's Board of Directors.
In 1996 the Company awarded to officers and non-employee directors
49,500 shares of restricted stock, 38,000 shares of deferred stock and
stock options for the purchase of 76,000 shares. The restricted stock is
comprised of up to 17,500 shares awarded as a Company match of shares if
purchased by certain officers by April 1997, and 32,000 shares which
will vest ratably over time. The deferred stock vests based upon the
Company achieving specified levels of total market capitalization. The
grant date weighted fair value of restricted and deferred stock was
approximately $18.57 per share. Included in the 76,000 of stock options
awarded in 1996 were options to purchase 2,000 shares that were awarded
to each of the eight non-employee directors of the Company.
Approximately 32,500 shares of restricted stock awards and the options
to purchase 30,000 shares were awarded out of the shares included in the
original 1992 Incentive Equity Plan. Approximately 173,000 shares remain
available for future awards. The Company's performance based Incentive
Bonus Plan implemented in 1996 includes awards of restricted stock and
stock options if specified Company performance criteria are achieved.
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and
related interpretations in accounting for its employee and director
stock options because, the alternative fair value accounting provided
for under FASB Statement No. 123, "Accounting for Stock Based
Compensation," ("FASB 123") requires use of option valuation models that
were not developed for use in valuing employee stock options. Under APB
25, because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.
Pro forma information regarding net income and earnings per share is
required by FASB 123, which also requires that the information be
determined as if the Company has accounted for its employee stock
options granted subsequent to December 31, 1994 under the fair value
method of that Statement. The fair value for these options was estimated
at the date of the grant using Black-Scholes option pricing model.
F-24
<PAGE>
89
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 9: INCENTIVE COMPENSATION PLAN (cont'd)
The following assumptions were utilized in the pricing model; a weighted
average risk free interest rate of 6.5% in 1995 and 1996; dividend yield
of one percent; volatility factors of the expected market price of the
Company's common stock of 0.236; and a weighted average expected life of
seven years in 1996 and eight years in 1995.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restriction and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion,
the existing models do not necessarily provide a reliable single measure
of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized over the options vesting period. The Company's pro
forma information follows:
1996 1995
------------------- -------------------
Pro forma net income $ 3,629,797 $ 5,090,716
=================== ===================
Pro forma earnings per share $ 0.92 $ 1.32
=================== ===================
As reported Earnings per share $ 0.96 $ 1.32
=================== ===================
Pro forma net income may not be representative of compensation expense
under FASB 123 when the effect of the amortization of multiple awards
would be reflected.
F-25
<PAGE>
90
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 9: INCENTIVE COMPENSATION PLAN (cont'd)
The following table summarizes the Company's stock option activity, and
related information for the years ended December 31, 1996, 1995 and 1994
(in thousands except for exercise prices)
<TABLE>
<CAPTION>
1996 1995 1994
------------------- --------------------- ---------------------
Weighted Weighted Weighted
Ave. Ave. Ave.
Exercise Exercise Exercise
Options Price Options Price Options Price
------------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at beginning of year 135 $4.10 135 $2.33 140 $2.31
------------------- --------------------- ---------------------
Options granted 76 $18.87 16 $17.25 1 $7.00
Options exercised (34) $1.80 (14) $2.27 (1) $2.62
Options forfeited (1) $2.62 (2) $2.62 (5) $2.62
------------------- --------------------- ---------------------
Options outstanding at end of year 176 $10.91 135 $4.10 135 $2.33
=================== ===================== =====================
Options exercisable at end of year 88 $5.20 96 $2.21 86 $2.12
=================== ===================== =====================
Weighted Ave. Fair Value of Options
Granted during the Year $6.37 $6.84 N/A
========== =========== ==========
</TABLE>
Options awarded have an exercise price equal to or greater than the
market price of the Common Stock at the time of the award, and are
subject to vesting schedules as determined by the Company's Board of
Directors. The options granted expire, if not exercised, ten years from
the date on which the option was granted. Exercise prices for options
outstanding as of December 31, 1996 ranged from $1.42 to $21.25 per
share with a weighted average remaining term of 7.7 years.
NOTE 10: INCOME TAXES
The Company and its subsidiaries file a consolidated Federal income tax
return. For financial reporting purposes, the Company follows FASB
Statement No. 109 ("FASB 109"). In accordance with FASB 109, as well as
SOP 90-7, income taxes have been provided at statutory rates in effect
during the period. Tax benefits associated with net operating loss
carryforwards and other temporary differences that existed at the time
fresh start reporting was adopted are reflected as an increase to
Additional Paid-in Capital in the period in which they were realized.
F-26
<PAGE>
91
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 10: INCOME TAXES (cont'd)
The provision for income taxes in the Consolidated Statements of Income
(including amounts applicable to extraordinary items) is as follows:
Years Ended
--------------------------------------------------
1996 1995 1994
---------------- ---------------- ----------------
Current:
Federal $ 0 $ 50,000 $ 0
State 250,000 314,000 201,000
Amounts not payable in cash 2,151,000 2,866,000 4,464,000
---------------- ---------------- ----------------
$ 2,401,000 $ 3,230,000 $ 4,665,000
================ ================ ================
The Company's actual income tax payments for the years 1996, 1995 and
1994 were significantly less than the total provision for income taxes
because of available net operating loss carryforwards and other tax
benefits. The amounts included in the provision for taxes for which no
amounts were payable in cash are set forth in the table above.
The effective income tax rates varied from the federal statutory rates
as follows:
1996 1995 1994
------------ ------------ ------------
Federal Tax provision at statutory rates $ 2,094,000 $ 2,832,000 $ 4,118,000
State Income Taxes,
Net of Federal Income Tax Benefit 288,000 386,000 537,000
Other Permanent Differences 19,000 12,000 10,000
------------ ------------ ------------
$ 2,401,000 $ 3,230,000 $ 4,665,000
============ ============ ============
Effective Income Tax Rate 39.0% 38.8% 39.6%
============ ============ ============
F-27
<PAGE>
92
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 10: INCOME TAXES (cont'd)
Significant components of the Company's deferred tax assets and
liabilities are as follows at December 31, 1996 and 1995.
<TABLE>
<CAPTION>
(000s omitted)
--------------------------------
1996 1995
-------------- ------------
<S> <C> <C>
Deferred Tax Assets and Other:
Net operating loss carryforwards and other carryforwards $ 19,000 $ 17,000
Suspended passive activity losses 38,000 39,000
Tax basis of assets in excess of Fresh Start estimated values 39,000 43,000
-------------- ------------
96,000 99,000
-------------- ------------
Less: valuation reserve (24,000) (30,000)
-------------- ------------
$ 72,000 $ 69,000
============== ============
Deferred Tax Liabilities:
Negative capital accounts $ 41,000 $ 35,000
Tax basis of liabilities in excess of related
Fresh Start estimated fair values 3,000 4,000
Tax basis of assets less than related
Fresh Start estimated fair values 28,000 30,000
-------------- ------------
$ 72,000 $ 69,000
============== ============
</TABLE>
The valuation reserve against deferred tax assets has been reduced by
amounts equivalent to the portions of the tax provisions which are not
payable in cash. Corresponding increases have been made to Additional
Paid-in Capital.
As a result of the uncertainties relating to the ultimate utilization
of favorable tax attributes described below, the Company has provided a
valuation reserve for the remaining excess of the net deferred tax
assets as of December 31, 1996 and 1995.
F-28
<PAGE>
93
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 10: INCOME TAXES (cont'd)
In addition to regular corporate income tax, corporations are subject
to an alternative minimum tax liability to the extent alternative
minimum tax exceeds regular tax. The Company will record an alternative
minimum tax liability in the year that events and transactions create
an alternative minimum tax which is probable of being paid and can be
reasonably estimated by the Company. As of December 31, 1996, the
Company has estimated that it has net operating loss ("NOL")
carryforwards for tax purposes of approximately $44.3 million which if
not utilized, expires in the years 2001 through 2009. In the event that
current or future 5% shareholders (as defined by the Internal Revenue
Code) acquire or dispose of shares, over a defined time period,
representing in the aggregate 50% or more of the Company's outstanding
shares, a limitation on the use of NOL carryforwards will occur. The
Company has also estimated that it has approximately $108.7 million in
suspended passive activity losses ("PALs") which may be available to
offset future passive and active income. The Company's determination of
its NOLs, PALs, and other tax attributes, as well as its ability to
utilize them to reduce taxable income is subject to uncertainties.
Although the Company believes that its determinations concerning its
tax attributes are supportable under applicable tax laws, there can be
no assurance that taxing authorities, upon examination will not argue
to the contrary.
NOTE 11: RESTRUCTURING/TENDER OFFER COSTS
In 1995, the Company implemented a corporate restructuring plan and
initiated further restructuring in 1996. The Company recorded a charge
of approximately $243,000 and $1.5 million in 1996 and 1995,
respectively, related to the costs of the restructuring, principally
severance and separation costs. Approximately 26 employees were
released as a result of the restructurings in 1995 and 1996. In 1996
the Company paid $1.7 million of costs related to the 1995 and 1996
restructuring.
In 1994, the Company received proposed tender offers for the
acquisition of at least 80% of the outstanding shares of the Company's
Common Stock. The Board of Directors of the Company engaged various
outside professionals to assist in the analysis of the proposed tender
offers. The costs associated with the outside professionals were
deferred pending the resolution of the proposed tender offers. Due to
the termination of all proposed tender offers, the Company expensed
approximately $977,000 of costs incurred in connection with the
proposed tender offers.
F-29
<PAGE>
94
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 12: COMMITMENTS AND CONTINGENCIES
Office Lease
------------
The Company leases its corporate office space under an operating lease
which expires in October, 1997. The Company has an option for five
additional terms of three years each. The Company is responsible for
the payment of insurance, real estate taxes and operating expenses of
the leased facility. (See Note 14). The Company's Lexford wholly owned
subsidiary leases office space in four cities to support its third
party management operations. The majority of leases expire in 1999.
Annual rental requirements are approximately $558,000 in 1997, $272,000
in 1998 and $133,000 in 1999. The Company also leases various
equipment, typically over five years, and management offices under
operating leases which generally have remaining terms of less than one
year. The equipment rental requirements are approximately $241,000 in
1997, $211,000 in 1998 and $146,000 in 1999. Rent expense for the years
ended December 31, 1996, 1995, and 1994 was approximately $749,000,
$512,000 and $391,000, respectively.
Litigation
----------
The Company is involved in various legal actions arising out of the
normal course of its business. Management of the Company, based upon
knowledge of facts and the advice of counsel, believes potential
exposure to loss from legal actions has been adequately reserved for in
the financial statements and should not result in a material adverse
effect on the Company's consolidated financial position.
NOTE 13: RETIREMENT PLAN
The Company maintains the Cardinal Realty Services, Inc. Savings Plan
(the "Savings Plan") under section 401(k) of the Internal Revenue
Service Code (the "Code"), to which participants may contribute a
percentage of their base pay and overtime earnings up to limits
established by the Code. The Savings Plan was amended and restated,
effective July 1, 1993, to (i) provide for discretionary matching
contributions by the Company, (ii) provide for immediate vesting in all
Company contributions and (iii) allow loans to participants. Effective
December 31, 1995 the Savings Plan was amended to exclude highly
compensated employees. Effective July 1, 1996, the Savings Plan was
amended to include employees of the Properties as participants,
increase the Company match from 1% for every 3% of wages contributed to
1% for every 2% of wages contributed, and to allow highly compensated
employees to participate in the Plan. The Company contribution amounts
to 1% of wages for every 2% of wages contributed by a participant up to
a maximum of the lesser of 3% of wages or $2,000 per year. In 1996,
1995 and 1994, the Company's cash contributions amounted to
approximately $134,000, $92,000, and $88,000, respectively. The Company
cash contributions are then invested in Company stock held by the
Savings Plan Trustee.
F-30
<PAGE>
95
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 14: RELATED PARTY TRANSACTIONS
The Company is the general and limited partner in, or the owner of, all
Wholly Owned Properties and is a general partner in the Syndicated
Partnerships. The Company also serves as the management company for
substantially all of these properties and provides various ancillary
services including sales of parts and supplies to the properties and
furniture rentals and renters insurance to residents. The Company's fee
based revenue, interest income and ancillary income result primarily
from properties affiliated with the Company. Approximately $4.1 million
and $3.9 million of the Company's accounts receivable are due from the
Syndicated Partnerships as of December 31, 1996, and 1995,
respectively.
The Company advanced, net of amounts repaid, to Syndicated Partnerships
$2.6 million, $8.6 million, and $1.4 million in 1996, 1995 and 1994,
respectively. The majority of the advances relate to supplemental
financing provided for the refinancing of the mortgages on the
properties as described in Note 6. Effective October 1, 1995, in
conjunction with the favorable terms the Company achieved on its credit
facility, the interest rate on these advances was revised to prime plus
one percent from principally prime plus six percent. The interest rate
on advances will be adjusted in the future based on prevailing market
rates.
During 1994, the Company loaned approximately $331,000 to certain key
officers and certain key employees. The majority of the loans bear
interest at the rate of 1% in excess of the prime rate of the Bank, and
are due in five years. The loans were made to fund the personal income
tax obligations arising from the tax effect of the vesting in the
Company's Common Stock awarded to these individuals and are secured by
the Common Stock awarded. All loans were repaid in 1996. At December
31, 1995, the amount of loans and related interest outstanding amounted
to approximately $109,900.
An outside director of the company is a partner in the law firm which
serves as outside general counsel to the Company. Legal fees paid
related to services provided to the Company by this law firm were
approximately $286,000 in 1996, $255,000 in 1995, and $432,000 in 1994.
In addition, legal fees paid related to debt restructuring and
refinancing services provided by this law firm to the Wholly Owned
Properties and Syndicated Partnerships were approximately $523,000 in
1996, $739,400 in 1995 and $935,000 in 1994, respectively.
Another outside director of the Company has an ownership interest in
the lessor of the Company's Ohio office facility (as discussed in Note
12).
F-31
<PAGE>
96
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE 15: QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------------------- -------------------- --------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Revenues
1996 $ 14,689,011 $ 14,711,256 $ 15,709,041 $ 20,191,682
1995 $ 5,541,014 $ 6,147,749 $ 5,748,023 $ 6,239,643
Income before Extraordinary Gain
1996 $ 1,091,350 $ 757,284 $ 887,034 $ 2,634,562
1995 $ 1,108,805 $ 1,494,284 $ 1,302,527 $ 387,097
Extraordinary Gain/(loss), net of
Income Taxes
1996 $ 0 $ 0 $ 0 $ (1,614,356)
1995 $ 263,952 $ 540,070 $ 0 $ 0
Net Income
1996 $ 1,091,350 $ 757,284 $ 887,034 $ 1,020,206
1995 $ 1,372,757 $ 2,034,354 $ 1,302,527 $ 387,097 (1)
Net Income per Common Share:
Income before Extraordinary Item
1996 $ 0.28 $ 0.19 $ 0.22 $ 0.64
1995 $ 0.28 $ 0.39 $ 0.34 $ 0.10
Extraordinary Gain/(Loss)
1996 $ 0.00 $ 0.00 $ 0.00 $ (0.39)
1995 $ 0.07 $ 0.14 $ 0.00 $ 0.00
Net Income
1996 $ 0.28 $ 0.19 $ 0.22 $ 0.25
1995 $ 0.35 $ 0.53 $ 0.34 $ 0.10
<FN>
(1) Reduced for pre-tax one time charge of $1.5 million related to corporate
restructuring (See Note 11).
</FN>
</TABLE>
F-32
<PAGE>
97
SCHEDULE II
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Allowance
for Doubtful Accounts
---------------------------
1996 1995
- --------------------------------------------------- --------------- ------------
Balance at Beginning of Period $2,468,845 $2,056,051
Add: Charged to Costs and Expenses:
(Recovery)/Reserves associated with loan fees (300,000) 291,164
Other reserves 92,692 121,630
Less: Account Charge Offs (227,247) 0
--------------- ------------
Balance at End of Period $2,034,290 $2,468,845
=============== ============
F-33
<PAGE>
98
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A | COLUMN B | COLUMN C | COLUMN D
- ------------------------------------------------------------------------------------------------------------------------
| | |
DESCRIPTION - | ENCUMBRANCES | INITIAL COST TO THE | COSTS CAPITALIZED
(ALL GARDEN APARTMENTS) | | COMPANY | SUBSEQUENT TO
| | | ACQUISITIONS
| | |
- ------------------------------------------------------------------------------------------------------------------------
| | AT | AT | | BUILDINGS |
| | CONTRACTUAL | STATED CARRYING | LAND | & | IMPROVEMENTS CARRYING
PROPERTY NAME |ST| VALUE | VALUE | | IMPROVEMENTS | COSTS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ACADIA COURT II IN 1,886,146 1,886,146 398,032 1,668,862 1,470 0
AMBERWOOD OH 908,924 908,924 171,878 1,003,228 0 0
AMESBURY I OH 1,257,832 1,257,832 136,179 1,133,012 3,030 0
AMESBURY II OH 1,331,775 1,331,775 168,000 1,621,000 4,660 0
ANNHURST II OH 1,122,316 1,202,232 123,397 1,006,847 0 0
ANNHURST III OH 966,308 966,308 70,246 1,003,822 0 0
APPLEGATE APTS II IN 1,265,575 1,265,575 163,470 1,815,278 10,705 0
APPLERIDGE I OH 1,061,450 1,061,450 214,233 912,594 7,200 0
ARAGON WOODS IN 1,150,600 1,150,600 298,431 1,248,762 0 0
ASHFORD HILLS OH 1,606,595 1,307,867 359,522 1,260,948 2,100 0
BEL AIRE II FL 1,198,276 436,040 81,451 287,059 0 0
BLUBERRY HILL FL 771,041 771,041 63,610 362,610 224 0
BRADFORD PLACE IL 1,181,417 886,338 215,924 719,156 (450) 0
BRUNSWICK APTS IL 1,449,460 1,449,460 53,500 1,644,920 0 0
BRUNSWICK II WV 1,341,640 1,341,640 104,000 1,696,000 0 0
CALIFORNIA GARDENS FL 1,174,998 584,065 96,067 521,414 0 0
CAMBRIDGE COMMONS III IN 1,888,323 1,271,224 1,087 1,306,118 0 0
CANTERBURY CROSSING FL 1,507,576 676,592 78,303 385,838 0 0
CEDARGATE II KY 1,032,435 1,032,435 123,475 966,198 0 0
CEDARHILL TN 1,487,500 1,487,500 235,269 1,331,238 0 0
CEDARWOOD II KY 1,020,000 1,020,000 173,648 913,048 3,011 0
CEDARWOOD III KY 888,760 888,760 122,917 966,624 23,740 0
CENTRE LAKE I, II & III FL 4,952,458 4,952,458 1,210,779 3,116,732 6,239 0
CHERRY GLEN I IN 1,396,026 1,396,026 203,862 1,465,002 0 0
CHERRY GLENN II IN 1,143,198 1,143,198 4,343 1,731,393 1,660 0
CHERRY TREE APT MD 2,217,868 2,217,868 623,153 2,711,201 2,988 0
CLEARWATER APTS OH 1,061,450 1,061,450 132,478 1,045,131 13,839 0
COLONY WOODS II GA 1,599,700 1,599,700 273,901 1,556,452 0 0
CRYSTAL COURT II FL 1,373,608 1,373,608 268,168 1,332,505 0 0
DARTMOUTH PLACE II OH 897,388 897,388 114,393 1,135,027 2,970 0
DOGWOOD GLEN I IN 1,792,218 1,792,218 248,246 1,427,201 21,107 0
ELMTREE PARK I IN 1,223,246 1,223,246 208,426 1,308,102 225 0
ELMTREE PARK II IN 1,050,340 1,050,340 45,751 1,107,766 163 0
FOREST GLEN FL 1,136,177 1,136,177 229,086 994,552 12,000 0
FORSYTHIA COURT II MD 2,414,099 1,801,658 283,697 1,597,543 0 0
FOXHAVEN OH 1,896,035 1,896,035 403,075 1,657,128 13,745 0
GARDEN COURT MI 2,185,573 2,185,573 127,573 2,247,404 1,856 0
GARDEN TERRACE I FL 621,464 621,464 89,123 801,137 39,180 0
GLEN ARM MANOR GA 1,283,702 1,283,702 148,679 1,274,345 43,359 0
</TABLE>
F-34
<PAGE>
99
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A | COLUMN B | COLUMN C | COLUMN D
- ------------------------------------------------------------------------------------------------------------------------
| | |
DESCRIPTION - | ENCUMBRANCES | INITIAL COST TO THE | COSTS CAPITALIZED
(ALL GARDEN APARTMENTS) | | COMPANY | SUBSEQUENT TO
| | | ACQUISITIONS
| | |
- ------------------------------------------------------------------------------------------------------------------------
| | AT | AT | | BUILDINGS |
| | CONTRACTUAL | STATED CARRYING | LAND | & | IMPROVEMENTS CARRYING
PROPERTY NAME |ST| VALUE | VALUE | | IMPROVEMENTS | COSTS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GLENVIEW AL 1,734,783 1,734,783 178,221 1,784,904 0 0
GLENWOOD VILLAGE GA 1,534,803 890,683 156,445 1,000,148 0 0
HARVEST GROVE OH 1,124,610 1,124,610 251,000 1,201,600 1,433 0
HARVEST GROVE I OH 1,400,534 1,400,534 225,001 1,276,072 0 0
HATCHERWAY GA 971,926 971,926 111,336 1,102,856 18,511 0
HAYFIELD PARK KY 1,615,000 1,615,000 341,799 1,680,717 11,524 0
HEATHMOORE I MI 1,601,847 1,601,847 128,605 1,329,672 0 0
HERON POINTE FL 1,649,000 1,649,000 367,599 1,440,838 20,125 0
HIDDEN ACRES FL 1,686,279 1,686,279 388,349 1,136,083 685 0
HILLSIDE TRACE FL 1,025,402 1,025,402 197,277 833,232 0 0
HOLLY SANDS II FL 1,062,500 1,062,500 231,970 943,482 39,715 0
HUNTER GLEN IL 1,051,233 1,051,233 256,720 1,461,719 0 0
INDIAN LAKE I & II GA 4,711,452 4,711,452 898,265 5,262,660 4,481 0
JEFFERSON WAY FL 1,053,286 1,053,286 116,366 1,062,590 16,769 0
JUPITER COVE I FL 1,440,394 1,142,910 219,698 805,001 0 0
JUPITER COVE III FL 1,502,508 1,502,508 285,929 1,026,413 0 0
KINGS COLONY GA 2,107,287 1,517,566 237,393 1,723,165 0 0
LAKESHORE I GA 1,265,576 1,265,576 45,846 995,214 (60) 0
LAUREL BAY MI 924,211 924,211 164,159 1,160,480 0 0
LAUREL GLEN GA 1,742,500 1,742,500 265,974 1,627,699 0 0
LINDENDALE APTS OH 1,439,828 1,439,828 188,724 1,717,434 0 0
MARABOU MILLS II IN 1,030,710 1,030,710 84,391 1,190,609 2,233 0
MARABOU MILLS III IN 1,205,060 1,205,060 75,122 1,099,183 0 0
MARIBOU MILLS IN 1,468,322 1,468,322 179,704 1,570,450 4,203 0
MARK LANDING I FL 1,338,708 1,338,708 250,827 1,481,543 32,904 0
MARSHLANDING II GA 982,213 934,175 28,851 918,445 2,778 0
MEADOWOOD OH 493,934 493,934 50,520 573,536 0 0
MEADOWOOD II IN 760,434 760,434 61,771 1,193,299 463 0
MERRIFIELD MD 2,127,341 2,127,341 210,294 2,271,824 2,546 0
MIGUEL PLACE FL 1,504,500 1,504,500 237,234 1,125,414 0 0
MILL RUN GA 1,283,468 1,283,468 187,772 1,260,209 0 0
MONTROSE SQUARE OH 1,759,807 1,759,807 568,914 2,184,937 0 0
NEWBERRY II MI 1,331,331 738,819 91,315 715,532 0 0
OAK GARDENS FL 2,756,106 1,868,311 582,419 1,758,597 484 0
OAKWOOD VILLAGE FL 757,708 314,630 103,045 566,398 0 0
PELICAN POINTE I FL 1,354,265 1,354,265 221,311 1,204,527 9,730 0
PELICAN POINTE II FL 1,038,343 1,038,343 158,390 1,190,595 9,290 0
PICKERINGTON MEADOWS OH 1,186,165 1,186,165 150,000 1,200,000 0 0
PINE BARRENS FL 1,560,120 1,560,120 302,399 1,405,048 51,675 0
</TABLE>
F-35
<PAGE>
100
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A | COLUMN B | COLUMN C | COLUMN D
- ------------------------------------------------------------------------------------------------------------------------
| | |
DESCRIPTION - | ENCUMBRANCES | INITIAL COST TO THE | COSTS CAPITALIZED
(ALL GARDEN APARTMENTS) | | COMPANY | SUBSEQUENT TO
| | | ACQUISITIONS
| | |
- ------------------------------------------------------------------------------------------------------------------------
| | AT | AT | | BUILDINGS |
| | CONTRACTUAL | STATED CARRYING | LAND | & | IMPROVEMENTS CARRYING
PROPERTY NAME |ST| VALUE | VALUE | | IMPROVEMENTS | COSTS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PINE VIEW FL 1,496,190 1,068,154 260,359 986,494 3,764 0
RAMBLEWOOD II GA 1,935,831 1,935,831 264,381 1,906,078 0 0
RAVENWOOD SC 1,718,721 1,718,721 169,601 1,507,589 0 0
RED DEER II OH 1,261,013 1,261,013 235,173 1,474,820 0 0
RIDGEWOOD IN 1,223,260 1,223,260 100,301 1,320,200 0 0
RIDGEWOOD II & III IN 1,393,574 1,393,574 100,795 1,564,956 0 0
RIVER GLEN I OH 1,106,752 1,106,752 146,287 1,287,027 0 0
RIVER GLEN II OH 1,184,132 1,184,132 178,568 1,230,268 0 0
RIVERS END II FL 1,176,332 1,176,332 160,894 936,779 0 0
RIVERVIEW ESTATES OH 1,392,390 1,392,390 74,073 1,609,026 38,800 0
ROSEWOOD COMMONS II IN 1,318,698 1,318,698 121,194 1,172,776 201 0
SHERBROOK IN 1,225,203 1,225,203 141,991 1,254,354 0 0
SHERBROOK PA 1,397,504 1,397,504 355,188 1,492,285 8,400 0
SKY PINES II FL 1,070,741 1,070,741 266,498 676,283 50,450 0
SPICEWOOD APT IN 1,036,385 1,036,385 90,619 1,025,442 2,927 0
SPRINGBROOK SC 1,742,965 1,742,965 120,467 1,762,353 32,645 0
SPRINGWOOD KY 839,305 839,305 85,723 844,029 26,000 0
STEWART WAY I GA 1,396,413 1,396,413 260,869 1,614,962 16,447 0
STEWART WAY II GA 1,252,664 1,252,664 215,612 1,468,190 0 0
SUFFOLK GROVE II OH 1,096,137 1,096,137 154,263 1,248,211 2,085 0
SUNSET WAY I FL 1,685,131 1,685,131 621,326 1,353,585 0 0
SUNSET WAY II FL 2,719,585 2,144,007 649,409 1,678,049 0 0
THE WILLOWS I OH 601,932 601,932 157,611 761,576 14,736 0
THE WILLOWS III OH 884,000 884,000 44,602 871,216 6,054 0
THYMEWOOD II FL 1,729,672 838,033 429,480 731,592 0 0
VALLEYBROOK GA 1,586,737 1,586,737 129,440 1,353,762 0 0
WALKER PLACE TX 1,198,295 1,198,295 269,890 1,196,059 0 0
WHISPERING PINES II FL 638,957 638,957 71,433 505,435 0 0
WILLCREST WOODS GA 1,067,846 1,067,846 245,513 1,189,165 16,260 0
WILLOW LAKE SC 2,099,515 2,099,515 188,704 1,738,232 0 0
WILLOWOOD II IN 1,065,380 1,065,380 149,671 1,310,162 21,600 0
WILLOWOOD II OH 957,792 957,792 35,657 622,170 0 0
WINDWOOD I FL 606,231 606,231 24,569 457,382 27,495 0
WINTHROP COURT II OH 760,000 760,000 145,906 825,115 300 0
WOODLANDS II PA 1,189,328 1,189,328 118,447 1,346,599 (249) 0
----------------------------------------------------------------------------------
TOTALS $157,381,602 $148,056,017 $23,652,841 $146,087,543 $712,425 $0
==================================================================================
</TABLE>
F-36
<PAGE>
101
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A | COLUMN E | COLUMN F | COLUMN G | COLUMN H | COLUMN I
- -----------------------------------------------------------------------------------------------------------------------------------
| | | | |
| GROSS AMOUNT AT WHICH CARRIED AT | | | | LIFE ON WHICH
DESCRIPTION - | CLOSE OF PERIOD, DECEMBER 31, 1996 | | | | DEPRECIATION IN
(ALL GARDEN APARTMENTS) | NOTES (1) AND (2) | | | | LATEST INCOME
- ----------------------------------------------------------------------| | | | STATEMENT
| | | BUILDINGS | | ACCUMULATED | DATE OF | DATE | IS COMPUTED
| | LAND | & | TOTAL | DEPRECIATION | CONSTRUCTION | ACQUIRED | NOTE (3)
PROPERTY NAME |ST| | IMPROVEMENTS | | NOTE (3) | | |
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ACADIA COURT II IN 398,032 1,602,171 2,000,203 52,800 06/06/86 N/A N/A
AMBERWOOD OH 171,878 1,001,682 1,173,560 31,600 10/01/87 N/A N/A
AMESBURY I OH 136,179 1,021,288 1,157,467 34,000 02/17/86 N/A N/A
AMESBURY II OH 168,000 1,623,162 1,791,162 54,300 N/A 09/26/95 N/A
ANNHURST II OH 123,397 1,128,155 1,251,552 36,983 07/01/86 N/A N/A
ANNHURST III OH 70,246 978,257 1,048,503 30,300 05/05/88 N/A N/A
APPLEGATE APTS II IN 163,470 1,823,186 1,986,656 58,500 06/01/87 N/A N/A
APPLERIDGE I OH 214,233 717,454 931,687 25,824 01/01/87 N/A N/A
ARAGON WOODS IN 298,431 1,171,393 1,469,824 37,800 12/26/86 N/A N/A
ASHFORD HILLS OH 359,522 927,802 1,287,324 30,577 06/23/86 N/A N/A
BEL AIRE II FL 81,451 395,381 476,832 13,229 01/01/86 N/A N/A
BLUBERRY HILL FL 63,610 362,275 425,885 11,700 12/01/86 N/A N/A
BRADFORD PLACE IL 215,924 615,347 831,271 20,158 07/23/86 N/A N/A
BRUNSWICK APTS IL 53,500 1,607,542 1,661,042 53,200 04/01/86 N/A N/A
BRUNSWICK II WV 104,000 1,693,983 1,797,983 56,400 N/A 09/26/95 N/A
CALIFORNIA GARDENS FL 96,067 396,171 492,238 12,550 07/01/87 N/A N/A
CAMBRIDGE COMMONS III IN 1,087 1,171,693 1,172,780 36,475 01/29/88 N/A N/A
CANTERBURY CROSSING FL 78,303 546,200 624,503 19,614 12/01/83 N/A N/A
CEDARGATE II KY 123,475 867,384 990,859 28,500 06/01/86 N/A N/A
CEDARHILL TN 235,269 1,225,967 1,461,236 40,300 05/30/86 N/A N/A
CEDARWOOD II KY 173,648 885,104 1,058,752 29,600 01/01/86 N/A N/A
CEDARWOOD III KY 122,917 988,875 1,111,792 33,400 05/20/86 N/A N/A
CENTRE LAKE I, II & III FL 1,210,779 3,109,169 4,319,948 102,700 06/01/86 N/A N/A
CHERRY GLEN I IN 203,862 1,450,193 1,654,055 47,500 07/10/86 N/A N/A
CHERRY GLENN II IN 4,343 1,682,732 1,687,075 54,000 04/01/87 N/A N/A
CHERRY TREE APT MD 623,153 2,428,672 3,051,825 79,300 09/01/86 N/A N/A
CLEARWATER APTS OH 132,478 966,579 1,099,057 31,900 11/01/86 N/A N/A
COLONY WOODS II GA 273,901 1,502,115 1,776,016 46,600 03/28/88 N/A N/A
CRYSTAL COURT II FL 268,168 1,217,477 1,485,645 40,000 06/01/86 N/A N/A
DARTMOUTH PLACE II OH 114,393 1,082,021 1,196,414 35,700 07/18/86 N/A N/A
DOGWOOD GLEN I IN 248,246 1,305,749 1,553,995 43,746 07/18/86 N/A N/A
ELMTREE PARK I IN 208,426 1,172,043 1,380,469 38,500 06/08/86 N/A N/A
ELMTREE PARK II IN 45,751 1,105,662 1,151,413 35,300 05/01/87 N/A N/A
FOREST GLEN FL 229,086 915,022 1,144,108 31,000 01/01/86 N/A N/A
FORSYTHIA COURT II MD 283,697 1,469,727 1,753,424 46,811 06/01/87 N/A N/A
FOXHAVEN OH 403,075 1,576,864 1,979,939 52,100 08/18/86 N/A N/A
GARDEN COURT MI 127,573 2,161,190 2,288,763 67,000 04/22/88 N/A N/A
GARDEN TERRACE I FL 89,123 839,083 928,206 33,900 09/01/81 N/A N/A
GLEN ARM MANOR GA 148,679 1,181,627 1,330,306 41,000 01/01/86 N/A N/A
</TABLE>
F-37
<PAGE>
102
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A | COLUMN E | COLUMN F | COLUMN G | COLUMN H | COLUMN I
- -----------------------------------------------------------------------------------------------------------------------------------
| | | | |
| GROSS AMOUNT AT WHICH CARRIED AT | | | | LIFE ON WHICH
DESCRIPTION - | CLOSE OF PERIOD, DECEMBER 31, 1996 | | | | DEPRECIATION IN
(ALL GARDEN APARTMENTS) | NOTES (1) AND (2) | | | | LATEST INCOME
- ----------------------------------------------------------------------| | | | STATEMENT
| | | BUILDINGS | | ACCUMULATED | DATE OF | DATE | IS COMPUTED
| | LAND | & | TOTAL | DEPRECIATION | CONSTRUCTION | ACQUIRED | NOTE (3)
PROPERTY NAME |ST| | IMPROVEMENTS | | NOTE (3) | | |
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GLENVIEW AL 178,221 1,596,313 1,774,534 52,200 08/01/86 N/A N/A
GLENWOOD VILLAGE GA 156,445 656,472 812,917 21,216 12/01/86 N/A N/A
HARVEST GROVE OH 251,000 1,201,181 1,452,181 40,100 N/A 09/26/95 N/A
HARVEST GROVE I OH 225,001 1,157,494 1,382,495 37,700 09/08/86 N/A N/A
HATCHERWAY GA 111,336 1,089,384 1,200,720 37,000 01/01/86 N/A N/A
HAYFIELD PARK KY 341,799 1,516,918 1,858,717 50,200 07/17/86 N/A N/A
HEATHMOORE I MI 128,605 1,190,421 1,319,026 38,900 07/31/86 N/A N/A
HERON POINTE FL 367,599 1,417,656 1,785,255 48,000 01/01/86 N/A N/A
HIDDEN ACRES FL 388,349 437,395 825,744 14,041 01/01/87 N/A N/A
HILLSIDE TRACE FL 197,277 831,948 1,029,225 26,200 09/01/87 N/A N/A
HOLLY SANDS II FL 231,970 962,066 1,194,036 33,100 06/01/86 N/A N/A
HUNTER GLEN IL 256,720 1,314,349 1,571,069 42,100 03/01/87 N/A N/A
INDIAN LAKE I & II GA 898,265 4,878,142 5,776,407 154,600 08/11/87 N/A N/A
JEFFERSON WAY FL 116,366 1,057,936 1,174,302 33,800 08/01/87 N/A N/A
JUPITER COVE I FL 219,698 877,950 1,097,648 27,728 09/01/87 N/A N/A
JUPITER COVE III FL 285,929 1,024,831 1,310,760 32,300 09/01/87 N/A N/A
KINGS COLONY GA 237,393 1,226,496 1,463,889 38,424 11/15/87 N/A N/A
LAKESHORE I GA 45,846 893,969 939,815 29,300 06/20/86 N/A N/A
LAUREL BAY MI 164,159 1,070,561 1,234,720 31,800 10/01/89 N/A N/A
LAUREL GLEN GA 265,974 1,625,191 1,891,165 53,600 04/04/86 N/A N/A
LINDENDALE APTS OH 188,724 1,632,869 1,821,593 52,300 03/01/87 N/A N/A
MARABOU MILLS II IN 84,391 1,144,923 1,229,314 35,000 N/A 10/29/93 N/A
MARABOU MILLS III IN 75,122 1,097,431 1,172,553 34,400 12/01/87 N/A N/A
MARIBOU MILLS IN 179,704 1,572,233 1,751,937 51,700 06/23/86 N/A N/A
MARK LANDING I FL 250,827 1,512,164 1,762,991 48,900 11/01/87 N/A N/A
MARSHLANDING II GA 28,851 882,456 911,307 28,595 12/31/86 N/A N/A
MEADOWOOD OH 50,520 572,652 623,172 19,100 01/01/86 N/A N/A
MEADOWOOD II IN 61,771 1,040,637 1,102,408 34,200 05/30/86 N/A N/A
MERRIFIELD MD 210,294 2,198,381 2,408,675 68,900 01/11/88 N/A N/A
MIGUEL PLACE FL 237,234 1,083,604 1,320,838 34,200 10/01/87 N/A N/A
MILL RUN GA 187,772 1,258,267 1,446,039 41,500 04/14/86 N/A N/A
MONTROSE SQUARE OH 568,914 2,160,316 2,729,230 72,000 01/01/87 N/A N/A
NEWBERRY II MI 91,315 626,087 717,402 20,204 12/26/86 N/A N/A
OAK GARDENS FL 582,419 1,249,586 1,832,005 39,063 01/01/88 N/A N/A
OAKWOOD VILLAGE FL 103,045 210,100 313,145 6,994 01/01/86 N/A N/A
PELICAN POINTE I FL 221,311 1,212,401 1,433,712 38,500 11/01/87 N/A N/A
PELICAN POINTE II FL 158,390 1,121,018 1,279,408 35,700 11/01/87 N/A N/A
PICKERINGTON MEADOWS OH 150,000 1,198,151 1,348,151 39,900 N/A 03/29/95 N/A
PINE BARRENS FL 302,399 1,454,558 1,756,957 49,800 06/01/86 N/A N/A
</TABLE>
F-38
<PAGE>
103
<TABLE>
CARDINAL REALTY SERVICES, INC.
AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A | COLUMN E | COLUMN F | COLUMN G | COLUMN H | COLUMN I
- -----------------------------------------------------------------------------------------------------------------------------------
| | | | |
| GROSS AMOUNT AT WHICH CARRIED AT | | | | LIFE ON WHICH
DESCRIPTION - | CLOSE OF PERIOD, DECEMBER 31, 1996 | | | | DEPRECIATION IN
(ALL GARDEN APARTMENTS) | NOTES (1) AND (2) | | | | LATEST INCOME
- ----------------------------------------------------------------------| | | | STATEMENT
| | | BUILDINGS | | ACCUMULATED | DATE OF | DATE | IS COMPUTED
| | LAND | & | TOTAL | DEPRECIATION | CONSTRUCTION | ACQUIRED | NOTE (3)
PROPERTY NAME |ST| | IMPROVEMENTS | | NOTE (3) | | |
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PINE VIEW FL 260,359 810,665 1,071,024 26,105 05/01/87 N/A N/A
RAMBLEWOOD II GA 264,381 1,763,395 2,027,776 57,400 10/01/86 N/A N/A
RAVENWOOD SC 169,601 1,505,266 1,674,867 48,100 05/07/87 N/A N/A
RED DEER II OH 235,173 1,380,894 1,616,067 43,700 08/01/87 N/A N/A
RIDGEWOOD IN 100,301 1,320,199 1,420,500 18,336 N/A 08/01/96 N/A
RIDGEWOOD II & III IN 100,795 1,415,338 1,516,133 46,900 03/01/86 N/A N/A
RIVER GLEN I OH 146,287 1,244,725 1,391,012 39,900 04/01/87 N/A N/A
RIVER GLEN II OH 178,568 1,196,259 1,374,827 37,600 11/01/87 N/A N/A
RIVERS END II FL 160,894 908,316 1,069,210 30,300 01/01/86 N/A N/A
RIVERVIEW ESTATES OH 74,073 1,645,347 1,719,420 60,100 01/01/87 N/A N/A
ROSEWOOD COMMONS II IN 121,194 1,171,170 1,292,364 37,300 06/01/87 N/A N/A
SHERBROOK IN 141,991 1,201,653 1,343,644 39,400 06/16/86 N/A N/A
SHERBROOK PA 355,188 1,436,005 1,791,193 46,700 12/20/86 N/A N/A
SKY PINES II FL 266,498 725,691 992,189 25,800 06/01/86 N/A N/A
SPICEWOOD APT IN 90,619 983,867 1,074,486 32,700 03/16/86 N/A N/A
SPRINGBROOK SC 120,467 1,725,155 1,845,622 58,000 06/13/86 N/A N/A
SPRINGWOOD KY 85,723 868,728 954,451 30,000 01/01/86 N/A N/A
STEWART WAY I GA 260,869 1,617,084 1,877,953 54,600 01/01/86 N/A N/A
STEWART WAY II GA 215,612 1,465,928 1,681,540 47,400 12/01/86 N/A N/A
SUFFOLK GROVE II OH 154,263 1,191,012 1,345,275 38,000 06/01/87 N/A N/A
SUNSET WAY I FL 621,326 1,351,499 1,972,825 42,800 08/01/87 N/A N/A
SUNSET WAY II FL 649,409 1,475,311 2,124,720 45,703 04/27/88 N/A N/A
THE WILLOWS I OH 157,611 754,543 912,154 27,500 01/01/87 N/A N/A
THE WILLOWS III OH 44,602 839,952 884,554 26,900 07/01/87 N/A N/A
THYMEWOOD II FL 429,480 362,932 792,412 12,118 01/01/86 N/A N/A
VALLEYBROOK GA 129,440 1,351,676 1,481,116 43,900 10/15/86 N/A N/A
WALKER PLACE TX 269,890 1,194,216 1,464,106 37,200 01/25/88 N/A N/A
WHISPERING PINES II FL 71,433 504,656 576,089 16,700 03/31/86 N/A N/A
WILLCREST WOODS GA 245,513 1,171,951 1,417,464 38,500 12/31/86 N/A N/A
WILLOW LAKE SC 188,704 1,754,417 1,943,121 56,785 12/12/86 N/A N/A
WILLOWOOD II IN 149,671 1,222,104 1,371,775 39,700 06/01/87 N/A N/A
WILLOWOOD II OH 35,657 596,607 632,264 19,500 08/01/86 N/A N/A
WINDWOOD I FL 24,569 484,172 508,741 16,100 05/01/88 N/A N/A
WINTHROP COURT II OH 145,906 823,536 969,442 27,400 02/25/86 N/A N/A
WOODLANDS II PA 118,447 1,281,910 1,400,357 41,100 03/01/87 N/A N/A
---------------------------------------------------------
$23,652,841 $137,917,083 $161,569,924 $4,478,379
=========================================================
</TABLE>
F-39
<PAGE>
104
<TABLE>
CARDINAL REALTY SERVICES, INC.
NOTES TO SCHEDULE III
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
Note (1) Schedule III Reconciliation: 1996 1995 1994
----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Balance as of beginning of year $ 164,334,055 $ 166,430,698 $ 170,171,409 (4)
Additions during the year
Acquisitions of Property 1,420,501 6,391,600 0
Costs Capitalized 702,056 0 0
Deductions during the period
Disposals through foreclosure (4,886,688) (3,380,382) (3,607,081)
Other (4) 0 (937,482) (253,908)
Application of Income from the
Effective Date through
December 31, 1995 upon full
consolidation from "Held for Sale"
classification 0 (4,170,379) N/A
----------------- ----------------- ------------------
Balance at close of period 161,569,924 164,334,055 166,310,420
Other
Furniture and Fixtures 0 3,368,617 4,160,477
Application of Income from the
Effective Date through
December 31, 1995 upon full
consolidation from "Held for Sale"
classification 0 (3,368,617) N/A
----------------- ----------------- ------------------
161,569,924 164,334,055 170,470,897
Income for the Period from the
Effective Date to December 31, 1995,
and 1994, respectively N/A N/A (6,236,719)
Other Assets Held for Sale N/A N/A N/A
----------------- ----------------- ------------------
Balance, Operating Real Estate
Assets, December 31, 1996,
1995 & 1994, respectively $161,569,924 $164,334,055 $164,234,178
================= ================= ==================
<FN>
Note (2) Tax basis of assets: The tax basis for federal income tax
purposes in the real estate was approximately $117,700,000 at December
31, 1996.
Note (3) Depreciation: No depreciation has been provided for the period
September 11, 1992 (Effective Date) to December 31, 1995 as the assets
were held for sale. (See Notes 1 and 2 to Consolidated Financial
Statements).
Note (4) Correction of interest recorded in prior years; such interest
was capitalized during the period the Wholly Owned Properties were
classified as Held for Sale and therefore has no impact on equity.
</FN>
</TABLE>
F-40
105
SEVERANCE AGREEMENT AND MUTUAL RELEASE
This SEVERANCE AGREEMENT AND MUTUAL RELEASE ("Agreement"), dated as of
September 4, 1996, by and between Cardinal Realty Services, Inc. (the
"Company"), and David P. Blackmore ("Employee").
WHEREAS, Employee and the Company have agreed that Employee shall resign
from all positions held with the Company, and its affiliates, subsidiaries and
related entities; and
WHEREAS, the Company and Employee wish to resolve any and all matters and
issues between them arising from or relating to Employee's services to the
Company, including his resignation therefrom.
NOW, THEREFORE, in return for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Employee
acknowledge and agree as follows:
1. Resignation. Employee hereby resigns from any and all positions he held
with the Company or its affiliated, related and subsidiary entities, including,
but not limited to, his position as Executive Vice President and Chief Financial
Officer of the Company and Plan Administrator of the Company's Pension Plan and
401(k) Savings Plan, as well as any position as an officer and director of any
subsidiaries of the Company, effective October 31, 1996.
2. Severance Period. Employee will receive the severance benefits from
November 1, 1996 through July 31, 1997 (the "Severance Period"), as specified in
this Agreement.
3. Final Compensation and Severance Benefits.
(a) The Company will pay Employee severance pay in the amount of One
Hundred Twelve Thousand Five Hundred Dollars ($112,500), less
applicable tax withholdings, which amount shall be paid in accordance
with the Company's normal payroll practices for the duration of the
Severance Period. This amount represents seventy-five percent (75%) of
Employee's annual base salary at the time of his resignation.
(b) The Company shall pay to Employee eighty-three and one-third
percent (83 1/3%) of Employee's Cash Bonus (as defined below) and
Stock Bonus (as defined below) for the 1996 fiscal year, if earned,
computed as follows:
(i) The Company will pay to Employee a cash bonus ("Cash Bonus")
determined on the basis of the increase, if any, of the Company's
consolidated earnings before interest, taxes, depreciation and
amortization, determined upon the application of generally
accepted accounting principles, consistently applied, and subject
to the independent audit of the Company's consolidated income
statement for the 1996 fiscal year by the Company's independent
certified public accountants ("EBITDA") when compared to the
Company's EBITDA for its immediately preceding fiscal year (the
"Comparison EBITDA") and measured as a percentage of Comparison
EBITDA, as follows:
-1 -
<PAGE>
106
Cash Bonus Expressed as
EBITDA expressed as Percentage Percentage of Base
of Comparison EBITDA Compensation
- ------------------------------ -------------------------------------
up to 103% 0
greater than 103% up to 110% Percentage Increase in Comparison
EBITDA multiplied by 1.5;
plus, if applicable
greater than 110% up to 120% Additional Percentage Increase in
Comparison EBITDA (above 110%)
multiplied by 2; plus, if applicable
greater than 120% Additional Percentage Increase in
Comparison EBITDA multiplied by
2.5; provided, however, the Cash
Bonus shall not exceed 60% of
Base Compensation
(ii) For purposes of determining the Cash Bonus, if any,
payable to Employee on account of the Company's 1996 fiscal year,
Employee and the Company acknowledge and agree that Employee's
1996 Base Compensation is equal to One Hundred Fifty Thousand
Dollars ($150,000) and Comparison EBITDA equals $9,072,649.
(iii) Employee's Cash Bonus due under subsections (i) and
(ii) above shall be paid within thirty (30) days after EBITDA is
calculated from the applicable final audited year end income
statements, of the Company, but no later than the date a cash
bonus is paid to any of the Company's executive officers (the
"Bonus Payment Date").
(iv) In addition to the Cash Bonus, for the Company's 1996
fiscal year, the Company grants to Employee a stock bonus ("Stock
Bonus") payable in shares of the Company's common stock, without
par value (the "Common Stock"), in accordance with and subject to
the Company's Incentive Equity Plan, as amended. The dollar
amount of the Stock Bonus will be determined on the same basis as
the Cash Bonus (including the limitations set forth in subsection
(ii) above), except that the dollar value of the Stock Bonus as a
percentage of Base Compensation will be as follows:
-2 -
<PAGE>
107
EBITDA expressed as Percentage Dollar Value of Stock
of Comparison EBITDA Bonus Expressed as Percentage
- ------------------------------ of Base Compensation
-----------------------------
up to 103% 0
greater than 103% up to 105% Equivalent to Percentage Increase
in Comparison EBITDA;
plus, if applicable
greater than 105% up to 110% Additional Percentage Increase in
Comparison EBITDA multiplied by
2; plus, if applicable
greater than 110% Additional Percentage Increase in
Comparison EBITDA multiplied by
3; provided, however, the Stock
Bonus shall not exceed 30% of
Base Compensation
(v) The number of shares constituting the Stock Bonus
payable to Employee will be determined by dividing (A) the dollar
value of the Stock Bonus determined in accordance with the table
above by (B) the closing price of the Company's Common Stock on
the NASDAQ National Market System, or if the Company's Common
Stock is not listed or admitted to trading in such system, the
principal securities exchange on which the Company's Common Stock
is listed or admitted to trading on December 31, 1996. Any Stock
Bonus which Employee is entitled to receive from the Company
shall be issued on the same date as the Cash Bonus. The
provisions of the Company's Incentive Equity Plan, as amended,
regarding fractional shares will apply to the Stock Bonus.
(c) The Company shall award to Employee two thousand (2,000)
shares of the Company's Common Stock on the Bonus Payment Date.
(d) The Company will pay Employee any 1996 accrued, unused
vacation and discretionary time, determined as of October 31, 1996.
(e) Salary and benefits shall be available to Employee through
October 31, 1996.
4. Additional Consideration for Execution and Delivery of This Agreement.
As additional consideration to support Employee's execution and delivery of this
Agreement and his promises and undertakings hereunder, the Company will provide
to Employee:
(a) Health and dental insurance, as well as Employee Assistance
Program benefits, at the Company's expense, through November 30, 1996.
Employee's benefits will
-3 -
<PAGE>
108
terminate after that date, subject to any right to benefit continuation
under the Comprehensive Omnibus Budget Reconciliation Act;
(b) Executive outplacement services through Right Associates
until such time as Employee has been placed in a position reasonably
comparable to his position with the Company. Such services shall
include, but are not limited to, career assessment, determination of
career objectives, career transition campaign design, career
transition campaign execution, financial consultation and support
services;
(c) Basic and optional life insurance benefits (not including
optional life insurance benefits provided by Cincinnati Life Insurance
Company), under the same terms and conditions that Employee received
such benefits during his employment, through November 30, 1996.
Employee has the right to convert his basic life insurance coverage to
an individual policy, at Employee's own expense, within thirty (30)
days from the date the coverage terminates by submitting the
appropriate conversion form to Community National Life Insurance
Company;
(d) Any benefits under the Company's 401(k) Savings Plan within
ten (10) business days of Employee's written request. Employee will be
required to complete and return appropriate election forms prior to
disbursal of such benefits;
(e) A loan equal to the amount of withholding tax attributable to
(i) the exercise of non-qualified stock options by Employee and (ii)
the awards of the Company's Common Stock under Sections 3(b) and (c)
hereof, which loan shall bear interest at The Provident Bank prime
rate and shall be repayable in full by Employee on or before twelve
(12) months from the date of such loan;
(f) A Consulting Agreement to be entered into by the Company and
Employee contemporaneously herewith, which provides for a payment by
the Company to Employee of Fifty Thousand Dollars ($50,000), which sum
shall be paid at Employee's option, in (i) lump sum on January 2,
1999, or (ii) nine (9) equal monthly installments commencing on
November 1, 1996;
(g) An extension of the termination date of Employee's option to
purchase four thousand three hundred seventy-eight (4,378) shares of
the Company's Common Stock issued in connection with the Trustee's
Second Employee Retention Plan at an exercise price of $1.42 per
share, until January 3, 1997; provided, however, that if Employee is
in possession of material nonpublic information regarding the Company
on such date, the termination date of such option will be extended
until the second day of the next Open Trading Window, as defined under
the Company's Insider Trading Compliance Policy; and
(h) An unlimited amount of time to interview for, or accept and
perform, for new employment, provided that Employee has obtained the
prior approval of the Company's President.
-4 -
<PAGE>
109
5. Proxy. Employee will execute and deliver to the Company his irrevocable
proxy in the form of Exhibit "A", attached hereto and incorporated herein by
reference. Employee covenants that he will not take any action designed to
directly or indirectly defeat the intent of his irrevocable proxy, it being
understood and agreed that so long as said proxy remains in effect, Employee
will not exercise voting power over any capital stock of the Company within the
meaning of Rule 13d-3, promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended. By way of example, but
not by way of limitation, Employee will not transfer any voting capital stock of
the Company to any person or entity (other than a "regular way" over-the-counter
or stock exchange sale through a registered broker-dealer) without first causing
such person or entity to execute and deliver to the Company an irrevocable proxy
substantially in the form of said Exhibit "A". An exception will be allowed for
bona fide gifts of a nominal number of shares.
6. Return of Equipment. Employee will return all equipment owned by the
Company, including but not limited to dictation equipment. Employee may retain
the laptop computer currently in his possession so long as he returns all
confidential information on such computer to the Company.
7. Consulting Agreement. Simultaneously with this Agreement, the Company
and Employee will enter into a consulting agreement in the form of Exhibit B, a
copy of which is attached as hereto and incorporated herein by reference.
8. Release by Employee.
(a) Except as provided below, Employee, for himself and his
dependents, successors, assigns, heirs, representatives, attorneys,
executors and administrators (and his and their legal representatives
of every kind), hereby completely and irrevocably discharges and
releases the Company, its officers, directors, employees, agents,
shareholders, affiliates, subsidiaries, related entities, successors
and assigns from any and all claims, demands, actions, causes of
action and/or liability whatsoever involving any matter arising out of
or in any way related, directly or indirectly, to Employee's
employment with the Company, including any positions with subsidiary
or affiliate entities, compensation therefor, or the termination
thereof, including, but not limited to, any claim for employment
discrimination in violation of Title VII of the Civil Rights Act of
1964, 42 U.S.C. ss.2000e, et seq., the Age Discrimination in
Employment Act, 29 U.S.C. ss.621, et seq., the Americans with
Disabilities Act, 42 U.S.C. ss.12101, et seq., Ohio Revised Code
Chapter 4112, Ohio Revised Code Chapter 4101 and any other federal,
state or municipal fair employment practice or discrimination laws,
statutes or ordinances, arising at any time prior to and including the
effective date of this Agreement. Employee agrees that he will not
seek reinstatement or reemployment with the Company or any affiliate
thereof at any time in the future. Nothing in this Section 8(a) shall
be deemed to constitute Employee's release of the Company from its
express obligations to indemnify Employee under any provision of the
Company's Articles of Incorporation or Regulations or under any
written contract of indemnification between the Company and Employee,
and such obligations shall remain unimpaired by this Section 8(a).
-5 -
<PAGE>
110
(b) Employee further agrees and acknowledges that he (i) has been
advised by the Company to consult with legal counsel prior to
executing this Agreement and the release provided for in this Section
8, (ii) has had an opportunity to consult with and has been advised by
legal counsel of his choice, (iii) fully understands the terms of this
Agreement and (iv) enters into this Agreement freely and voluntarily
and intending to be bound.
9. Release by the Company. The Company, on behalf of itself and its
affiliated, related and subsidiary entities, successors and assigns (herein the
"Corporate Releasors"), hereby releases, dismisses and forever discharges
Employee, his successors, assigns, heirs, representatives, attorneys, executors
and administrators from any and all claims, demands, damages, actions and/or
causes of action of any kind and every description, whether known or unknown,
which the Corporate Releasors now have or may have had for, upon, or by reasons
of any cause whatsoever, against Employee. This release shall not, however,
apply to the obligations of Employee, if any, arising under this Agreement or
under the Non-Qualified Stock Option Agreement and Restricted Shares Agreement
between the Company and Employee. Any monies owed by Employee to the Company
under any loan program may be set off against any of the Company's obligations
under this Agreement.
10. Continued Availability and Cooperation.
(a) Employee shall cooperate reasonably with the Company and with
the Company's counsel in connection with any present and future actual
or threatened litigation or administrative proceeding involving the
Company, its affiliated, related or subsidiary entities, its officers,
directors, shareholders, employees, agents and representatives, and
its successors or assigns that relates to events, occurrences or
conduct occurring (or claimed to have occurred) during the period of
Employee's employment by the Company.
(b) Employee shall be reimbursed by the Company for reasonable
travel, lodging, telephone and similar expenses incurred in connection
with such cooperation, which the Company shall reasonably endeavor to
schedule at times not conflicting with the reasonable requirements of
any future employer of Employee or with the requirements of any third
party with whom Employee has a business relationship that provides
remuneration to Employee. Employee shall not unreasonably withhold his
availability for such cooperation.
11. Successors and Binding Agreement.
(a) This Agreement shall be binding upon and inure to the benefit
of the Company and any successor of or to the Company, including,
without limitation, any persons acquiring directly or indirectly all
or substantially all of the business and/or assets of the Company
whether by purchase, merger, consolidation, reorganization or
otherwise (and such successor shall thereafter be deemed included in
the definition of the Company for the purposes of this Agreement), but
shall not otherwise be assignable or delegable by the Company.
-6 -
<PAGE>
111
(b) This Agreement shall inure to the benefit of and be
enforceable by Employee, his personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
(c) This Agreement is personal in nature and none of the parties
hereto shall, without the consent of the other parties, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 11(a) and 11(b) of
this Agreement.
(d) This Agreement is intended to be for the exclusive benefit of
the parties hereto, and except as provided in Section 11(a) of this
Agreement, no third party shall have any rights hereunder.
12. Confidentiality and Statements to Third Parties.
(a) Except as otherwise required by law and except to the extent,
and only to the extent, that the Company has publicly disclosed the
terms of this Agreement, Employee will not disclose the terms of
Sections 3 through 9 of this Agreement to anyone other than members of
his immediate family, his accountants, or his legal advisors, as
necessary, and Employee will require that they and their agents take
all reasonable steps to maintain the confidentiality hereof, except as
otherwise required by law, and the Company will disclose the terms of
this Agreement only to those persons (including employees of the
Company) with a genuine business interest in learning such
information.
(b) Neither Employee nor the Company shall, directly or
indirectly, make or cause to be made any statements to any third
parties criticizing or disparaging the other or commenting adversely
on the character or business reputation of the other, but this
provision shall not limit the ability or responsibility of either
party to respond to the best of its knowledge to administrative or
regulatory inquiries or to testify to the best of its knowledge in
legal proceedings.
(c) Employee agrees not to disclose, divulge, discuss, copy or
otherwise use or suffer to be used in any manner, in competition with,
or contrary to the interests of, the Company or any of the Company's
subsidiaries, affiliates or related entities, customer lists, product
research, pricing information, the Company's trade secrets or any
other information that would provide the Company's competitors with
information about the Company's methods, goals, or customers, it being
acknowledged by Employee that all such information regarding the
Company's business and the Company's subsidiaries, affiliates and
related entities compiled or obtained by, or furnished to, Employee
while Employee was employed by or associated with the Company is
confidential information and the Company's exclusive property.
13. Notices. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered, addressed (a) to the Company (to the attention of
Director, Human Resources) at its principal executive offices located at 6954
Americana Parkway, Reynoldsburg, Ohio 43068, and (b) to Employee at
-7 -
<PAGE>
112
his principal residence, or to such other address as either party may have
furnished to the other in writing and in accordance herewith. Notices of change
of address shall be effective only upon receipt.
14. Governing Law. The validity, interpretation, construction and
performance of this Agreement (and every other issue arising hereunder) shall be
governed by the laws of the State of Ohio, without giving effect to the
principles of conflict of laws of such state.
15. Miscellaneous. The Company and Employee hereby acknowledge and
understand that:
(a) Each was provided with the opportunity to review and consider
the terms of this Agreement for a period of twenty-one (21) days and
Employee has knowingly and voluntarily waived that opportunity;
(b) Each has had the opportunity to receive counsel regarding
their respective rights, obligations and liabilities;
(c) Nothing in this Agreement is or shall be construed as an
admission by the Company of any breach of any agreement or any
intentional or unintentional wrongdoing of any nature;
(d) Neither Employee nor the Company have made any
representations concerning the terms or effects of this Agreement
other than those contained in this Agreement and this Agreement may
not be modified or terminated orally;
(e) The terms of this Agreement are not effective or enforceable
until seven (7) days after its execution, during which period Employee
may revoke this Agreement;
(f) The benefits provided Employee herein are in excess of the
benefits as to which he would otherwise be entitled;
(g) The death or disability of Employee following the execution
of this Agreement shall not affect or revoke this Agreement or any of
the obligations of the parties hereto, except for obligations of
Employee under Section 10(a) hereof. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by Employee and the
Company. No waiver by either party hereto at any time of any breach by
the other party hereto or compliance with any condition or provision
of this Agreement to be performed by such other party shall deemed a
waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or representations,
oral or otherwise, expressed or implied, with respect to the subject
matter hereof have been made by any of the parties that are not set
forth expressly in this Agreement and every one of them (if, in fact,
there have been any) is hereby terminated without liability or any
other legal effect whatsoever; and
-8 -
<PAGE>
113
(h) Except as provided for in this Agreement, all compensation
and other payments due Employee as a result of his employment with the
Company have been paid in full and Employee is not entitled to any
additional salary, bonus or other payments whatsoever.
16. Entire Agreement. This Agreement (together with the other documents and
supporting information delivered simultaneously herewith) shall constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and shall supersede all prior verbal or written agreements, covenants,
communications, understandings, commitments, representations or warranties,
whether oral or written, by any party hereto or any of its representatives
pertaining to such subject matter.
17. Validity. The validity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement which shall nevertheless remain in full force and effect.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
19. Captions and Section Headings. Captions and section headings used
herein are for convenience and are not part of this Agreement and shall not be
used in construing it.
20. Further Assurances. Each party hereto shall execute such additional
documents, and do such additional things, as may reasonably be requested by the
other party to effectuate the purposes and provisions of the Agreement.
IN WITNESS WHEREOF, the undersigned parties have hereunto executed this
Severance Agreement and Mutual Release as of the day and date first above
written.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
-------------------------
Print Name: John B. Bartling, Jr.
Its: President and
Chief Executive Officer
/s/ David P. Blackmore
------------------
DAVID P. BLACKMORE
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CARDINAL REALTY SERVICES, INC.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
September 4, 1996
Dear David:
In connection with your resignation from employment effective October 31,
1996, attached is a Severance Agreement and Mutual Release which includes a
severance package providing for salary and benefit continuation. However, in
order to receive the enhanced severance package outlined, you will be required
to execute the Severance Agreement and Mutual Release.
By entering into the Severance Agreement and Mutual Release, you will be
specifically waiving and releasing all rights you may have against Cardinal
Realty Services, Inc. Before entering into the Severance Agreement and Mutual
Release, you are advised to consult with an attorney. By law you must be
afforded 21 days in which to consider the Severance Agreement and Mutual
Release. Thus, the opportunity to enter into the Severance Agreement and Mutual
Release shall remain available to you through 21 days from the date of this
letter.
If you have any questions, please do not hesitate to contact me.
Sincerely yours,
/s/ John B. Bartling, Jr.
-------------------------
John B. Bartling, Jr.
Chief Executive Officer
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Cardinal Realty Services, Inc.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
Attention: John B. Bartling, Jr.
Dear John:
I understand I have 21 days to consider the severance offer made by
Cardinal Realty Services, Inc. (the "Company"), but I wish to waive the right to
consider its offer for this period of time. I have thoroughly reviewed the
offer, understand it, and wish to accept it immediately.
Acceptance is based on the following conditions:
(i) I have been advised by legal counsel of the Company that
shares subject to the awards defined in the Severance
Agreement and Mutual Release between the Company and me (the
"Agreement") will be promptly registered with the Securities
and Exchange Commission; and
(ii) I have been advised by legal counsel of the Company that the
Irrevocable Proxy attached as an exhibit to the Agreement
ceases to apply ipso facto to any shares immediately upon any
permitted dispositions.
Sincerely,
/s/ David P. Blackmore
- ----------------------
David P. Blackmore
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EXHIBIT A
IRREVOCABLE PROXY
The undersigned hereby irrevocably appoints________________________________
and ______________________________ or either of them, each with the power to
appoint h___ substitute, as proxies of the undersigned to vote and give consents
with respect to all shares of the Common Stock, without par value, of Cardinal
Realty Services, Inc., an Ohio corporation ("Cardinal"), which the undersigned
would be entitled to vote now or hereafter, as fully as the undersigned could
vote and give consents in person at any annual or special meeting of
shareholders of Cardinal or with respect to any actions taken by the written
consent of shareholders of Cardinal, upon any and all matters to come before the
shareholders of Cardinal.
The undersigned hereby acknowledges that this proxy is irrevocable and is
given for consideration and is coupled with an interest, to-wit: Cardinal and
the undersigned have on this date entered into a Severance Agreement providing
for the payment of monies and other benefits to the undersigned in exchange for,
inter alia, this proxy.
This proxy has been made and given at Columbus, Ohio and shall be
interpreted in accordance with the laws of the State of Ohio. This proxy shall
be in effect irrevocably until the earlier of (i) a sale of all of the
undersigned's shares of Cardinal Common Stock (at a time when the undersigned
has no unexercised or unexpired options or other rights to purchase Cardinal
Common Stock) in good faith to a bona fide purchaser in a manner described in
paragraph (f) of Rule 144 under the Securities Act of 1933 and the expiration of
a one (1) year period following such sale during which the undersigned has not
acquired any additional shares of Cardinal Common Stock in excess of the
undersigned's shares of Cardinal Common Stock held on the date hereof; or (ii)
the later of three (3) years from the date hereof or the date of the final
adjournment of Cardinal's annual meeting of shareholders held in 1999.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 4th day
of September, 1996.
/s/ David P. Blackmore
------------------
DAVID P. BLACKMORE
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EXHIBIT B
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made this 4th day of September,
1996, by and between CARDINAL REALTY SERVICES, INC., an Ohio corporation (the
"Company") and DAVID P. BLACKMORE ("Consultant").
WHEREAS, the Company desires to secure for itself the services of
Consultant by retaining Consultant as a consultant to the Company, under the
terms and conditions set forth herein; and
WHEREAS, the Company and Consultant are contemporaneously entering into a
Severance Agreement and Mutual Release, for which the payments hereunder shall
serve as partial consideration;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. Consulting Services; Availability. For a nine-month period beginning on
the November 1, 1996, unless mutually extended by the parties in writing (the
"Consulting Period"), the Company shall retain Consultant as a part-time,
independent consultant with respect to the Company's finances and business.
Consultant shall perform such consulting services in such a manner and on such
dates as Consultant and Company agree. During the Consulting Period, within
reason, Consultant shall make himself available to the Company no less than
twelve (12) hours each thirty (30) day period (the "Minimum Service
Requirement") to render such advice and assistance regarding financial and
business matters as may be reasonably requested of Consultant by the Company.
For each hour of service in excess of the Minimum Service Requirement, the
Company shall pay Consultant One Hundred Fifty ($150) per hour; provided,
however, Consultant shall not perform any services in excess of the Minimum
Service Requirement without the prior written instruction of the Company's Chief
Executive Officer.
2. Consulting Payments. In consideration of the services to be performed by
Consultant pursuant to the provisions of Paragraph 1 above, the Company shall
pay to Consultant the sum of Fifty Thousand Dollars ($50,000), payable in (i) a
lump sum on January 2, 1997 or (ii) nine (9) equal monthly installments,
commencing November 1, 1996.
3. Expense Reimbursement. During the Consulting Period, Consultant shall be
entitled to reimbursement of all expenses reasonably incurred by Consultant in
connection with Consultant's performance of consulting services hereunder (but
no expenses under paragraph 2(b) hereof shall be incurred without first
obtaining Company's written approval), provided that Consultant submits to the
Company invoices or other documentary verifications of the amounts thereof.
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4. Termination.
(a) The engagement of Consultant under this Consulting Agreement,
and the term hereof, may be terminated by Company for cause at any
time by action of the Board of Directors. For purposes hereof, the
term "cause" shall mean:
(i) any act of fraud, dishonesty, willful misconduct, or
other intentional act that is wrongful and detrimental to the
interests of Company; or
(ii) Consultant's material breach of this Consulting
Agreement.
(b) The engagement of Consultant under this Consulting Agreement,
and the term hereof, shall be terminated on the death or permanent
disability of Consultant. For these purposes, permanent disability
shall be deemed to occur after ninety (90) days in the aggregate
during any consecutive twelve (12) month period, or after sixty (60)
consecutive days, during which, as the case may be, Consultant shall
have been unable to discharge his duties under this Consulting
Agreement by reason of his physical or mental disability or illness.
(c) Upon any such termination Consultant or his estate or
personal representative, as the case may be, shall be entitled only to
accrued but unpaid compensation up to the date of such termination and
Company shall have no further obligation to Consultant under this
Consulting Agreement.
5. Assignment. Without the written consent of the Company, Consultant shall
have no right to assign or otherwise transfer any rights created under this
Agreement. This Agreement shall be binding upon, and shall inure to the benefit
of, the Company and its successors and assigns, and Consultant and Consultant's
legal representatives, heirs, successors and permitted assigns.
6. Relationship. The Company and Consultant expressly acknowledge and agree
that the consulting services to be provided by Consultant under this Agreement
shall be performed as an independent contractor, and not as an agent or employee
of the Company. The parties also expressly acknowledge and agree that with
respect to any payments made to Consultant hereunder, the Company shall not: (i)
withhold or pay FICA or other Federal, state, or local income or other taxes; or
(ii) comply with or contribute to state worker's compensation, unemployment or
other funds or programs. Consultant also acknowledges that as an independent
contractor Consultant will not be given the right to participate in any employee
benefit or insurance plan or any other plan or other fringe benefit which is
maintained, established or provided by the Company for its employees.
7. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the Rules of the American Arbitration Association then pertaining in the
City of Columbus, Ohio and judgment upon the award rendered by the Arbitrator or
Arbitrators may be entered in any Court having jurisdiction
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119
thereof. The Arbitrator or Arbitrators shall be deemed to possess the powers to
issue mandatory orders and restraining orders in connection with such
arbitration.
8. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Ohio.
9. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous written or oral conversations,
agreements or discussions concerning the subject matter hereof.
10. Validity. The validity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement which shall nevertheless remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
12. Captions and Section Headings. Captions and section headings used
herein are for convenience and are not part of this Agreement and shall not be
used in construing it.
13. Further Assurances. Each party hereto shall execute such additional
documents, and do such additional things, as may reasonably be requested by the
other party, to effectuate the purposes and provisions of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
------------------------------
Print Name: John B. Bartling, Jr.
Its: President
/s/ David P. Blackmore
----------------------
DAVID P. BLACKMORE
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SEVERANCE AGREEMENT AND MUTUAL RELEASE
This SEVERANCE AGREEMENT AND MUTUAL RELEASE ("Agreement"), dated as of
January 16, 1996, by and between Cardinal Realty Services, Inc. (the "Company"),
and Michael F. Carbone ("Employee").
WHEREAS, the Company and Employee are parties to a certain Employment
Agreement, dated as of June 30, 1992, as amended ("Employment Agreement");
WHEREAS, Employee and the Company have agreed that Employee shall resign
from all positions held with the Company, and its affiliates, subsidiaries and
related entities; and
WHEREAS, the Company and Employee wish to resolve any and all matters and
issues between them arising from or relating to Employee's services to the
Company, including his resignation therefrom.
NOW, THEREFORE, in return for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Employee
acknowledge and agree as follows:
1. Resignation. Employee hereby resigns from any and all positions he held
with the Company or its affiliated, related and subsidiary entities, including,
but not limited to, his position as Vice President and Chief Financial Officer
of the Company, as well as any position as an officer and director of any
subsidiaries of the Company, effective January 16, 1996.
2. Payout and Severance Period. Employee will receive payment pursuant to
the terms of the Employment Agreement and other severance benefits from January
16, 1996 through December 31, 1996 (the "Severance Period").
3. Final Compensation and Severance Benefits.
(a) The Company will pay Employee all amounts of Employee's base
compensation remaining unpaid under the Employment Agreement through
December 31, 1996, less applicable tax withholdings, which amount shall be
paid in accordance with the Company's past payroll practices with respect
to Employee for the duration of the Severance Period. This amount
represents payment in full of the Company's obligations to Employee with
respect to base compensation under the terms of the Employment Agreement
which Employment Agreement is hereby terminated in all other respects.
(b) Within ten (10) business days after the expiration of the seven
(7) day period referred to in Section 15(e) of this Agreement following
execution of this Agreement, the Company will pay Employee a cash bonus
equal to fifty percent (50%) of Employee's annual base salary, this being a
cash bonus in the amount of One Hundred Two Thousand Nine Hundred Fifty-two
Dollars and Fifty Cents ($102,952.50), less applicable tax withholdings.
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121
(c) Within ten (10) business days after the expiration of the seven
(7) day period referred to in Section 15(e) of this Agreement following
execution of this Agreement, the Company will pay Employee an additional
cash bonus of Three Hundred Twenty-Five Thousand Dollars ($325,000).
(d) The Company has delivered to Employee Thirty One Thousand Six
Hundred Seventy-Eight (31,678) shares of the Company's common stock,
without par value, as complete satisfaction for any and all shares awarded
to Employee under the Company's Incentive Equity Plan, free of any
forfeiture provisions or other restrictions imposed under said Plan or
Employee's award agreement thereunder. The Company will deliver to Employee
any additional shares to which Employee may become entitled under the terms
of said Plan.
4. Additional Consideration for Execution and Delivery of this Agreement.
As additional consideration to support Employee's execution and delivery of this
Agreement and his promises and undertakings hereunder, the Company will provide
Employee:
(a) An additional cash payment in the amount of One Hundred Two
Thousand Nine Hundred Fifty-Two Dollars and Fifty Cents ($102,952.50), less
applicable tax withholdings;
(b) Health and Dental insurance, as well as Employee Assistance
Program benefits, at the Company's expense, through February 18, 1996.
Employee's benefits will terminate after that date, subject to any right to
benefit continuation under the Comprehensive Omnibus Budget Reconciliation
Act.
(c) Basic and optional life insurance benefits (not including optional
life insurance benefits provided by Cincinnati Life Insurance Company),
under the same terms and conditions that Employee received such benefits
during his employment, through February 29, 1996. Employee has the right to
convert his basic life insurance coverage to an individual policy, at
Employee's own expense, within thirty (30) days from the date the coverage
terminates by submitting the appropriate conversion form to Community
National Life Insurance Company;
(d) Any vested 401(k) Plan "Retirement Plan" benefits within eight (8)
to ten (10) weeks after the end of the quarter in which Employee has ceased
making contributions to the Retirement Plan (March, 1996). Employee will be
required to complete and return appropriate election forms prior to
disbursal of such benefits as may be required by the terms of the Plan and
applicable law; and
(e) A loan equal to the amount of required withholding tax
attributable to the exercise of non-qualified stock options by Employee on
or before the date set forth in Section 1 hereof, which loan shall bear
interest at The Provident Bank prime rate and shall be repayable in full by
Employee on or before twelve (12) months from the date of said loan.
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5. Proxy. Employee will execute and deliver to the Company his irrevocable
proxy in the form of Exhibit A, attached hereto and incorporated herein by
reference. Employee covenants that he will not take any action designed to
directly or indirectly defeat the intent of his irrevocable proxy, it being
understood and agreed that so long as said proxy remains in effect Employee will
not exercise voting power over any capital stock of the Company within the
meaning of Rule 13d-3, promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended. Notwithstanding anything
contained herein to the contrary or otherwise, Employee shall have the right to
sell, transfer, or otherwise dispose of any of all shares of Cardinal common
stock held by Employee, at any time or from time to time (in accordance with
applicable law), but not with a view toward violating Employee's covenants
contained in the second sentence of this Section 5.
6. Return of Equipment. Employee will return all equipment, if any, owned
by the Company, including but not limited to, a laptop computer and dictation
equipment.
7. Consulting Agreement. Simultaneously with the execution of this
Agreement, the Company and Employee will enter into a consulting agreement in
the form of Exhibit B, a copy of which is attached hereto and incorporated
herein by reference.
8. Release by Employee
(a) Employee, for himself and his dependents, successors, assigns,
heirs, representatives, attorneys, executors and administrators (and his
and their legal representatives of every kind), hereby completely and
irrevocably discharges and releases the Company, its officers, directors,
employees, agents, shareholders, affiliates, subsidiaries, related
entities, successors and assigns from any and all claims, demands, actions,
causes of action and/or liability whatsoever involving any matter arising
out of or in any way related, directly or indirectly, to Employee's
employment with the Company, including any positions with subsidiary or
affiliated entities, compensation therefor, or the termination thereof,
including, but not limited to, any claim for employment discrimination in
violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. ss.2000e,
et seq., the Age Discrimination in Employment Act, 29 U.S.C. ss.621, et
seq., the Americans with Disabilities Act, 42 U.S.C. ss.12101, et seq.,
Ohio Revised Code ss.4112, Ohio Revised Code ss.4101 and any other federal,
state or municipal fair employment practice or discrimination laws,
statutes or ordinances, arising at any time prior to and including the
effective date of this Agreement. Employee agrees that he will not seek
reinstatement or reemployment with the Company or any affiliate thereof at
any time in the future. This release shall not, however, apply to the
obligations of the Company under this Agreement or under the Non-Qualified
Stock Option Agreement and Restricted Shares Agreement between the Company
and Employee.
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123
(b) Employee further agrees and acknowledges that he (i) has been
advised by the Company to consult with legal counsel prior to executing
this Agreement and the release provided for in this Section 8, (ii) has had
an opportunity to consult with and has been advised by legal counsel of his
choice, (iii) fully understands the terms of this Agreement and (iv) enters
into this Agreement freely and voluntarily and intending to be bound.
9. Release by the Company. The Company, on behalf of itself and its
affiliated, related and subsidiary entities, successors and assigns (herein the
"Corporate Releasors"), hereby releases, dismisses and forever discharges
Employee, his successors, assigns, heirs, representatives, attorneys, executors
and administrators from any and all claims, demands, damages, actions and/or
causes of action of any kind and every description, whether known or unknown,
which the Corporate Releasors now have or may have had for, upon, or by reasons
of any cause whatsoever, against Employee. This release shall not, however,
apply to the obligations of Employee arising under this Agreement or under the
Non-Qualified Stock Option Agreement and Restricted Shares Agreement between the
Company and Employee. The Company acknowledges that no monies are owed by
Employee to the Company under any loan program of the Company or its
subsidiaries or affiliates.
10. Continued Availability and Cooperation.
(a) Employee shall cooperate fully with the Company and with the
Company's counsel in connection with any present and future actual or
threatened litigation or administrative proceeding involving the Company,
its affiliated, related or subsidiary entities, its officers, directors,
shareholders, employees, agents and representatives, and its successors or
assigns that relates to events, occurrences or conduct occurring (or
claimed to have occurred) during the period of Employee's employment by the
Company other than with respect to any action relating to this Agreement.
(b) Employee shall be reimbursed by the Company for reasonable travel,
lodging, telephone and similar expenses incurred in connection with such
cooperation, which the Company shall reasonably endeavor to schedule at
times not conflicting with the reasonable requirements of Employee or any
future employer of Employee or with the requirements of any third party
with whom Employee has a business relationship that provides remuneration
to Employee. Employee shall not unreasonably withhold his availability for
such cooperation.
11. Successors and Binding Agreement.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company and any successor of or to the Company, including, without
limitation, any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such
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124
successor shall thereafter be deemed included in the definition of the
Company for the purposes of this Agreement), but shall not otherwise be
assignable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be enforceable by
Employee, his personal or legal representatives, executors, administrators,
successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other party, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 11(a) and 11(b) of this Agreement.
(d) This Agreement is intended to be for the exclusive benefit of the
parties hereto, and except as provided in subsection (a) of this Section
11, no third party shall have any rights hereunder.
12. Confidentiality and Statements to Third Parties.
(a) Except as otherwise required by law, regulation, or legal process,
or except with the prior written consent of the Company, Employee will not
disclose the terms of this Agreement to anyone other than members of his
immediate family, his accountants, or his legal advisors, as necessary, and
Employee will require that they and their agents take all reasonable steps
to maintain the confidentiality hereof. Unless otherwise agreed to in
writing by Employee and except as otherwise required by law, regulation, or
legal process, the Company will disclose the terms of this Agreement only
to such of its officers, directors, and employees of the Company, the
Company's legal advisors and accountants, and other third parties who have
a genuine business interest or need in learning such information.
(b) Neither Employee nor the Company shall, directly or indirectly,
make or cause to be made any statements to any third parties criticizing or
disparaging the other or commenting adversely on the character or business
reputation of the other, but this provision shall not limit the ability or
responsibility of either party to respond to the best of its knowledge to
administrative or regulatory inquiries or to testify to the best of its
knowledge in legal proceedings.
(c) Employee agrees not to disclose, divulge, discuss, copy or
otherwise use or suffer to be used in any manner, in competition with, or
adverse to the interests of, the Company or any of the Company's
subsidiaries, affiliates or related entities, customer lists, product
research, pricing information, the Company's trade secrets or any other
information that would provide the Company's competitors with information
about the Company's methods, goals, or customers, it being acknowledged by
Employee that all such information regarding the Company's business and the
Company's subsidiaries, affiliates and related entities compiled or
obtained by, or furnished to, Employee while Employee was employed by or
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125
associated with the Company is confidential information and the Company's
exclusive property.
13. Notices. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered, addressed (a) to the Company (to the attention of the
Chief Executive Officer at its principal executive offices located at 6954
Americana Parkway, Reynoldsburg, Ohio 43068, and (b) to Employee at his
principal residence at One Oakledge Road, Bronxville, New York 10708, or to such
other address as either party may have furnished to the other in writing and in
accordance herewith. Notices of change of address shall be effective only upon
receipt.
14. Governing Law. The validity, interpretation, construction and
performance of this Agreement (and every other issue arising hereunder) shall be
governed by the laws of the State of Ohio, without giving effect to the
principles of conflict of laws of such state.
15. Miscellaneous. The Company and Employee hereby acknowledge and
understand that:
(a) Each has had the opportunity to review and consider the terms of
this Agreement for a period of forty-five (45) days;
(b) Each has had the opportunity to receive counsel regarding their
respective rights, obligations and liabilities;
(c) Nothing in this Agreement is or shall be construed as an admission
by the Company or the Employee of any breach of any agreement or any
intentional or unintentional wrongdoing of any nature with respect to
either party;
(d) Neither Employee nor the Company has made any representations
concerning the terms or effects of this Agreement other than those
contained in this Agreement, and this Agreement may not be modified or
terminated orally;
(e) The terms of this Agreement are not effective or enforceable until
seven (7) days after its execution, during which period Employee may revoke
this Agreement;
(f) The Company provided Employee, at the beginning of the forty-five
(45) day period referred to in subparagraph (a) above, a list of the
individuals being offered similar severance packages in connection with the
termination of such individuals' employment, and the eligibility factors
and time limits applicable to the severance packages being offered. In
addition, Employee has been informed, at the same time, of the job titles
and ages of those being offered similar severance packages and the ages of
all individuals in the same job classification not being offered similar
severance packages.
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(g) It is the Company's view that the benefits provided Employee
herein are in excess of the benefits to which he would otherwise be
contractually entitled as of the date of this Agreement;
(h) The death or disability of Employee following the execution of
this Agreement shall not affect or revoke this Agreement or any of the
obligations of the parties hereto. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Employee and the Company. No
waiver by either party hereto at any time of any breach by the other party
hereto or compliance with any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
expressed or implied, with respect to the subject matter hereof have been
made by any of the parties that are not set forth expressly in this
Agreement and every one of them (if, in fact, there have been any) is
hereby terminated without liability or any other legal effect whatsoever;
and
(i) Except as provided for in this Agreement and in a certain
Consulting Agreement between the Company and Employee dated as of the date
of this Agreement, all compensation and other payments due Employee as a
result of his employment with the Company have been paid in full and
Employee is not entitled to any additional salary, bonus or other payments
whatsoever.
16. Entire Agreement. This Agreement (together with the other documents and
supporting information delivered simultaneously herewith, including without
limitation, said Consulting Agreement) shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and shall
supersede all prior verbal or written agreements, covenants, communications,
understandings, commitments, representations or warranties, whether oral or
written, by any party hereto or any of its representatives pertaining to such
subject matter.
17. Validity. The validity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement which shall nevertheless remain in full force and effect.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
19. Captions and Section Headings. Captions and section headings used
herein are for convenience and are not part of this Agreement and shall not be
used in construing it.
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127
20. Further Assurances. Each party hereto shall execute such additional
documents, and do such additional things, as may reasonably be requested by the
other party to effectuate the purposes and provisions of the Agreement.
IN WITNESS WHEREOF, the undersigned parties have hereunto executed this
Severance Agreement and Mutual Release as of the day and date first above
written.
CARDINAL REALTY SERVICES, INC.
By: /s/ John Bartling, Jr.
------------------
John Bartling, Jr.
Its: President and Chief Executive Officer
/s/ Michael F. Carbone
------------------
MICHAEL F. CARBONE
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CARDINAL REALTY SERVICES, INC.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
July 1, 1996
Dear Michael:
In connection with the termination of your employment effective as of
January 16, 1996, attached is a Severance Agreement and Mutual Release which
includes a severance package providing for salary and benefit continuation.
However, in order to receive the enhanced severance package outlined, you will
be required to execute the Severance Agreement and Mutual Release.
By entering into the Severance Agreement and Mutual Release, you will
be specifically waiving and releasing all rights you may have against Cardinal
Realty Services, Inc. including, but not limited to, any rights you may have
under the Age Discrimination in Employment Act. Before entering into the
Severance Agreement and Mutual Release, you are advised to consult with an
attorney. By law you must be afforded 45 days in which to consider the Severance
Agreement and Mutual Release. Thus, the opportunity to enter into the Severance
Agreement and Mutual Release shall remain available to you through August 15,
1996.
In addition, the law requires that we give you certain information
regarding the severance package and who is eligible for the same. Similar
severance packages are being offered to those Vice Presidents being asked to
resign. Only those Vice Presidents being asked to resign are being offered such
packages. As noted previously, you have forty-five (45) days in which to
consider this severance offer. As you are aware, there are six Vice Presidents.
Four Vice Presidents are being offered a severance package. Their ages are 48,
49, 56, and 56. The two Vice Presidents not being offered such severance
packages are ages 43 and 44.
If you have any questions, please do not hesitate to contact me.
Sincerely yours,
/s/ John B. Bartling, Jr.,
Chief Executive Officer
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July 1, 1996
Cardinal Realty Services, Inc.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
Attention: John B. Bartling, Jr.
Dear John:
I understand I have 45 days to consider the severance offer made by
Cardinal Realty Services, Inc., but I wish to waive the right to consider its
offer for this period of time. I have thoroughly reviewed the offer, understand
it, and wish to accept it immediately.
Sincerely,
/s/ Michael F. Carbone
------------------
Michael F. Carbone
-5 -
<PAGE>
130
IRREVOCABLE PROXY
The undersigned hereby irrevocably appoints ___________________________ and
______________________________ or either of them, each with the power to appoint
h___ substitute, as proxies of the undersigned to vote and give consents with
respect to all shares of the Common Stock, without par value, of Cardinal Realty
Services, Inc., an Ohio corporation ("Cardinal"), which the undersigned would be
entitled to vote now or hereafter, as fully as the undersigned could vote and
give consents in person at any annual or special meeting of shareholders of
Cardinal or with respect to any actions taken by the written consent of
shareholders of Cardinal, upon any and all matters to come before the
shareholders of Cardinal.
The undersigned hereby acknowledges that this proxy is irrevocable and is
given for consideration and is coupled with an interest, to-wit: Cardinal and
the undersigned have on this date entered into a Severance Agreement providing
for the payment of monies and other benefits to the undersigned in exchange for,
inter alia, this proxy.
This proxy has been made and given at Columbus, Ohio and shall be
interpreted in accordance with the laws of the State of Ohio, without giving
effect to the conflict of law provisions thereof. This proxy shall be in effect
irrevocably until the earlier of (i) a sale of all of the undersigned's shares
of Cardinal Common Stock (at a time when the undersigned has no unexercised or
unexpired options or other rights to purchase Cardinal Common Stock) in good
faith to a bona fide purchaser; or (ii) the later of three (3) years from the
date hereof or the date of the final adjournment of Cardinal's annual meeting of
shareholders held in 1999.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
1st day of July, 1996.
/s/ Michael F. Carbone
------------------
MICHAEL F. CARBONE
EXHIBIT "A"
<PAGE>
131
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made as of the 16th day of
January, 1996, by and between CARDINAL REALTY SERVICES, INC., an Ohio
corporation (the "Company") and MICHAEL F. CARBONE ("Consultant").
WHEREAS, the Company desires to secure for itself the services of
Consultant by retaining Consultant as a consultant to the Company, under the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. Consulting Services; Availability. For a one-year period beginning June
____, 1996, unless mutually extended by the parties in writing (the "Consulting
Period"), the Company shall retain Consultant as a part-time, independent
consultant with respect to the Company's finances and business. Consultant shall
perform such consulting services in such a manner and on such dates as
Consultant and Company agree. During the Consulting Period, Consultant shall
make himself available to the Company no less than twelve (12) hours each thirty
(30) day period (the "minimum service requirement") to render such advice and
assistance regarding financial and business matters as may be reasonably
requested of Consultant by the Company.
2. Consulting Payments.
(a) In consideration of the services to be performed by Consultant
pursuant to the provisions of Paragraph 1 above, the Company shall pay to
Consultant, concurrently with the execution of this Agreement, the sum of
One Hundred Fifty Thousand Dollars ($150,000).
(b) In addition to the amount payable in Paragraph 2(a) above,
Consultant shall be paid an incentive fee ("Fee") based on the amount of
any financings obtained by Company from any financing sources solicited by
Consultant and presented to Company by Consultant after the date hereof
which financings are completed during the Consulting Period or within one
year thereafter. The Fee shall be paid at the closing and initial funding
of each financing. The Fee for any financing shall be at then market rates
as agreed upon between Company and Consultant. Consultant shall obtain and
keep all state or federal licenses, if any, that are necessary for
Consultant lawfully to be paid any Fee under this Paragraph 2(b).
3. Expense Reimbursement. During the Consulting Period, Consultant shall be
entitled to reimbursement of all expenses reasonably incurred by Consultant in
connection with Consultant's performance of consulting services hereunder (but
no expenses under paragraph 2(b) hereof shall be incurred without first
obtaining Company's written approval), provided that Consultant submits to the
Company invoices or other documentary verifications of the amounts thereof.
4. Death or Permanent Disability. In the event of death or permanent
disability of Consultant during the one year consulting period referred to in
Paragraph 1 above, Consultant or his estate shall have no obligation to return
or refund to the Company the payment to Consultant
1
<PAGE>
132
provided for in Paragraph 2(a) above. For purposes of Paragraph 2(b),
Consultant's death or permanent disability shall not affect the Company's
obligation to pay any Fee earned thereunder as described in said Paragraph 2(b),
and the Consulting Period, for such purposes, shall be deemed to continue for
the full one year period thereof.
5. Assignment. Without the written consent of the Company, Consultant shall
have no right to assign or otherwise transfer any rights created under this
Agreement. This Agreement shall be binding upon, and shall inure to the benefit
of, the Company and its successors and assigns, and Consultant and Consultant's
legal representatives, heirs, successors and permitted assigns.
6. Relationship. The Company and Consultant expressly acknowledge and agree
that the consulting services to be provided by Consultant under this Agreement
shall be performed as an independent contractor, and not as an agent or employee
of the Company. The parties also expressly acknowledge and agree that with
respect to any payments made to Consultant hereunder, the Company shall not: (i)
withhold or pay FICA or other Federal, state, or local income or other taxes; or
(ii) comply with or contribute to state worker's compensation, unemployment or
other funds or programs. The Company shall make all appropriate filings in
connection with the payment of any monies hereunder to the Consultant including
the filing of Form 1099. Consultant also acknowledges that as an independent
contractor Consultant will not be given the right to participate in any employee
benefit or insurance plan or any other plan or other fringe benefit which is
maintained, established or provided by the Company for its employees. Nothing
herein, however, shall be construed to adversely affect the rights of
Consultant, or relieve the Company of any obligations under the Severance
Agreement and Mutual Release dated the date hereof, between the Company and
Employee (the "Severance Agreement").
7. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the Rules of the American Arbitration Association then pertaining in the
City of Columbus, Ohio and judgment upon the award rendered by the Arbitrator or
Arbitrators may be entered in any Court having jurisdiction thereof. The
Arbitrator or Arbitrators shall be deemed to possess the powers to issue
mandatory orders and restraining orders in connection with such arbitration.
8. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Ohio, without giving effect to the conflict
of laws provisions thereof.
9. Entire Agreement. This Agreement, together with the Severance Agreement,
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous written or
oral conversations, agreements or discussions concerning the subject matter
hereof.
10. Validity. The validity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement which shall nevertheless remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
12. Captions and Section Headings. Captions and section headings used
herein are for convenience and are not part of this Agreement and shall not be
used in construing it.
13. Further Assurances. Each party hereto shall execute such additional
documents, and do such additional things, as may reasonably be requested by the
other party, to effectuate the purposes and provisions of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
-------------------------
John B. Bartling, Jr.
Its: President and
Chief Executive Officer
/s/ Michael F. Carbone
------------------
Michael F. Carbone
2
133
ASSUMPTION OF LOAN AND SECURITY AGREEMENT
THIS ASSUMPTION OF LOAN AND SECURITY AGREEMENT (the "Assumption") is made
and entered into to be effective the 26th day of February, 1997, by and among
THE PROVIDENT BANK (the "Bank"), and LEXFORD PROPERTIES, INC. ("Lexford").
RECITALS
I. The following Companies: Cardinal Realty Services, Inc., Cardinal
Apartment Management Group, Inc., fka Cardinal Acceptance Corporation, Cardinal
GP VIII Corporation, Cardinal GP X Corporation, Cardinal GP XI Corporation,
Cardinal GP XII Corporation, Cardinal Industries Development Corporation,
Cardinal Ancillary Insurance Agency, Inc., fka Cardinal Industries Insurance
Agencies, Inc., Cardinal Industries of Florida Services Corporation, Cardinal
Industries of Georgia Services Corporation, Cardinal Industries of Texas, Inc.,
Cardinal Industries Services Corporation, Cardinal Realty Company, Cardinal
Regulatory of Kentucky, Inc., Cardinal Regulatory of West Virginia, Inc., CII of
Pennsylvania, Inc., R/E Management Services, Inc., and Walker Place Limited
Liability Company, jointly and severally (herein each a "Company" or
collectively, the "Companies"), and the Bank entered into a Loan and Security
Agreement dated August 11, 1995 (the "Loan Agreement") and various loan
documents executed in connection therewith (the "Loan Documents"); and
II. The Companies and the Bank have agreed to extend the due date for the
$3,000,000.00 Operating Revolving Line Note provided for in the Loan Agreement,
which extension is hereafter included in the reference to Loan Documents; and
III. The Companies, Lexford and the Bank desire to acknowledge Lexford's
joint and several obligation with the Companies to repay the loans evidenced by
the Loan Agreement and related Loan Documents.
NOW, THEREFORE, in consideration of the extension of the Operating
Revolving Line, and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Assumption of Joint and Several Liability. Lexford has become an
affiliate of Cardinal Realty Services, Inc. and the other Companies following
execution of the Loan Agreement on August 11, 1995. Lexford acknowledges the
receipt of valuable consideration as a result of the now existing extensions of
credit under the Loan Agreement. Therefore, Lexford hereby assumes and promises
to pay, jointly and severally with the other Companies, any now existing or
hereafter arising obligation due under the terms of the Loan Agreement,
including, without limitation, any promissory note executed by one or more of
the Companies payable to the Bank.
<PAGE>
134
Section 2. Collateral. The Companies and the Bank are negotiating certain
terms and conditions of the Loan Agreement and Loan Documents related to the
Companies' grant of security interests in their Collateral as that term is
defined in the Loan Agreement. Notwithstanding its assumption to repay the loans
due the Bank, Lexford does not grant a security interest in any of its
Collateral until such time as the negotiations are complete and documented.
Nevertheless, Lexford represents and warrants that there is no existing security
interest in any of its Collateral and Lexford further agrees it shall not grant
any security interest to any creditor other than the Bank in any of its
Collateral.
Section 3. Ratification of Loan Documents. Lexford agrees the Loan
Agreement and Loan Documents are and shall remain in full force and effect.
Except as related to its Collateral, Lexford hereby ratifies, confirms and
approves the Loan Agreement and Loan Documents, agrees that the Loan Agreement
and Loan Documents constitutes the valid and binding obligations and agreements
of Lexford and the Companies, enforceable by the Bank in accordance with their
terms; and affirms each of the representations and warranties provided for in
the Loan Agreement effective as of the execution of this Assumption. Nothing in
this Assumption shall be deemed to impair or otherwise affect the lien of the
Loan Agreement and Loan Documents on the Collateral of the Companies.
Section 4. Governing Law. This Assumption shall be governed by and
construed and enforced in accordance with the laws of the State of Ohio.
Section 5. Successors and Assigns Bound. This Assumption is binding upon
and shall inure to the benefit of the parties hereto, and their respective
successors and assigns.
Section 6. Entire Agreement. This Assumption, in addition to the Loan
Agreement and the Loan Documents, constitutes the sole and entire agreement
between Lexford and the Bank with respect to the subject matter hereof. Neither
this Assumption nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of such change, waiver, discharge or termination is
sought.
Section 7. Warrant of Attorney. With full knowledge of all constitutional
rights, if any payment under the Notes, as defined in the Loan Agreement, is not
paid on or before the date when due, or should default be made in the
performance or observance of any of the covenants or agreements of the Loan
Documents or this Assumption, Lexford hereby authorizes and empowers any
attorney of any court of record within the United States of America or elsewhere
to appear for Lexford and confess judgment or a series of judgments against
Lexford and/or any or all of the Companies in favor of the holder of the Notes
as of any time, present or future, for the then due and unpaid balance or
balances of the principal, interest, late charges and collection expenses
evidenced by the Notes, or any part thereof, together with the costs of the
suit, and to waive and release all errors in said proceedings and petitions in
error and the right to appeal from the judgment rendered, on which judgment or
judgments one or more executions may issue forthwith; and for so doing the Note
or a copy thereof and this Assumption or a copy hereof verified by affidavit
shall be a sufficient warrant.
IN WITNESS WHEREOF, the Bank and Lexford have executed this Assumption at
Columbus, Franklin County, Ohio, or caused it to be executed by their duly
authorized representatives, intending to be legally bound as of the date first
above written.
2
<PAGE>
135
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR, WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE. (SEC. 2323.13, O.R.C.).
Lexford Properties, Inc.
By: /s/ John B. Bartling, Jr.
--------------------------
John B. Bartling, Jr.
Its: President and CEO
THE BANK:
The Provident Bank
By: /s/ William R. McNamara
-----------------------
William R. McNamara
Its: Vice President
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
136
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AND THE STATEMENT
OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,593
<SECURITIES> 0
<RECEIVABLES> 7,079
<ALLOWANCES> 2,034
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 161,570
<DEPRECIATION> 4,478
<TOTAL-ASSETS> 245,368
<CURRENT-LIABILITIES> 0
<BONDS> 163,319
0
0
<COMMON> 29,122
<OTHER-SE> 33,386
<TOTAL-LIABILITY-AND-EQUITY> 245,368
<SALES> 0
<TOTAL-REVENUES> 65,301
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 41,285
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,230
<INCOME-PRETAX> 8,786
<INCOME-TAX> 3,416
<INCOME-CONTINUING> 5,370
<DISCONTINUED> 0
<EXTRAORDINARY> (1,614)
<CHANGES> 0
<NET-INCOME> 3,756
<EPS-PRIMARY> 0.96
<EPS-DILUTED> 0.96
<FN>
THE REGISTRANT HAS A NON-CLASSIFIED BALANCE SHEET
</FN>
</TABLE>
137
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop# Name Loc Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
==============================================================================================================================
WHOLLY OWNED PROPERTIES
============================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1375 RIVERVIEW ESTATES OH 100 391,632 2,233 3,642 9,197 (26,744) (2,671) 377,289
1377 APPLE RIDGE I OH 60 262,425 487 4,119 3,345 (26,694) (7,994) 235,688
1389 THE WILLOWS I OH 50 224,914 3,967 2,753 1,298 (28,334) (3,732) 200,867
1439 MONTROSE SQUARE OH 129 575,970 2,711 6,835 (1,237) (85,889) (28,888) 469,500
1542 SPRINGWOOD KY 54 215,764 2,359 2,330 1,164 (5,953) (560) 215,104
1620 MEADOWOOD OH 40 179,732 2,227 1,122 (7,463) (13,275) (552) 161,790
1672* RIDGEWOOD ELHART IN 71 140,280 0 0 6,210 (7,485) (1,886) 137,119
1690 HEATHMOORE I MI 60 386,582 2,014 3,206 4,548 (9,737) (3,203) 383,410
1750 CEDARWOOD II KY 48 240,426 1,242 3,557 2,514 (16,673) (4,834) 226,233
1780 BRUNSWICK IL 82 413,537 3,003 1,399 3,072 (17,789) (2,072) 401,149
1786 SPICEWOOD IN 53 267,249 149 2,112 3,093 (7,581) (4,605) 260,418
1806 WINTHROP CT II OH 38 195,737 415 1,487 2,038 (15,186) (2,500) 181,991
1809 MEADOWOOD II IN 75 339,655 4,318 3,612 3,884 (37,520) (6,550) 307,400
1810 ACADIA CT II IN 105 548,878 2,395 15,106 7,607 (23,765) (14,513) 535,709
1814 ASHFORD HILL OH 79 372,358 1,476 5,255 6,386 (13,412) (18,845) 353,217
1816 CEDARWOOD III KY 48 242,823 1,784 3,230 3,561 (19,860) (5,335) 226,203
1822 MARABOU MILLS I IN 88 434,537 2,728 2,834 8,832 (32,020) (8,935) 407,975
1823 ELMTREE PARK I IN 74 362,029 1,551 255 6,854 (29,882) (4,086) 336,720
1824 AMESBURY I OH 69 311,770 1,219 1,562 4,489 (31,167) (5,416) 282,458
1825 BRADFORD PL IL 69 319,609 718 1,332 4,497 (12,198) (441) 313,517
1830 SHERBROOK IN 78 406,568 1,208 4,344 5,865 (37,131) (7,898) 372,956
1833 HAYFIELD PARK KY 88 416,692 1,870 4,572 6,609 (20,177) (3,675) 405,892
1838 CEDARGATE II KY 58 269,120 107 2,292 2,027 (11,449) (34) 262,063
1839 DARTMOUTH PL II OH 49 276,045 2,820 1,794 2,016 (9,319) (1,184) 272,172
1841 WILLOWOOD II OH 65 286,099 1,353 3,646 2,649 (27,799) (5,011) 260,936
1843 DOGWOOD GLEN I IN 85 427,154 1,561 2,563 5,511 (14,295) (1,567) 420,926
1846 CHERRY GLEN I IN 72 345,542 890 (697) 4,592 (21,625) (2,758) 325,944
1853 FOXHAVEN OH 108 494,882 3,585 2,928 856 (37,142) (3,581) 461,529
1859 ANNHURST II OH 54 252,210 1,387 196 5,033 (13,938) 133 245,021
1863 HUNTER GLEN IL 66 334,582 2,932 1,311 3,086 (32,292) (2,277) 307,342
1869 HARVEST GROVE I OH 74 351,145 1,372 524 4,760 (16,175) 0 341,626
1871 CLEARWATER OH 43 238,751 2,823 1,755 3,088 (8,981) (1,968) 235,468
1877 SHERBROOK PA 74 478,893 4,294 3,090 7,219 (8,485) (2,141) 482,870
1880 ARAGON WOODS IN 69 343,592 1,016 3,702 3,583 (27,465) (11,903) 312,526
1885 NEWBERRY II MI 48 255,375 2,109 241 1,255 (7,433) 0 251,547
1887 RIVER GLEN I OH 61 292,048 2,264 2,955 4,033 (23,142) (2,030) 276,127
1889 APPLEGATE II IN 80 398,786 2,152 3,301 2,053 (19,763) (1,823) 384,706
1895 ROSEWOOD COMMONS II IN 77 373,503 4,333 (853) 5,879 (26,754) (2,627) 353,481
1898 RIDGEWOOD II IN 100 442,942 5,708 2,770 2,950 (21,590) (3,319) 429,461
1908 CHERRY GLENN II IN 69 343,392 1,785 80 4,832 (18,087) (3,487) 328,515
1909 LINDENDALE OH 78 365,755 1,115 617 5,861 (19,488) (2,743) 351,117
1911 ELMTREE PARK II IN 53 263,229 560 (134) 2,888 (23,495) (3,005) 240,043
1914 WOODLANDS II PA 62 348,577 1,568 1,903 2,703 (16,547) (4,205) 334,000
1917 WILLOWOOD II IN 58 278,453 2,121 2,568 1,213 (5,619) (228) 278,508
1935 RED DEER II OH 63 322,774 2,492 2,013 1,922 (2,311) (97) 326,795
1936 SUFFOLK GROVE II OH 49 273,950 1,911 1,455 1,752 (6,621) (2,128) 270,320
1937 THE WILLOWS III OH 44 211,380 1,564 4,090 4,158 (11,426) (4,819) 204,946
1946 AMBERWOOD OH 64 305,410 1,380 3,005 (1,493) (38,385) (5,433) 264,484
1966 RIVER GLEN II OH 53 273,618 933 2,367 3,299 (29,866) (5,393) 244,958
1982 MARABOU MILLS III IN 59 310,494 478 1,427 3,081 (21,455) (1,640) 292,386
1983 CAMBRIDGE COMMONS III IN 77 345,406 1,166 1,899 6,113 (80,585) (6,872) 267,126
1986 GARDEN CT MI 103 561,254 1,397 2,657 4,885 (14,753) (2,646) 552,795
1005 ANNHURST III OH 52 259,351 3,153 1,097 1,968 (23,699) (2,354) 239,516
1039 LAUREL BAY MI 69 392,210 4,189 2,284 9,307 (32,905) (10,758) 364,327
2137 WINDWOOD I FL 64 291,076 2,075 1,263 6,352 (46,853) (9,210) 244,702
2208 GARDEN TERRACE I FL 59 258,524 3,863 1,735 4,354 (24,952) (6,282) 237,241
2385 CANTERBURY CROSSINGS FL 71 466,010 4,295 6,047 2,517 (4,635) (3,354) 470,879
</TABLE>
<PAGE>
138
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop# Name Loc Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
==============================================================================================================================
WHOLLY OWNED PROPERTIES
============================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2455 THYMEWOOD II FL 70 493,949 2,487 2,907 12,461 (26,924) (11,760) 473,120
2462 FOREST GLEN FL 73 340,395 1,934 7,272 5,486 (13,349) (2,064) 339,674
2469 BEL AIRE II FL 51 314,980 897 5,585 8,119 (17,364) (4,186) 308,030
2479 HERON POINTE FL 99 496,690 2,062 3,556 3,689 (12,792) (1,925) 491,279
2482 OAKWOOD VILLAGE FL 75 313,215 1,485 3,271 677 (32,892) (315) 285,441
2487 RIVERS END II FL 69 348,768 2,144 3,945 4,516 (7,197) (3,495) 348,680
2501 WHISPERING PINES II FL 44 206,421 1,040 3,620 1,759 (27,935) (2,557) 182,349
2512 SKY PINES II FL 52 263,836 1,066 3,378 4,242 (18,715) (16,881) 236,926
2513 CRYSTAL CT II FL 80 340,101 1,809 2,545 (1,870) (33,538) (7,831) 301,216
2515 HIDDEN ACRES FL 94 454,719 2,007 5,735 5,664 (18,496) (12,177) 437,452
2519 CENTRE LAKE III FL 235 1,418,593 11,644 9,496 84,811 (85,753) (87,996) 1,350,795
2520 PINE VIEW FL 92 454,329 2,385 3,539 13,546 (32,904) (20,134) 420,761
2521 BLUEBERRY HILL I FL 68 330,691 3,286 4,306 2,578 (38,945) (1,362) 300,553
2526 HOLLY SANDS II FL 52 264,588 2,095 2,676 4,588 (6,273) (419) 267,254
2527 SUNSET WAY I FL 100 646,841 1,886 6,326 17,942 (58,877) (17,452) 596,666
2530 PINE BARRENS FL 104 506,001 4,227 3,584 6,682 (6,949) (4,998) 508,547
2535 PELICAN POINTE I FL 86 419,180 1,160 4,250 6,564 (19,631) (12,598) 398,926
2537 CALIFORNIA GARDENS FL 71 343,854 913 3,017 1,132 (38,884) (7,542) 302,489
2543 MIGUEL PL FL 91 393,735 5,020 1,517 (3,172) (24,851) (4,244) 368,006
2545 JUPITER COVE I FL 63 379,794 1,385 4,254 7,170 (10,708) (4,776) 377,118
2546 PELICAN POINTE II FL 74 359,485 1,516 5,384 5,721 (29,902) (10,594) 331,611
2547 MARK LANDING I FL 72 386,033 1,941 6,710 7,058 (7,446) (6,567) 387,729
2549 JUPITER COVE III FL 63 379,211 1,395 3,730 8,003 (16,002) (6,559) 369,778
2556 HILLSIDE TRACE FL 64 275,583 4,120 3,404 4,001 (15,232) (887) 270,988
2559 JEFFERSON WAY I FL 56 297,418 1,533 2,849 715 (11,619) (3,053) 287,842
2580 SUNSET WAY II FL 100 648,108 2,000 6,256 21,135 (55,142) (24,241) 598,117
2587 OAK GARDENS FL 106 650,552 2,993 6,421 10,596 (25,652) (4,597) 640,313
3166 CEDAR HILL TN 74 387,139 2,447 3,482 3,314 (11,762) 27 384,647
3171 LAUREL GLEN GA 81 448,752 907 4,072 2,610 (2,609) (2,871) 450,861
3173 SPRINGBROOK SC 92 428,237 3,163 1,910 5,001 (25,677) (11,193) 401,440
3174 LAKESHORE I GA 79 358,878 2,022 6,580 (601) (8,080) (6,293) 352,506
3175 GLENVIEW AL 90 371,955 637 1,380 (376) (19,031) (3,037) 351,528
3186 RAMBLEWOOD II GA 102 471,350 1,488 2,330 1,323 (33,987) (3,532) 438,972
3188 VALLEYBROOK GA 72 382,952 2,191 5,225 5,420 (9,627) (2,816) 383,344
3189 WILLOW LAKES SC 95 460,480 2,440 2,261 3,476 (22,160) (3,550) 442,949
3190 GLENWOOD VILLAGE GA 80 376,829 2,834 2,480 2,246 (8,743) (2,314) 373,331
3208 RAVENWOOD SC 82 396,322 980 1,012 2,654 (7,963) (3,026) 389,979
3209 INDIAN LAKE I GA 244 1,395,642 15,711 12,922 30,134 (72,172) (18,027) 1,364,210
3231 WALKER PL TX 67 315,621 309 564 8,610 (26,425) (4,181) 294,497
3233 GREENBRIAR GLEN GA 75 435,838 3,467 958 13,789 (29,625) (7,424) 417,002
3400 HATCHERWAY GA 64 266,530 861 5,458 4,085 (23,203) (475) 253,256
3417 GLEN ARM MANOR GA 70 312,619 2,724 1,434 2,779 (17,103) (2,013) 300,440
3480 MILL RUN GA 88 397,203 856 2,886 6,060 (11,877) (1,666) 393,462
3486 STEWART WAY I GA 69 349,960 1,204 1,961 5,298 (27,144) (2,652) 328,627
3494 WILCREST WOODS GA 69 341,498 832 2,472 5,724 (8,048) (1,730) 340,748
3496 MARSHLANDING II GA 48 236,044 698 2,614 2,434 (8,449) (2,655) 230,686
3522 STEWART WAY II GA 63 335,471 1,369 1,811 3,074 (17,675) (2,550) 321,500
3532 KINGS COLONY GA 89 457,596 4,403 3,394 5,308 (10,942) (2,029) 457,730
4109 CHERRY TREE MD 103 595,795 6,078 4,068 8,361 (40,896) (4,616) 568,790
4111 FORSYTHIA CT II MD 76 428,187 1,489 1,291 4,483 (23,928) (1,252) 410,270
4133 MERRIFIELD MD 96 530,190 3,109 2,693 7,716 (26,715) (5,280) 511,713
5910 MARABOU MILLS II IN 64 321,981 5,960 2,862 5,234 (20,574) (8,972) 306,491
5886 PICKERINGTON MEADOWS IN 60 309,346 545 2,163 2,689 (25,865) (2,792) 286,087
5903 BRUNSWICK II WV 82 400,603 1,424 2,504 (237) (81,949) (4,832) 317,512
5906 AMESBURY II OH 81 360,892 2,235 1,372 1,246 (47,008) (5,354) 313,382
5951 HARVEST GROVE II OH 57 284,292 1,365 224 1,282 (21,559) (316) 265,288
-------------------------------------------------------------------------------------------
113 8,504 42,865,966 257,000 346,467 599,617 (2,652,572) (654,563) 40,761,914
-------------------------------------------------------------------------------------------
</TABLE>
* Partial year
<PAGE>
139
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop# Name Loc Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
==============================================================================================================================
SYNDICATED
==========================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1109 DOGWOOD TERRACE OH 110 509,493 692 7,611 5,292 (116,491) (11,129) 395,468
1112 LONDON LAMPLIGHT OH 54 244,575 1,042 2,783 2,697 (11,123) (5,451) 234,523
1123 SPRINGFIELD WOODGATE OH 39 150,514 681 2,852 2,155 (3,538) (2,801) 149,863
1262 THE BIRCHES LIMA OH 58 245,930 1,111 4,024 1,125 (29,572) (4,504) 218,114
1297 PLUMWOOD APTS OH 109 511,046 3,004 5,115 1,273 (31,734) (9,074) 479,630
1310 MELDON PL OH 129 544,560 5,253 6,766 11,881 (21,965) (3,267) 543,228
1320 WEST OF EASTLAND OH 125 540,563 626 8,208 11,984 (41,245) (23,186) 496,951
1322 PARKVILLE OH 101 451,795 1,243 3,809 7,087 (20,160) (9,758) 434,015
1327 CHARING CROSS APTS OH 68 282,294 2,079 2,334 4,048 (20,535) (2,280) 267,940
1329 INDEPENDENCE VIL OH 124 563,522 1,675 6,157 6,731 (47,370) (8,897) 521,817
1330 POPLAR CT OH 62 265,880 3,813 4,322 2,684 (19,722) (1,893) 255,084
1341 GREENLEAF APTS OH 50 149,897 0 0 5,998 0 0 155,895
1344 LAUREL CT APTS OH 70 291,635 1,089 5,639 2,597 (20,977) (2,419) 277,565
1379 AMHURST APTS OH 75 333,177 2,089 4,465 6,277 (18,974) (4,434) 322,601
1404 KETWOOD APTS OH 94 456,357 4,340 5,608 3,635 (34,687) (6,852) 428,401
1436 SANDALWOOD APTS OH 39 172,909 1,208 1,508 1,024 (3,438) (280) 172,931
1437 HICKORY MILL OH 62 304,537 3,807 1,555 4,317 (8,416) (3,104) 302,696
1455 MONTROSE SQ OH 65 241,537 3,272 6,373 2,010 (7,844) (3,519) 241,829
1456 APPLE RIDGE OH 53 229,795 555 4,331 1,937 (24,631) (6,486) 205,501
1460 WESTWOOD OH 14 56,278 721 818 419 (4,962) (427) 52,847
1461 APPLE RUN II OH 51 230,633 1,287 4,356 2,374 (20,633) (8,178) 209,837
1462 PLUMWOOD IN 39 181,230 1,640 2,008 2,126 (4,401) (923) 181,681
1464 GREENGLEN OH 68 247,730 2,943 2,784 6,086 (4,775) (1,373) 253,394
1465 CEDARWOOD BELPRE OH 45 187,320 1,392 2,035 547 (11,802) (661) 178,833
1466 AMHURST II OH 74 336,227 2,329 6,616 3,056 (18,901) (7,065) 322,262
1469 CHELSEA CT OH 70 287,133 2,595 3,558 760 (33,636) (3,619) 256,791
1470 MILLSTON APTS OH 55 182,192 1,439 2,504 2,499 (18,536) (2,622) 167,475
1473 MILLBURN II OH 52 261,551 2,029 1,866 1,463 (17,242) (749) 248,918
1483 WOODBINE OH 41 166,982 490 909 351 (4,028) 0 164,703
1485 HAMPSHIRE II OH 57 259,572 1,501 6,578 8,041 (15,884) (5,975) 253,832
1489 PLUMWOOD IN 57 251,298 2,117 513 3,616 (7,968) (1,072) 248,504
1491 CAMELLIA CT WASHINGTON CH OH 41 181,095 796 518 (953) (9,796) (2,119) 169,540
1499 CONCORD SQ ONTARIO OH 42 182,957 1,514 3,809 900 (5,858) (924) 182,398
1505 CAMELLIA CT DAYTON OH 57 271,498 1,500 789 715 (8,786) (1,723) 263,993
1510 BECKFORD PL WAPAKONETA OH 41 168,106 488 2,519 1,261 (18,360) (1,777) 152,237
1511 APPLEGATE CHILLICOTHE II OH 42 178,560 494 650 1,007 (30,230) (8,132) 142,350
1512 SPRINGWOOD NEW HAVEN IN 49 230,487 2,938 1,193 2,491 (19,076) (849) 217,184
1516 THE WILLOWS DELAWARE II OH 42 193,123 2,523 1,828 1,511 (9,406) (3,918) 185,661
1519 GREENGLEN ALLEN II OH 54 236,970 1,237 4,051 832 (22,293) (3,385) 217,411
1523 LARKSPUR MORAINE OH 30 134,619 1,053 1,972 265 (8,820) (797) 128,291
1524 MILLSTON ABERDEEN II OH 39 133,368 1,602 1,025 1,179 (6,070) (1,435) 129,667
1526 CAMELLIA CT COLUMBUS OH 64 315,271 2,555 1,769 738 (12,546) (1,506) 306,281
1527 WOODBINE CUYAHOGA FALLS OH 55 306,088 2,064 1,739 1,832 (6,148) (906) 304,668
1528 APPLEGATE LORDSTOWN OH 40 186,082 1,270 1,680 1,944 (11,778) (1,836) 177,361
1529 PARKVILLE ENGLEWOOD OH 48 236,253 1,714 1,915 570 (11,816) (1,689) 226,947
1530 CEDARWOOD SABINA OH 32 141,976 1,803 1,662 1,057 (8,248) (2,776) 135,474
1531 ANDOVER CT OH 52 250,979 1,778 2,790 942 (1,851) (692) 253,947
1533 HAMPSHIRE BLUFFTON IN 46 203,464 571 1,395 1,718 (10,252) (1,675) 195,221
1534 CONCORD SQ LAWRENCEBURG IN 49 225,079 1,520 1,704 1,515 (2,817) (1,686) 225,315
1535 GREENGLEN TOLEDO II OH 59 266,945 3,619 3,052 3,074 (14,465) (2,067) 260,157
1539 FOXTON SEYMOUR IN 39 181,907 743 1,645 885 (21,928) (2,163) 161,089
1540 DARTMOUTH PL KENT OH 54 305,032 2,007 2,743 2,170 (17,392) (4,488) 290,073
1549 CAMELLIA CT DAYTON II OH 53 256,089 1,464 2,243 904 (12,795) (2,078) 245,827
1550 APPLEGATE COLUMBUS IN 58 289,139 3,012 2,106 2,489 (3,479) (2,129) 291,137
1553 APPLE RIDGE III OH 30 133,364 800 2,057 499 (7,494) (732) 128,493
1554 SPRINGWOOD AUSTINTOWN II OH 43 205,497 1,746 1,613 1,334 (11,997) (3,454) 194,740
1555 DOVER PL EASTLAKE OH 64 367,873 3,720 1,014 2,103 (13,925) (1,259) 359,527
1556 PARKVILLE PARKERSBURG WV 49 219,442 872 2,025 (832) (13,341) (513) 207,653
1557 HARTWICK TIPTON IN 45 222,743 2,614 2,157 1,182 (18,982) (3,281) 206,432
1558 BECKFORD PL THE PLAINS OH 60 300,800 3,454 1,236 2,471 (3,072) 280 305,168
1559 LARKSPUR COLUMBUS OH 60 327,462 3,104 997 1,894 (29,207) (1,666) 302,585
1560 SPRINGWOOD COLUMBUS OH 64 314,465 381 1,018 1,699 (24,524) (2,087) 290,952
1561 PARKVILLE GAS CITY IN 49 229,947 658 2,815 2,023 (23,058) (3,111) 209,274
1562 CAMELLIA CT CARROLLTON KY 56 229,060 2,031 3,361 3,036 (16,143) (3,763) 217,582
1563 FOXTON DAYTON II OH 80 389,628 2,751 11,301 1,694 (28,267) (14,082) 363,024
1566 APPLE RUN HILLSDALE MI 39 189,794 2,210 1,383 528 (5,454) 0 188,461
1567 PINE GROVE ROSEVILLE MI 50 292,446 1,431 655 1,023 (12,146) (1,865) 281,545
</TABLE>
<PAGE>
140
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop# Name Loc Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
==============================================================================================================================
SYNDICATED
==========================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1568 ASHGROVE FRANKLIN OH 64 313,106 1,015 5,349 3,641 (16,690) (4,856) 301,566
1569 MEADOWOOD JACKSON MI 47 249,462 788 1,761 1,516 (2,984) (135) 250,408
1571 GEORGETWN S TUSCARAWAS II OH 48 235,226 385 5,819 3,449 (51,433) (11,673) 181,772
1572 CONCORD SQ KOKOMO IN 49 263,899 1,885 1,281 1,479 (9,792) (419) 258,333
1573 SANDALWOOD ALEXANDRIA IN 44 207,877 636 2,203 1,683 (14,249) (2,572) 195,578
1574 AMHURST TOLEDO OH 58 282,025 2,127 1,653 2,237 (9,511) (584) 277,947
1575 HAMPSHIRE WILLIAMSTOWN KY 32 128,423 1,788 2,465 2,066 (9,885) (6,479) 118,378
1576 MEADOWOOD MANSFIELD OH 50 224,215 482 3,241 (800) (3,522) (245) 223,372
1577 HICKORY MILL HURRICANE WV 48 234,600 590 1,565 2,344 (21,026) (621) 217,452
1578 ASHGROVE FLORENCE KY 47 241,300 549 2,719 2,685 (23,094) (2,772) 221,387
1579 MEADOWOOD FRANKLIN IN 51 284,426 2,625 3,766 7,164 (4,961) (2,272) 290,747
1581 CEDARWOOD GOSHEN IN 43 199,800 2,080 2,680 3,956 (3,201) (2,591) 202,724
1582 CONCORD SQ ONTARIO II OH 31 134,880 257 1,079 368 (2,664) (48) 133,872
1583 MEADOWOOD CRAWFORDSVILLE IN 64 325,160 1,782 1,766 3,231 (29,607) (2,512) 299,821
1585 BECKFORD PL N CANTON OH 60 309,128 1,266 953 (1,887) (10,855) (77) 298,527
1587 PINE GROVE COLUMBUS II OH 18 82,169 249 30 662 (17,500) (2,314) 63,296
1588 PLUMWOOD COLUMBUS III OH 34 171,030 1,820 838 1,351 (7,021) (2,111) 165,906
1589 WOODLANDS COLUMBUS OH 90 458,098 977 2,195 3,447 (43,191) (4,378) 417,148
1590 WOODLANDS FRANKLIN KY 57 227,744 1,457 1,530 2,469 (19,729) (2,147) 211,324
1591 MEADOWOOD FLATWOODS KY 53 227,527 755 904 1,471 (12,451) (1,563) 216,643
1592 GREENGLEN DAYTON OH 77 367,693 2,519 4,144 4,275 (19,582) (2,134) 356,915
1593 ASHGROVE INDIANAPOLIS IN 58 317,963 3,647 5,608 6,392 (26,944) (8,951) 297,714
1595 MEADOWOOD NICHOLASVILLE KY 68 323,223 1,972 3,296 3,152 (12,975) 5 318,672
1596 STONEHENGE RICHMOND IN 59 297,912 1,598 1,093 3,073 (7,063) 479 297,092
1597 WILLOWOOD COLUMBUS IN 52 263,850 2,328 1,215 3,239 (2,335) (1,173) 267,124
1598 CEDARGATE BOWLING GREEN KY 59 293,059 2,224 1,392 4,092 (9,287) (349) 291,131
1599 WILLOW RUN WILLARD KY 61 248,551 2,568 2,287 2,160 (31,963) (5,944) 217,658
1600 HEATHMOORE JEFFERSON KY 63 295,745 1,936 3,657 4,256 (21,267) (9,425) 274,901
1601 STONEHENGE GLASGOW KY 54 218,029 429 1,403 (2,487) (11,322) (695) 205,357
1602 HEATHMOORE INDIANAPOLIS IN 55 298,350 1,714 1,614 5,905 (16,409) (3,618) 287,556
1603 APPLE RUN TRUMBULL OH 48 237,290 1,206 2,106 4,222 (19,441) (4,702) 220,681
1604 FOXTON MONROE MI 51 273,418 1,463 1,558 2,123 (3,204) (2,240) 273,117
1605 ASHGROVE CALHOUN MI 51 257,249 400 1,107 860 (11,699) (4,257) 243,659
1606 STONEHENGE OTTAWA OH 37 154,563 1,147 436 1,691 (1,613) 189 156,414
1613 WOODLANDS ZELIENOPLE PA 50 284,125 1,237 1,753 5,014 (13,153) (449) 278,527
1615 RIDGEWOOD WESTLAND MI 57 339,867 701 3,344 1,774 (22,334) (8,377) 314,975
1616 HEATHMOORE MACOMB MI 73 399,865 0 1,065 5,508 (19,966) (4,768) 381,704
1617 DOVER PL EASTLAKE II OH 67 364,963 2,120 2,108 3,544 (20,933) (477) 351,324
1618 DOVER PL EASTLAKE III OH 30 174,791 1,177 785 1,597 (8,779) (2,652) 166,919
1619 CEDARGATE MICHIGAN CITY IN 53 259,438 698 2,403 3,069 (9,709) (1,267) 254,633
1622 CEDARGATE BLOOMINGTON IN 70 394,983 8,020 5,862 5,552 (20,794) (298) 393,326
1623 CEDARGATE LANCASTER OH 48 201,918 871 2,321 2,220 (14,635) (3,200) 189,496
1624 STONEHENGE JEFFERSON KY 62 306,857 3,296 2,479 3,854 (11,881) (1,753) 302,853
1626 SLATE RUN INDIANAPOLIS IN 92 482,242 1,876 2,261 3,513 (5,312) (1,368) 483,213
1630 SANDALWOOD TOLEDO OH 51 247,047 2,851 3,021 3,529 (9,788) (1,970) 244,689
1635 RIDGEWOOD COLUMBUS OH 61 317,202 1,559 829 3,799 (14,721) 71 308,739
1637 APPLEGATE DELAWARE IN 54 281,221 1,448 2,518 2,343 (16,196) (104) 271,229
1638 MEADOWOOD LOGANSPORT IN 42 194,725 581 665 2,194 (4,509) (3,808) 189,848
1639 SLATE RUN LEBANON IN 62 323,698 1,831 1,767 2,004 (11,420) (639) 317,241
1640 WESTWOOD ROCHESTER IN 42 181,367 290 3,429 1,424 (5,607) (9,171) 171,732
1641 WILLOWOOD WOOSTER OH 52 247,985 2,746 2,557 3,852 (15,904) (396) 240,839
1642 STONEHENGE STARK OH 61 290,843 2,090 3,341 1,499 (31,062) (4,399) 262,312
1644 RIDGEWOOD LEXINGTON KY 63 325,337 4,162 1,145 3,666 (9,736) (2,234) 322,340
1645 RIDGEWOOD BEDFORD IN 48 224,664 1,116 2,598 2,434 (6,924) (38) 223,850
1646 CAMELLIA CT COLUMBUS II OH 41 200,736 1,010 1,450 2,176 (6,936) (281) 198,154
1647 CEDARGATE ENGLEWOOD OH 61 310,741 946 2,034 5,346 (12,873) (3,178) 303,015
1648 SLATE RUN HOPKINSVILLE KY 58 262,557 3,480 1,444 1,935 (24,692) (2,823) 241,901
1649 WILLOWOOD GROVE CITY OH 47 247,577 2,182 2,075 5,272 (15,547) (3,325) 238,236
1650 MEADOWOOD COLUMBUS OH 61 303,596 3,780 1,824 3,786 (18,496) (2,264) 292,226
1651 STONEHENGE INDIANAPOLIS IN 61 328,511 2,265 688 5,150 (23,109) (1,619) 311,887
1652 MEADOWOOD WARRICK IN 65 283,850 409 2,373 2,833 (33,497) (4,597) 251,372
1653 WILLOWOOD E INDIANAPOLIS IN 61 310,521 701 3,028 6,878 (29,534) (7,534) 284,060
1655 CEDARGATE SHELBY KY 58 294,552 878 2,555 4,185 (17,600) (2,705) 281,864
1656 RIDGEWOOD RUSSELVILLE KY 53 231,078 120 3,043 431 (27,165) (1,722) 205,784
1657 WILLOW RUN NEW ALBANY IN 65 327,658 1,680 4,644 1,932 (7,650) (6,142) 322,121
</TABLE>
<PAGE>
141
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop# Name Loc Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
==============================================================================================================================
SYNDICATED
==========================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1658 ASHGROVE JEFFERSON KY 61 307,560 4,709 1,210 2,444 (11,334) (2,870) 301,719
1659 SLATE RUN JEFFERSON KY 66 321,877 3,579 3,057 4,868 (28,139) (15,658) 289,585
1660 MEADOWOOD LEXINGTON KY 51 253,043 2,477 4,769 5,601 (23,631) (7,795) 234,464
1661 FORSYTHIA CT COLUMBUS OH 61 310,007 2,955 659 4,011 (19,533) (2,914) 295,186
1663 WATERBURY GREENWOOD IN 45 245,570 1,437 5,610 2,385 (24,567) (17,043) 213,391
1664 SLATE RUN BARDSTOWN KY 54 230,829 2,031 1,602 3,781 (33,853) (1,624) 202,766
1666 WILLOWOOD FRANKFORT KY 57 284,463 486 2,203 2,644 (27,669) (2,225) 259,901
1667 BECKFORD PL NEW CASTLE IN 42 201,717 1,686 1,634 2,587 (4,966) 185 202,843
1669 WILLOWOOD OWENSBORO KY 56 221,711 406 1,924 1,845 (19,943) (1,796) 204,147
1670 STONEHENGE MONTGOMERY OH 69 347,678 1,681 6,058 8,852 (11,191) (2,980) 350,097
1671 LARKSPUR MORAINE II OH 16 69,141 265 293 (311) (3,522) 90 65,956
1673 SLATE RUN BEDFORD OH 63 386,901 1,243 2,559 4,066 (14,484) (4,886) 375,399
1674 ROSEWOOD JEFFERSON KY 78 419,429 4,951 2,124 1,617 (15,238) (112) 412,771
1676 MILLBURN STOW OH 53 337,709 2,255 1,983 2,593 (8,814) (185) 335,541
1677 WILLOW RUN MADISONVILLE KY 73 306,071 402 2,293 777 (13,810) (1,331) 294,403
1678 CEDARWOOD GOSHEN II IN 47 219,751 826 3,021 1,689 (5,503) (1,405) 218,379
1679 HEATHMOORE EVANSVILLE IN 74 337,739 2,020 785 4,105 (18,485) (310) 325,854
1681 FOREST PARK MEADOWOOD OH 106 580,152 5,385 2,966 8,544 (17,061) (6,854) 573,132
1682 STONEHENGE TECUMSEH MI 49 275,990 1,148 2,724 3,600 (25,268) (223) 257,972
1683 BRANDON CT BLOOMINGTON IN 80 443,249 4,302 4,086 7,498 (25,135) (61) 433,939
1686 ASHGROVE STERLING MI 116 690,951 1,338 2,239 11,246 (30,530) (11,999) 663,245
1687 MONTGOMERY CT INGHAM MI 59 324,567 3,199 666 8,680 (12,331) (982) 323,799
1691 PINE GROVE ROSEVILLE II MI 33 193,322 2,035 1,094 1,082 (7,313) (3,800) 186,420
1692 MEADOWOOD MONROE MI 58 296,193 971 426 2,982 (2,053) 126 298,644
1695 ANNHURST INDIANAPOLIS IN 85 415,288 32 2,444 8,554 (37,087) (10,640) 378,591
1696 ANNHURST ALLEGHENY PA 97 613,415 5,287 3,614 (901) (21,781) (5,023) 594,612
1698 WOODLANDS STREETSBORO OH 61 351,760 3,066 3,110 5,459 (14,501) (1,452) 347,441
1699 ROANOKE OAKLAND MI 88 611,694 4,195 942 7,463 (27,443) (2,049) 594,801
1700 DANIEL CT CLERMONT OH 114 583,457 943 5,248 7,286 (33,424) (10,566) 552,943
1702 STRATFORD S CHARLESTON WV 80 432,329 995 4,610 (5,570) (30,551) (2,473) 399,340
1703 BARRINGTON BEDFORD OH 81 490,102 3,163 453 4,367 (14,911) (3,661) 479,513
1704 MULBERRY HILLIARD OH 61 319,077 1,742 3,656 2,963 (6,347) 0 321,091
1705 WOODLANDS COLUMBUS II OH 71 358,143 2,929 3,038 2,738 (26,891) (2,821) 337,137
1707 LARKSPUR COLUMBUS II OH 62 335,384 1,849 1,708 5,049 (23,845) (4,983) 315,162
1714 NEWBERRY EATON MI 63 329,659 2,022 499 9,471 (10,585) (338) 330,729
1717 HICKORY MILL HURRICANE II WV 44 213,099 1,488 2,157 604 (17,872) 34 199,510
1718 MEADOWOOD COLUMBUS II OH 23 116,590 818 1,038 906 (3,771) (2,468) 113,113
1719 VALLEYFIELD LEXINGTON KY 84 436,538 2,005 3,631 3,421 (35,522) (2,217) 407,856
1720 RIDGEWOOD COLUMBUS II OH 58 312,379 1,711 616 1,990 (22,984) (507) 293,205
1721 OLIVEWOOD INDIANAPOLIS IN 63 325,517 4,392 965 7,192 (11,389) (3,759) 322,918
1723 ROANOKE JEFFERSON KY 66 330,235 1,915 1,512 3,875 (3,522) 1,248 335,262
1724 MEADOWOOD CUYAHOGA FALLS OH 60 342,759 2,140 1,470 3,975 (13,562) (117) 336,665
1725 RIDGEWOOD LEXINGTON II KY 51 273,482 2,863 2,188 1,741 (9,558) (3,510) 267,206
1726 STONEHENGE JASPER IN 40 160,393 398 1,948 1,386 (15,536) (3,389) 145,201
1727 CARLETON CT KANAWHA WV 73 357,425 1,274 3,730 1,587 (25,301) (1,593) 337,121
1728 NEWBERRY GROVE CITY PA 53 269,425 2,426 6,033 3,902 (4,690) (2,770) 274,326
1729 BECKFORD PL N CANTON II OH 60 307,612 1,241 730 (1,784) (8,461) (597) 298,742
1730 NORTHRUP CT ALLEGHENY PA 60 381,496 1,068 2,156 (9,533) (29,597) 181 345,771
1731 FORSYTHIA CT JEFFERSON KY 99 477,592 1,388 3,557 4,250 (9,312) (5,331) 472,145
1732 WINTHROP CT FRANKFURT KY 79 383,789 2,160 4,923 (216) (47,930) (9,263) 333,462
1733 PRINCETON CT EVANSVILLE IN 62 300,732 662 2,352 3,265 (17,247) (2,219) 287,545
1735 ROSEWOOD COLUMBUS OH 91 448,619 4,531 1,562 4,104 (39,888) (4,397) 414,531
1737 SLATE RUN JEFFERSON II KY 64 309,448 473 1,873 4,833 (14,139) (9,220) 293,267
1741 WILLOWOOD TROTWOOD OH 61 276,156 3,208 3,036 3,779 (21,661) (2,751) 261,766
1744 BRUNSWICK TRUMBULL OH 60 304,432 7,288 3,249 6,353 (12,416) (2,559) 306,348
1745 WYCLIFFE CT TN 65 308,702 432 981 2,903 (10,511) (638) 301,868
1747 SLATE RUN MIAMISBURG OH 49 252,208 1,265 2,088 2,121 (7,452) (661) 249,568
1748 MONTGOMERY CT COLUMBUS OH 62 324,193 1,648 2,671 5,187 (12,897) (5,652) 315,149
1749 WATERBURY CLARKSVILLE TN 54 266,013 1,668 1,190 1,633 (10,510) (270) 259,725
1751 WINTHROP CT COLUMBUS OH 63 312,728 1,615 2,442 3,026 (11,278) (3,451) 305,083
1752 PICKERINGTON MEADOWS OH 61 277,737 1,976 1,291 3,555 (21,235) 1,135 264,458
1756 WATERBURY CLERMONT OH 70 366,627 3,248 2,871 8,870 (10,736) (2,263) 368,617
1757 WILLOWOOD GROVE CITY II OH 26 140,383 937 1,128 1,584 (11,579) (2,045) 130,409
1758 CEDARGATE BLOOMINGTON II IN 58 335,212 2,937 3,601 3,476 (16,672) (2,303) 326,251
1759 ACADIA CT IN 99 555,775 3,018 4,356 6,605 (21,524) (115) 548,115
</TABLE>
<PAGE>
142
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop# Name Loc Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
==============================================================================================================================
SYNDICATED
==========================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1760 WILLOWOOD E INDIANAPLS II IN 60 288,284 2,122 787 2,713 (32,974) 430 261,362
1761 SHERBROOK COLUMBUS OH 61 286,820 1,269 566 2,044 (13,580) (2,563) 274,556
1762 LONGWOOD LEXINGTON KY 61 302,122 2,894 1,876 2,400 (21,816) (6,780) 280,695
1763 NORTHRUP CT ALLEGHENY II PA 49 309,913 3,802 2,446 (8,719) (29,711) (2,681) 275,051
1765 LAURELWOOD CT BEDFORD IN 50 225,309 798 2,459 2,064 (9,285) (2,755) 218,589
1768 CARLETON CT ANN ARBOR MI 105 670,033 2,897 750 5,109 (21,999) (1,162) 655,628
1770 VALLEYFIELD PA 77 521,743 1,499 3,499 795 (22,297) 69 505,308
1772 WENTWORTH ROSEVILLE MI 76 433,322 2,314 2,921 5,258 (14,037) (8,710) 421,068
1773 WATERBURY WESTLAND MI 102 608,394 3,183 1,677 5,427 (23,909) (9,506) 585,266
1777 HEATHMOORE INDIANAPLS II IN 80 410,638 1,448 2,149 3,036 (22,845) (2,069) 392,355
1779 AMBERIDGE MI 47 267,788 1,643 969 3,211 (12,364) (5,154) 256,094
1783 WOODLANDS STREETSBORO II OH 60 350,717 899 4,826 4,588 (13,168) (8,883) 338,978
1785 CARLETON CT ERIE PA 60 313,146 771 900 3,138 (24,938) (1,791) 291,226
1787 ROSEWOOD COMMONS IN 97 450,892 1,416 (739) 6,991 (23,440) (1,275) 433,845
1790 WILLOWOOD FRANKFORT II KY 53 255,144 2,025 939 (546) (32,880) (510) 224,172
1794 ANNHURST COLUMBUS OH 57 268,026 726 654 3,894 (17,332) (2,673) 253,295
1799 BEREA TABOR RIDGE OH 97 538,233 4,446 2,137 3,843 (52,694) (2,831) 493,133
1801 WILLOWOOD WOOSTER II OH 53 245,101 1,496 3,821 697 (26,129) (2,683) 222,303
1804 CAMBRIDGE COMMONS IN 88 400,158 2,346 3,074 8,016 (26,224) (5,591) 381,779
1805 OLIVEWOOD INDIANAPOLIS II IN 67 332,874 1,539 1,393 5,104 (20,126) (6,295) 314,488
1807 BRUNSWICK MONONGALIA WV 102 512,014 1,024 4,243 (12,712) (64,509) (3,180) 436,880
1812 HAMPTON WOODS COLUMBUS OH 49 227,952 603 1,196 3,142 (20,616) (1,190) 211,088
1813 SUFFOLK GROVE GROVE CITY OH 71 370,483 2,721 3,006 4,674 (20,493) (3,654) 356,737
1815 MONTGOMERY CT COLUMBUS II OH 57 299,381 6,202 1,469 3,176 (11,859) (3,483) 294,886
1818 REDWOOD HOLLOW SMYRNA TN 72 357,212 1,295 1,113 2,962 (7,946) (2,546) 352,089
1829 CLEARVIEW GREENWOOD IN 73 372,325 6,538 1,302 4,689 (18,184) (428) 366,243
1832 ANSLEY OAKS IL 69 331,801 2,305 1,187 2,965 (8,040) (235) 329,984
1844 STERLING HGTS OLIVEWOOD MI 154 892,589 7,093 3,095 12,280 (20,739) (5,943) 888,375
1847 RED DEER FAIRBORN OH 70 345,874 2,181 1,535 6,131 (9,462) 0 346,259
1851 ASHGROVE STERLING II MI 91 541,102 2,168 1,330 4,446 (19,559) (1,279) 528,209
1866 HEATHMOORE WAYNE II MI 51 326,360 3,169 945 2,682 (10,799) (2,229) 320,127
1875 DOVER PL EASTLAKE IV OH 73 411,997 2,467 2,921 4,694 (22,040) (4,424) 395,615
1905 CAMBRIDGE COMMONS II IN 76 350,141 1,118 3,266 9,912 (40,597) (10,238) 313,601
1907 DOGWOOD GLEN MARION II IN 78 386,143 2,257 2,548 5,210 (16,993) (2,058) 377,107
1916 CLEARVIEW GREENWOOD II IN 81 426,587 3,189 2,949 5,523 (20,785) (2,570) 414,892
1928 WOODLANDS COLUMBUS III OH 95 466,383 1,947 5,414 6,076 (43,845) (9,071) 426,905
1944 TIMBERCREEK TOLEDO OH 78 361,915 541 3,799 4,811 (12,501) (683) 357,881
2100 SANFORD CT INVESTORS FL 107 525,760 2,056 6,050 (6,618) (18,263) (12,012) 496,973
2106 OLD ARCHER CT FL 72 357,991 3,899 2,213 3,711 (28,094) (1,508) 338,212
2107 PALATKA OAKS FL 34 142,715 1,317 2,155 (521) (22,209) (4,683) 118,773
2108 AZALEA HILL FL 53 232,732 416 440 (149) (77,963) (725) 154,751
2112 TURKSCAP FL 49 237,183 1,362 1,515 7,124 (38,335) (8,584) 200,266
2114 CEDARWOOD FL 55 231,205 3,742 2,708 6,313 (24,014) (3,867) 216,087
2115 UNIVERSITY SQ FL 81 358,257 3,919 2,330 6,231 (17,998) (5,512) 347,228
2129 NORTHWOOD FL 42 180,150 616 1,258 2,433 (12,315) (3,466) 168,676
2131 ROLLINGWOOD FL 65 323,994 525 1,638 10,050 (50,830) (19,410) 265,967
2139 MEADOWOOD II FL 54 280,040 2,096 424 602 (5,818) (297) 277,047
2143 CEDARWOOD II FL 39 172,498 858 2,095 2,886 (24,868) (5,031) 148,438
2153 NOVAWOOD FL 58 285,508 1,284 6,600 7,639 (35,491) (5,191) 260,350
2154 KNOLLWOOD II FL 56 208,371 184 908 2,044 (197,375) (23,437) (9,305)
2164 PALATKA OAKS II FL 23 110,854 1,301 1,000 (420) (6,886) (4,203) 101,646
2165 NOVAWOOD II FL 61 298,992 2,364 8,018 11,172 (36,374) (12,830) 271,343
2166 WINGWOOD FL 86 434,689 3,270 3,155 8,561 (15,155) (10,010) 424,510
2172 HEATHERWOOD II FL 42 209,826 1,621 2,998 2,203 (26,294) (11,179) 179,174
2173 COUNTRYSIDE FL 60 293,916 1,408 1,107 5,432 (19,114) (8,439) 274,310
2174 COUNTRYSIDE II FL 97 487,997 3,391 2,116 6,752 (37,725) (5,832) 456,699
2189 HIDDEN PINES FL 56 314,014 1,108 820 3,156 (23,210) (9,840) 286,049
2190 MOSSWOOD FL 58 292,168 2,003 2,527 5,664 (24,844) (9,281) 268,236
2191 MOSSWOOD II FL 89 455,769 2,604 4,774 5,814 (34,800) (10,878) 423,284
2193 SUNRISE FL 60 278,009 1,895 1,991 6,039 (39,568) (12,805) 235,560
2194 SUNRISE II FL 37 175,904 331 1,324 1,313 (31,680) (7,707) 139,484
2196 BRANCHWOOD FL 117 584,270 2,165 3,616 6,897 (61,521) (3,252) 532,175
2199 CONCORD SQ II FL 73 350,760 5,177 3,764 5,299 (29,181) (7,584) 328,234
2201 LONGWOOD FL 60 296,240 1,671 1,958 5,341 (19,403) (3,840) 281,966
2202 LONGWOOD II FL 36 178,980 393 2,367 3,610 (14,578) (3,880) 166,892
2205 BRANDYWYNE E FL 38 172,294 1,724 4,251 2,056 (1,705) (2,509) 176,111
</TABLE>
<PAGE>
143
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop# Name Loc Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
==============================================================================================================================
SYNDICATED
==========================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2212 AMBERWOOD FL 50 225,476 1,650 2,385 7,631 (18,312) (2,542) 216,288
2215 COUNTRYSIDE III FL 34 163,439 888 611 945 (7,380) (603) 157,899
2218 INDIAN RIDGE FL 57 293,110 4,900 3,677 5,318 (29,972) (3,979) 273,054
2222 SHADOWOOD FL 69 344,058 4,703 4,685 6,567 (13,436) (9,905) 336,671
2224 ROSEWOOD FL 66 289,567 3,229 3,811 2,668 (13,551) (4,147) 281,578
2226 SPRINGTREE FL 72 410,006 3,990 3,792 10,669 (13,192) (7,223) 408,041
2230 RIVERWOOD FL 68 320,152 895 2,065 187 (16,573) (5,708) 301,018
2231 APPLEWOOD FL 69 326,048 1,103 3,736 5,459 (13,070) (13,116) 310,161
2234 WINDRUSH FL 67 325,130 707 3,013 3,750 (30,375) (6,690) 295,534
2235 HERONWOOD FL 59 304,573 1,040 2,745 6,133 (22,376) (4,523) 287,592
2237 SANDPIPER II FL 66 325,722 788 6,111 4,642 (44,631) (8,008) 284,625
2240 BAYSIDE FL 59 249,062 2,204 1,590 3,331 (20,266) (1,545) 234,377
2242 DEERWOOD FL 50 249,330 1,904 1,452 (3,627) (15,784) (2,518) 230,756
2244 CANDLELIGHT FL 51 217,042 2,135 3,306 3,868 (24,864) (926) 200,560
2246 GARDEN TERRACE II FL 65 282,661 4,669 4,033 6,078 (39,012) (12,017) 246,412
2247 INDIAN RIDGE II FL 39 203,029 1,615 2,748 1,273 (11,498) (1,013) 196,154
2249 SHADOWOOD II FL 70 344,148 872 3,234 7,013 (24,920) (6,735) 323,613
2251 STRAWBERRY PL FL 55 237,744 2,305 3,656 4,091 (6,370) (2,453) 238,973
2253 CRYSTAL CT FL 72 307,363 1,571 2,267 5,518 (31,860) (2,858) 282,001
2254 TURKSCAP III FL 50 244,648 2,409 1,190 2,667 (16,682) (3,333) 230,900
2265 PINE LAKE FL 41 190,054 1,716 1,031 2,728 (25,703) (3,197) 166,628
2284 CAPITAL RIDGE FL 70 367,606 3,954 1,724 5,432 (16,336) 1,612 363,991
2285 WOODLAND FL 92 482,204 1,570 9,210 12,635 (34,768) (31,014) 439,837
2288 SHADOW RIDGE FL 62 313,783 1,480 1,752 5,264 (20,947) (1,135) 300,198
2295 HICKORY PL FL 70 358,044 1,035 2,792 4,338 (18,591) (412) 347,206
2300 PINE TERRACE FL 80 367,289 802 3,638 3,792 (11,488) (1,778) 362,255
2301 PALM PL FL 80 452,283 2,661 5,660 6,660 (6,240) (1,136) 459,888
2309 THE LANDINGS FL 60 273,580 4,398 2,995 4,402 (9,944) (4,398) 271,033
2311 ASTORWOOD FL 75 471,687 2,070 3,168 9,067 (11,999) (5,660) 468,333
2312 PINELLAS PINES FL 68 350,745 1,247 2,486 5,545 (34,261) (8,516) 317,244
2313 SPRING GATE FL 66 310,683 1,869 2,984 2,698 (3,522) (910) 313,802
2314 GARDEN TERRACE III FL 91 416,497 9,921 3,492 7,536 (89,068) (14,170) 334,208
2340 SHADOW BAY FL 53 276,789 330 3,718 4,930 (12,531) (2,807) 270,429
2341 TERRACE TRACE FL 88 393,961 1,854 3,445 3,501 (9,102) (2,240) 391,419
2343 KINGS CROSSING FL 69 351,498 1,698 2,178 3,197 (17,856) (1,924) 338,791
2344 ELMWOOD FL 52 314,790 719 4,459 14,318 (18,525) (15,500) 300,262
2355 NOVA GLEN FL 62 315,281 1,459 2,540 6,399 (35,625) (11,682) 278,372
2363 MORNINGSIDE II FL 184 772,755 4,946 4,173 10,692 (224,531) (19,300) 548,736
2365 APPLEWOOD II FL 92 437,833 727 4,191 6,689 (118,272) (16,649) 314,519
2376 MOULTRIE FL 79 434,915 2,101 2,094 3,854 (6,948) (1,806) 434,210
2379 SUGARTREE FL 60 303,295 1,370 2,245 3,283 (25,853) (1,196) 283,144
2387 SOUTHGATE FL 62 425,867 2,168 2,048 8,625 (27,256) (7,977) 403,475
2399 SUTTON PL FL 55 253,232 1,704 5,618 162 (18,143) (4,670) 237,903
2405 DRIFTWOOD FL 63 326,699 3,378 2,222 5,852 (4,164) (6,483) 327,505
2407 PINE MEADOWS FL 60 323,859 1,238 3,164 6,577 (18,189) (4,305) 312,344
2411 ELMWOOD II FL 50 300,942 2,389 4,038 10,797 (17,229) (10,280) 290,657
2412 PARKWAY N FL 56 299,422 983 1,978 4,937 (16,837) (2,135) 288,348
2416 PINE TERRACE II FL 68 312,761 614 2,009 3,836 (13,519) (1,445) 304,257
2422 HILLVIEW TERRACE FL 60 289,864 2,527 2,200 5,460 (1,501) (656) 297,894
2427 HILLCREST VILLA FL 65 288,473 2,018 2,291 3,287 (5,056) (1,289) 289,723
2429 CYPRESS FL 70 339,020 2,481 2,053 5,681 (25,176) (2,103) 321,956
2431 OLYMPIAN VIL FL 87 568,505 1,219 5,160 20,356 (66,743) (33,483) 495,014
2432 SILVER FOREST FL 51 243,515 706 3,155 3,038 (26,494) (1,325) 222,595
2438 BERRY PINES FL 64 287,451 1,356 3,554 4,045 (14,051) (1,936) 280,420
2439 OAK RIDGE FL 63 306,601 2,593 2,118 4,961 (3,188) (2,036) 311,050
2441 OAK SHADE FL 82 411,095 1,596 145 3,720 (10,178) (281) 406,098
2442 HOLLY SANDS FL 72 373,083 4,600 4,217 6,272 (4,931) (3,756) 379,485
2443 BROADVIEW OAKS FL 90 408,845 3,567 4,609 5,609 (17,778) (6,852) 398,001
2444 THYMEWOOD FL 90 644,796 2,633 2,370 15,913 (39,661) (25,197) 600,852
2446 SHADOW BAY II FL 59 308,413 2,418 6,620 4,904 (15,351) (7,881) 299,123
2447 CANDLELIGHT II FL 60 250,059 3,403 2,854 (912) (34,128) (963) 220,312
2449 SUGARTREE II FL 60 302,117 2,001 2,050 3,850 (20,911) (2,269) 286,838
2451 WINTER WOODS FL 57 283,798 893 2,722 6,443 (9,514) (3,264) 281,078
2452 WOODLAND II FL 77 406,991 1,113 11,701 13,453 (31,529) (36,474) 365,255
2454 BEL AIRE FL 70 427,107 1,512 7,766 10,906 (20,980) (9,212) 417,099
2459 CLEARLAKE PINES II FL 52 267,596 1,071 828 5,667 (20,792) (6,075) 248,295
</TABLE>
<PAGE>
144
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop# Name Loc Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
==============================================================================================================================
SYNDICATED
==========================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2460 MANCHESTER FL 78 379,179 2,248 4,034 1,050 (13,791) (3,709) 369,010
2461 RANCHSIDE FL 76 317,102 2,624 1,867 (1,136) (16,755) (2,818) 300,885
2464 ESSEX SQ FL 88 400,540 1,698 5,927 7,532 (2,278) (5,881) 407,538
2465 WESTCREEK FL 86 438,958 1,393 3,038 7,521 (31,094) (9,605) 410,211
2466 SKY PINES FL 89 443,618 1,366 3,779 9,073 (31,633) (24,239) 401,964
2470 RIVERS END FL 66 339,801 1,970 2,305 1,895 (5,597) (2,764) 337,609
2471 BRIDGE POINT FL 71 346,591 2,753 2,626 5,239 (16,711) (3,461) 337,037
2478 NOVA GLEN II FL 81 400,491 1,160 1,033 8,838 (38,727) (19,389) 353,406
2483 OAKWOOD MANOR FL 64 353,372 764 1,618 7,835 (19,663) (7,637) 336,289
2484 HOLLY RIDGE FL 98 606,225 2,182 4,232 11,798 (33,550) (9,371) 581,515
2488 HIGH POINTS FL 95 379,156 1,789 4,966 4,478 (45,722) (2,554) 342,113
2499 WINTER WOODS II FL 44 222,860 346 3,744 742 (19,253) (6,040) 202,399
2502 PALM SIDE FL 87 392,833 837 1,557 6,566 (22,616) (7,626) 371,551
2574 PALM BAY/WINDWOOD II FL 64 293,836 2,928 4,497 7,533 (71,641) (14,682) 222,472
3101 MEADOWOOD NORCROSS GA 63 379,102 2,404 3,272 7,414 (1,557) (390) 390,246
3102 CEDARGATE LAWRENCEVILLE GA 55 330,788 4,270 2,494 5,562 (2,819) (1,469) 338,826
3104 WILLOW RUN DEKALB GA 74 445,915 671 1,495 10,979 (26,677) (22,838) 409,544
3108 FOREST VIL BIBB GA 83 448,342 3,470 2,615 1,811 (20,280) (1,141) 434,817
3109 RIDGEWOOD DEKALB GA 63 377,478 1,361 2,336 8,506 (16,759) (11,500) 361,422
3111 IRIS GLEN ROCKDALE GA 80 472,434 2,494 7,194 6,182 (24,062) (5,447) 458,796
3112 MEADOWLAND CLARKE GA 60 320,170 1,910 1,764 3,988 (26,522) (2,642) 298,668
3114 WILLOWOOD MILLEDGEVILLE GA 63 313,574 4,367 1,285 13 (17,141) (1,197) 300,902
3115 MEADOWOOD NORCROSS II GA 51 313,326 3,025 3,529 1,583 (2,864) (3,903) 314,695
3116 VALLEYFIELD DEKALB GA 66 392,430 947 627 10,614 (11,745) (5,258) 387,615
3117 NORWOOD GWINNETT GA 76 457,882 1,568 921 2,767 (2,138) (709) 460,291
3118 SHADOW TRACE DEKALB GA 81 488,216 2,650 1,552 9,266 (13,149) (9,146) 479,388
3120 OAKLEY WOODS UNION CITY GA 60 344,782 1,577 3,753 10,668 (20,850) (21,750) 318,179
3121 ELMWOODS MARIETTA GA 48 293,119 1,998 409 141 (2,453) (372) 292,842
3122 WOOD TRAIL NEWMAN GA 61 341,224 2,416 5,720 5,178 (608) (1,206) 352,725
3123 REDAN VIL DEKALB GA 78 461,698 3,525 332 11,762 (11,676) (18,487) 447,154
3124 BARRINGTON DEKALB GA 47 282,046 546 2,404 8,582 (16,274) (11,459) 265,845
3125 STRATFORD LANE COLUMBUS GA 68 326,769 2,485 3,621 6,015 (9,250) (1,379) 328,260
3127 WOODCLIFF LILBURN GA 73 428,139 2,664 1,996 3,830 (22,516) (2,007) 412,106
3128 WOODCREST GA 66 325,641 1,231 1,295 3,395 (2,903) (658) 328,001
3130 RAMBLEWOOD RICHMOND GA 84 400,448 4,236 2,635 6,818 (31,402) (5,859) 376,875
3131 COUNTRYSIDE MANOR GA 83 467,794 2,686 10,993 6,386 (11,586) (10,828) 465,446
3132 WINDSOR VIL TN 54 259,457 489 1,292 978 (6,403) 22 255,835
3135 WATERBURY CLARKE GA 53 288,320 4,345 1,237 4,267 (21,183) (2,552) 274,433
3136 BURNSBROOKE ATHENS TN 61 288,106 2,096 1,041 1,621 (46,333) 804 247,335
3137 GENTIAN OAKS COLUMBUS GA 62 299,000 802 2,537 3,258 (9,899) (310) 295,389
3138 WILLOW CREEK GRIFFIN GA 53 277,216 1,556 1,467 3,661 (783) (4,023) 279,095
3139 TIMBERWOODS PERRY GA 60 282,735 1,934 4,717 2,336 (17,361) (5,785) 268,577
3140 CARRIAGE HILLS DUBLIN GA 60 280,196 1,736 2,320 (1,158) (17,202) 521 266,413
3141 HILLANDALE MANOR DEKALB GA 48 297,028 2,447 215 8,358 (7,538) (7,574) 292,936
3142 WHISPERWOOD CORDELE GA 50 220,835 3,043 2,757 1,409 (5,467) 215 222,792
3143 OAKWOOD VIL RICHMOND GA 70 341,890 2,094 3,636 2,485 (7,919) (4,376) 337,810
3145 PINE KNOLL CLAYTON GA 46 256,951 1,673 1,048 2,716 (8,238) (1,678) 252,472
3149 HARBINWOOD GWINNETT GA 72 451,102 2,086 4,871 5,223 98 178 463,558
3150 PARKWOOD VIL GA 69 394,479 3,629 7,826 6,412 (25,198) (9,922) 377,226
3151 AMBERWOOD BARTOW GA 56 296,010 2,309 3,380 3,373 (9,274) (2,698) 293,100
3152 WOOD VALLEY CALHOUN AL 69 312,909 2,645 3,018 3,536 (11,083) 45 311,070
3153 NORTHRIDGE CARROLLTON GA 77 382,893 4,735 4,317 6,032 (14,527) (2,900) 380,549
3154 HILLSIDE MANOR AMERICUS GA 60 257,871 1,950 2,179 3,778 (14,991) (5,338) 245,449
3156 VALLEYFIELD DEKALB II GA 66 396,361 4,534 (73) 8,694 (14,877) (10,002) 384,636
3158 WOODCLIFF LILBURN II GA 72 404,994 1,907 1,570 1,351 (19,942) (1,558) 388,322
3159 FOREST RIDGE RICHMOND GA 75 330,477 529 3,039 4,992 (36,810) (8,847) 293,380
3160 SHANNON WDS UNION CITY II GA 74 389,743 3,699 4,333 10,299 (25,884) (21,823) 360,367
3161 HOLLY PARK COLUMBUS GA 66 298,204 1,905 2,929 4,742 (6,122) (1,187) 300,470
3162 REDAN VIL DEKALB II GA 76 434,721 3,717 1,925 13,069 (20,836) (16,846) 415,750
3163 RIDGEWOOD DEKALB II GA 52 302,437 1,159 3,279 8,495 (11,090) (11,742) 292,538
3168 KNOX LANDING KNOXVILLE TN 85 409,517 2,958 3,171 4,405 (25,957) (3,966) 390,129
3176 MORGAN TRACE UNION CITY GA 80 424,765 3,137 2,264 7,818 (27,207) (6,748) 404,028
3184 AMBERWOOD II GA 61 319,105 2,998 5,103 2,546 (17,626) (2,368) 309,757
3197 PARKWOOD VIL II GA 66 361,779 4,351 4,265 2,190 (22,608) (5,053) 344,924
3200 SKYRIDGE GA 120 683,597 2,891 5,851 3,924 (11,361) (3,759) 681,144
3266 MARSH LANDING GA 57 278,804 2,128 2,986 822 (12,240) (420) 272,081
</TABLE>
<PAGE>
145
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS)
-----------------------------------------------------------------------------------------------
Laundry
Vending
Rent Interest Security & Other Net
Prop# Name Loc Units Revenue Revenue Deposits Revenue Vacancies Bad Debts Revenues
==============================================================================================================================
SYNDICATED
==========================
<S> <C> <C><C> <C> <C> <C> <C> <C> <C> <C>
3269 WOODSIDE GA 52 236,791 3,816 2,418 3,608 (8,717) 0 237,916
3270 GREENTREE GA 43 190,808 667 495 2,865 (8,719) (1,335) 184,782
3271 STILLWATER GA 53 275,497 1,413 1,762 3,183 (7,273) (2,712) 271,871
3353 RAMBLEWOOD II GA 28 129,052 2,078 1,793 754 (4,016) (15) 129,647
3358 LINK TERRACE GA 54 285,540 2,992 1,776 5,832 (18,749) (2,435) 274,956
3366 GREENTREE II GA 32 144,053 508 1,475 2,062 (10,071) (3,120) 134,907
3378 SUNNYSIDE GA 72 321,809 1,901 7,005 4,357 (5,995) (133) 328,943
3409 QUAIL CALL GA 55 246,573 548 2,639 4,498 (5,205) (1,904) 247,150
3428 WESTWAY GA 70 350,321 4,222 3,738 2,789 (12,387) (2,212) 346,471
3430 CAMDEN WAY GA 63 274,010 580 888 2,731 (80,322) (1,476) 196,410
3450 CAMDEN WAY II GA 60 262,454 5,940 1,031 3,475 (67,534) (1,016) 204,349
4101 FORSYTHIA CT HARFORD MD 76 441,642 2,086 65 7,491 (24,490) (1,590) 425,204
4149 GLEN HOLLOW GLEN BURNIE MD 47 310,213 468 2,700 2,676 (18,011) (1,006) 297,040
4708 ANNHURST HARFORD MD 68 414,654 2,428 4,832 6,938 (19,841) (4,882) 404,128
-------------------------------------------------------------------------------------------
409 25,859 $130,169,282 $831,514 $1,097,892 $1,600,490 $(8,163,745) $(1,800,439) $123,734,994
-------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
146
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
-------------------------------------------------------------
Contractual
First Subordinate Interest
Operating Net Operating Mortgage Debt Payable
Prop # Name Expenses Income Interest Interest to Cardinal
=====================================================================================================
WHOLLY OWNED PROPERTIES
==============================
<S> <C> <C> <C> <C> <C> <C>
1375 RIVERVIEW ESTATES $171,114 $206,175 $123,479 $0 $(20)
1377 APPLE RIDGE I 94,839 140,849 113,226 389 2,971
1389 THE WILLOWS I 90,246 110,620 51,287 0 0
1439 MONTROSE SQUARE 245,572 223,929 143,259 0 0
1542 SPRINGWOOD 87,967 127,137 69,653 0 1,326
1620 MEADOWOOD 102,647 59,144 38,730 5,860 0
1672 * RIDGEWOOD ELHART 67,397 69,722 44,957 0 (4,826)
1690 HEATHMOORE I 153,216 230,194 116,446 350 0
1750 CEDARWOOD II 84,133 142,100 109,204 0 2,191
1780 BRUNSWICK 190,835 210,315 110,429 27,546 0
1786 SPICEWOOD 124,919 135,499 94,913 0 52
1806 WINTHROP CT II 79,768 102,223 79,397 427 1,755
1809 MEADOWOOD II 190,728 116,672 66,366 0 3,574
1810 ACADIA CT II 241,539 294,170 167,873 0 0
1814 ASHFORD HILL 157,056 196,160 132,542 0 0
1816 CEDARWOOD III 85,702 140,501 78,816 0 5,779
1822 MARABOU MILLS I 174,125 233,850 141,478 0 1,613
1823 ELMTREE PARK I 166,599 170,121 108,106 0 0
1824 AMESBURY I 126,354 156,104 91,357 707 0
1825 BRADFORD PL 147,684 165,833 110,196 4,078 4,255
1830 SHERBROOK 192,284 180,672 108,008 0 0
1833 HAYFIELD PARK 155,573 250,319 123,901 0 0
1838 CEDARGATE II 93,183 168,880 84,614 0 0
1839 DARTMOUTH PL II 108,409 163,762 78,303 0 0
1841 WILLOWOOD II 134,686 126,250 79,889 0 (17)
1843 DOGWOOD GLEN I 158,633 262,293 142,036 1,008 689
1846 CHERRY GLEN I 148,992 176,952 123,068 0 0
1853 FOXHAVEN 195,046 266,482 168,420 0 (17)
1859 ANNHURST II 106,626 138,395 96,550 634 0
1863 HUNTER GLEN 148,559 158,783 92,414 0 0
1869 HARVEST GROVE I 130,370 211,256 123,464 0 0
1871 CLEARWATER 95,955 139,513 79,765 0 0
1877 SHERBROOK 216,798 266,072 122,220 0 549
1880 ARAGON WOODS 142,091 170,435 98,918 0 0
1885 NEWBERRY II 95,332 156,215 91,254 0 0
1887 RIVER GLEN I 104,038 172,089 97,098 0 3,152
1889 APPLEGATE II 162,232 222,474 114,472 711 646
1895 ROSEWOOD COMMONS II 151,638 201,843 115,965 0 12,062
1898 RIDGEWOOD II 187,137 242,324 121,624 0 0
1908 CHERRY GLENN II 148,141 180,374 96,023 0 0
1909 LINDENDALE 127,669 223,447 135,873 0 6,320
1911 ELMTREE PARK II 116,364 123,680 105,712 0 0
1914 WOODLANDS II 146,650 187,350 100,550 0 0
1917 WILLOWOOD II 102,079 176,429 78,739 0 0
1935 RED DEER II 108,284 218,510 110,442 0 (0)
1936 SUFFOLK GROVE II 96,939 173,380 97,207 0 2,489
1937 THE WILLOWS III 85,006 119,941 77,796 324 0
1946 AMBERWOOD 156,558 107,926 73,635 17,624 1,805
1966 RIVER GLEN II 90,507 154,452 118,427 642 2,928
1982 MARABOU MILLS III 117,816 174,570 137,694 0 3,100
1983 CAMBRIDGE COMMONS III 145,868 121,259 116,933 14,680 0
1986 GARDEN CT 217,533 335,262 157,038 0 0
1005 ANNHURST III 112,680 126,836 84,714 0 2,959
1039 LAUREL BAY 193,530 170,797 80,487 0 0
2137 WINDWOOD I 152,918 91,784 46,611 11,311 900
2208 GARDEN TERRACE I 123,275 113,966 52,053 0 19,304
2385 CANTERBURY CROSSINGS 215,223 255,656 118,943 25,133 0
2455 THYMEWOOD II 231,654 241,466 145,114 15,775 0
2462 FOREST GLEN 149,312 190,362 87,677 0 3,855
2469 BEL AIRE II 174,917 133,113 99,793 11,401 0
2479 HERON POINTE 245,002 246,277 67,871 603 1,187
2482 OAKWOOD VILLAGE 164,764 120,677 54,599 0 4,446
2487 RIVERS END II 141,087 207,592 104,413 0 0
2501 WHISPERING PINES II 93,289 89,060 47,537 11,580 0
2512 SKY PINES II 119,294 117,632 91,740 0 20,882
2513 CRYSTAL CT II 140,554 160,663 102,052 25,686 0
2515 HIDDEN ACRES 204,853 232,599 124,059 26,353 1,165
</TABLE>
<PAGE>
147
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
-------------------------------------------------------------
Contractual
First Subordinate Interest
Operating Net Operating Mortgage Debt Payable
Prop # Name Expenses Income Interest Interest to Cardinal
=====================================================================================================
WHOLLY OWNED PROPERTIES
==============================
<S> <C> <C> <C> <C> <C> <C>
2519 CENTRE LAKE III 717,737 633,057 439,593 0 3,056
2520 PINE VIEW 236,900 183,861 111,756 26,937 0
2521 BLUEBERRY HILL I 170,120 130,433 68,440 0 (17)
2526 HOLLY SANDS II 111,677 155,577 74,315 15,627 212
2527 SUNSET WAY I 299,029 297,638 173,465 18,000 44,152
2530 PINE BARRENS 247,809 260,739 129,609 0 3,402
2535 PELICAN POINTE I 168,442 230,483 120,153 0 (17)
2537 CALIFORNIA GARDENS 146,495 155,994 87,590 21,645 0
2543 MIGUEL PL 163,350 204,656 107,544 23,579 0
2545 JUPITER COVE I 157,493 219,624 109,429 25,490 0
2546 PELICAN POINTE II 145,774 185,837 74,495 0 461
2547 MARK LANDING I 187,957 199,772 84,954 19,457 0
2549 JUPITER COVE III 160,584 209,194 119,483 16,628 0
2556 HILLSIDE TRACE 122,150 148,839 76,278 18,726 0
2559 JEFFERSON WAY I 137,110 150,732 81,021 11,794 0
2580 SUNSET WAY II 308,771 289,346 232,259 0 0
2587 OAK GARDENS 301,595 338,717 218,822 32,015 0
3166 CEDAR HILL 154,275 230,372 111,259 544 0
3171 LAUREL GLEN 171,342 279,519 185,913 637 2,919
3173 SPRINGBROOK 178,928 222,512 156,627 0 368
3174 LAKESHORE I 179,165 173,341 80,434 463 0
3175 GLENVIEW 156,617 194,911 129,362 0 0
3186 RAMBLEWOOD II 192,217 246,755 166,112 3,000 0
3188 VALLEYBROOK 107,949 275,395 157,042 0 1,969
3189 WILLOW LAKES 170,792 272,156 163,771 0 0
3190 GLENWOOD VILLAGE 158,263 215,068 117,637 0 0
3208 RAVENWOOD 159,621 230,358 131,272 0 0
3209 INDIAN LAKE I 473,684 890,526 418,350 0 0
3231 WALKER PL 155,851 138,646 76,341 0 6,482
3233 GREENBRIAR GLEN 176,740 240,262 136,145 22,453 6,270
3400 HATCHERWAY 113,488 139,768 88,691 2,760 4,639
3417 GLEN ARM MANOR 126,309 174,130 100,832 15,277 0
3480 MILL RUN 181,211 212,251 119,681 4,433 (275)
3486 STEWART WAY I 146,197 182,430 129,315 4,790 5,866
3494 WILCREST WOODS 164,234 176,514 99,563 3,688 5,465
3496 MARSHLANDING II 107,602 123,084 83,823 0 0
3522 STEWART WAY II 139,328 182,171 116,795 4,326 8,516
3532 KINGS COLONY 185,283 272,447 149,421 0 24,640
4109 CHERRY TREE 207,635 361,155 202,260 0 0
4111 FORSYTHIA CT II 160,526 249,744 222,266 0 0
4133 MERRIFIELD 203,505 308,208 193,644 0 13,436
5910 MARABOU MILLS II 128,633 177,858 89,955 0 7,703
5886 PICKERINGTON MEADOWS 123,559 162,528 79,394 545 39,199
5903 BRUNSWICK II 157,636 159,877 118,984 0 48,368
5906 AMESBURY II 143,037 170,345 118,109 0 49,505
5951 HARVEST GROVE II 121,055 144,233 99,736 0 35,898
------------------------------------------------------------
113 $18,259,463 $22,502,451 $13,119,364 $495,636 $419,291
------------------------------------------------------------
* Partial year
</TABLE>
<PAGE>
148
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
-------------------------------------------------------------
Contractual
First Subordinate Interest
Operating Net Operating Mortgage Debt Payable
Prop # Name Expenses Income Interest Interest to Cardinal
=====================================================================================================
SYNDICATED
==============================
<S> <C> <C> <C> <C> <C> <C>
1109 DOGWOOD TERRACE $237,560 $157,908 $174,330 $0 $59,338
1112 LONDON LAMPLIGHT 120,336 114,187 16,717 0 4,379
1123 SPRINGFIELD WOODGATE 89,004 60,859 25,936 6,390 0
1262 THE BIRCHES LIMA 97,688 120,425 85,780 0 3,395
1297 PLUMWOOD APTS 172,946 306,685 157,398 0 14,034
1310 MELDON PL 229,053 314,175 161,716 0 62,866
1320 WEST OF EASTLAND 214,061 282,890 198,548 0 65,054
1322 PARKVILLE 190,190 243,826 155,826 0 1,799
1327 CHARING CROSS APTS 114,832 153,109 74,437 0 25,483
1329 INDEPENDENCE VIL 226,764 295,054 197,866 0 6,219
1330 POPLAR CT 109,105 145,979 72,108 4,209 2,701
1341 GREENLEAF APTS 96,036 59,859 48,256 7,350 6,720
1344 LAUREL CT APTS 122,693 154,872 121,833 0 19,051
1379 AMHURST APTS 155,627 166,973 84,689 0 8,506
1404 KETWOOD APTS 188,279 240,122 150,665 0 0
1436 SANDALWOOD APTS 82,056 90,875 48,100 0 0
1437 HICKORY MILL 121,791 180,905 91,778 0 0
1455 MONTROSE SQ 116,039 125,790 68,014 0 59,415
1456 APPLE RIDGE 82,233 123,267 87,711 0 17,556
1460 WESTWOOD 40,572 12,275 8,194 0 5,378
1461 APPLE RUN II 106,531 103,306 44,712 10,039 23,188
1462 PLUMWOOD 81,549 100,133 38,750 0 8,527
1464 GREENGLEN 108,799 144,596 76,261 13,376 57,118
1465 CEDARWOOD BELPRE 76,437 102,396 55,839 0 2,233
1466 AMHURST II 151,267 170,995 87,962 0 3,415
1469 CHELSEA CT 107,954 148,838 64,135 0 17,956
1470 MILLSTON APTS 92,395 75,081 38,484 0 37,428
1473 MILLBURN II 136,565 112,354 80,940 11,592 26,113
1483 WOODBINE 72,759 91,945 66,503 0 2,547
1485 HAMPSHIRE II 141,893 111,938 61,090 0 28,144
1489 PLUMWOOD 109,379 139,125 57,456 0 28,373
1491 CAMELLIA CT WASHINGTON CH 86,452 83,089 49,167 0 26,736
1499 CONCORD SQ ONTARIO 92,174 90,224 58,384 0 2,679
1505 CAMELLIA CT DAYTON 110,913 153,081 92,793 0 499
1510 BECKFORD PL WAPAKONETA 80,663 71,574 50,005 0 14,920
1511 APPLEGATE CHILLICOTHE II 84,159 58,191 49,566 0 15,018
1512 SPRINGWOOD NEW HAVEN 113,108 104,076 67,368 0 32,089
1516 THE WILLOWS DELAWARE II 74,154 111,507 63,416 0 40,048
1519 GREENGLEN ALLEN II 86,071 131,340 80,041 0 6,037
1523 LARKSPUR MORAINE 64,448 63,844 39,361 0 14,635
1524 MILLSTON ABERDEEN II 68,601 61,066 28,681 0 34,019
1526 CAMELLIA CT COLUMBUS 101,162 205,119 99,097 0 14,843
1527 WOODBINE CUYAHOGA FALLS 115,480 189,188 97,034 0 2,481
1528 APPLEGATE LORDSTOWN 96,540 80,821 48,059 0 19,623
1529 PARKVILLE ENGLEWOOD 109,424 117,522 55,325 0 7,966
1530 CEDARWOOD SABINA 81,425 54,049 35,779 1,750 4,647
1531 ANDOVER CT 136,095 117,852 68,606 0 15,124
1533 HAMPSHIRE BLUFFTON 97,864 97,357 56,752 0 23,045
1534 CONCORD SQ LAWRENCEBURG 107,049 118,266 74,258 0 14,139
1535 GREENGLEN TOLEDO II 101,130 159,028 81,930 0 39,842
1539 FOXTON SEYMOUR 97,670 63,419 63,228 0 9,720
1540 DARTMOUTH PL KENT 118,663 171,410 87,939 0 0
1549 CAMELLIA CT DAYTON II 104,120 141,708 73,383 0 15,680
1550 APPLEGATE COLUMBUS 103,254 187,883 90,467 0 15,338
1553 APPLE RIDGE III 52,174 76,320 48,578 0 1,279
1554 SPRINGWOOD AUSTINTOWN II 107,506 87,234 53,493 2,409 13,166
1555 DOVER PL EASTLAKE 119,714 239,812 105,589 0 15,470
1556 PARKVILLE PARKERSBURG 91,979 115,674 79,298 0 10,654
1557 HARTWICK TIPTON 98,946 107,487 57,361 0 13,995
1558 BECKFORD PL THE PLAINS 121,115 184,053 95,022 0 20,368
1559 LARKSPUR COLUMBUS 120,328 182,256 98,751 0 10,212
1560 SPRINGWOOD COLUMBUS 134,749 156,203 127,446 0 6,683
1561 PARKVILLE GAS CITY 108,194 101,080 62,429 0 30,490
1562 CAMELLIA CT CARROLLTON 111,382 106,199 59,144 0 30,620
1563 FOXTON DAYTON II 181,169 181,855 128,086 0 37,578
1566 APPLE RUN HILLSDALE 93,417 95,044 49,320 0 19,398
1567 PINE GROVE ROSEVILLE 108,548 172,997 119,357 0 1,061
</TABLE>
<PAGE>
149
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
-------------------------------------------------------------
Contractual
First Subordinate Interest
Operating Net Operating Mortgage Debt Payable
Prop # Name Expenses Income Interest Interest to Cardinal
=====================================================================================================
SYNDICATED
==============================
<S> <C> <C> <C> <C> <C> <C>
1568 ASHGROVE FRANKLIN 129,438 172,128 117,168 0 10,024
1569 MEADOWOOD JACKSON 101,117 149,292 99,075 0 5,708
1571 GEORGETOWN S TUSCARAWAS II 136,332 45,440 54,511 0 31,684
1572 CONCORD SQ KOKOMO 93,577 164,756 73,814 0 10,399
1573 SANDALWOOD ALEXANDRIA 103,917 91,661 49,764 0 27,621
1574 AMHURST TOLEDO 118,887 159,060 75,378 0 22,980
1575 HAMPSHIRE WILLIAMSTOWN 72,591 45,787 33,098 0 19,794
1576 MEADOWOOD MANSFIELD 106,525 116,847 84,820 0 17,100
1577 HICKORY MILL HURRICANE 96,159 121,293 69,342 0 21,022
1578 ASHGROVE FLORENCE 117,203 104,184 92,807 0 3,762
1579 MEADOWOOD FRANKLIN 106,751 183,996 85,790 0 9,692
1581 CEDARWOOD GOSHEN 85,806 116,918 52,675 0 0
1582 CONCORD SQ ONTARIO II 62,267 71,605 62,030 0 4,860
1583 MEADOWOOD CRAWFORDSVILLE 146,927 152,894 101,556 0 13,800
1585 BECKFORD PL N CANTON 110,882 187,645 107,709 0 10,924
1587 PINE GROVE COLUMBUS II 31,182 32,114 32,211 0 6,554
1588 PLUMWOOD COLUMBUS III 64,272 101,633 41,645 0 21,000
1589 WOODLANDS COLUMBUS 167,276 249,873 170,313 0 1,927
1590 WOODLANDS FRANKLIN 106,829 104,495 59,604 13,776 39,732
1591 MEADOWOOD FLATWOODS 95,979 120,664 75,558 0 21,552
1592 GREENGLEN DAYTON 154,102 202,812 107,451 0 28,854
1593 ASHGROVE INDIANAPOLIS 143,415 154,299 82,403 0 24,903
1595 MEADOWOOD NICHOLASVILLE 106,360 212,312 97,019 0 31,243
1596 STONEHENGE RICHMOND 130,294 166,798 79,623 0 34,855
1597 WILLOWOOD COLUMBUS 96,495 170,628 58,188 0 32,032
1598 CEDARGATE BOWLING GREEN 98,373 192,758 83,434 0 28,781
1599 WILLOW RUN WILLARD 123,606 94,052 80,871 0 32,682
1600 HEATHMOORE JEFFERSON 140,945 133,956 85,822 0 38,843
1601 STONEHENGE GLASGOW 100,183 105,175 67,035 0 36,315
1602 HEATHMOORE INDIANAPOLIS 115,241 172,315 89,090 0 24,150
1603 APPLE RUN TRUMBULL 116,971 103,710 62,802 0 32,323
1604 FOXTON MONROE 126,204 146,913 83,180 0 2,142
1605 ASHGROVE CALHOUN 118,586 125,072 99,666 0 15,022
1606 STONEHENGE OTTAWA 59,645 96,768 51,655 0 15,277
1613 WOODLANDS ZELIENOPLE 124,348 154,179 80,644 0 18,476
1615 RIDGEWOOD WESTLAND 150,875 164,100 128,451 0 500
1616 HEATHMOORE MACOMB 139,516 242,187 171,512 0 0
1617 DOVER PL EASTLAKE II 127,962 223,362 115,839 0 45,709
1618 DOVER PL EASTLAKE III 60,368 106,551 58,832 0 18,820
1619 CEDARGATE MICHIGAN CITY 146,314 108,319 72,408 0 23,981
1622 CEDARGATE BLOOMINGTON 147,822 245,504 108,128 0 24,000
1623 CEDARGATE LANCASTER 97,495 92,001 55,792 0 25,573
1624 STONEHENGE JEFFERSON 134,475 168,378 80,978 0 65,000
1626 SLATE RUN INDIANAPOLIS 192,941 290,272 160,053 0 31,279
1630 SANDALWOOD TOLEDO 89,542 155,147 92,515 5,184 16,287
1635 RIDGEWOOD COLUMBUS 107,416 201,324 96,011 0 34,455
1637 APPLEGATE DELAWARE 130,094 141,136 66,552 0 20,040
1638 MEADOWOOD LOGANSPORT 90,605 99,243 59,567 0 15,980
1639 SLATE RUN LEBANON 141,424 175,817 81,215 0 30,600
1640 WESTWOOD ROCHESTER 97,010 74,722 67,968 0 25,713
1641 WILLOWOOD WOOSTER 98,394 142,445 66,027 0 24,924
1642 STONEHENGE STARK 130,421 131,891 57,851 0 31,417
1644 RIDGEWOOD LEXINGTON 106,648 215,692 99,182 0 65,584
1645 RIDGEWOOD BEDFORD 94,374 129,475 62,743 0 27,097
1646 CAMELLIA CT COLUMBUS II 70,389 127,765 60,457 0 20,577
1647 CEDARGATE ENGLEWOOD 137,405 165,610 128,149 0 17,881
1648 SLATE RUN HOPKINSVILLE 137,364 104,536 84,134 0 47,372
1649 WILLOWOOD GROVE CITY 103,303 134,933 81,973 0 19,112
1650 MEADOWOOD COLUMBUS 113,341 178,886 97,649 0 25,663
1651 STONEHENGE INDIANAPOLIS 138,780 173,107 90,670 0 31,144
1652 MEADOWOOD WARRICK 128,041 123,330 96,562 0 46,484
1653 WILLOWOOD E INDIANAPOLIS 123,954 160,106 87,805 3,299 39,303
1655 CEDARGATE SHELBY 114,919 166,945 108,660 0 21,180
1656 RIDGEWOOD RUSSELVILLE 95,658 110,126 73,201 0 34,520
1657 WILLOW RUN NEW ALBANY 140,743 181,378 81,153 0 34,941
</TABLE>
<PAGE>
150
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
-------------------------------------------------------------
Contractual
First Subordinate Interest
Operating Net Operating Mortgage Debt Payable
Prop # Name Expenses Income Interest Interest to Cardinal
=====================================================================================================
SYNDICATED
==============================
<S> <C> <C> <C> <C> <C> <C>
1658 ASHGROVE JEFFERSON 110,245 191,474 97,207 0 37,295
1659 SLATE RUN JEFFERSON 130,187 159,398 83,907 0 45,283
1660 MEADOWOOD LEXINGTON 89,094 145,370 69,190 0 28,075
1661 FORSYTHIA CT COLUMBUS 132,395 162,791 91,376 0 25,388
1663 WATERBURY GREENWOOD 121,799 91,592 64,987 0 23,913
1664 SLATE RUN BARDSTOWN 102,483 100,283 70,935 0 54,263
1666 WILLOWOOD FRANKFORT 114,679 145,223 125,441 0 18,655
1667 BECKFORD PL NEW CASTLE 92,889 109,954 57,192 0 20,700
1669 WILLOWOOD OWENSBORO 105,962 98,185 66,609 0 51,967
1670 STONEHENGE MONTGOMERY 151,351 198,747 104,695 0 43,067
1671 LARKSPUR MORAINE II 39,645 26,311 18,150 0 7,244
1673 SLATE RUN BEDFORD 179,896 195,502 120,550 0 31,226
1674 ROSEWOOD JEFFERSON 151,452 261,319 148,875 0 46,512
1676 MILLBURN STOW 141,731 193,811 98,591 0 30,000
1677 WILLOW RUN MADISONVILLE 127,298 167,104 130,713 0 40,466
1678 CEDARWOOD GOSHEN II 83,824 134,555 83,762 0 17,177
1679 HEATHMOORE EVANSVILLE 142,484 183,369 130,382 0 35,043
1681 FOREST PARK MEADOWOOD 216,167 356,964 168,862 0 0
1682 STONEHENGE TECUMSEH 114,655 143,317 66,690 0 28,500
1683 BRANDON CT BLOOMINGTON 193,665 240,274 132,236 0 45,312
1686 ASHGROVE STERLING 253,579 409,666 247,850 9,220 74,591
1687 MONTGOMERY CT INGHAM 143,568 180,231 106,854 0 29,998
1691 PINE GROVE ROSEVILLE II 72,591 113,830 67,580 0 8,808
1692 MEADOWOOD MONROE 118,840 179,804 119,962 0 26,285
1695 ANNHURST INDIANAPOLIS 207,901 170,689 88,835 0 5,364
1696 ANNHURST ALLEGHENY 269,419 325,193 174,520 0 71,114
1698 WOODLANDS STREETSBORO 123,150 224,291 110,532 0 21,215
1699 ROANOKE OAKLAND 207,636 387,165 186,933 0 35,665
1700 DANIEL CT CLERMONT 236,294 316,649 268,632 0 55,054
1702 STRATFORD SOUTH CHARLESTON 182,520 216,820 150,778 0 36,033
1703 BARRINGTON BEDFORD 207,143 272,370 150,769 0 39,000
1704 MULBERRY HILLIARD 138,086 183,004 104,439 2,875 21,950
1705 WOODLANDS COLUMBUS II 136,914 200,223 110,487 23,987 30,000
1707 LARKSPUR COLUMBUS II 124,918 190,244 112,151 0 90,937
1714 NEWBERRY EATON 126,372 204,356 106,068 0 8,891
1717 HICKORY MILL HURRICANE II 85,735 113,774 62,118 0 32,381
1718 MEADOWOOD COLUMBUS II 46,412 66,701 34,772 0 18,354
1719 VALLEYFIELD LEXINGTON 152,359 255,497 133,780 0 64,307
1720 RIDGEWOOD COLUMBUS II 100,903 192,302 92,810 0 30,609
1721 OLIVEWOOD INDIANAPOLIS 135,388 187,531 87,822 0 39,915
1723 ROANOKE JEFFERSON 142,454 192,808 94,904 0 27,900
1724 MEADOWOOD CUYAHOGA FALLS 127,418 209,247 119,091 0 31,500
1725 RIDGEWOOD LEXINGTON II 90,436 176,770 98,958 0 38,897
1726 STONEHENGE JASPER 78,890 66,310 34,797 0 23,040
1727 CARLETON CT KANAWHA 141,395 195,726 112,572 0 35,710
1728 NEWBERRY GROVE CITY 137,534 136,792 72,120 13,035 41,724
1729 BECKFORD PL N CANTON II 110,412 188,330 113,937 0 34,923
1730 NORTHRUP CT ALLEGHENY 148,674 197,097 111,095 23,756 18,212
1731 FORSYTHIA CT JEFFERSON 195,607 276,538 162,766 6,029 52,749
1732 WINTHROP CT FRANKFURT 168,281 165,181 112,983 0 51,343
1733 PRINCETON CT EVANSVILLE 144,485 143,060 86,751 3,192 48,623
1735 ROSEWOOD COLUMBUS 199,699 214,832 119,924 0 43,789
1737 SLATE RUN JEFFERSON II 128,772 164,496 128,513 0 37,462
1741 WILLOWOOD TROTWOOD 137,160 124,606 72,640 15,055 32,652
1744 BRUNSWICK TRUMBULL 106,198 200,150 106,212 0 0
1745 WYCLIFFE CT 123,870 177,998 119,281 0 50,806
1747 SLATE RUN MIAMISBURG 115,389 134,178 77,918 0 30,529
1748 MONTGOMERY CT COLUMBUS 139,237 175,913 101,226 0 53,094
1749 WATERBURY CLARKSVILLE 109,302 150,423 77,305 0 28,775
1751 WINTHROP CT COLUMBUS 126,217 178,866 99,369 0 28,913
1752 PICKERINGTON MEADOWS 129,276 135,181 73,544 0 63,468
1756 WATERBURY CLERMONT 161,577 207,041 105,951 0 40,605
1757 WILLOWOOD GROVE CITY II 60,102 70,307 39,137 7,064 17,486
1758 CEDARGATE BLOOMINGTON II 122,460 203,791 102,461 0 33,768
1759 ACADIA CT 237,184 310,931 192,679 0 67,805
</TABLE>
<PAGE>
151
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
-------------------------------------------------------------
Contractual
First Subordinate Interest
Operating Net Operating Mortgage Debt Payable
Prop # Name Expenses Income Interest Interest to Cardinal
=====================================================================================================
SYNDICATED
==============================
<S> <C> <C> <C> <C> <C> <C>
1760 WILLOWOOD E INDIANAPOLIS II 116,486 144,875 71,904 0 45,661
1761 SHERBROOK COLUMBUS 120,261 154,295 88,555 0 32,264
1762 LONGWOOD LEXINGTON 118,420 162,275 99,894 0 51,056
1763 NORTHRUP CT ALLEGHENY II 126,215 148,836 79,867 0 35,273
1765 LAURELWOOD CT BEDFORD 94,446 124,143 64,625 0 36,956
1768 CARLETON CT ANN ARBOR 273,458 382,170 197,665 0 109,023
1770 VALLEYFIELD 240,495 264,813 180,604 0 29,542
1772 WENTWORTH ROSEVILLE 171,198 249,870 138,054 0 34,707
1773 WATERBURY WESTLAND 252,816 332,450 195,281 0 50,637
1777 HEATHMOORE INDIANAPOLIS II 151,058 241,298 122,564 0 32,316
1779 AMBERIDGE 118,704 137,390 87,120 0 25,500
1783 WOODLANDS STREETSBORO II 120,764 218,214 141,706 0 85,799
1785 CARLETON CT ERIE 156,868 134,358 96,913 0 22,379
1787 ROSEWOOD COMMONS 189,136 244,709 163,302 0 34,685
1790 WILLOWOOD FRANKFORT II 101,498 122,673 78,816 0 38,690
1794 ANNHURST COLUMBUS 110,031 143,264 95,074 0 72,817
1799 BEREA TABOR RIDGE 222,525 270,608 161,200 0 0
1801 WILLOWOOD WOOSTER II 105,212 117,091 74,013 0 2,627
1804 CAMBRIDGE COMMONS 184,456 197,323 82,202 20,300 35,039
1805 OLIVEWOOD INDIANAPOLIS II 136,578 177,911 97,138 0 150
1807 BRUNSWICK MONONGALIA 183,141 253,739 167,958 0 45,264
1812 HAMPTON WOODS COLUMBUS 109,276 101,813 77,698 0 22,273
1813 SUFFOLK GROVE GROVE CITY 131,595 225,142 113,374 0 43,234
1815 MONTGOMERY CT COLUMBUS II 122,687 172,199 74,545 1,785 36,982
1818 REDWOOD HOLLOW SMYRNA 146,372 205,718 131,001 0 46,673
1829 CLEARVIEW GREENWOOD 142,497 223,746 101,122 4,998 89
1832 ANSLEY OAKS 150,814 179,170 117,186 16,630 30,000
1844 STERLING HGTS OLIVEWOOD 322,216 566,159 256,893 0 0
1847 RED DEER FAIRBORN 116,376 229,882 124,193 0 (4,337)
1851 ASHGROVE STERLING II 187,916 340,293 196,321 24,464 30,766
1866 HEATHMOORE WAYNE II 125,159 194,968 90,269 0 13,807
1875 DOVER PL EASTLAKE IV 141,493 254,121 148,531 0 14,368
1905 CAMBRIDGE COMMONS II 160,049 153,552 125,940 0 1,868
1907 DOGWOOD GLEN MARION II 149,657 227,450 122,414 0 13,293
1916 CLEARVIEW GREENWOOD II 140,677 274,215 120,958 28,949 0
1928 WOODLANDS COLUMBUS III 169,001 257,904 174,593 0 0
1944 TIMBERCREEK TOLEDO 137,943 219,938 142,860 0 0
2100 SANFORD CT INVESTORS 274,401 222,573 178,775 0 0
2106 OLD ARCHER CT 149,925 188,287 71,933 0 14,956
2107 PALATKA OAKS 84,292 34,481 16,406 0 18,172
2108 AZALEA HILL 77,789 76,961 0 0 4,752
2112 TURKSCAP 109,787 90,479 44,501 0 11,228
2114 CEDARWOOD 110,331 105,756 57,531 0 6,448
2115 UNIVERSITY SQ 180,127 167,101 85,108 0 9,308
2129 NORTHWOOD 86,873 81,803 47,948 0 45,060
2131 ROLLINGWOOD 165,735 100,233 111,932 0 2,870
2139 MEADOWOOD II 137,212 139,835 76,264 0 7,387
2143 CEDARWOOD II 80,036 68,401 49,219 0 27,325
2153 NOVAWOOD 154,461 105,888 55,800 13,145 19,364
2154 KNOLLWOOD II 31,635 (40,940) 0 0 62,780
2164 PALATKA OAKS II 58,263 43,383 18,047 0 12,741
2165 NOVAWOOD II 161,458 109,885 71,820 0 29,711
2166 WINGWOOD 196,573 227,937 96,766 22,142 10,761
2172 HEATHERWOOD II 106,092 73,082 45,386 10,823 92
2173 COUNTRYSIDE 152,701 121,609 77,303 0 21,516
2174 COUNTRYSIDE II 235,626 221,072 125,180 30,158 0
2189 HIDDEN PINES 158,174 127,875 78,758 11,909 315
2190 MOSSWOOD 134,128 134,108 72,758 0 33,461
2191 MOSSWOOD II 204,126 219,159 102,618 9,703 12,537
2193 SUNRISE 143,429 92,132 67,401 15,996 30,604
2194 SUNRISE II 92,168 47,316 35,421 1,312 33,414
2196 BRANCHWOOD 242,256 289,919 224,390 0 1,307
2199 CONCORD SQ II 201,429 126,805 72,715 0 78,728
2201 LONGWOOD 144,664 137,302 70,678 16,776 50,103
2202 LONGWOOD II 88,229 78,663 48,801 1,809 34,517
2205 BRANDYWYNE E 90,847 85,264 43,701 10,919 40,210
</TABLE>
<PAGE>
152
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
-------------------------------------------------------------
Contractual
First Subordinate Interest
Operating Net Operating Mortgage Debt Payable
Prop # Name Expenses Income Interest Interest to Cardinal
=====================================================================================================
SYNDICATED
==============================
<S> <C> <C> <C> <C> <C> <C>
2212 AMBERWOOD 139,178 77,110 36,852 0 39,625
2215 COUNTRYSIDE III 78,717 79,182 40,925 9,544 7,306
2218 INDIAN RIDGE 124,180 148,874 87,737 0 37
2222 SHADOWOOD 147,499 189,173 80,838 0 36,000
2224 ROSEWOOD 145,647 135,931 83,678 0 20,093
2226 SPRINGTREE 229,123 178,918 47,718 11,139 1,154
2230 RIVERWOOD 152,145 148,874 69,925 0 55,671
2231 APPLEWOOD 148,252 161,909 101,433 0 56,542
2234 WINDRUSH 156,681 138,853 82,309 3,052 56,623
2235 HERONWOOD 140,794 146,798 89,989 2,760 23,800
2237 SANDPIPER II 141,203 143,422 82,408 0 35,021
2240 BAYSIDE 132,181 102,196 54,289 13,566 52,555
2242 DEERWOOD 123,017 107,739 53,610 12,756 35,405
2244 CANDLELIGHT 105,247 95,313 44,473 10,377 45,944
2246 GARDEN TERRACE II 136,688 109,724 59,498 0 69,275
2247 INDIAN RIDGE II 86,669 109,485 55,186 0 14,541
2249 SHADOWOOD II 143,923 179,691 99,588 3,688 8,994
2251 STRAWBERRY PL 142,218 96,755 40,926 0 44,532
2253 CRYSTAL CT 139,126 142,874 81,219 20,694 44,789
2254 TURKSCAP III 115,923 114,976 37,762 7,959 37,563
2265 PINE LAKE 106,517 60,111 28,526 5,656 44,617
2284 CAPITAL RIDGE 166,042 197,949 119,830 0 14,849
2285 WOODLAND 222,714 217,123 130,990 21,988 7,274
2288 SHADOW RIDGE 136,213 163,985 80,057 0 66,572
2295 HICKORY PL 151,661 195,545 94,243 0 110,168
2300 PINE TERRACE 146,456 215,799 126,320 4,681 87,911
2301 PALM PL 202,263 257,625 107,960 44,650 4,533
2309 THE LANDINGS 140,300 130,733 63,261 0 58,225
2311 ASTORWOOD 228,624 239,709 103,410 41,327 20,049
2312 PINELLAS PINES 171,682 145,562 99,321 0 0
2313 SPRING GATE 150,911 162,892 77,601 0 56,140
2314 GARDEN TERRACE III 189,620 144,588 83,457 0 101,948
2340 SHADOW BAY 139,059 131,370 99,868 0 28,408
2341 TERRACE TRACE 191,414 200,005 88,684 0 70,409
2343 KINGS CROSSING 168,603 170,188 85,093 16,950 70,074
2344 ELMWOOD 156,460 143,801 81,496 19,882 25,706
2355 NOVA GLEN 170,135 108,237 75,420 18,017 63,941
2363 MORNINGSIDE II 432,457 116,279 88,316 21,240 147,231
2365 APPLEWOOD II 185,317 129,203 137,808 21,074 65,044
2376 MOULTRIE 195,067 239,144 116,353 0 54,000
2379 SUGARTREE 124,004 159,140 66,770 13,893 48,905
2387 SOUTHGATE 219,379 184,096 98,388 0 59,941
2399 SUTTON PL 128,647 109,256 56,917 13,889 44,434
2405 DRIFTWOOD 156,751 170,753 32,582 46,035 1,857
2407 PINE MEADOWS 160,645 151,699 84,729 0 61,487
2411 ELMWOOD II 149,794 140,863 110,565 0 64,203
2412 PARKWAY N 150,324 138,024 80,434 2,979 16,258
2416 PINE TERRACE II 125,699 178,557 109,905 4,078 59,599
2422 HILLVIEW TERRACE 132,131 165,763 90,637 12,172 44,490
2427 HILLCREST VILLA 144,199 145,525 67,585 7,225 40,154
2429 CYPRESS 139,881 182,075 89,892 12,253 71,442
2431 OLYMPIAN VIL 269,113 225,901 170,989 0 28,142
2432 SILVER FOREST 101,785 120,810 61,085 15,140 33,853
2438 BERRY PINES 148,708 131,712 79,069 0 45,010
2439 OAK RIDGE 144,409 166,641 79,779 17,146 46,932
2441 OAK SHADE 176,490 229,608 116,981 0 52,271
2442 HOLLY SANDS 143,382 236,103 127,324 0 51,659
2443 BROADVIEW OAKS 182,140 215,861 138,185 0 9,432
2444 THYMEWOOD 292,148 308,705 182,238 22,201 77,825
2446 SHADOW BAY II 148,157 150,967 76,097 19,042 40,025
2447 CANDLELIGHT II 123,491 96,821 47,399 11,391 44,480
2449 SUGARTREE II 124,274 162,564 88,579 0 51,715
2451 WINTER WOODS 145,678 135,400 75,530 0 33,528
2452 WOODLAND II 200,434 164,821 108,387 26,143 53,812
2454 BEL AIRE 229,819 187,281 127,665 14,586 52,241
2459 CLEARLAKE PINES II 130,581 117,714 86,123 0 40,788
</TABLE>
<PAGE>
153
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
-------------------------------------------------------------
Contractual
First Subordinate Interest
Operating Net Operating Mortgage Debt Payable
Prop # Name Expenses Income Interest Interest to Cardinal
=====================================================================================================
SYNDICATED
==============================
<S> <C> <C> <C> <C> <C> <C>
2460 MANCHESTER 180,051 188,959 95,442 19,655 15,900
2461 RANCHSIDE 151,481 149,404 53,136 0 57,113
2464 ESSEX SQ 169,113 238,425 96,066 0 20,532
2465 WESTCREEK 193,758 216,453 122,812 29,524 58,521
2466 SKY PINES 198,697 203,266 115,050 0 67,590
2470 RIVERS END 141,890 195,720 98,933 0 51,854
2471 BRIDGE POINT 175,855 161,182 96,845 0 33,278
2478 NOVA GLEN II 212,365 141,041 102,941 0 54,106
2483 OAKWOOD MANOR 200,917 135,373 118,008 27,276 31,077
2484 HOLLY RIDGE 302,851 278,664 203,745 31,225 26,295
2488 HIGH POINTS 170,162 171,951 84,317 0 76,796
2499 WINTER WOODS II 102,738 99,660 68,929 2,548 36,337
2502 PALM SIDE 213,241 158,310 100,532 3,723 61,269
2574 PALM BAY/WINDWOOD II 147,749 74,723 34,088 8,415 28,188
3101 MEADOWOOD NORCROSS 144,619 245,626 96,339 0 10,655
3102 CEDARGATE LAWRENCEVILLE 125,849 212,978 85,611 0 15,523
3104 WILLOW RUN DEKALB 155,920 253,624 186,649 0 1,578
3108 FOREST VIL BIBB 169,530 265,288 110,753 0 38,728
3109 RIDGEWOOD DEKALB 138,444 222,978 119,840 0 30,790
3111 IRIS GLEN ROCKDALE 198,725 260,071 167,940 0 30,972
3112 MEADOWLAND CLARKE 127,002 171,666 78,392 0 20,661
3114 WILLOWOOD MILLEDGEVILLE 127,725 173,177 106,944 0 29,566
3115 MEADOWOOD NORCROSS II 129,679 185,015 85,406 0 24,359
3116 VALLEYFIELD DEKALB 137,477 250,138 133,787 0 28,800
3117 NORWOOD GWINNETT 180,184 280,107 118,286 0 21,000
3118 SHADOW TRACE DEKALB 166,084 313,304 186,953 0 4,074
3120 OAKLEY WOODS UNION CITY 160,884 157,296 84,264 2,760 13,619
3121 ELMWOODS MARIETTA 118,785 174,057 81,503 0 29,769
3122 WOOD TRAIL NEWMAN 118,642 234,082 99,440 0 28,500
3123 REDAN VIL DEKALB 169,202 277,951 115,535 0 25,790
3124 BARRINGTON DEKALB 113,248 152,597 95,181 0 32,040
3125 STRATFORD LANE COLUMBUS 125,757 202,503 88,666 0 51,270
3127 WOODCLIFF LILBURN 146,706 265,400 116,606 0 42,642
3128 WOODCREST 144,241 183,761 88,763 0 43,961
3130 RAMBLEWOOD RICHMOND 168,787 208,088 138,501 0 108,222
3131 COUNTRYSIDE MANOR 179,144 286,301 115,902 0 44,508
3132 WINDSOR VIL 131,516 124,318 111,864 0 39,239
3135 WATERBURY CLARKE 111,028 163,405 61,732 0 27,839
3136 BURNSBROOKE ATHENS 126,264 121,071 66,703 0 54,221
3137 GENTIAN OAKS COLUMBUS 126,441 168,948 98,924 0 36,600
3138 WILLOW CREEK GRIFFIN 135,520 143,575 77,140 0 26,824
3139 TIMBERWOODS PERRY 137,676 130,901 52,140 0 32,877
3140 CARRIAGE HILLS DUBLIN 135,199 131,214 68,208 0 66,454
3141 HILLANDALE MANOR DEKALB 112,611 180,325 70,787 0 28,215
3142 WHISPERWOOD CORDELE 114,967 107,825 56,590 0 33,293
3143 OAKWOOD VIL RICHMOND 151,028 186,782 102,602 0 36,659
3145 PINE KNOLL CLAYTON 109,344 143,128 66,080 0 25,287
3149 HARBINWOOD GWINNETT 181,072 282,486 150,733 0 50,009
3150 PARKWOOD VIL 140,886 236,341 116,707 0 34,542
3151 AMBERWOOD BARTOW 93,706 199,394 85,640 0 34,131
3152 WOOD VALLEY CALHOUN 109,626 201,444 107,077 16,304 34,715
3153 NORTHRIDGE CARROLLTON 154,306 226,243 95,707 0 46,921
3154 HILLSIDE MANOR AMERICUS 126,677 118,772 60,995 0 37,329
3156 VALLEYFIELD DEKALB II 136,251 248,385 96,354 0 21,559
3158 WOODCLIFF LILBURN II 141,058 247,263 125,318 22,072 46,390
3159 FOREST RIDGE RICHMOND 166,445 126,935 110,693 0 35,338
3160 SHANNON WOODS UNION CITY II 170,735 189,633 61,355 0 31,187
3161 HOLLY PARK COLUMBUS 135,963 164,507 74,246 0 32,518
3162 REDAN VIL DEKALB II 158,093 257,657 101,442 0 20,505
3163 RIDGEWOOD DEKALB II 104,079 188,459 106,532 0 25,097
3168 KNOX LANDING KNOXVILLE 181,760 208,369 143,762 0 38,680
3176 MORGAN TRACE UNION CITY 166,939 237,089 132,401 0 68,275
3184 AMBERWOOD II 92,764 216,993 92,553 3,063 22,113
3197 PARKWOOD VIL II 130,490 214,435 112,303 0 173
3200 SKYRIDGE 258,563 422,580 176,693 0 14,082
3266 MARSH LANDING 122,787 149,294 80,098 0 36,312
</TABLE>
<PAGE>
154
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
-------------------------------------------------------------
Contractual
First Subordinate Interest
Operating Net Operating Mortgage Debt Payable
Prop # Name Expenses Income Interest Interest to Cardinal
=====================================================================================================
SYNDICATED
==============================
<S> <C> <C> <C> <C> <C> <C>
3269 WOODSIDE 85,888 152,028 90,399 0 39,981
3270 GREENTREE 72,105 112,677 69,153 0 5,342
3271 STILLWATER 133,477 138,394 97,680 0 26,864
3353 RAMBLEWOOD II 47,738 81,909 44,757 0 20,125
3358 LINK TERRACE 144,675 130,280 83,276 0 14,540
3366 GREENTREE II 55,986 78,921 48,398 0 10,086
3378 SUNNYSIDE 132,074 196,870 103,899 0 34,500
3409 QUAIL CALL 110,391 136,759 79,585 2,943 40,163
3428 WESTWAY 159,013 187,459 89,042 0 40,282
3430 CAMDEN WAY 116,864 79,546 85,227 2,760 54,782
3450 CAMDEN WAY II 109,771 94,579 74,295 0 32,595
4101 FORSYTHIA CT HARFORD 171,719 253,485 196,968 0 25,506
4149 GLEN HOLLOW GLEN BURNIE 127,924 169,116 156,776 0 1,058
4708 ANNHURST HARFORD 165,525 238,603 121,051 0 29,968
-------------------------------------------------------------
409 $56,038,864 $67,696,130 $38,138,223 $1,146,852 $12,397,718
-------------------------------------------------------------
</TABLE>
<PAGE>
155
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
----------------------------------------------------------------------------
Deprec Major Non Operating
Prop # Name & Amort Replacement Maintenance Expenses Net Income
=============================================================================================================================
WHOLLY OWNED PROPERTIES
===================================
<S> <C> <C> <C> <C> <C> <C>
1375 RIVERVIEW ESTATES 70,845 19,058 9,764 (791) (16,159)
1377 APPLE RIDGE I 33,394 14,940 4,165 3,386 (31,623)
1389 THE WILLOWS I 34,975 23,726 1,124 4,299 (4,791)
1439 MONTROSE SQUARE 72,000 30,251 1,021 1,048 (23,650)
1542 SPRINGWOOD 34,417 17,888 2,450 (664) 2,067
1620 MEADOWOOD 19,100 14,663 12,401 (745) (30,866)
1672 * RIDGEWOOD ELHART 18,335 6,228 2,364 1,392 1,272
1690 HEATHMOORE I 39,999 18,194 15,263 9,151 30,791
1750 CEDARWOOD II 30,260 14,205 25,345 2,437 (41,543)
1780 BRUNSWICK 53,200 25,783 7,560 (17,838) 3,636
1786 SPICEWOOD 33,374 6,368 0 (4,456) 5,247
1806 WINTHROP CT II 27,675 7,874 1,108 4,758 (20,771)
1809 MEADOWOOD II 34,200 21,432 6,243 15,871 (31,014)
1810 ACADIA CT II 58,294 25,723 19,493 21,161 1,626
1814 ASHFORD HILL 37,300 34,117 2,014 3,485 (13,299)
1816 CEDARWOOD III 38,752 11,133 6,335 (3,831) 3,518
1822 MARABOU MILLS I 62,496 10,429 6,782 41,460 (30,408)
1823 ELMTREE PARK I 38,500 11,237 0 (8,851) 21,129
1824 AMESBURY I 34,381 11,973 0 5,023 12,662
1825 BRADFORD PL 23,500 10,319 9,221 (912) 5,176
1830 SHERBROOK 39,400 32,953 876 (6,620) 6,055
1833 HAYFIELD PARK 51,012 21,986 1,661 (7,798) 59,556
1838 CEDARGATE II 28,500 3,452 968 2,471 48,876
1839 DARTMOUTH PL II 35,700 10,665 4,989 1,908 32,197
1841 WILLOWOOD II 23,570 18,140 2,642 (10,403) 12,430
1843 DOGWOOD GLEN I 44,930 19,002 4,863 5,492 44,273
1846 CHERRY GLEN I 47,500 12,733 21 (15,733) 9,364
1853 FOXHAVEN 57,293 14,660 9,478 13,350 3,298
1859 ANNHURST II 32,100 3,807 (48) (24,229) 29,581
1863 HUNTER GLEN 42,100 6,301 6,796 (4,553) 15,724
1869 HARVEST GROVE I 37,700 4,021 4,604 12,439 29,028
1871 CLEARWATER 32,587 9,324 2,277 5,164 10,396
1877 SHERBROOK 46,700 25,309 10,159 983 60,152
1880 ARAGON WOODS 40,153 5,469 7,117 18,158 621
1885 NEWBERRY II 21,100 9,169 7,473 517 26,701
1887 RIVER GLEN I 39,900 11,456 0 15,102 5,381
1889 APPLEGATE II 58,876 8,853 19 38,728 170
1895 ROSEWOOD COMMONS II 37,300 25,654 1,308 (11,208) 20,762
1898 RIDGEWOOD II 46,900 19,033 3,061 24,818 26,888
1908 CHERRY GLENN II 54,000 15,345 21 (32,853) 47,839
1909 LINDENDALE 53,488 12,567 1,578 (20,215) 33,835
1911 ELMTREE PARK II 35,300 8,492 590 (8,321) (18,093)
1914 WOODLANDS II 41,100 18,579 4,004 4,450 18,668
1917 WILLOWOOD II 39,700 11,842 0 (6,184) 52,332
1935 RED DEER II 52,770 17,398 2,527 (11,513) 46,885
1936 SUFFOLK GROVE II 42,212 8,862 2,034 27,877 (7,301)
1937 THE WILLOWS III 27,598 10,201 154 25,651 (21,784)
1946 AMBERWOOD 32,401 15,951 6,482 (9,792) (30,181)
1966 RIVER GLEN II 42,140 4,709 370 88,073 (102,837)
1982 MARABOU MILLS III 35,117 6,618 1,767 (1,398) (8,330)
1983 CAMBRIDGE COMMONS III 40,600 5,431 936 19,840 (77,162)
1986 GARDEN CT 70,402 18,138 2,810 5,682 81,192
1005 ANNHURST III 36,477 12,738 48 10,859 (20,959)
1039 LAUREL BAY 40,248 15,125 10,724 21,372 2,840
2137 WINDWOOD I 16,100 28,460 18,722 32,277 (62,597)
2208 GARDEN TERRACE I 33,900 16,934 13,895 15,018 (37,138)
2385 CANTERBURY CROSSINGS 12,200 19,883 21,371 (46,408) 104,535
2455 THYMEWOOD II 23,500 17,146 2,207 9,882 27,842
2462 FOREST GLEN 31,000 17,985 4,322 5,386 40,137
2469 BEL AIRE II 8,700 5,526 1,393 2,651 3,649
2479 HERON POINTE 48,631 24,875 33,665 6,622 62,823
2482 OAKWOOD VILLAGE 17,000 19,817 10,760 3,337 10,719
2487 RIVERS END II 36,283 22,011 11,924 6,441 26,521
2501 WHISPERING PINES II 16,700 19,452 3,092 6,015 (15,316)
2512 SKY PINES II 25,800 17,072 7,916 151,266 (197,044)
2513 CRYSTAL CT II 40,000 14,774 7,733 (1,630) (27,952)
2515 HIDDEN ACRES 34,269 22,458 8,014 19,697 (3,417)
</TABLE>
<PAGE>
156
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
----------------------------------------------------------------------------
Deprec Major Non Operating
Prop # Name & Amort Replacement Maintenance Expenses Net Income
=============================================================================================================================
WHOLLY OWNED PROPERTIES
===================================
<S> <C> <C> <C> <C> <C> <C>
2519 CENTRE LAKE III 121,374 120,911 16,616 24,961 (93,453)
2520 PINE VIEW 28,900 36,727 8,154 1,454 (30,066)
2521 BLUEBERRY HILL I 11,700 21,905 3,259 4,060 21,086
2526 HOLLY SANDS II 33,629 9,289 4,573 19,666 (1,734)
2527 SUNSET WAY I 47,690 24,908 16,968 35,234 (62,780)
2530 PINE BARRENS 56,424 31,159 14,424 4,741 20,980
2535 PELICAN POINTE I 44,759 25,453 8,424 266 31,445
2537 CALIFORNIA GARDENS 16,500 7,061 723 12,598 9,878
2543 MIGUEL PL 34,729 30,967 11,602 2,976 (6,742)
2545 JUPITER COVE I 24,300 14,340 2,822 4,534 38,710
2546 PELICAN POINTE II 35,700 23,618 2,956 109,892 (61,285)
2547 MARK LANDING I 49,949 16,571 7,635 1,072 20,133
2549 JUPITER COVE III 36,016 19,320 4,333 22,765 (9,351)
2556 HILLSIDE TRACE 26,200 14,956 5,020 1,138 6,521
2559 JEFFERSON WAY I 34,527 22,398 2,276 2,989 (4,274)
2580 SUNSET WAY II 51,900 19,566 1,162 (3,008) (12,533)
2587 OAK GARDENS 54,900 19,092 179 (14,297) 28,007
3166 CEDAR HILL 40,741 16,812 12,044 (1,199) 50,171
3171 LAUREL GLEN 54,080 17,206 13,268 20,136 (14,640)
3173 SPRINGBROOK 59,208 25,239 1,909 15,117 (35,956)
3174 LAKESHORE I 29,890 18,451 16,286 (5,764) 33,581
3175 GLENVIEW 52,200 9,263 12,399 11,179 (19,492)
3186 RAMBLEWOOD II 57,400 20,846 8,754 10,172 (19,529)
3188 VALLEYBROOK 44,280 12,551 8,753 165,117 (114,317)
3189 WILLOW LAKES 51,688 19,214 (144) (4,240) 41,867
3190 GLENWOOD VILLAGE 31,700 18,727 14,793 7,722 24,489
3208 RAVENWOOD 48,100 7,927 508 3,099 39,453
3209 INDIAN LAKE I 156,483 61,268 31,435 22,443 200,547
3231 WALKER PL 37,200 18,243 0 1,593 (1,212)
3233 GREENBRIAR GLEN 49,245 17,474 15,528 60,795 (67,649)
3400 HATCHERWAY 37,000 6,363 6,187 6,454 (12,326)
3417 GLEN ARM MANOR 41,000 17,401 16,343 36,577 (53,300)
3480 MILL RUN 41,500 34,458 13,070 20,207 (20,822)
3486 STEWART WAY I 54,600 14,749 7,043 (26,946) (6,987)
3494 WILCREST WOODS 38,500 23,441 13,725 20,898 (28,767)
3496 MARSHLANDING II 29,800 11,325 7,706 2,990 (12,559)
3522 STEWART WAY II 47,400 16,171 8,443 15,507 (34,988)
3532 KINGS COLONY 52,000 11,009 2,852 16,192 16,332
4109 CHERRY TREE 79,300 25,293 10,126 16,394 27,782
4111 FORSYTHIA CT II 49,300 7,235 733 (16,479) (13,310)
4133 MERRIFIELD 73,377 17,164 13,236 20,629 (23,278)
5910 MARABOU MILLS II 46,966 5,446 3,190 (6,726) 31,324
5886 PICKERINGTON MEADOWS 42,478 17,523 1,200 35,945 (53,757)
5903 BRUNSWICK II 63,918 17,348 4,753 1,378 (94,871)
5906 AMESBURY II 63,190 20,751 340 9,510 (91,059)
5951 HARVEST GROVE II 48,498 11,661 2,910 19,433 (73,903)
---------------------------------------------------------------------------
113 $4,776,193 $2,004,724 $738,491 $1,167,226 $(218,474)
---------------------------------------------------------------------------
* Partial year
</TABLE>
<PAGE>
157
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
----------------------------------------------------------------------------
Deprec Major Non Operating
Prop # Name & Amort Replacement Maintenance Expenses Net Income
=============================================================================================================================
SYNDICATED
===================================
<S> <C> <C> <C> <C> <C> <C>
1109 DOGWOOD TERRACE $93,237 $77,831 $43,697 $(313,512) $22,986
1112 LONDON LAMPLIGHT 18,231 22,761 3,929 (40,978) 89,148
1123 SPRINGFIELD WOODGATE 16,703 10,111 400 (5,553) 6,872
1262 THE BIRCHES LIMA 17,559 14,410 4,588 8,420 (13,726)
1297 PLUMWOOD APTS 26,147 40,642 11,101 49,728 7,634
1310 MELDON PL 67,357 47,767 14,949 (123) (40,357)
1320 WEST OF EASTLAND 86,681 23,507 1,177 8,887 (100,963)
1322 PARKVILLE 32,736 23,899 6,838 21,651 1,077
1327 CHARING CROSS APTS 34,217 17,756 5,349 (5,384) 1,251
1329 INDEPENDENCE VIL 58,696 18,327 3,624 (46,092) 56,413
1330 POPLAR CT 32,768 30,723 11,883 23,948 (32,360)
1341 GREENLEAF APTS 22,854 9,208 0 23,066 (57,595)
1344 LAUREL CT APTS 32,871 11,428 6,671 3,085 (40,066)
1379 AMHURST APTS 33,421 28,959 6,865 340 4,193
1404 KETWOOD APTS 56,306 37,255 1,818 8,111 (14,034)
1436 SANDALWOOD APTS 22,601 4,838 32 3,306 11,999
1437 HICKORY MILL 38,814 23,271 1,828 34,146 (8,932)
1455 MONTROSE SQ 40,687 17,903 2,013 1,844 (64,086)
1456 APPLE RIDGE 46,690 10,791 1,134 2,945 (43,559)
1460 WESTWOOD 7,160 3,709 (10,387) (6,924) 5,145
1461 APPLE RUN II 32,977 19,192 2,523 (10,516) (18,809)
1462 PLUMWOOD 23,567 8,507 3,426 13,793 3,563
1464 GREENGLEN 42,158 15,497 8,849 (929) (67,734)
1465 CEDARWOOD BELPRE 30,739 8,670 (263) (2,474) 7,653
1466 AMHURST II 37,882 40,617 8,097 1,399 (8,377)
1469 CHELSEA CT 37,883 19,753 451 3,962 4,697
1470 MILLSTON APTS 38,391 13,481 1,896 (4,743) (49,856)
1473 MILLBURN II 30,337 30,573 6,567 13,473 (87,242)
1483 WOODBINE 28,767 9,532 1,351 (2,120) (14,635)
1485 HAMPSHIRE II 29,265 21,239 6,478 (8,013) (26,265)
1489 PLUMWOOD 33,104 8,401 3,205 4,089 4,498
1491 CAMELLIA CT WASHINGTON CH 25,810 8,453 5,644 (116,299) 83,578
1499 CONCORD SQ ONTARIO 26,384 8,526 5,300 309 (11,358)
1505 CAMELLIA CT DAYTON 40,224 21,340 2,376 7,426 (11,576)
1510 BECKFORD PL WAPAKONETA 24,832 22,915 3,212 6,089 (50,400)
1511 APPLEGATE CHILLICOTHE II 25,349 19,902 6,039 1,695 (59,378)
1512 SPRINGWOOD NEW HAVEN 31,996 17,647 13,847 (3,713) (55,159)
1516 THE WILLOWS DELAWARE II 25,223 9,585 150 5,035 (31,951)
1519 GREENGLEN ALLEN II 38,782 8,619 2,314 1,505 (5,958)
1523 LARKSPUR MORAINE 22,277 22,088 771 (3,720) (31,567)
1524 MILLSTON ABERDEEN II 30,790 12,235 10,307 (10,438) (44,528)
1526 CAMELLIA CT COLUMBUS 39,808 19,129 4,990 7,103 20,149
1527 WOODBINE CUYAHOGA FALLS 43,328 12,906 8,266 (20,669) 45,843
1528 APPLEGATE LORDSTOWN 20,056 14,121 6,732 2,081 (29,850)
1529 PARKVILLE ENGLEWOOD 24,524 15,633 1,863 18,724 (6,513)
1530 CEDARWOOD SABINA 19,815 13,141 5,140 11,419 (37,641)
1531 ANDOVER CT 37,038 6,962 908 4,483 (15,269)
1533 HAMPSHIRE BLUFFTON 29,956 22,623 1,203 3,616 (39,838)
1534 CONCORD SQ LAWRENCEBURG 29,800 9,032 0 7,567 (16,530)
1535 GREENGLEN TOLEDO II 42,061 13,297 2,911 (6,252) (14,760)
1539 FOXTON SEYMOUR 23,643 12,492 4,242 6,831 (56,737)
1540 DARTMOUTH PL KENT 35,815 15,306 11,326 2,363 18,661
1549 CAMELLIA CT DAYTON II 31,009 26,444 810 6,100 (11,719)
1550 APPLEGATE COLUMBUS 45,655 10,274 0 48,243 (22,094)
1553 APPLE RIDGE III 19,035 4,921 862 (7,057) 8,702
1554 SPRINGWOOD AUSTINTOWN II 26,790 13,184 6,998 7,535 (36,340)
1555 DOVER PL EASTLAKE 51,908 23,417 8,972 (2,784) 37,241
1556 PARKVILLE PARKERSBURG 30,676 11,888 95 2,319 (19,258)
1557 HARTWICK TIPTON 34,010 25,332 1,228 802 (25,241)
1558 BECKFORD PL THE PLAINS 50,860 12,193 707 6,668 (1,765)
1559 LARKSPUR COLUMBUS 47,189 28,240 6,067 5,430 (13,631)
1560 SPRINGWOOD COLUMBUS 39,387 7,936 1,129 10,090 (36,467)
1561 PARKVILLE GAS CITY 30,685 15,194 180 18,669 (56,567)
1562 CAMELLIA CT CARROLLTON 31,468 20,440 2,164 7,104 (44,741)
1563 FOXTON DAYTON II 55,841 21,937 11,241 (8,526) (64,301)
1566 APPLE RUN HILLSDALE 23,508 11,652 4,718 6,530 (20,082)
1567 PINE GROVE ROSEVILLE 30,024 15,098 13,815 28,836 (35,195)
</TABLE>
<PAGE>
158
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
----------------------------------------------------------------------------
Deprec Major Non Operating
Prop # Name & Amort Replacement Maintenance Expenses Net Income
=============================================================================================================================
SYNDICATED
===================================
<S> <C> <C> <C> <C> <C> <C>
1568 ASHGROVE FRANKLIN 36,405 19,750 7,318 1,195 (19,732)
1569 MEADOWOOD JACKSON 28,684 5,146 (11) 17,413 (6,723)
1571 GEORGETOWN S TUSCARAWAS II 24,222 8,665 1,025 34,894 (109,562)
1572 CONCORD SQ KOKOMO 36,441 19,379 2,000 7,616 15,106
1573 SANDALWOOD ALEXANDRIA 35,216 13,435 156 31,559 (66,089)
1574 AMHURST TOLEDO 34,262 18,324 6,487 9,679 (8,051)
1575 HAMPSHIRE WILLIAMSTOWN 16,866 8,162 1,560 (2,780) (30,912)
1576 MEADOWOOD MANSFIELD 31,547 7,565 2,025 32,619 (58,829)
1577 HICKORY MILL HURRICANE 47,662 11,792 4,542 3,586 (36,651)
1578 ASHGROVE FLORENCE 31,213 12,165 2,007 5,098 (42,867)
1579 MEADOWOOD FRANKLIN 43,022 11,333 7,715 9,409 17,034
1581 CEDARWOOD GOSHEN 27,496 12,214 6,257 4,938 13,338
1582 CONCORD SQ ONTARIO II 18,192 2,145 1,437 998 (18,057)
1583 MEADOWOOD CRAWFORDSVILLE 44,717 14,688 21,210 5,367 (48,445)
1585 BECKFORD PL N CANTON 38,359 12,912 1,746 1,063 14,931
1587 PINE GROVE COLUMBUS II 8,140 9,804 0 (683) (23,912)
1588 PLUMWOOD COLUMBUS III 24,858 16,953 3,263 6,199 (12,285)
1589 WOODLANDS COLUMBUS 55,614 31,311 0 115,149 (124,442)
1590 WOODLANDS FRANKLIN 32,513 17,198 7,932 3,665 (69,925)
1591 MEADOWOOD FLATWOODS 36,343 17,152 1,289 1,496 (32,725)
1592 GREENGLEN DAYTON 47,494 23,119 19,159 13,523 (36,788)
1593 ASHGROVE INDIANAPOLIS 45,901 15,782 10,637 4,699 (30,027)
1595 MEADOWOOD NICHOLASVILLE 58,986 18,497 3,151 8,063 (4,645)
1596 STONEHENGE RICHMOND 41,881 18,058 2,930 6,584 (17,133)
1597 WILLOWOOD COLUMBUS 31,215 12,293 755 12,361 23,784
1598 CEDARGATE BOWLING GREEN 45,887 6,967 972 4,966 21,751
1599 WILLOW RUN WILLARD 44,271 19,832 4,767 8,543 (96,914)
1600 HEATHMOORE JEFFERSON 44,731 24,051 3,021 29,505 (92,018)
1601 STONEHENGE GLASGOW 35,472 8,455 7,411 6,243 (55,758)
1602 HEATHMOORE INDIANAPOLIS 36,238 9,706 2,869 40,042 (29,779)
1603 APPLE RUN TRUMBULL 37,638 17,104 7,633 279 (54,069)
1604 FOXTON MONROE 30,693 21,206 4,908 32,146 (27,363)
1605 ASHGROVE CALHOUN 31,094 13,323 2,293 (176,331) 140,005
1606 STONEHENGE OTTAWA 27,957 9,342 2,690 2,811 (12,964)
1613 WOODLANDS ZELIENOPLE 46,635 23,772 6,502 8,644 (30,493)
1615 RIDGEWOOD WESTLAND 34,955 9,275 31,522 4,456 (45,059)
1616 HEATHMOORE MACOMB 39,193 8,866 0 (81,617) 104,233
1617 DOVER PL EASTLAKE II 60,610 15,354 8,430 1,146 (23,725)
1618 DOVER PL EASTLAKE III 25,995 10,729 4,304 45,204 (57,333)
1619 CEDARGATE MICHIGAN CITY 33,920 13,948 7,198 38,847 (81,982)
1622 CEDARGATE BLOOMINGTON 56,795 11,990 2,235 15,167 27,189
1623 CEDARGATE LANCASTER 23,911 14,398 8,527 (14,641) (21,561)
1624 STONEHENGE JEFFERSON 40,773 15,381 1,514 13,358 (48,627)
1626 SLATE RUN INDIANAPOLIS 74,865 18,263 3,614 6,123 (3,925)
1630 SANDALWOOD TOLEDO 26,474 14,013 10,885 22,085 (32,296)
1635 RIDGEWOOD COLUMBUS 38,718 17,273 7,310 13,470 (5,913)
1637 APPLEGATE DELAWARE 39,540 11,718 13 1,819 1,453
1638 MEADOWOOD LOGANSPORT 25,644 11,453 10,135 7,239 (30,774)
1639 SLATE RUN LEBANON 41,877 14,020 2,000 14,970 (8,865)
1640 WESTWOOD ROCHESTER 28,529 8,995 0 (924) (55,559)
1641 WILLOWOOD WOOSTER 30,356 13,821 5,383 4,642 (2,709)
1642 STONEHENGE STARK 42,686 12,381 1,072 624 (14,140)
1644 RIDGEWOOD LEXINGTON 49,785 17,956 3,964 5,722 (26,501)
1645 RIDGEWOOD BEDFORD 32,841 9,885 745 13,906 (17,741)
1646 CAMELLIA CT COLUMBUS II 30,636 9,278 2,132 1,780 2,906
1647 CEDARGATE ENGLEWOOD 39,040 20,335 1,659 2,458 (43,911)
1648 SLATE RUN HOPKINSVILLE 42,657 16,401 23,065 3,701 (112,794)
1649 WILLOWOOD GROVE CITY 33,385 19,467 1,632 1,753 (22,389)
1650 MEADOWOOD COLUMBUS 46,205 23,766 1,216 10,638 (26,252)
1651 STONEHENGE INDIANAPOLIS 43,566 17,581 366 27,623 (37,843)
1652 MEADOWOOD WARRICK 43,203 14,131 14,195 3,227 (94,472)
1653 WILLOWOOD E INDIANAPOLIS 47,893 9,743 2,645 5,786 (36,368)
1655 CEDARGATE SHELBY 39,443 12,764 2,245 (1,059) (16,289)
1656 RIDGEWOOD RUSSELVILLE 34,540 5,099 1,915 3,811 (42,960)
1657 WILLOW RUN NEW ALBANY 38,510 15,886 6,076 6,547 (1,735)
</TABLE>
<PAGE>
159
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
----------------------------------------------------------------------------
Deprec Major Non Operating
Prop # Name & Amort Replacement Maintenance Expenses Net Income
=============================================================================================================================
SYNDICATED
===================================
<S> <C> <C> <C> <C> <C> <C>
1658 ASHGROVE JEFFERSON 45,327 13,106 4,558 (15,520) 9,501
1659 SLATE RUN JEFFERSON 44,785 26,212 7,479 8,472 (56,739)
1660 MEADOWOOD LEXINGTON 32,739 14,684 20,626 (2,384) (17,559)
1661 FORSYTHIA CT COLUMBUS 36,248 11,441 1,901 4,855 (8,418)
1663 WATERBURY GREENWOOD 39,250 12,721 86 20,362 (69,727)
1664 SLATE RUN BARDSTOWN 41,556 12,609 11,733 (15,348) (75,464)
1666 WILLOWOOD FRANKFORT 58,985 7,335 6,765 22,541 (94,500)
1667 BECKFORD PL NEW CASTLE 27,381 14,201 6,906 2,599 (19,024)
1669 WILLOWOOD OWENSBORO 38,390 12,385 1,422 5,949 (78,536)
1670 STONEHENGE MONTGOMERY 48,633 37,909 3,171 19,237 (57,965)
1671 LARKSPUR MORAINE II 7,680 4,311 119 2,029 (13,222)
1673 SLATE RUN BEDFORD 46,425 20,093 4,841 17,579 (45,212)
1674 ROSEWOOD JEFFERSON 60,561 15,578 7,726 (24,763) 6,831
1676 MILLBURN STOW 54,214 10,539 8,714 29,733 (37,980)
1677 WILLOW RUN MADISONVILLE 45,775 20,561 38 (52,645) (17,804)
1678 CEDARWOOD GOSHEN II 32,943 12,964 14,847 2,680 (29,819)
1679 HEATHMOORE EVANSVILLE 51,649 19,626 12,667 (362,829) 296,831
1681 FOREST PARK MEADOWOOD 83,092 31,915 2,204 (1,278) 72,170
1682 STONEHENGE TECUMSEH 33,486 14,139 2,509 (5,311) 3,304
1683 BRANDON CT BLOOMINGTON 59,639 18,076 7,090 (15,867) (6,212)
1686 ASHGROVE STERLING 97,377 34,342 474 340 (54,528)
1687 MONTGOMERY CT INGHAM 39,629 20,053 3,111 (1,253) (18,161)
1691 PINE GROVE ROSEVILLE II 27,544 8,339 26,989 4,250 (29,680)
1692 MEADOWOOD MONROE 42,101 12,409 7,772 5,059 (33,783)
1695 ANNHURST INDIANAPOLIS 62,343 28,725 36,995 (12,340) (39,232)
1696 ANNHURST ALLEGHENY 97,222 33,268 11,723 (35,180) (27,474)
1698 WOODLANDS STREETSBORO 57,960 15,583 6,681 5,127 7,193
1699 ROANOKE OAKLAND 78,623 18,953 7,503 (34,128) 93,616
1700 DANIEL CT CLERMONT 78,498 25,864 1,996 (7,240) (106,155)
1702 STRATFORD SOUTH CHARLESTON 60,292 13,272 6,333 8,942 (58,829)
1703 BARRINGTON BEDFORD 75,554 16,825 9,493 (25,675) 6,404
1704 MULBERRY HILLIARD 42,944 27,321 677 6,145 (23,347)
1705 WOODLANDS COLUMBUS II 56,381 29,001 0 (1,390) (48,245)
1707 LARKSPUR COLUMBUS II 46,532 27,697 3,382 10,862 (101,318)
1714 NEWBERRY EATON 49,139 9,207 3,195 5,113 22,743
1717 HICKORY MILL HURRICANE II 29,185 9,563 5,359 (33,142) 8,310
1718 MEADOWOOD COLUMBUS II 23,224 6,218 868 23,456 (40,192)
1719 VALLEYFIELD LEXINGTON 82,345 24,307 3,174 (2,709) (49,708)
1720 RIDGEWOOD COLUMBUS II 40,225 16,566 7,770 12,688 (8,367)
1721 OLIVEWOOD INDIANAPOLIS 47,520 20,108 2,600 7,563 (17,998)
1723 ROANOKE JEFFERSON 39,671 13,661 4,412 3,270 8,990
1724 MEADOWOOD CUYAHOGA FALLS 51,724 11,892 3,607 8,214 (16,781)
1725 RIDGEWOOD LEXINGTON II 42,788 13,050 3,969 (20,610) (283)
1726 STONEHENGE JASPER 19,811 17,557 2,137 (143,215) 112,184
1727 CARLETON CT KANAWHA 50,490 10,404 19,671 15,196 (48,318)
1728 NEWBERRY GROVE CITY 38,819 15,185 4,528 (16,399) (32,220)
1729 BECKFORD PL N CANTON II 52,793 8,820 2,189 12,520 (36,852)
1730 NORTHRUP CT ALLEGHENY 50,664 15,630 8,769 (767) (30,263)
1731 FORSYTHIA CT JEFFERSON 74,806 22,459 5,667 (32,124) (15,813)
1732 WINTHROP CT FRANKFURT 47,131 16,643 9,548 14,734 (87,201)
1733 PRINCETON CT EVANSVILLE 42,854 13,383 14,046 11,858 (77,647)
1735 ROSEWOOD COLUMBUS 74,181 21,954 4,660 4,929 (54,605)
1737 SLATE RUN JEFFERSON II 39,143 9,535 4,426 (138,077) 83,494
1741 WILLOWOOD TROTWOOD 40,716 21,437 4,103 5,843 (67,839)
1744 BRUNSWICK TRUMBULL 39,272 24,678 14,865 50,069 (34,946)
1745 WYCLIFFE CT 44,171 10,489 30,201 5,173 (82,124)
1747 SLATE RUN MIAMISBURG 33,197 15,066 1,783 17,983 (42,297)
1748 MONTGOMERY CT COLUMBUS 71,679 10,304 2,031 5,705 (68,125)
1749 WATERBURY CLARKSVILLE 45,094 10,258 21,466 2,869 (35,344)
1751 WINTHROP CT COLUMBUS 52,445 14,433 3,711 6,806 (26,811)
1752 PICKERINGTON MEADOWS 40,562 11,014 361 17,244 (71,012)
1756 WATERBURY CLERMONT 57,047 32,433 8,199 13,959 (51,155)
1757 WILLOWOOD GROVE CITY II 17,905 6,354 140 2,943 (20,722)
1758 CEDARGATE BLOOMINGTON II 46,198 8,447 6,879 23,906 (17,868)
1759 ACADIA CT 82,523 26,954 2,164 28,022 (89,215)
</TABLE>
<PAGE>
160
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
----------------------------------------------------------------------------
Deprec Major Non Operating
Prop # Name & Amort Replacement Maintenance Expenses Net Income
=============================================================================================================================
SYNDICATED
===================================
<S> <C> <C> <C> <C> <C> <C>
1760 WILLOWOOD E INDIANAPOLIS II 50,240 8,212 4,724 (159,196) 123,329
1761 SHERBROOK COLUMBUS 39,512 4,460 (190) 10,871 (21,178)
1762 LONGWOOD LEXINGTON 49,211 17,356 572 3,344 (59,157)
1763 NORTHRUP CT ALLEGHENY II 43,595 13,117 16,580 (62,384) 22,789
1765 LAURELWOOD CT BEDFORD 33,135 8,779 12 33,740 (53,105)
1768 CARLETON CT ANN ARBOR 90,937 16,880 13,510 9,261 (55,106)
1770 VALLEYFIELD 64,609 29,011 12,038 483 (51,473)
1772 WENTWORTH ROSEVILLE 64,110 15,822 19,378 9,591 (31,792)
1773 WATERBURY WESTLAND 80,774 29,519 20,386 12,787 (56,933)
1777 HEATHMOORE INDIANAPOLIS II 58,296 10,653 1,759 8,454 7,256
1779 AMBERIDGE 39,271 11,569 26,395 3,064 (55,529)
1783 WOODLANDS STREETSBORO II 65,964 16,639 6,243 5,546 (103,684)
1785 CARLETON CT ERIE 36,021 17,140 5,110 (14,264) (28,940)
1787 ROSEWOOD COMMONS 64,131 24,296 1,761 4,494 (47,961)
1790 WILLOWOOD FRANKFORT II 40,353 2,623 17,259 4,229 (59,296)
1794 ANNHURST COLUMBUS 48,414 2,638 0 14,887 (90,567)
1799 BEREA TABOR RIDGE 81,600 27,272 1,512 4,701 (5,677)
1801 WILLOWOOD WOOSTER II 41,889 16,971 6,180 (7,890) (16,699)
1804 CAMBRIDGE COMMONS 61,591 42,294 23,238 (187,514) 120,172
1805 OLIVEWOOD INDIANAPOLIS II 48,601 14,056 1,263 2,351 14,352
1807 BRUNSWICK MONONGALIA 83,955 21,193 9,817 (13,951) (60,496)
1812 HAMPTON WOODS COLUMBUS 33,387 4,872 800 3,512 (40,728)
1813 SUFFOLK GROVE GROVE CITY 40,631 13,593 83 7,089 7,138
1815 MONTGOMERY CT COLUMBUS II 42,571 12,572 504 5,103 (1,862)
1818 REDWOOD HOLLOW SMYRNA 59,937 15,748 17,878 (250,965) 185,445
1829 CLEARVIEW GREENWOOD 48,278 19,992 873 (55,723) 104,116
1832 ANSLEY OAKS 53,346 15,292 10,876 (6,044) (58,117)
1844 STERLING HGTS OLIVEWOOD 156,389 37,901 3,615 (5,485) 116,846
1847 RED DEER FAIRBORN 49,365 28,810 2,525 5,787 23,540
1851 ASHGROVE STERLING II 78,972 21,149 11,337 3,735 (26,451)
1866 HEATHMOORE WAYNE II 37,401 14,421 16,987 6,564 15,519
1875 DOVER PL EASTLAKE IV 49,112 24,829 9,507 3,066 4,708
1905 CAMBRIDGE COMMONS II 41,091 17,793 427 (4,910) (28,657)
1907 DOGWOOD GLEN MARION II 46,169 19,567 2,131 7,916 15,959
1916 CLEARVIEW GREENWOOD II 68,436 22,508 1,700 (218,420) 250,083
1928 WOODLANDS COLUMBUS III 88,845 33,323 1,919 (49,343) 8,566
1944 TIMBERCREEK TOLEDO 66,564 12,476 2,833 (5,017) 222
2100 SANFORD CT INVESTORS 70,141 27,938 5,806 522 (60,609)
2106 OLD ARCHER CT 38,772 14,943 10,441 100,983 (63,742)
2107 PALATKA OAKS 11,005 14,537 777 5,217 (31,634)
2108 AZALEA HILL 19,772 1,923 1,351 23,429 25,734
2112 TURKSCAP 18,563 12,081 7,192 94 (3,179)
2114 CEDARWOOD 30,156 29,962 3,705 5,547 (27,593)
2115 UNIVERSITY SQ 39,686 21,341 6,435 (6,346) 11,568
2129 NORTHWOOD 26,929 14,287 4,533 12,215 (69,169)
2131 ROLLINGWOOD 35,761 16,000 14,533 (37,607) (43,258)
2139 MEADOWOOD II 39,522 13,486 13,404 (13,978) 3,749
2143 CEDARWOOD II 29,034 12,658 3,260 17,952 (71,046)
2153 NOVAWOOD 35,779 14,446 7,215 4,999 (44,860)
2154 KNOLLWOOD II 35,988 0 2,570 (43,701) (98,576)
2164 PALATKA OAKS II 13,714 13,568 671 (629) (14,728)
2165 NOVAWOOD II 38,678 19,458 5,961 (23,257) (32,487)
2166 WINGWOOD 56,560 24,097 37,571 49,349 (69,309)
2172 HEATHERWOOD II 28,148 14,235 14,236 (341,342) 301,503
2173 COUNTRYSIDE 39,114 14,892 5,315 212 (36,743)
2174 COUNTRYSIDE II 69,413 43,723 1,509 (5,815) (43,096)
2189 HIDDEN PINES 44,868 26,011 7,991 4,462 (46,438)
2190 MOSSWOOD 44,084 14,148 10,665 6,295 (47,304)
2191 MOSSWOOD II 58,488 18,456 9,883 (5,573) 13,045
2193 SUNRISE 36,794 13,059 6,355 89,738 (167,816)
2194 SUNRISE II 21,366 8,992 7,960 5,935 (67,084)
2196 BRANCHWOOD 72,199 24,978 14,538 7,905 (55,397)
2199 CONCORD SQ II 60,659 38,580 14,108 14,586 (152,570)
2201 LONGWOOD 34,960 28,843 7,422 8,485 (79,965)
2202 LONGWOOD II 21,379 15,850 5,021 7,083 (55,798)
2205 BRANDYWYNE E 19,597 6,833 1,759 2,724 (40,478)
</TABLE>
<PAGE>
161
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
----------------------------------------------------------------------------
Deprec Major Non Operating
Prop # Name & Amort Replacement Maintenance Expenses Net Income
=============================================================================================================================
SYNDICATED
===================================
<S> <C> <C> <C> <C> <C> <C>
2212 AMBERWOOD 34,414 26,524 9,272 9,423 (79,001)
2215 COUNTRYSIDE III 22,774 11,572 3,016 (18,989) 3,034
2218 INDIAN RIDGE 43,265 21,033 4,062 (268,356) 261,096
2222 SHADOWOOD 45,972 25,182 4,878 4,644 (8,341)
2224 ROSEWOOD 46,319 11,407 9,404 3,880 (38,850)
2226 SPRINGTREE 50,916 20,711 20,684 93,397 (66,802)
2230 RIVERWOOD 48,885 24,952 0 7,623 (58,183)
2231 APPLEWOOD 42,677 18,556 1,683 18,276 (77,257)
2234 WINDRUSH 50,991 28,754 21,399 4,891 (109,166)
2235 HERONWOOD 44,173 27,133 14,003 2,563 (57,622)
2237 SANDPIPER II 49,526 13,939 5,888 2,680 (46,040)
2240 BAYSIDE 32,785 13,866 4,839 2,714 (72,418)
2242 DEERWOOD 31,651 16,867 0 12,686 (55,237)
2244 CANDLELIGHT 35,621 13,418 1,347 21,319 (77,185)
2246 GARDEN TERRACE II 52,144 25,317 8,546 27,501 (132,558)
2247 INDIAN RIDGE II 31,666 18,064 2,351 (23,666) 11,343
2249 SHADOWOOD II 47,628 18,561 15,084 11,906 (25,759)
2251 STRAWBERRY PL 50,183 13,368 2,678 7,469 (62,401)
2253 CRYSTAL CT 46,457 16,390 8,786 6,732 (82,193)
2254 TURKSCAP III 32,581 11,384 9,113 28,996 (50,382)
2265 PINE LAKE 28,026 9,860 3,045 (39,062) (20,555)
2284 CAPITAL RIDGE 54,369 21,857 13,418 22,717 (49,091)
2285 WOODLAND 66,835 28,066 8,546 17,929 (64,506)
2288 SHADOW RIDGE 45,672 22,462 702 12,548 (64,028)
2295 HICKORY PL 68,557 19,784 1,540 87,070 (185,818)
2300 PINE TERRACE 49,285 13,042 9,344 8,048 (82,833)
2301 PALM PL 54,350 31,917 4,561 23,545 (13,891)
2309 THE LANDINGS 47,509 14,088 10,468 4,499 (67,316)
2311 ASTORWOOD 64,225 24,189 2,130 8,956 (24,576)
2312 PINELLAS PINES 49,579 20,576 1,909 13,866 (39,689)
2313 SPRING GATE 42,786 5,663 3,952 5,655 (28,906)
2314 GARDEN TERRACE III 65,497 43,543 19,149 (1,868) (167,139)
2340 SHADOW BAY 39,607 12,488 3,821 6,222 (59,045)
2341 TERRACE TRACE 59,362 17,979 25,227 (3,978) (57,679)
2343 KINGS CROSSING 54,187 18,969 8,056 2,234 (85,376)
2344 ELMWOOD 37,681 16,769 1,512 9,929 (49,174)
2355 NOVA GLEN 47,811 19,482 3,675 524 (120,633)
2363 MORNINGSIDE II 128,019 46,176 27,731 28,504 (370,938)
2365 APPLEWOOD II 73,313 4,996 6,151 (17,471) (161,712)
2376 MOULTRIE 57,309 19,659 18,300 13,443 (39,920)
2379 SUGARTREE 42,969 17,587 1,782 13,264 (46,029)
2387 SOUTHGATE 44,875 15,403 9,705 20,014 (64,231)
2399 SUTTON PL 32,973 15,553 9,062 (1,766) (61,806)
2405 DRIFTWOOD 44,915 14,796 21,312 6,182 3,073
2407 PINE MEADOWS 45,697 19,580 1,154 1,261 (62,210)
2411 ELMWOOD II 49,162 19,543 14,546 193,454 (310,610)
2412 PARKWAY N 42,610 20,618 8,583 9,284 (42,743)
2416 PINE TERRACE II 46,204 13,432 4,736 9,510 (68,908)
2422 HILLVIEW TERRACE 42,085 9,043 1,636 (24,280) (10,021)
2427 HILLCREST VILLA 37,467 8,786 13,541 12,791 (42,024)
2429 CYPRESS 54,388 14,795 12,608 2,729 (76,032)
2431 OLYMPIAN VIL 61,877 24,707 697 14,266 (74,778)
2432 SILVER FOREST 33,583 24,393 4,722 32,380 (84,346)
2438 BERRY PINES 45,838 15,196 4,416 3,367 (61,185)
2439 OAK RIDGE 42,828 15,422 7,914 9,203 (52,582)
2441 OAK SHADE 61,342 25,470 9,558 (3,395) (32,620)
2442 HOLLY SANDS 54,265 19,367 12,153 (21,421) (7,245)
2443 BROADVIEW OAKS 51,777 12,191 8,965 51,808 (56,496)
2444 THYMEWOOD 70,083 18,141 5,814 244 (67,841)
2446 SHADOW BAY II 45,677 25,919 12,342 (2,987) (65,148)
2447 CANDLELIGHT II 36,226 19,528 3,344 20,791 (86,337)
2449 SUGARTREE II 44,447 16,054 570 1,730 (40,532)
2451 WINTER WOODS 35,210 13,295 2,104 6,889 (31,156)
2452 WOODLAND II 61,988 25,788 5,841 (10,614) (106,524)
2454 BEL AIRE 57,972 7,833 1,129 1,296 (75,442)
2459 CLEARLAKE PINES II 41,198 9,739 1,388 94,743 (156,263)
</TABLE>
<PAGE>
162
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
----------------------------------------------------------------------------
Deprec Major Non Operating
Prop # Name & Amort Replacement Maintenance Expenses Net Income
=============================================================================================================================
SYNDICATED
===================================
<S> <C> <C> <C> <C> <C> <C>
2460 MANCHESTER 48,324 14,256 11,165 5,382 (21,165)
2461 RANCHSIDE 44,566 18,620 3,193 3,206 (30,429)
2464 ESSEX SQ 53,476 15,266 3,492 4,886 44,707
2465 WESTCREEK 61,981 14,324 5,728 12,712 (89,148)
2466 SKY PINES 56,125 22,497 7,231 5,968 (71,194)
2470 RIVERS END 56,480 17,164 10,703 14,249 (53,663)
2471 BRIDGE POINT 50,009 20,057 23,076 3,369 (65,453)
2478 NOVA GLEN II 58,596 19,148 8,585 (2,853) (99,484)
2483 OAKWOOD MANOR 50,910 11,258 10,636 11,149 (124,940)
2484 HOLLY RIDGE 71,686 32,515 5,725 1,480 (94,006)
2488 HIGH POINTS 65,098 16,959 4,350 5,525 (81,093)
2499 WINTER WOODS II 29,309 12,160 1,744 (2,933) (48,433)
2502 PALM SIDE 55,826 19,516 5,612 5,572 (93,739)
2574 PALM BAY/WINDWOOD II 16,639 36,899 21,169 (1,407) (69,268)
3101 MEADOWOOD NORCROSS 52,685 34,443 16,605 4,252 30,648
3102 CEDARGATE LAWRENCEVILLE 46,482 28,020 15,588 72,298 (50,545)
3104 WILLOW RUN DEKALB 67,181 21,848 13,387 135,712 (172,732)
3108 FOREST VIL BIBB 62,368 32,392 28,570 9,967 (17,491)
3109 RIDGEWOOD DEKALB 41,949 15,449 26,726 26,042 (37,818)
3111 IRIS GLEN ROCKDALE 65,264 16,319 8,518 217,281 (246,223)
3112 MEADOWLAND CLARKE 40,112 17,907 8,805 132,213 (126,424)
3114 WILLOWOOD MILLEDGEVILLE 45,366 31,027 24,954 17,801 (82,481)
3115 MEADOWOOD NORCROSS II 40,689 23,676 10,174 4,731 (4,021)
3116 VALLEYFIELD DEKALB 43,923 24,117 11,155 4,370 3,987
3117 NORWOOD GWINNETT 57,017 24,385 17,998 897 40,525
3118 SHADOW TRACE DEKALB 60,851 25,583 11,500 7,040 17,304
3120 OAKLEY WOODS UNION CITY 47,532 13,211 13,964 (78,386) 60,330
3121 ELMWOODS MARIETTA 42,912 11,775 8,030 138,231 (138,162)
3122 WOOD TRAIL NEWMAN 55,777 14,617 2,891 5,904 26,953
3123 REDAN VIL DEKALB 69,812 28,498 17,465 247,172 (226,322)
3124 BARRINGTON DEKALB 53,932 19,912 29,471 58,476 (136,414)
3125 STRATFORD LANE COLUMBUS 49,942 26,615 13,680 44,461 (72,131)
3127 WOODCLIFF LILBURN 68,309 23,193 13,397 3,093 (1,840)
3128 WOODCREST 46,396 16,800 5,830 6,151 (24,141)
3130 RAMBLEWOOD RICHMOND 59,978 32,027 16,062 11,751 (158,454)
3131 COUNTRYSIDE MANOR 63,686 25,614 9,688 20,698 6,205
3132 WINDSOR VIL 39,380 19,578 2,122 4,570 (92,434)
3135 WATERBURY CLARKE 37,784 17,239 803 (3,823) 21,832
3136 BURNSBROOKE ATHENS 47,578 17,274 2,912 13,551 (81,168)
3137 GENTIAN OAKS COLUMBUS 44,057 17,364 11,237 19,060 (58,294)
3138 WILLOW CREEK GRIFFIN 36,955 12,356 395 6,932 (17,026)
3139 TIMBERWOODS PERRY 39,650 41,026 16,251 5,242 (56,285)
3140 CARRIAGE HILLS DUBLIN 48,399 28,837 9,177 206,971 (296,833)
3141 HILLANDALE MANOR DEKALB 43,856 19,639 27,687 7,673 (17,532)
3142 WHISPERWOOD CORDELE 31,151 19,469 2,416 2,745 (37,839)
3143 OAKWOOD VIL RICHMOND 55,005 15,028 2,601 6,711 (31,825)
3145 PINE KNOLL CLAYTON 30,103 8,988 6,418 2,835 3,416
3149 HARBINWOOD GWINNETT 63,414 38,940 28,827 6,818 (56,256)
3150 PARKWOOD VIL 62,403 14,118 12,543 13,118 (17,090)
3151 AMBERWOOD BARTOW 45,971 8,477 3,233 7,661 14,281
3152 WOOD VALLEY CALHOUN 51,570 7,646 11,576 26,944 (54,388)
3153 NORTHRIDGE CARROLLTON 61,615 22,278 14,944 4,253 (19,475)
3154 HILLSIDE MANOR AMERICUS 47,209 16,084 361 15,479 (58,685)
3156 VALLEYFIELD DEKALB II 56,697 21,948 13,404 5,417 33,006
3158 WOODCLIFF LILBURN II 53,177 19,558 13,807 13,265 (46,325)
3159 FOREST RIDGE RICHMOND 47,941 24,533 2,765 12,590 (106,924)
3160 SHANNON WOODS UNION CITY II 52,078 12,974 11,129 (10,751) 31,662
3161 HOLLY PARK COLUMBUS 49,608 18,869 3,351 8,981 (23,067)
3162 REDAN VIL DEKALB II 69,768 25,463 15,197 7,854 17,428
3163 RIDGEWOOD DEKALB II 38,335 17,605 12,924 20,718 (32,752)
3168 KNOX LANDING KNOXVILLE 58,097 30,672 6,837 9,693 (79,372)
3176 MORGAN TRACE UNION CITY 75,734 9,532 7,721 (24,637) (31,936)
3184 AMBERWOOD II 70,942 12,309 8,603 (82,998) 90,409
3197 PARKWOOD VIL II 53,266 9,056 9,144 10,670 19,823
3200 SKYRIDGE 102,278 57,521 37,876 1,829 32,301
3266 MARSH LANDING 41,763 21,095 11,760 13,727 (55,462)
</TABLE>
<PAGE>
163
<TABLE>
CARDINAL REALTY SERVICES, INC.
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
SELECTED FINANCIAL INFORMATION (ACCRUAL BASIS) (cont'd)
----------------------------------------------------------------------------
Deprec Major Non Operating
Prop # Name & Amort Replacement Maintenance Expenses Net Income
=============================================================================================================================
SYNDICATED
===================================
<S> <C> <C> <C> <C> <C> <C>
3269 WOODSIDE 38,417 15,102 22,647 (3,339) (51,179)
3270 GREENTREE 29,416 13,019 11,811 16,368 (32,432)
3271 STILLWATER 40,909 25,622 6,388 4,548 (63,616)
3353 RAMBLEWOOD II 19,693 (1,909) 19,922 (6,793) (13,885)
3358 LINK TERRACE 37,121 31,387 5,773 10,909 (52,725)
3366 GREENTREE II 21,640 6,995 12,518 4,010 (24,726)
3378 SUNNYSIDE 36,314 17,392 12,276 742 (8,252)
3409 QUAIL CALL 32,693 18,182 5,360 20,105 (62,271)
3428 WESTWAY 57,961 19,206 1,781 3,153 (23,965)
3430 CAMDEN WAY 48,397 16,622 17,731 5,558 (151,530)
3450 CAMDEN WAY II 54,693 21,209 12,330 (943) (99,600)
4101 FORSYTHIA CT HARFORD 66,412 9,614 53 15,214 (60,281)
4149 GLEN HOLLOW GLEN BURNIE 54,198 4,914 4,418 83,956 (136,205)
4708 ANNHURST HARFORD 65,359 12,278 6,414 34,977 (31,443)
------------------------------------------------------------------------------
409 $18,500,152 $7,269,074 $2,993,221 $1,075,720 $(13,824,830)
------------------------------------------------------------------------------
</TABLE>
<PAGE>
164
<TABLE>
CARDINAL REALTY SERVICES INC
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
OTHER FINANCIAL INFORMATION (CASH BASIS)
-----------------------------------------------------------------------------------
Contractual Sub- Dis-
First ordinated tribution Excess Real
Capital Mortgage Debt to Limited Cash Flow Estate
Prop # Name Expenditures Principal Principal to Partners Cardinal Investment Taxes
====================================================================================================================================
WHOLLY OWNED PROPERTIES
=================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1375 RIVERVIEW ESTATES 38,800 16,314 10,272 0 24,826
1377 APPLE RIDGE I 7,200 11,479 2,221 (254,857) 14,840
1389 THE WILLOWS I 14,736 11,799 19,458 0 16,307
1439 MONTROSE SQUARE 0 31,582 0 0 46,329
1542 SPRINGWOOD 26,000 10,695 16,454 0 6,029
1620 MEADOWOOD 0 4,892 720 0 0 11,036
1672* RIDGEWOOD ELHART 0 6,177 23,348 (17,500) 0
1690 HEATHMOORE I 0 18,500 67,944 0 35,817
1750 CEDARWOOD II 3,011 11,759 0 (187,924) 9,800
1780 BRUNSWICK 0 12,975 51,599 0 0 54,924
1786 SPICEWOOD 2,927 41,304 0 (4,452) 19,997
1806 WINTHROP CT II 300 9,248 0 (150,534) 14,364
1809 MEADOWOOD II 463 14,624 0 0 37,642
1810 ACADIA CT II 1,470 22,099 40,146 0 61,287
1814 ASHFORD HILL 2,100 17,073 7,011 0 33,211
1816 CEDARWOOD III 23,740 10,413 5,545 0 9,754
1822 MARABOU MILLS I 4,203 20,701 13,243 (36,107) 32,912
1823 ELMTREE PARK I 225 19,640 43,522 0 31,491
1824 AMESBURY I 3,030 14,862 40,482 0 26,990
1825 BRADFORD PL 0 6,006 29,885 0 32,880
1830 SHERBROOK 0 19,695 18,716 0 31,647
1833 HAYFIELD PARK 11,524 20,627 59,331 0 13,040
1838 CEDARGATE II 0 2,842 0 0 11,479
1839 DARTMOUTH PL II 2,970 17,256 61,182 0 23,501
1841 WILLOWOOD II 0 12,240 5,792 0 24,600
1843 DOGWOOD GLEN I 21,107 20,725 43,524 (59,145) 31,174
1846 CHERRY GLEN I 0 22,414 5,015 0 34,704
1853 FOXHAVEN 13,745 22,052 62,699 0 33,360
1859 ANNHURST II 0 9,913 0 0 16,653
1863 HUNTER GLEN 0 26,242 27,081 0 38,928
1869 HARVEST GROVE I 0 22,513 44,450 0 24,427
1871 CLEARWATER 13,839 11,839 32,106 0 13,775
1877 SHERBROOK 8,400 33,177 74,334 0 53,579
1880 ARAGON WOODS 0 4,400 5,261 0 25,131
1885 NEWBERRY II 0 16,496 6,348 0 0 25,652
1887 RIVER GLEN I 0 33,882 19,061 0 28,309
1889 APPLEGATE II 10,705 16,748 21,732 (55,382) 34,421
1895 ROSEWOOD COMMONS II 201 34,809 19,017 0 29,612
1898 RIDGEWOOD II 0 26,815 68,600 0 40,863
1908 CHERRY GLENN II 1,660 13,722 52,611 0 35,111
1909 LINDENDALE 0 4,172 0 (165,118) 30,502
1911 ELMTREE PARK II 163 6,795 0 0 19,552
1914 WOODLANDS II 0 19,616 30,623 0 28,775
1917 WILLOWOOD II 21,600 12,094 60,363 0 18,233
1935 RED DEER II 0 24,255 56,757 0 16,800
1936 SUFFOLK GROVE II 2,085 12,843 19,066 0 25,523
1937 THE WILLOWS III 6,054 10,173 21,362 0 15,672
1946 AMBERWOOD 0 7,090 5,263 0 (154,857) 15,720
1966 RIVER GLEN II 0 19,667 0 (251,150) 23,162
1982 MARABOU MILLS III 0 9,018 0 (265,955) 22,537
1983 CAMBRIDGE COMMONS III 0 0 0 0 29,083
1986 GARDEN CT 1,856 29,427 100,342 0 50,760
1005 ANNHURST III 0 30,028 0 0 21,420
1039 LAUREL BAY 0 43,748 61,604 0 48,486
2137 WINDWOOD I 27,495 4,740 1,108 0 0 21,854
2208 GARDEN TERRACE I 39,180 7,906 10,318 0 19,362
2385 CANTERBURY CROSSINGS 0 12,768 82,482 0 0 52,757
2455 THYMEWOOD II 0 16,490 7,812 0 0 49,882
2462 FOREST GLEN 12,000 17,727 53,664 0 16,891
2469 BEL AIRE II 0 11,355 1,200 0 0 24,376
2479 HERON POINTE 20,125 11,336 112,695 0 36,369
2482 OAKWOOD VILLAGE 0 14,454 22,648 0 19,682
2487 RIVERS END II 0 13,668 64,714 0 22,566
2501 WHISPERING PINES II 0 5,481 0 0 15,239
2512 SKY PINES II 50,450 21,715 0 0 20,543
2513 CRYSTAL CT II 0 11,869 2,695 0 0 23,249
2515 HIDDEN ACRES 684 11,397 16,400 0 (99,957) 39,740
</TABLE>
<PAGE>
165
<TABLE>
CARDINAL REALTY SERVICES INC
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
OTHER FINANCIAL INFORMATION (CASH BASIS)
-----------------------------------------------------------------------------------------
Contractual Sub- Dis-
First ordinated tribution Excess Real
Capital Mortgage Debt to Limited Cash Flow Estate
Prop # Name Expenditures Principal Principal to Partners Cardinal Investment Taxes
====================================================================================================================================
WHOLLY OWNED PROPERTIES
=================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2519 CENTRE LAKE III 0 57,542 655 0 141,383
2520 PINE VIEW 3,764 13,532 3,881 0 0 31,688
2521 BLUEBERRY HILL I 224 8,959 9,138 0 15,846
2526 HOLLY SANDS II 39,716 7,308 28,744 0 (18,181) 18,457
2527 SUNSET WAY I 0 27,041 30,468 (790,033) 66,809
2530 PINE BARRENS 51,675 19,881 52,947 0 35,575
2535 PELICAN POINTE I 9,730 15,735 37,954 0 28,381
2537 CALIFORNIA GARDENS 0 10,198 1,420 0 0 23,038
2543 MIGUEL PL 0 10,162 6,695 0 0 22,246
2545 JUPITER COVE I 0 13,040 12,877 0 0 31,843
2546 PELICAN POINTE II 9,290 13,719 37,192 0 24,236
2547 MARK LANDING I 32,904 8,232 40,195 0 0 24,025
2549 JUPITER COVE III 0 14,301 12,235 0 0 31,472
2556 HILLSIDE TRACE 0 8,804 1,354 0 0 21,080
2559 JEFFERSON WAY I 6,400 8,470 12,828 0 0 16,324
2580 SUNSET WAY II 0 23,455 0 0 66,174
2587 OAK GARDENS 484 27,262 28,101 0 0 69,437
3166 CEDAR HILL 0 19,003 36,564 0 21,398
3171 LAUREL GLEN 0 11,996 0 (250,429) 25,497
3173 SPRINGBROOK 32,645 20,886 5,556 (31,563) 34,224
3174 LAKESHORE I 0 7,644 27,769 0 17,244
3175 GLENVIEW 0 27,685 0 0 18,941
3186 RAMBLEWOOD II 0 65,442 0 0 17,784
3188 VALLEYBROOK 0 22,114 86,681 (76,934) 17,622
3189 WILLOW LAKES 0 48,204 0 0 28,962
3190 GLENWOOD VILLAGE 0 14,515 77,723 0 20,101
3208 RAVENWOOD 0 43,133 44,054 0 28,221
3209 INDIAN LAKE I 4,481 140,897 242,542 0 64,823
3231 WALKER PL 0 11,714 0 (79,661) 35,301
3233 GREENBRIAR GLEN 0 27,866 65,880 (172,181) 35,258
3400 HATCHERWAY 18,511 5,310 28,192 0 19,337
3417 GLEN ARM MANOR 43,359 12,550 1,753 0 0 17,978
3480 MILL RUN 0 3,264 21,575 0 21,958
3486 STEWART WAY I 16,447 8,506 6,599 0 26,225
3494 WILCREST WOODS 16,260 6,504 15,519 0 20,816
3496 MARSHLANDING II 2,777 8,467 0 0 8,315
3522 STEWART WAY II 0 7,630 20,223 0 28,218
3532 KINGS COLONY 0 7,460 0 0 27,994
4109 CHERRY TREE 2,988 58,398 19,265 0 44,972
4111 FORSYTHIA CT II 0 23,695 26,417 0 0 25,680
4133 MERRIFIELD 2,546 29,504 36,950 (284,688) 49,199
5910 MARABOU MILLS II 2,233 19,823 50,870 0 21,639
5886 PICKERINGTON MEADOWS 0 20,596 0 (11,300) 16,786
5903 BRUNSWICK II 0 15,851 106 0 31,361
5906 AMESBURY II 4,660 15,735 69 0 24,731
5951 HARVEST GROVE II 1,433 13,287 6,853 0 40,532
------------- ----------- ---------- ---------- ---------- ------------ -----------
113 $696,575 $2,095,701 $352,127 $0 $2,515,542 $(3,417,909) $3,278,271
------------- ----------- ---------- ---------- ---------- ------------ -----------
* Partial year
</TABLE>
<PAGE>
166
<TABLE>
CARDINAL REALTY SERVICES INC
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
OTHER FINANCIAL INFORMATION (CASH BASIS)
-----------------------------------------------------------------------------------------
Contractual Sub- Dis-
First ordinated tribution Excess Real
Capital Mortgage Debt to Limited Cash Flow Estate
Prop # Name Expenditures Principal Principal to Partners Cardinal Investment Taxes
====================================================================================================================================
SYNDICATED
=================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1109 DOGWOOD TERRACE 103,385 2,928 0 (214,722) 27,710
1112 LONDON LAMPLIGHT 0 29,879 16,398 12,712 0 14,330
1123 SPRINGFIELD WOODGATE 6,458 2,657 10,737 0 0 13,080
1262 THE BIRCHES LIMA 17,143 4,973 4,337 0 12,503
1297 PLUMWOOD APTS 10,423 15,369 52,897 42,286 0 30,147
1310 MELDON PL 27,082 27,901 54,407 0 52,388
1320 WEST OF EASTLAND 0 11,438 0 0 38,049
1322 PARKVILLE 47,495 8,650 3,389 0 32,999
1327 CHARING CROSS APTS 18,625 9,834 55,652 0 18,778
1329 INDEPENDENCE VIL 1,925 14,150 0 0 41,055
1330 POPLAR CT 12,919 18,824 10,578 4,304 0 14,582
1341 GREENLEAF APTS 0 2,743 0 0 14,988
1344 LAUREL CT APTS 10,925 9,789 0 0 14,532
1379 AMHURST APTS 0 20,778 15,302 6,496 0 25,976
1404 KETWOOD APTS 37,362 33,168 6,196 0 0 40,092
1436 SANDALWOOD APTS 0 11,309 13,149 1,461 0 11,520
1437 HICKORY MILL 25,070 14,093 41,632 42,503 0 24,702
1455 MONTROSE SQ 27,075 10,444 41,550 0 10,675
1456 APPLE RIDGE 0 7,147 15,457 (106,172) 14,040
1460 WESTWOOD 10,400 1,258 0 0 3,185
1461 APPLE RUN II 0 4,710 87,449 0 0 15,251
1462 PLUMWOOD 0 10,629 9,450 0 12,096
1464 GREENGLEN 0 6,140 20,220 10,000 0 15,316
1465 CEDARWOOD BELPRE 0 9,628 5,418 12,978 0 6,919
1466 AMHURST II 15,840 19,316 19,801 4,781 0 27,096
1469 CHELSEA CT 23,549 14,134 43,343 0 14,148
1470 MILLSTON APTS 7,350 5,914 10,306 0 9,562
1473 MILLBURN II 14,775 6,851 1,391 0 (238,032) 24,480
1483 WOODBINE 6,210 7,114 0 (121,066) 9,592
1485 HAMPSHIRE II 17,375 16,715 2,879 0 18,120
1489 PLUMWOOD 0 12,489 43,301 0 22,675
1491 CAMELLIA CT WASHINGTON CH 0 7,545 7,569 0 9,295
1499 CONCORD SQ ONTARIO 2,230 6,499 3,124 0 11,760
1505 CAMELLIA CT DAYTON 13,156 10,768 2,520 4,968 (22,850) 22,201
1510 BECKFORD PL WAPAKONETA 14,975 3,324 0 0 7,699
1511 APPLEGATE CHILLICOTHE II 3,650 3,685 0 0 9,604
1512 SPRINGWOOD NEW HAVEN 0 10,312 14,692 0 19,649
1516 THE WILLOWS DELAWARE II 12,507 7,366 16,771 0 13,627
1519 GREENGLEN ALLEN II 10,812 6,438 5,452 (146,613) 11,279
1523 LARKSPUR MORAINE 12,600 5,367 76 0 1,320
1524 MILLSTON ABERDEEN II 7,625 4,404 6,356 0 6,982
1526 CAMELLIA CT COLUMBUS 37,503 34,463 16,793 17,360 0 22,183
1527 WOODBINE CUYAHOGA FALLS 0 21,383 42,952 3,076 0 23,675
1528 APPLEGATE LORDSTOWN 0 10,593 0 0 8,791
1529 PARKVILLE ENGLEWOOD 0 12,149 13,074 15,269 0 16,596
1530 CEDARWOOD SABINA 0 7,880 0 0 8,579
1531 ANDOVER CT 0 18,243 6,564 0 11,180
1533 HAMPSHIRE BLUFFTON 0 9,273 316 0 11,919
1534 CONCORD SQ LAWRENCEBURG 0 5,416 19,068 0 23,061
1535 GREENGLEN TOLEDO II 32,515 9,410 39,705 0 19,920
1539 FOXTON SEYMOUR 0 4,940 0 0 8,855
1540 DARTMOUTH PL KENT 15,988 13,008 0 0 26,772
1549 CAMELLIA CT DAYTON II 0 16,119 19,098 0 22,358
1550 APPLEGATE COLUMBUS 0 26,156 31,992 16,860 0 24,884
1553 APPLE RIDGE III 0 7,582 7,156 1,663 0 9,948
1554 SPRINGWOOD AUSTINTOWN II 0 11,301 7,726 0 0 15,074
1555 DOVER PL EASTLAKE 4,100 23,253 74,775 19,877 0 19,925
1556 PARKVILLE PARKERSBURG 2,770 5,387 14,478 0 9,120
1557 HARTWICK TIPTON 0 15,765 1,167 0 17,325
1558 BECKFORD PL THE PLAINS 0 20,939 28,711 0 22,385
1559 LARKSPUR COLUMBUS 9,040 33,146 6,681 0 25,643
1560 SPRINGWOOD COLUMBUS 0 8,859 2,611 0 21,742
1561 PARKVILLE GAS CITY 0 4,917 10,920 (90,985) 19,197
1562 CAMELLIA CT CARROLLTON 14,800 22,377 0 0 8,398
1563 FOXTON DAYTON II 35,512 16,871 4,137 0 35,520
1566 APPLE RUN HILLSDALE 8,282 13,645 27,516 0 16,989
1567 PINE GROVE ROSEVILLE 0 7,614 0 (158,561) 34,483
</TABLE>
<PAGE>
167
<TABLE>
CARDINAL REALTY SERVICES INC
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
OTHER FINANCIAL INFORMATION (CASH BASIS)
-----------------------------------------------------------------------------------------
Contractual Sub- Dis-
First ordinated tribution Excess Real
Capital Mortgage Debt to Limited Cash Flow Estate
Prop # Name Expenditures Principal Principal to Partners Cardinal Investment Taxes
====================================================================================================================================
SYNDICATED
=================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1568 ASHGROVE FRANKLIN 2,700 9,303 0 0 19,320
1569 MEADOWOOD JACKSON 12,339 6,862 6,270 (131,569) 18,366
1571 GEORGETOWN S TUSCARAWAS II 0 9,024 0 0 14,820
1572 CONCORD SQ KOKOMO 0 25,625 25,953 0 19,219
1573 SANDALWOOD ALEXANDRIA 0 30,402 0 0 17,899
1574 AMHURST TOLEDO 11,900 16,614 35,224 0 25,132
1575 HAMPSHIRE WILLIAMSTOWN 14,625 5,728 0 0 5,874
1576 MEADOWOOD MANSFIELD 0 10,293 0 0 12,720
1577 HICKORY MILL HURRICANE 19,200 11,865 11,714 0 11,904
1578 ASHGROVE FLORENCE 4,500 12,669 0 0 11,809
1579 MEADOWOOD FRANKLIN 30,216 3,930 57,691 2,353 (10,710) 15,046
1581 CEDARWOOD GOSHEN 0 11,966 36,642 2,977 0 15,642
1582 CONCORD SQ ONTARIO II 0 5,293 0 0 8,640
1583 MEADOWOOD CRAWFORDSVILLE 0 17,083 11,499 0 25,276
1585 BECKFORD PL N CANTON 6,205 14,171 4,948 12,378 0 20,160
1587 PINE GROVE COLUMBUS II 0 3,145 0 0 6,242
1588 PLUMWOOD COLUMBUS III 2,477 9,181 27,354 0 11,313
1589 WOODLANDS COLUMBUS 0 18,047 0 0 34,090
1590 WOODLANDS FRANKLIN 0 6,803 3,265 0 0 696
1591 MEADOWOOD FLATWOODS 0 13,285 12,950 0 12,191
1592 GREENGLEN DAYTON 7,250 24,179 34,375 0 31,220
1593 ASHGROVE INDIANAPOLIS 1,087 21,284 33,041 0 26,718
1595 MEADOWOOD NICHOLASVILLE 19,987 7,405 69,130 0 11,453
1596 STONEHENGE RICHMOND 16,935 6,153 12,599 46,014 0 34,773
1597 WILLOWOOD COLUMBUS 0 6,837 63,055 46,811 0 21,287
1598 CEDARGATE BOWLING GREEN 0 27,672 59,628 0 11,294
1599 WILLOW RUN WILLARD 0 23,984 0 0 12,000
1600 HEATHMOORE JEFFERSON 0 11,338 8,172 0 13,635
1601 STONEHENGE GLASGOW 0 11,422 0 0 8,661
1602 HEATHMOORE INDIANAPOLIS 0 13,648 49,149 28,026 0 25,456
1603 APPLE RUN TRUMBULL 0 13,838 0 0 12,533
1604 FOXTON MONROE 0 11,072 2,182 8,944 0 23,510
1605 ASHGROVE CALHOUN 0 7,413 0 (23,562) 17,520
1606 STONEHENGE OTTAWA 7,884 6,280 10,872 0 5,092
1613 WOODLANDS ZELIENOPLE 0 12,501 19,673 0 22,149
1615 RIDGEWOOD WESTLAND 0 8,795 0 0 41,291
1616 HEATHMOORE MACOMB 0 0 37,810 0 0 31,920
1617 DOVER PL EASTLAKE II 2,600 14,909 20,761 12,771 0 19,504
1618 DOVER PL EASTLAKE III 1,800 7,349 7,444 1,897 0 9,202
1619 CEDARGATE MICHIGAN CITY 0 8,706 9,479 (187,911) 29,790
1622 CEDARGATE BLOOMINGTON 0 33,197 63,885 0 38,850
1623 CEDARGATE LANCASTER 0 4,094 0 0 9,998
1624 STONEHENGE JEFFERSON 0 17,845 44,443 0 13,664
1626 SLATE RUN INDIANAPOLIS 18,581 23,994 18,515 61,283 0 35,101
1630 SANDALWOOD TOLEDO 8,665 10,085 0 (91,584) 22,781
1635 RIDGEWOOD COLUMBUS 4,825 6,946 46,330 0 24,151
1637 APPLEGATE DELAWARE 7,137 15,693 28,701 0 34,079
1638 MEADOWOOD LOGANSPORT 0 8,242 11,943 0 19,509
1639 SLATE RUN LEBANON 0 8,506 69,996 0 20,756
1640 WESTWOOD ROCHESTER 0 10,464 0 0 15,468
1641 WILLOWOOD WOOSTER 0 14,509 7,158 40,453 0 15,240
1642 STONEHENGE STARK 24,055 7,626 21,052 0 11,760
1644 RIDGEWOOD LEXINGTON 13,617 24,374 66,453 0 9,106
1645 RIDGEWOOD BEDFORD 3,168 15,762 43,995 0 19,889
1646 CAMELLIA CT COLUMBUS II 3,640 8,613 28,629 0 15,892
1647 CEDARGATE ENGLEWOOD 0 11,272 0 (22,441) 27,600
1648 SLATE RUN HOPKINSVILLE 5,900 10,218 97 0 10,955
1649 WILLOWOOD GROVE CITY 11,647 6,228 20,101 0 22,436
1650 MEADOWOOD COLUMBUS 0 27,746 20,384 0 23,877
1651 STONEHENGE INDIANAPOLIS 0 8,530 61,505 0 27,418
1652 MEADOWOOD WARRICK 1,400 14,164 0 0 21,600
1653 WILLOWOOD E INDIANAPOLIS 0 6,668 40,265 0 27,071
1655 CEDARGATE SHELBY 0 15,545 16,215 0 13,817
1656 RIDGEWOOD RUSSELVILLE 0 13,154 0 (149,635) 8,385
1657 WILLOW RUN NEW ALBANY 18,866 20,762 28,783 0 26,024
</TABLE>
<PAGE>
168
<TABLE>
CARDINAL REALTY SERVICES INC
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
OTHER FINANCIAL INFORMATION (CASH BASIS)
----------------------------------------------------------------------------------------
Contractual Sub- Dis-
First ordinated tribution Excess Real
Capital Mortgage Debt to Limited Cash Flow Estate
Prop # Name Expenditures Principal Principal to Partners Cardinal Investment Taxes
====================================================================================================================================
SYNDICATED
=================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1658 ASHGROVE JEFFERSON 17,802 12,843 65,434 0 8,600
1659 SLATE RUN JEFFERSON 0 24,727 22,908 0 12,605
1660 MEADOWOOD LEXINGTON 18,915 18,365 24,040 0 10,085
1661 FORSYTHIA CT COLUMBUS 0 29,503 20,347 0 29,798
1663 WATERBURY GREENWOOD 0 6,340 21,965 0 16,126
1664 SLATE RUN BARDSTOWN 5,185 9,372 87 0 7,664
1666 WILLOWOOD FRANKFORT 0 11,939 0 (387,626) 11,253
1667 BECKFORD PL NEW CASTLE 0 5,368 26,639 0 11,770
1669 WILLOWOOD OWENSBORO 0 6,443 0 0 10,494
1670 STONEHENGE MONTGOMERY 0 16,097 35,135 0 28,368
1671 LARKSPUR MORAINE II 0 6,926 0 0 1,440
1673 SLATE RUN BEDFORD 0 15,256 43,924 0 51,357
1674 ROSEWOOD JEFFERSON 36,824 19,669 81,562 0 20,581
1676 MILLBURN STOW 16,148 24,845 11,167 24,097 0 28,634
1677 WILLOW RUN MADISONVILLE 0 11,694 0 (103,194) 14,350
1678 CEDARWOOD GOSHEN II 0 7,034 8,203 0 16,835
1679 HEATHMOORE EVANSVILLE 1,209 12,633 0 (59,555) 36,000
1681 FOREST PARK MEADOWOOD 0 43,461 0 0 51,067
1682 STONEHENGE TECUMSEH 0 6,179 3,722 52,861 0 27,660
1683 BRANDON CT BLOOMINGTON 0 17,460 55,439 0 51,316
1686 ASHGROVE STERLING 6,426 16,391 89,802 0 60,842
1687 MONTGOMERY CT INGHAM 0 13,124 24,847 0 34,278
1691 PINE GROVE ROSEVILLE II 0 8,196 17,934 0 19,533
1692 MEADOWOOD MONROE 12,750 10,524 81,946 0 26,593
1695 ANNHURST INDIANAPOLIS 0 88,835 0 0 33,823
1696 ANNHURST ALLEGHENY 0 25,851 61,092 0 80,275
1698 WOODLANDS STREETSBORO 11,483 33,728 13,102 20,905 0 20,702
1699 ROANOKE OAKLAND 35,650 22,565 0 0 62,776
1700 DANIEL CT CLERMONT 0 22,593 0 0 41,173
1702 STRATFORD SOUTH CHARLESTON 0 36,034 0 0 34,225
1703 BARRINGTON BEDFORD 9,418 44,657 5,887 27,939 0 69,793
1704 MULBERRY HILLIARD 16,112 13,236 42,332 0 0 29,357
1705 WOODLANDS COLUMBUS II 3,295 12,905 44,012 0 0 27,055
1707 LARKSPUR COLUMBUS II 4,870 10,503 31,096 0 25,827
1714 NEWBERRY EATON 0 14,966 52,862 0 32,275
1717 HICKORY MILL HURRICANE II 12,090 14,957 30,512 0 11,422
1718 MEADOWOOD COLUMBUS II 0 2,924 22,305 0 9,037
1719 VALLEYFIELD LEXINGTON 1,280 11,347 94,297 0 19,242
1720 RIDGEWOOD COLUMBUS II 0 6,705 35,784 0 23,345
1721 OLIVEWOOD INDIANAPOLIS 17,093 19,259 63,464 0 26,294
1723 ROANOKE JEFFERSON 0 35,206 21,790 0 9,851
1724 MEADOWOOD CUYAHOGA FALLS 581 15,735 49,283 0 25,695
1725 RIDGEWOOD LEXINGTON II 31,304 13,074 48,505 0 9,364
1726 STONEHENGE JASPER 0 5,144 4,572 (54,605) 16,149
1727 CARLETON CT KANAWHA 18,350 16,357 18,524 (29,532) 22,980
1728 NEWBERRY GROVE CITY 0 6,908 17,959 6,737 (98,219) 22,815
1729 BECKFORD PL N CANTON II 0 13,837 21,330 0 20,280
1730 NORTHRUP CT ALLEGHENY 0 11,711 2,426 0 (185,398) 29,300
1731 FORSYTHIA CT JEFFERSON 0 9,707 67,404 0 13,252
1732 WINTHROP CT FRANKFURT 0 14,323 41,405 0 14,336
1733 PRINCETON CT EVANSVILLE 0 5,024 23,061 0 32,055
1735 ROSEWOOD COLUMBUS 0 26,453 34,674 0 32,614
1737 SLATE RUN JEFFERSON II 0 23,563 0 0 13,982
1741 WILLOWOOD TROTWOOD 0 6,934 5,491 0 (101,080) 24,000
1744 BRUNSWICK TRUMBULL 5,016 0 0 0 0 19,377
1745 WYCLIFFE CT 0 1,097 0 (134,377) 26,640
1747 SLATE RUN MIAMISBURG 15,602 10,578 20,044 (130,000) 19,507
1748 MONTGOMERY CT COLUMBUS 0 13,204 44,347 0 28,492
1749 WATERBURY CLARKSVILLE 0 15,928 33,200 0 20,412
1751 WINTHROP CT COLUMBUS 0 11,228 20,974 (144,024) 23,685
1752 PICKERINGTON MEADOWS 8,250 9,388 31,062 0 21,041
1756 WATERBURY CLERMONT 1,000 23,348 30,295 0 26,705
1757 WILLOWOOD GROVE CITY II 4,509 3,624 4,792 3,000 0 12,562
1758 CEDARGATE BLOOMINGTON II 1,821 13,537 62,350 0 32,149
1759 ACADIA CT 6,970 14,259 68,800 0 58,491
</TABLE>
<PAGE>
169
<TABLE>
CARDINAL REALTY SERVICES INC
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
OTHER FINANCIAL INFORMATION (CASH BASIS)
-----------------------------------------------------------------------------------------
Contractual Sub- Dis-
First ordinated tribution Excess Real
Capital Mortgage Debt to Limited Cash Flow Estate
Prop # Name Expenditures Principal Principal to Partners Cardinal Investment Taxes
====================================================================================================================================
SYNDICATED
=================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1760 WILLOWOOD E INDIANAPOLIS II 0 10,234 47,743 0 24,345
1761 SHERBROOK COLUMBUS 0 6,358 28,788 0 27,676
1762 LONGWOOD LEXINGTON 0 11,320 44,182 0 11,558
1763 NORTHRUP CT ALLEGHENY II 0 12,679 2,000 0 30,350
1765 LAURELWOOD CT BEDFORD 2,712 10,280 8,330 0 19,123
1768 CARLETON CT ANN ARBOR 0 31,365 79,824 0 89,770
1770 VALLEYFIELD 0 18,655 0 0 58,825
1772 WENTWORTH ROSEVILLE 0 24,070 64,903 0 46,839
1773 WATERBURY WESTLAND 0 25,958 41,416 0 74,036
1777 HEATHMOORE INDIANAPOLIS II 0 23,524 43,710 0 33,295
1779 AMBERIDGE 0 9,876 21,770 0 34,352
1783 WOODLANDS STREETSBORO II 3,470 5,461 23,711 0 18,148
1785 CARLETON CT ERIE 0 17,858 8,982 0 27,638
1787 ROSEWOOD COMMONS 0 23,773 30,944 0 34,896
1790 WILLOWOOD FRANKFORT II 8,000 10,413 20,890 0 10,792
1794 ANNHURST COLUMBUS 0 0 0 0 18,334
1799 BEREA TABOR RIDGE 0 41,165 0 0 62,508
1801 WILLOWOOD WOOSTER II 0 11,163 1,854 (124,933) 15,720
1804 CAMBRIDGE COMMONS 0 9,501 40,972 0 0 30,930
1805 OLIVEWOOD INDIANAPOLIS II 17,657 38,057 10,609 643 (42,213) 25,344
1807 BRUNSWICK MONONGALIA 0 19,173 11,416 0 18,188
1812 HAMPTON WOODS COLUMBUS 0 13,197 0 0 15,816
1813 SUFFOLK GROVE GROVE CITY 6,420 14,337 12,162 50,679 0 31,950
1815 MONTGOMERY CT COLUMBUS II 0 16,428 49,563 1,993 0 24,588
1818 REDWOOD HOLLOW SMYRNA 0 13,551 3,355 (131,564) 21,672
1829 CLEARVIEW GREENWOOD 15,064 22,293 50,375 85,247 161 0 28,309
1832 ANSLEY OAKS 0 14,595 36,619 0 0 36,576
1844 STERLING HGTS OLIVEWOOD 2,495 189,083 103,863 0 0 75,812
1847 RED DEER FAIRBORN 0 36,594 34,506 0 16,560
1851 ASHGROVE STERLING II 3,672 28,514 17,703 17,703 (184,328) 46,572
1866 HEATHMOORE WAYNE II 9,865 29,110 40,086 0 30,450
1875 DOVER PL EASTLAKE IV 4,300 13,101 47,271 0 24,226
1905 CAMBRIDGE COMMONS II 0 5,869 0 0 30,017
1907 DOGWOOD GLEN MARION II 17,252 19,551 47,342 (105,135) 27,333
1916 CLEARVIEW GREENWOOD II 17,904 14,100 64,715 0 0 15,985
1928 WOODLANDS COLUMBUS III 0 29,367 0 0 37,498
1944 TIMBERCREEK TOLEDO 0 0 0 0 32,811
2100 SANFORD CT INVESTORS 0 0 0 0 38,568
2106 OLD ARCHER CT 26,843 27,837 18,008 30,287 0 26,293
2107 PALATKA OAKS 5,580 2,516 89 0 9,402
2108 AZALEA HILL 0 0 0 0 8,723
2112 TURKSCAP 0 9,187 2,786 0 15,761
2114 CEDARWOOD 16,250 8,360 487 0 14,007
2115 UNIVERSITY SQ 56,312 10,979 9,774 0 20,831
2129 NORTHWOOD 22,080 7,096 110 0 11,923
2131 ROLLINGWOOD 0 10,962 0 0 20,002
2139 MEADOWOOD II 17,410 10,066 29,364 0 19,347
2143 CEDARWOOD II 7,790 7,550 0 0 10,452
2153 NOVAWOOD 8,202 5,756 4,664 0 0 22,331
2154 KNOLLWOOD II 0 0 0 0 6,880
2164 PALATKA OAKS II 10,500 2,768 1,471 0 7,456
2165 NOVAWOOD II 0 8,379 13,846 0 23,531
2166 WINGWOOD 0 10,288 4,098 0 0 31,516
2172 HEATHERWOOD II 0 5,155 1,113 0 0 13,613
2173 COUNTRYSIDE 8,640 7,641 0 0 25,543
2174 COUNTRYSIDE II 34,705 12,791 3,705 0 0 41,002
2189 HIDDEN PINES 0 9,132 1,274 0 0 21,960
2190 MOSSWOOD 0 9,591 27,906 0 19,268
2191 MOSSWOOD II 0 11,477 66,574 0 0 30,007
2193 SUNRISE 0 7,856 0 0 22,815
2194 SUNRISE II 14,700 2,223 0 0 12,836
2196 BRANCHWOOD 0 27,322 0 0 37,024
2199 CONCORD SQ II 30,406 11,043 122 0 24,980
2201 LONGWOOD 29,022 8,099 1,779 0 0 24,388
2202 LONGWOOD II 4,604 3,190 0 0 13,665
2205 BRANDYWYNE E 0 4,976 1,735 0 0 14,080
</TABLE>
<PAGE>
170
<TABLE>
CARDINAL REALTY SERVICES INC
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
OTHER FINANCIAL INFORMATION (CASH BASIS)
-----------------------------------------------------------------------------------------
Contractual Sub- Dis-
First ordinated tribution Excess Real
Capital Mortgage Debt to Limited Cash Flow Estate
Prop # Name Expenditures Principal Principal to Partners Cardinal Investment Taxes
====================================================================================================================================
SYNDICATED
=================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2212 AMBERWOOD 4,502 4,824 2,574 0 15,667
2215 COUNTRYSIDE III 6,715 4,736 9,422 0 0 13,490
2218 INDIAN RIDGE 97,576 11,570 8,776 0 19,132
2222 SHADOWOOD 0 8,308 0 0 33,322
2224 ROSEWOOD 0 12,834 47,263 0 21,539
2226 SPRINGTREE 44,619 4,354 864 0 0 29,471
2230 RIVERWOOD 0 10,415 6,340 0 19,936
2231 APPLEWOOD 9,198 13,927 0 0 21,997
2234 WINDRUSH 17,250 5,356 9,618 0 18,489
2235 HERONWOOD 33,120 5,879 6,039 0 17,179
2237 SANDPIPER II 3,596 17,256 0 0 24,502
2240 BAYSIDE 0 6,314 1,484 0 0 20,494
2242 DEERWOOD 0 6,105 3,188 0 0 11,164
2244 CANDLELIGHT 41,859 4,140 1,114 0 (68,936) 22,173
2246 GARDEN TERRACE II 27,666 9,035 2,606 0 20,946
2247 INDIAN RIDGE II 36,531 6,483 0 0 13,756
2249 SHADOWOOD II 0 6,520 9,226 0 33,128
2251 STRAWBERRY PL 0 8,832 0 0 15,868
2253 CRYSTAL CT 0 9,416 2,195 0 0 21,967
2254 TURKSCAP III 7,240 3,215 36,745 0 0 17,754
2265 PINE LAKE 0 3,099 16,084 0 0 12,551
2284 CAPITAL RIDGE 88,095 15,871 9,824 0 27,204
2285 WOODLAND 5,354 14,919 14,375 0 0 29,858
2288 SHADOW RIDGE 28,805 10,606 7,718 0 24,413
2295 HICKORY PL 12,873 20,634 37,380 0 26,733
2300 PINE TERRACE 0 8,255 56,474 0 18,853
2301 PALM PL 0 22,660 0 0 35,995
2309 THE LANDINGS 0 9,447 25,598 0 20,957
2311 ASTORWOOD 0 10,096 32,430 0 (78,494) 32,152
2312 PINELLAS PINES 0 11,352 0 0 36,348
2313 SPRING GATE 0 15,983 24,660 0 15,190
2314 GARDEN TERRACE III 82,413 12,675 9,858 0 29,818
2340 SHADOW BAY 0 17,247 0 0 19,453
2341 TERRACE TRACE 12,275 18,287 33,728 0 28,075
2343 KINGS CROSSING 29,810 12,535 13,200 0 0 23,841
2344 ELMWOOD 865 16,810 0 0 28,046
2355 NOVA GLEN 4,229 8,802 2,326 0 0 26,818
2363 MORNINGSIDE II 43,491 8,905 0 0 67,969
2365 APPLEWOOD II 4,980 0 0 0 35,326
2376 MOULTRIE 19,922 11,358 58,137 0 20,579
2379 SUGARTREE 650 7,605 22,201 0 0 24,851
2387 SOUTHGATE 0 20,294 48,930 0 46,063
2399 SUTTON PL 6,253 6,634 1,499 0 0 18,097
2405 DRIFTWOOD 0 3,347 83,629 0 0 21,421
2407 PINE MEADOWS 0 17,471 21,321 0 19,326
2411 ELMWOOD II 45,921 12,356 0 0 27,059
2412 PARKWAY N 18,760 5,253 8,995 0 18,144
2416 PINE TERRACE II 0 7,192 28,911 0 14,332
2422 HILLVIEW TERRACE 3,910 9,068 25,255 304 (68,260) 14,324
2427 HILLCREST VILLA 4,515 6,270 49,389 0 0 15,850
2429 CYPRESS 41,945 11,116 21,852 0 0 13,842
2431 OLYMPIAN VIL 0 29,000 0 0 58,025
2432 SILVER FOREST 10,560 7,103 1,631 0 (138,956) 13,925
2438 BERRY PINES 0 16,276 19,255 0 20,817
2439 OAK RIDGE 2,221 8,634 18,565 0 0 18,583
2441 OAK SHADE 12,990 24,096 42,434 0 33,378
2442 HOLLY SANDS 56,351 16,654 59,987 0 18,968
2443 BROADVIEW OAKS 46,125 15,089 0 0 28,476
2444 THYMEWOOD 0 18,784 36,035 0 0 59,273
2446 SHADOW BAY II 14,465 6,814 36,205 0 0 20,804
2447 CANDLELIGHT II 10,436 5,175 1,196 0 (91,799) 24,612
2449 SUGARTREE II 1,940 13,589 61,288 0 23,513
2451 WINTER WOODS 0 15,579 0 0 18,514
2452 WOODLAND II 4,561 12,546 2,789 0 0 28,114
2454 BEL AIRE 0 14,519 1,535 0 0 35,201
2459 CLEARLAKE PINES II 16,930 9,138 0 0 21,248
</TABLE>
<PAGE>
171
<TABLE>
CARDINAL REALTY SERVICES INC
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
OTHER FINANCIAL INFORMATION (CASH BASIS)
-----------------------------------------------------------------------------------------
Contractual Sub- Dis-
First ordinated tribution Excess Real
Capital Mortgage Debt to Limited Cash Flow Estate
Prop # Name Expenditures Principal Principal to Partners Cardinal Investment Taxes
====================================================================================================================================
SYNDICATED
=================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2460 MANCHESTER 14,225 9,833 11,486 0 0 24,908
2461 RANCHSIDE 15,782 11,286 20,332 0 19,707
2464 ESSEX SQ 5,294 19,793 1,836 77,880 0 20,867
2465 WESTCREEK 15,465 14,112 3,268 0 0 34,697
2466 SKY PINES 4,769 23,729 14,376 0 32,101
2470 RIVERS END 30,890 41,335 8,864 0 23,612
2471 BRIDGE POINT 10,534 14,848 8,923 0 23,630
2478 NOVA GLEN II 0 21,100 0 0 31,612
2483 OAKWOOD MANOR 4,200 13,598 0 0 37,191
2484 HOLLY RIDGE 0 23,514 4,430 0 0 54,073
2488 HIGH POINTS 750 17,372 0 0 36,698
2499 WINTER WOODS II 0 4,503 0 0 14,038
2502 PALM SIDE 0 6,567 16,956 0 32,658
2574 PALM BAY/WINDWOOD II 28,340 3,353 764 0 0 25,476
3101 MEADOWOOD NORCROSS 0 31,968 91,927 0 21,652
3102 CEDARGATE LAWRENCEVILLE 14,590 31,296 22,654 0 25,017
3104 WILLOW RUN DEKALB 0 10,585 0 (313,801) 26,690
3108 FOREST VIL BIBB 3,475 39,951 14,811 0 0 23,963
3109 RIDGEWOOD DEKALB 5,044 17,855 28,349 0 24,663
3111 IRIS GLEN ROCKDALE 0 16,440 0 (255,920) 33,134
3112 MEADOWLAND CLARKE 27,540 17,415 61,881 0 17,760
3114 WILLOWOOD MILLEDGEVILLE 0 14,115 32,804 0 13,895
3115 MEADOWOOD NORCROSS II 0 29,066 11,521 0 0 26,134
3116 VALLEYFIELD DEKALB 0 11,403 15,000 0 24,605
3117 NORWOOD GWINNETT 0 24,411 43,982 0 30,893
3118 SHADOW TRACE DEKALB 0 16,607 41,585 19,490 0 27,533
3120 OAKLEY WOODS UNION CITY 22,570 5,504 7,382 0 24,573
3121 ELMWOODS MARIETTA 0 28,272 19,357 0 14,242
3122 WOOD TRAIL NEWMAN 0 34,134 74,005 0 18,145
3123 REDAN VIL DEKALB 14,366 32,799 61,721 0 28,549
3124 BARRINGTON DEKALB 0 9,115 11,252 (140,137) 8,917
3125 STRATFORD LANE COLUMBUS 0 33,132 27,764 0 23,662
3127 WOODCLIFF LILBURN 0 40,674 73,995 0 29,191
3128 WOODCREST 0 18,929 37,346 0 21,363
3130 RAMBLEWOOD RICHMOND 972 18,281 1,893 0 16,449
3131 COUNTRYSIDE MANOR 0 40,906 86,070 0 23,150
3132 WINDSOR VIL 0 0 0 0 23,550
3135 WATERBURY CLARKE 21,265 13,593 28,817 11,663 0 15,322
3136 BURNSBROOKE ATHENS 1,603 20,861 0 0 19,935
3137 GENTIAN OAKS COLUMBUS 0 22,492 0 0 22,042
3138 WILLOW CREEK GRIFFIN 0 10,182 22,389 0 11,362
3139 TIMBERWOODS PERRY 0 2,480 33,410 0 0 12,901
3140 CARRIAGE HILLS DUBLIN 0 24,360 0 0 11,922
3141 HILLANDALE MANOR DEKALB 0 18,689 66,794 0 18,657
3142 WHISPERWOOD CORDELE 0 21,527 0 0 16,282
3143 OAKWOOD VIL RICHMOND 0 31,917 8,668 803 0 11,809
3145 PINE KNOLL CLAYTON 0 8,474 67,351 0 21,937
3149 HARBINWOOD GWINNETT 9,392 19,900 35,033 0 27,272
3150 PARKWOOD VIL 0 15,387 23,365 0 20,459
3151 AMBERWOOD BARTOW 0 31,236 48,876 3,894 0 10,306
3152 WOOD VALLEY CALHOUN 0 9,720 29,936 0 0 7,873
3153 NORTHRIDGE CARROLLTON 0 26,756 64,619 0 19,316
3154 HILLSIDE MANOR AMERICUS 0 19,395 7,828 0 12,515
3156 VALLEYFIELD DEKALB II 20,504 4,366 80,484 34,441 0 25,131
3158 WOODCLIFF LILBURN II 0 10,176 56,804 0 0 28,971
3159 FOREST RIDGE RICHMOND 0 0 0 0 10,157
3160 SHANNON WOODS UNION CITY II 0 6,752 35,421 46,257 0 27,855
3161 HOLLY PARK COLUMBUS 0 16,342 24,719 0 0 18,917
3162 REDAN VIL DEKALB II 0 22,326 104,236 0 27,047
3163 RIDGEWOOD DEKALB II 0 3,007 254 (120,644) 19,610
3168 KNOX LANDING KNOXVILLE 34,093 18,975 1,114 0 35,606
3176 MORGAN TRACE UNION CITY 0 17,060 76,373 0 39,703
3184 AMBERWOOD II 0 16,652 9,801 0 9,859
3197 PARKWOOD VIL II 0 14,809 110,789 59,433 0 17,825
3200 SKYRIDGE 18,219 38,805 0 250,599 0 35,827
3266 MARSH LANDING 10,158 29,527 0 0 10,592
</TABLE>
<PAGE>
172
<TABLE>
CARDINAL REALTY SERVICES INC
INDIVIDUAL PROPERTY FINANCIAL INFORMATION SUMMARY (UNAUDITED)
BASED ON PROPERTIES OWNED AS OF DECEMBER 31, 1996
<CAPTION>
OTHER FINANCIAL INFORMATION (CASH BASIS)
-----------------------------------------------------------------------------------------
Contractual Sub- Dis-
First ordinated tribution Excess Real
Capital Mortgage Debt to Limited Cash Flow Estate
Prop # Name Expenditures Principal Principal to Partners Cardinal Investment Taxes
====================================================================================================================================
SYNDICATED
=================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3269 WOODSIDE 38,430 11,830 79,563 0 7,284
3270 GREENTREE 35,772 7,922 0 0 9,366
3271 STILLWATER 0 4,578 11,372 (76,793) 23,564
3353 RAMBLEWOOD II 21,034 5,857 50,982 0 4,570
3358 LINK TERRACE 17,690 10,293 4,241 0 23,515
3366 GREENTREE II 44,884 5,813 0 (16,466) 6,738
3378 SUNNYSIDE 0 12,203 47,179 0 14,974
3409 QUAIL CALL 16,649 5,191 26,251 0 14,432
3428 WESTWAY 25,720 28,371 33,386 0 14,170
3430 CAMDEN WAY 21,302 5,566 0 0 9,659
3450 CAMDEN WAY II 34,620 22,149 0 0 7,462
4101 FORSYTHIA CT HARFORD 0 28,801 0 (382,502) 25,920
4149 GLEN HOLLOW GLEN BURNIE 0 21,291 0 0 18,784
4708 ANNHURST HARFORD 0 17,235 58,268 0 23,524
------------- ----------- ---------- ---------- ---------- ------------ -----------
409 $3,236,122 $5,925,445 $1,433,783 $1,094,093 $7,325,849 $(5,484,904) $9,304,852
------------- ----------- ---------- ---------- ---------- ------------ -----------
</TABLE>
