<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------------
[_] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number 1-12514
---------
American Real Estate Investment Corporation
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 84-1246585
- ----------------------------------- ---------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1670 Broadway, Suite 3350, Denver, Colorado 80202
--------------------------------------------------
(Address of principal executive offices)
----------------------------------------
(303) 869-4700
------------------------------
(issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No ____
----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 1,105,603
-----------------
Transitional Small Business Disclosure Format (check one):
Yes ______ No X
---
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheet (unaudited) as
of June 30, 1996 3
Consolidated Condensed Statements of Operations (unaudited)
for the six months ended June 30, 1996 and June 30,
1995 and the three months ended June 30, 1996 and June 30, 1995 4
Consolidated Condensed Statements of Cash Flows
(unaudited) for the six months ended June 30, 1996 and June 30, 1995 5
Notes to Consolidated Condensed Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis or Plan of Operation 8
PART II. OTHER INFORMATION 14
SIGNATURES 14
</TABLE>
2
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30,
1996
-------------------
<S> <C>
ASSETS
- ------
Investment in real estate:
Land $ 8,624,135
Buildings and improvements 38,889,236
-------------------
47,513,371
Less: Accumulated depreciation (3,683,900)
-------------------
43,829,471
Investment in partnership 1,225,951
-------------------
Total investment in real estate 45,055,422
Cash & cash equivalents 706,653
Restricted cash 712,498
Accounts receivable 106,200
Other assets, net 383,513
-------------------
Total assets $ 46,964,286
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Mortgage notes payable $ 33,211,046
Other notes payable 6,351,852
Accrued interest 183,392
Accrued property taxes 218,646
Accrued expenses and other liabilities 450,560
Security deposits 295,313
-------------------
Total liabilities 40,710,809
-------------------
Commitments and contingencies
Minority interest 2,100,299
Shareholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized;
no preferred shares issued and outstanding 0
Common stock, $.001 par value; 30,000,000 shares authorized;
1,105,603 common shares issued and outstanding 1,106
Additional paid-in capital 5,240,435
Cumulative net income 1,054,174
Cumulative dividends (2,142,537)
-------------------
Total shareholders' equity 4,153,178
-------------------
Total liabilities and shareholders' equity $ 46,964,286
===================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this balance sheet.
3
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Three months ended
----------------------------- -----------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rents and fees $ 4,917,175 $ 4,718,123 $ 2,413,894 $ 2,357,479
Other income 143,814 165,386 73,399 90,965
------------ ------------- ------------- -------------
Total revenues 5,060,989 4,883,509 2,487,293 2,448,444
------------ ------------- ------------- -------------
Operating expenses:
Repairs and maintenance 303,378 318,080 171,300 168,983
Property taxes 211,790 214,442 108,573 101,399
Property management fees 175,453 165,499 86,500 81,639
Utilities 530,752 486,996 242,176 229,113
Payroll 431,372 383,505 198,611 191,263
Other property operations 476,475 487,480 238,395 259,486
General and administrative 284,368 270,443 107,777 125,324
Depreciation and amortization 652,260 644,720 327,371 324,590
------------ ------------- ------------- -------------
Total operating expenses 3,065,848 2,971,165 1,480,703 1,481,797
------------ ------------- ------------- -------------
Financing expenses:
Non-related party interest expense 1,954,157 2,021,572 972,026 1,107,346
Related party interest expense 0 200,959 0 67,397
Loss from debt repayment 0 242,605 0 242,605
------------ ------------- ------------- -------------
Total financing expenses 1,954,157 2,465,136 972,026 1,417,348
------------ ------------- ------------- -------------
Equity in earnings from investment
in partnership 242,289 240,694 81,685 117,224
------------ ------------- ------------- -------------
Net income (loss) before minority interest 283,273 (312,098) 116,249 (333,477)
Minority interest 0 0 0 0
------------ ------------- ------------- -------------
Net income (loss) $ 283,273 $ (312,098) $ 116,249 $ (333,477)
============ ============= ============= =============
Primary earnings (loss) per share $ 0.26 $ (0.29) $ 0.11 $ (0.31)
============ ============= ============= =============
Fully diluted earnings (loss) per share $ 0.16 $ (0.29) $ 0.07 $ (0.31)
============ ============= ============= =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
4
4
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months Six months
ended ended
June 30, June 30,
1996 1995
---------------- ----------------
<S> <C> <C>
Operating Activities:
Net income (loss) $ 283,273 $ (312,098)
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Depreciation & amortization 678,939 681,387
Common stock compensation 81,000 80,999
Cash provided by operating assets 268,760 319,675
Cash used in operating liabilities (163,574) (584,481)
---------------- ----------------
Net cash provided by operating activities 1,148,398 185,482
---------------- ----------------
Investing Activities:
Cash used in investment in real estate (227,144) (141,160)
Cash provided by investment in partnership 126,863 126,612
---------------- ----------------
Net cash used in investing activities (100,281) (14,548)
---------------- ----------------
Financing activities:
Dividends paid (465,459) (445,960)
Minority interest distributions (335,613) (327,692)
Proceeds from notes payable 0 10,310,000
Repayment of notes payable (176,350) (9,934,496)
---------------- ----------------
Net cash used in financing activities (977,422) (398,148)
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 70,695 (227,214)
Cash and cash equivalents, beginning of period 635,958 1,263,280
---------------- ----------------
Cash and cash equivalents, end of period $ 706,653 $ 1,036,066
================ ================
Supplemental Disclosure of Cash
Flow Information:
Cash paid for interest $ 1,627,215 $ 2,064,433
================ ================
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
5
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements include the account balances as of
June 30, 1996 and the activity for the six months ended June 30, 1996 and June
30, 1995 and for the three months ended June 30, 1996 and June 30, 1995 for the
Company on a consolidated basis. Certain prior year balances may have been
reclassified to conform with the current year presentation.
The unaudited interim financial statements prepared by management include
all normal recurring adjustments which are, in the opinion of management,
necessary for a fair presentation.
Allocations of Income and Distributions of Cash
All income of the Operating Partnership for the six months ended June 30,
1996 and June 30, 1995 and for the three months ended June 30, 1996 and June 30,
1995 was allocated to the Company, therefore there were no allocations to the
minority interest for such periods. All such allocations of net income and net
loss will be made subject to compliance with the provisions of Section 704(b)
and 704(c) of the Internal Revenue Code and the Treasury Regulations promulgated
thereunder.
The Company has the right to cause the Operating Partnership to distribute
all or any portion of its "net operating cash flow" (as defined) to the partners
as determined from time to time. The Company, in its capacity as general
partner, will make this determination. The Company is required to use its best
efforts to cause the Operating Partnership to distribute sufficient amounts to
enable the Company to pay shareholders dividends that will satisfy the REIT
requirements and avoid any Federal income tax or excise tax liabilities for the
Company.
6
<PAGE>
Revenue Recognition
Revenues, consisting primarily of rentals for apartments, are recognized on
the accrual basis of accounting.
Earnings per Share
Primary earnings per share were calculated based on weighted average shares
outstanding of 1,098,474 and 1,080,684 for the six months ended June 30, 1996
and June 30, 1995, respectively, and 1,100,891 and 1,085,952 for the three
months ended June 30, 1996 and June 30, 1995, respectively. Fully diluted
earnings per share were calculated based on weighted average shares outstanding
upon conversion of the limited partner interests, or a total of 1,734,659 and
1,792,008 for the six months ended June 30, 1996 and June 30, 1995,
respectively, and a total of 1,737,076 and 1,797,276 for the three months ended
June 30, 1996 and June 30, 1995, respectively.
2. Company Strategy and Operations
The Company announced on August 1, 1996 that, through its operating
partnership, it has entered into a letter of intent to sell three of its
properties located in the Denver, Colorado metropolitan area. The transaction is
subject to execution of a definitive purchase agreement and completion of
buyer's due diligence and is expected to close within 90 days of the execution
of the purchase agreement. The Company is considering various alternatives for
the redeployment of the net proceeds and no decision has been made at present
The Company is continuing its attempt to resolve the matter relating to the
lawsuit commenced during 1995 by the Company's co-general partner in the
partnership that owns Emerald Pointe apartments.
3. Subsequent Events
The Company announced on August 13, 1996 that it had declared a cash
dividend of $.21375 per share for operations relating to the quarter ended June
30, 1996 payable on September 4, 1996 to shareholders of record on August 23,
1996.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
The following discussion should be read in conjunction with the
consolidated financial statements of American Real Estate Investment Corporation
(the "Company"), including Notes to Consolidated Condensed Financial Statements.
The Company presently owns either a full or partial interest in multifamily
residential properties which comprise an aggregate of 2,142 units, or almost
triple the 726 wholly owned units at inception in November, 1993.
Results of Operations
The following discussion of results of operations relates to the
consolidated operations of the Company for the six months ended June 30, 1996
and June 30, 1995 and the three months ended June 30, 1996 and June 30, 1995.
Certain operating expenses for the periods ended June 30, 1995 were reclassified
for comparability to the current reporting classifications for the same periods
in 1996.
Six months and three months ended June 30, 1996 Compared to six months and three
months ended June 30, 1995
Rents and fees revenues increased from $4,718,123 for the six months ended
June 30, 1995 to $4,917,175 for the same period in 1996 and from $2,357,479 for
the three months ended June 30, 1994 to $2,413,894 for the same period in 1996,
primarily as a result of an increase in rental rates and net rental revenues at
Quadrangles.
Other income decreased from $165,386 to $143,814 for the six months ended
June 30, 1995 and June 30, 1996, respectively and from $90,965 to $73,399 for
the three months ended June 30, 1995 and June 30, 1996, respectively. A cable
television and telephone agreement relating to the properties, excluding Emerald
Pointe, was executed during the first calendar quarter of 1995, generating
additional revenues in 1995, resulting in a decrease in other income in 1996.
This decrease was partially offset by slightly higher other income experienced
at Quadrangles in the 1996 periods.
Repairs and maintenance remained relatively stable for both periods,
ranging from $318,080 to $303,378 for the six months ended June 30, 1995 and
June 30, 1996, respectively, and from $168,983 to $171,300 for the three months
ended June 30, 1995 and June 30, 1996, respectively.
8
<PAGE>
Property taxes were $108,573 and $211,790 for the three months ended June
30, 1996 and the six months ended June 30, 1996, respectively. Property taxes
for these same two periods in 1995 were relatively stable at $101,399 and
$214,442, respectively.
Property management fees increased from $165,499 to $175,453 for the six
months ended June 30, 1995 and June 30, 1996, respectively, and from $81,639 for
the three months ended June 30, 1995 to $86,500 for the three months ended June
30, 1996 primarily due to higher rents and fees revenues for Quadrangles.
Utilities increased from $486,996 to $530,752, respectively, for the six
months ended June 30, 1995 and June 30, 1996 and from $229,113 to $242,176,
respectively, for the three months ended June 30, 1995 and June 30, 1996 as a
result of slightly higher utility costs for all properties.
Payroll increased to $431,372 for the six months ended June 30, 1996 from
$383,505 for the six months ended June 30, 1995 and from $191,263 to $198,611,
respectively for the three months ended June 30, 1996 and June 30, 1995
primarily as a result of employee turnover costs associated with new management
personnel at three of the Denver area properties.
Other property operations remained relatively stable for the six months
ended June 30, ranging from $487,480 in 1995 to $476,475 in 1996 and from
$259,486 in 1995 to $238,395 in 1996 for the three months ended June 30.
General and administrative expenses increased slightly from $270,443 to
$284,368 for the six months ended June 30, 1995 and June 30, 1996, primarily as
a result of the company's directors and officers liability insurance policy
which was in place for the entire period in 1996 and for only four months in
1995, along with an increase in salaries and wages in 1996. General and
administrative expenses decreased from $125,324 to $107,777 for the three months
ended June 30, 1995 and June 30, 1996, respectively, primarily as a result of
the timing of various expenses between the first and second calendar quarters of
1995 and 1996. Certain expenses were incurred during the first quarter of 1996
whereas such expenses were not incurred until the second quarter of 1995 and
this is reflected in the overall stability in general and administrative
expenses for the six months ended June 30, 1995 and June 30, 1996.
Depreciation and amortization expense remained relatively stable at
$644,720 for the six months ended June 30, 1995 and $652,260 for the six months
ended June 30, 1996 and for the three months ended June 30 at $324,590 in 1995
and $327,371 in 1996.
Total financing expenses for the six month periods ended June 30 in 1995
and 1996 decreased from $2,465,136 to $1,954,157 and from $1,417,348 to $972,026
for the three months ended June 30, 1995 and June 30, 1996, respectively. The
decrease in financing expenses resulted from a variety of reasons. Lower
interest rates were experienced on the Company's bank loan facilities resulting
from the 50 basis point reduction recognized upon renewal of such loan
facilities in August of 1995 and the decrease in the prime rate since the 1995
periods. The
9
<PAGE>
Company also refinanced the mortgage note payable collateralized by Americana on
April 27, 1995 with a loan from General Electric Capital Corporation ("GECC").
A loss from debt repayment of $242,605, resulting from a prepayment penalty, was
recognized for the six months and the three months ended June 30, 1995 in
conjunction with the April, 1995 repayment of the previously existing first
mortgage loan secured by Americana with proceeds from the GECC first mortgage
loan secured by the same property. There were no such expenses incurred in
1996. In addition, the bridge loan which was originally obtained from a related
party to provide a portion of the financing to acquire Quadrangles was paid off
in its entirety with proceeds from the GECC first mortgage loan. The remaining
unamortized loan costs for both loans which were repaid in full were included in
interest expense during the second quarter of 1995. This refinancing is also
the reason for the decrease in related party interest expense of $200,959 and
$67,397, respectively, for the six months ended June 30, 1995 and the three
months ended June 30, 1995 to zero for the same periods in 1996.
Equity in earnings from investment partnerships was $242,289 and
$81,685, respectively, for the six months ended June 30, 1996 and the three
months ended June 30, 1996 as compared to $240,694 and $117,224, respectively,
for the same two periods ended June 30, 1995. The decrease from the three
months ended June 30, 1995 to the three months ended June 30, 1996 reflects
timing differences between the first and second calendar quarters for these two
years. The amounts for the six months ended June 30, 1995 and June 30, 1996 are
relatively stable as shown by the resulting equity in earnings from investment
partnerships for these two periods.
The net loss of the Company for the six months ended June 30, 1995 was
$(312,098) and $(333,477) for the three months ended June 30, 1995, as compared
to net income of $283,273 and $116,249, respectively, for the same periods in
1996. The substantial increase in net income relates primarily to the one time
prepayment penalty of approximately $243,000 resulting from the refinancing of
the first mortgage loan secured by Americana Lakewood Apartments, the one time
write off of all remaining unamortized loan costs of approximately $110,000
relating to such loan and the write off of all remaining unamortized costs of
approximately $30,000 relating to the Quadrangles bridge loan, all of which
occurred during the second quarter of 1995, along with the increased rents and
fees revenues and the reduced interest expense relating to the Company's bank
loan facilities which favorably impacted 1996 operating results.
LIQUIDITY AND CAPITAL RESOURCES
The primary source of cash during the six months ended June 30, 1996
was the Company's cash from operations. Principal cash outflows for the same
six month period were dividends paid to holders of common stock, distributions
to limited partners (i.e. minority interest distributions) and principal and
interest payments on existing indebtedness.
The Company expects to meet its short term liquidity requirements
generally through its cash flow provided by operations. The Company believes
that its cash from operations will be sufficient to meet operating requirements
and to make dividend payments to stockholders in
10
<PAGE>
accordance with REIT qualification requirements.
The Company had outstanding indebtedness of approximately $39,563,000
as of June 30, 1996, representing three non-recourse mortgage notes payable
aggregating $33,211,000, a bank installment loan with a balance of approximately
$5,852,000 and a bank line of credit with an outstanding balance of $500,000.
One non-recourse mortgage note payable, collateralized by Americana,
bears interest at GECC's composite commercial paper rate plus 3.75%, adjusted on
a monthly basis, and matures on April 30, 2000. The mortgage note payable
requires monthly interest payments, in addition to quarterly principal payments
based on a stipulated percentage of the excess cash flow, as defined, from
Americana. The note contains a 1% prepayment penalty from April 27, 1996 to
April 26, 1997 and no prepayment penalty from April 27, 1997 to maturity. The
note requires a balloon payment in the amount of the outstanding principal
balance on April 30, 2000, the maturity date. Proceeds from the GECC loan were
used to repay the previously existing first mortgage loan collateralized by
Americana and the bridge loan which was originally obtained from a related party
to provide a portion of the financing to acquire Quadrangles. The GECC loan
proceeds were also used to pay the prepayment penalty of $242,605 relating to
the first mortgage refinancing.
A non-recourse mortgage note payable, collateralized by Timberleaf,
bears interest at 9.0% per annum payable monthly and matures in 2004. Through
March 20, 2003, such note may only be prepaid upon payment of all principal and
accrued interest and a prepayment penalty calculated in accordance with a
formula based on the yield rate of a certain U.S. Treasury security. Thereafter
there is a 1% prepayment penalty through maturity. At maturity on April 1,
2004, a balloon payment of approximately $5,822,000 will be payable.
A non-recourse mortgage note payable, collateralized by Quadrangles,
which is a financing by the Department of Housing and Urban Development, bears
interest at 6.35% per annum payable monthly and matures in 2026. The note
cannot be prepaid prior to June, 2003 and thereafter contains a prepayment
penalty as follows: 2% from June, 2003 to May, 2004; 1% from June, 2004 to May,
2005; 0% thereafter. At maturity on May 1, 2026, the note will be fully
amortized.
The Company refinanced the bank line of credit collateralized by
Sedona and International in the form of two separate loan facilities on August
31, 1995. The two new loans bear interest at the bank's prime rate plus 0.50%,
which is 50 basis points lower than the original line of credit. The first loan
facility, for which the Company intends to obtain a short term renewal, is a
$500,000 bank line of credit which bears interest at the bank's prime rate plus
0.50%, adjusted on a daily basis, and matures on August 31, 1996. Monthly
interest payments are required during the term of this loan, and, in addition,
the line of credit must be reduced to a zero balance on any date prior to
maturity. The second loan facility is a bank loan in the amount of $5,904,143
which bears interest at the bank's prime rate plus 0.50%, adjusted on a daily
basis. This loan requires monthly principal and interest payments based on a 25
year
11
<PAGE>
amortization period. The note can be prepaid at any time without penalty and
matures on August 31, 1998.
The Company may continue to seek additional multifamily investment
opportunities, as well as alternative real estate investment opportunities. To
finance such potential acquisitions the Company may seek to enter into secured
borrowings or to sell additional equity interests in the Company. There can be
no assurance such arrangements can be entered into or that additional capital
will be available. In addition, the Company may offer in exchange for such
properties its shares of Common Stock or additional limited partnership
interests in the Operating Partnership which may be exchangeable for Common
Stock of the Company under the terms of the Operating Partnership agreement. The
Company may also use other sources of capital to finance such acquisitions,
including non-distributed funds from operations or the issuance of debt
securities. There can be no assurance such financing can be obtained. The
Company has no material commitments for additional capital improvements to the
Properties.
See the accompanying Statements of Cash Flows included in the financial
statements for a reconciliation of cash for the periods described therein.
FUNDS FROM OPERATIONS
Funds From Operations ("FFO"), which is a commonly used measurement of the
performance of an equity real estate investment trust ("REIT"), as defined by
the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"), is
net income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect funds from
operations on the same basis. FFO does not represent cash generated from
operating activities in accordance with generally accepted accounting principles
and is not necessarily indicative of cash available to fund cash needs. The
Company's FFO was $538,229 for the three months ended June 30, 1996 as compared
to $492,455 for the three months ended June 30, 1995. FFO for the three months
ended June 30, 1996 was calculated by deducting the Company's equity in earnings
from investment in partnership (i.e. the Company's unconsolidated investment in
Emerald Vista Associates, L.P.) of $81,685 from net income before minority
interest of $116,249, adding depreciation and amortization of $327,371, and then
adding the Company's FFO allocation from Emerald Vista Associates, L.P. of
$176,294. FFO for the three months ended June 30, 1995 was calculated by
deducting the Company's equity in earnings from investment in partnership (i.e.
the Company's unconsolidated investment in Emerald Vista Associates, L.P.) of
$117,224 from net loss before minority interest of $(333,477), and then adding
depreciation and amortization of $324,590, adding amortization of loan costs
aggregating $186,246, adding the prepayment penalty loss for debt extinguishment
relating to the first mortgage loan refinancing for Americana of $242,605 and
adding the Company's FFO allocation from Emerald Vista Associates, L.P. of
$189,715. NAREIT recently clarified the application of its FFO definition and,
as a result of
12
<PAGE>
this new application, loan cost amortization would not be added back to FFO
presented for the period ended June 30, 1995. NAREIT recommended the
implementation of the new application of its FFO definition no later than for
fiscal periods beginning in 1996. The Company has implemented the new
application of the NAREIT FFO definition, effective for the 1996 reporting
periods wherein amortization of loan costs aggregating $16,984 has not been
included in FFO for the three months ended June 30, 1996.
INFLATION
Substantially all of the leases at the Properties are for a term of
one year or less which may enable the Company to seek increased rents upon
renewal or reletting of apartment units. Such short-term leases generally
minimize the risk to the Company of the adverse effects of inflation.
13
<PAGE>
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits filed with this Form 10-QSB - None
(b) No report on Form 8-K was filed by the registrant during
the fiscal quarter ended June 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN REAL ESTATE INVESTMENT CORPORATION
By: _______________________________________
Evan Zucker
President
By: _______________________________________
Rick A. Burger
Treasurer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1996 FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 707
<SECURITIES> 0
<RECEIVABLES> 106
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,909
<PP&E> 47,513
<DEPRECIATION> 3,684
<TOTAL-ASSETS> 46,964
<CURRENT-LIABILITIES> 1,148
<BONDS> 39,563
0
0
<COMMON> 1
<OTHER-SE> 4,152
<TOTAL-LIABILITY-AND-EQUITY> 46,964
<SALES> 0<F1>
<TOTAL-REVENUES> 5,061
<CGS> 0
<TOTAL-COSTS> 2,781
<OTHER-EXPENSES> 284<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,954
<INCOME-PRETAX> 283
<INCOME-TAX> 0
<INCOME-CONTINUING> 283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 283
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.16
<FN>
<F1>The Company's revenues relate primarily to income from rental property.
<F2>Other expenses reflects the Company's general and administrative expenses.
</FN>
</TABLE>
