<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number: 1-12424
--------------------------------
HORIZON GROUP, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
MICHIGAN 38-2559212
- ---------------------------------- -----------------------------------------
State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
5000 HAKES DRIVE, NORTON SHORES, MI 49441
- ----------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(616) 798-9100
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
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
--- ---
NUMBER OF COMMON SHARES OUTSTANDING AT MAY 8, 1998 24,177,366
----------
1
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HORIZON GROUP, INC.
Index to Form 10-Q
March 31, 1998
<TABLE>
<CAPTION>
Page No.
--------
PART I. FINANCIAL INFORMATION:
<S> <C>
Consolidated Condensed Statements of Operations for the
three months ended March 31, 1998 and 1997 3
Consolidated Condensed Balance Sheets as of
March 31, 1998 and December 31, 1997 4
Consolidated Condensed Statements of Cash Flows for the
three months ended March 31, 1998 and 1997 5
Notes to Consolidated Condensed Financial Statements 6-7
Management's Discussion and Analysis of Results of Operations
and Financial Condition 8-11
Part II.
Other Information 12
Signatures 13
</TABLE>
2
<PAGE> 3
HORIZON GROUP, INC.
Consolidated Condensed Statements of Operations
For the three months ended March 31, 1998 and 1997
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
1998 1997
---- ----
(thousands, except per share data)
<S> <C> <C>
REVENUE
Base rent $27,940 $26,304
Percentage rent 1,154 914
Expense recoveries 7,785 8,461
Other 2,211 1,624
---------- -----------
Total revenue 39,090 37,303
---------- -----------
EXPENSES
Property operating 5,700 6,100
Real estate taxes 3,509 3,316
Land leases and other 2,397 2,763
Depreciation and amortization 10,376 9,560
General and administrative 2,640 2,545
Merger expense 1,169
Interest 13,566 11,409
---------- -----------
Total expenses 39,357 35,693
---------- -----------
Income (loss) before minority interests (267) 1,610
Minority interests 149 (278)
---------- -----------
NET INCOME (LOSS) $ (118) $ 1,332
========== ===========
PER COMMON SHARE - BASIC AND DILUTED:
Net income (loss) $ (.00) $ .06
========== ===========
Cash dividend $ .34 $ .35
========== ===========
Weighted average common shares outstanding 24,130 23,661
- basic ========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
HORIZON GROUP, INC.
Consolidated Condensed Balance Sheets
as of March 31, 1998 and December 31, 1997
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
ASSETS (thousands)
<S> <C> <C>
REAL ESTATE - AT COST:
Land $ 144,600 $ 144,589
Buildings and improvements 962,953 960,522
Less accumulated depreciation (105,177) (95,512)
---------- -----------
Total net real estate 1,002,376 1,009,599
Cash and cash equivalents 13,960 12,091
Restricted Cash 760 751
Tenant accounts receivable 6,186 6,489
Due from joint venture 9,791 11,639
Assets held for sale 1,933 1,933
Deferred costs 18,250 18,708
Other assets 11,672 11,456
---------- ----------
Total assets $1,064,928 $1,072,666
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgages and other debt $ 624,708 $ 626,097
Accounts payable and accrued expenses 16,541 20,516
Prepaid rents and other tenant liabilities 5,537 5,769
Other liabilities 9,054 7,955
Dividends and distributions payable 6,802 15
---------- ----------
Total liabilities 662,642 660,352
MINORITY INTERESTS 57,899 61,080
SHAREHOLDERS' EQUITY:
Common shares 241 241
Additional paid-in capital 470,205 468,593
Distributions in excess of net income (126,059) (117,600)
---------- ----------
Total shareholders' equity 344,387 351,234
---------- ----------
Total liabilities and shareholders' equity $1,064,928 $1,072,666
========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
HORIZON GROUP, INC.
Consolidated Condensed Statements of Cash Flows
For the three months ended March 31, 1998 and 1997
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
1998 1997
--------- --------
(thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (118) $ 1,332
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Minority interests in net income (149) 278
Depreciation and amortization 11,022 10,228
Changes in assets and liabilities:
Tenant accounts receivable 303 (1,728)
Due from joint venture 1,848 2,670
Deferred costs and other assets (748) 3,030
Accounts payable and accrued expenses (1,932) (2,489)
Other liabilities 1,099 (138)
Prepaid rents and other tenant expenses (232) (1,624)
--------- --------
Net cash provided by operating activities 11,093 11,559
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for real estate and improvements (4,714) (18,519)
Investment in restricted cash (9) -
--------- --------
Net cash used in investing activities (4,723) (18,519)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 5,915
Dividends (2,537) (12,098)
Distributions - minority interests (436) (2,756)
Principal payments on mortgages and other debt (1,296) (1,495)
Debt issue costs (232) (134)
Net proceeds from revolving credit facility 18,780
--------- --------
Net cash provided by (used in) financing activities (4,501) 8,212
--------- --------
Net increase in cash 1,869 1,252
CASH AND CASH EQUIVALENTS:
Beginning of period 12,091 16,464
--------- --------
End of period $ 13,960 $ 17,716
========= ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
HORIZON GROUP, INC.
Notes to Consolidated Condensed Financial Statements
(unaudited)
(1) Financial Statement Presentation
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions to Form 10-Q and do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity
with generally accepted accounting principles since it is assumed the user
of these statements is reading them in conjunction with the most recent
year-end audited financial statements. In the opinion of management, the
consolidated condensed financial statements contain all normal, recurring
adjustments necessary for a fair statement of financial results for the
interim periods presented. The preparation of these financial statements
require management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates. For further
information, refer to the consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 1997.
(2) Business Combinations
On November 12, 1997, the Company entered into a merger agreement (which was
amended and restated on February 1, 1998) with Prime Retail, Inc. ("Prime")
which provides for Prime to integrate 22 of the Company's existing outlet
centers into its portfolio and the Company's remaining 13 centers (as well as
two centers currently owned by Prime) to be operated by a newly formed entity.
The shares of the newly formed entity will be distributed following the merger,
on a pro rata basis, to the shareholders of both Prime and the Company. The
Company has expensed costs of $1.2 million in the three months ended March 31,
1998 in conjunction with this merger. The merger is conditioned upon, among
other things, the approvals of each of the respective Company's shareholders
and the satisfaction of other customary conditions.
On April 1, 1998, the Company consummated a Contribution Agreement with
Castle & Cooke Properties, Inc. which released the Company from its obligations
under its long-term lease of the Dole Cannery outlet center in Honolulu,
Hawaii, in connection with the formation of a joint venture with certain
affiliates of Castle & Cooke, Inc. ("Castle & Cooke") to operate such property.
Under the terms of the agreement, Castle & Cooke Properties, Inc., the landlord
of the project, released the Company from all post-closing obligations under
the lease, which expires in 2045, in exchange for the Company's conveyance to
the joint venture of its rights and obligations under such lease. The
agreement also provided that the Company transfer to such joint venture
substantially all of the Company's economic interest in its outlet center in
Lake Elsinore, California together with vacant property located adjacent to the
center. The Company estimates that a net loss of approximately $30.0 million
will be recorded in the second quarter to reflect the transfer of the economic
interest in this property. The Company holds a small minority interest in the
joint venture but has no obligation or commitment with respect to the
operations of the Dole Cannery project following the closing.
6
<PAGE> 7
HORIZON GROUP, INC.
Notes to Consolidated Condensed Financial Statements (continued)
(unaudited)
(3) Earnings per share
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------
1998 1997
---- ----
<S> <C> <C>
NUMERATOR:
Net income (loss) - basic $ (118) $ 1,332
Minority interest of Unitholders (23) 267
----------- ----------
Net income (loss) - diluted $ (141) $ 1,599
=========== ==========
Denominator:
Weighted average common shares outstanding - basic 24,130 23,661
Effect of converting units to shares 4,164 4,538
----------- ----------
Weighted average common shares outstanding - diluted 28,294 28,199
=========== ==========
Net income (loss) per share - basic and diluted $ (.00) $ .06
=========== ==========
</TABLE>
Outstanding options and convertible venture interests were excluded because the
effect of such items were anti-dilutive for the periods presented.
(4) Contingencies
On December 10, 1997, a shareholder of the Company filed a purported class
action lawsuit in the Circuit Court for Muskegon County, Michigan against the
Company, Prime and certain directors and former directors of the Company. The
substantive allegations claim that the Company's directors breached their
fiduciary duties to the Company's shareholders in approving the merger between
the Company and Prime and that the consideration to be paid to the Company's
shareholders in connection with the merger is unfair and inadequate. The
lawsuit requests that the merger be enjoined or, in the event that the merger is
consummated that it be rescinded or damages be awarded to the class members. On
May 4, 1998, the Company entered into a Memorandum of Understanding which
provided for a settlement of the lawsuit subject to certain conditions.
(5) Reclassifications
Certain reclassifications have been made to previously reported balances in
order to provide comparability to the statements reported herein. These
reclassifications have not changed previously reported results or shareholders'
equity.
7
<PAGE> 8
HORIZON GROUP, INC.
Management's Discussion and Analysis of Results of Operations
and Financial Condition
For the three months ended March 31, 1998
(unaudited)
General Overview
Horizon Group, Inc. (the "Company") is a self-administered and self-managed
real estate investment trust ("REIT") that is engaged in the ownership,
acquisition, development and operation of outlet shopping centers. The
operations of the Company are conducted through a majority-owned subsidiary,
Horizon/Glen Outlet Centers Limited Partnership, (the "Operating Partnership").
As of March 31, 1998, the Company owned 85.4 percent of the Operating
Partnership.
Results of Operations
The net loss before minority interests was $.3 million in the three months
ended March 31, 1998 compared to net income before minority interests of $1.6
million in the corresponding period of 1997. The loss in 1998 resulted
primarily from $1.2 million of professional fees incurred relating to the
impending merger with Prime.
Total revenues increased $1.8 million, or 4.8%, to $39.1 million in the three
months ended March 31, 1998 from $37.3 million in the corresponding period of
1997. Base rent increased $1.6 million, or 6.2%, to $27.9 million in the three
months ended March 31, 1998 from $26.3 million in the corresponding period of
1997. Percent rent was $1.2 million in the first quarter of 1998 and $.9
million in the first quarter of 1997. The increase in rents is the result of
additional gross leasable area ("GLA") primarily from the acquisition of an
approximately 203,000 square foot center adjacent to the Company's Gilroy,
California center in December of 1997. The Company also increased GLA by
developing one new center and expanding three existing centers subsequent to
March 31, 1997. These increases in GLA are collectively referred to as the
"Portfolio Expansion."
Tenant expense recoveries decreased $.7 million, or 8.0%, to $7.8
million in the three months ended March 31, 1998 from $8.5 million in the
corresponding period of 1997 principally as the result of increased caps on
recovery rates and the lack of recovery revenue from the vacant New Mexico
Center. Expense recoveries covered 84.5% of property operating and real estate
tax expenses in the first quarter of 1998 compared to 90.0% in the first
quarter of 1997.
Other income increased $.6 million, or 36.1%, to $2.2 million in the three
months ended 1998 from $1.6 million in the corresponding period of 1997. The
increase resulted from a $.6 million increase in temporary tenant income and
lease termination income offset by declines in interest and leasing income.
8
<PAGE> 9
HORIZON GROUP, INC.
Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued)
For the three months ended March 31, 1998
(unaudited)
Property operating and real estate tax expenses in the first quarter of 1998
compared to the first quarter of 1997 remained stable. Increased operating
costs from increased GLA due to the Portfolio expansion were offset by
portfolio-wide decreased spending.
Land lease and other expense decreased $.4 million, or 13.2%, to $2.4 million
in the three months ended 1998 from $2.8 million in the corresponding period of
1997 principally from discontinuing landlord marketing contributions for 1998.
General and administrative expenses remained consistent between the first
quarters of 1998 and 1997, representing 6.8% of revenue in each period.
Depreciation and amortization increased $.8 million, or 8.5%, to $10.4 million
in the three months ended March 31, 1998 from $9.6 million in the corresponding
period of 1997. The increase was principally due to the Portfolio expansion.
Interest expense increased $2.2 million, or 18.9%, to $13.6 million in the
first quarter of 1998 compared to $11.4 million in the first quarter of 1997
due to increased borrowings, principally resulting from the Portfolio
Expansion.
Liquidity and Capital Resources
As of March 31, 1998, the Company's outstanding mortgages and other debt was
$624.7 million. While the Company has some additional availability under its
credit facilities, additional borrowings may not be available due to the
financial ratios the Company is required to maintain.
During 1998, the Company has no plans to expand its outlet centers. However,
the Company plans to spend approximately $19.0 million for tenant allowances
and capital improvements to its outlet centers in 1998 of which $4.7 million
was spent in the first quarter of 1998. The Company plans to fund these costs
with existing cash balances, cash flow from operations and proceeds from
the sale of assets.
The Company expects to meet its short-term liquidity requirements generally
through working capital and cash flows from operations. The Company expects to
meet its long-term requirements, such as tenant allowances for new leases and
capital improvements, through the additional borrowing of long-term debt and
the potential offering of equity securities in the private or public capital
markets. As a result of the Company's leverage and the covenants related to
its debt, the Company's ability to obtain additional financing sources is
limited. There can be no assurance that the Company will be able to
successfully obtain such funding sources or, if obtained, on favorable terms.
9
<PAGE> 10
HORIZON GROUP, INC.
Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued)
For the three months ended March 31, 1998
(unaudited)
In order to qualify as a real estate invest trust ("REIT") for federal income
tax purposes, the Company is required to pay dividends to its shareholders of
at least 95% of its REIT taxable income in addition to satisfying other
requirements. Although the Company intends to make distributions to its
shareholders in accordance with the requirements of the Internal Revenue Code
of 1986, as amended, it also intends to retain such amounts as it considers
necessary from time to time for the acquisition or development of new
properties as suitable opportunities arise, for the expansion and renovation of
its existing factory outlet centers and for the retirement of debt.
Year 2000
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities.
The Company does not believe that the impact of the recognition of the year
2000 by its information and operating technology systems will have a material
adverse effect on the Company's financial condition and results of operations.
The majority of any necessary system changes will be upgraded in the normal
course of business. The Company has initiated formal communications with all
of its significant suppliers to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure to remediate
their own year 2000 issues. There can be no guarantee that the systems of
other companies, on which the Company's systems rely, will be timely converted
and would not have an adverse effect on the Company's systems.
Funds from Operations Before Minority Interests
Management believes that in order to facilitate a clear understanding of the
consolidated historical operating results of the Company, Fund From Operations
("FFO") should be considered. Management generally considers FFO to be an
appropriate measure of the performance of any equity REIT. Funds From
Operations before minority interests is defined as net income before minority
interests (computed in accordance with generally accepted accounting
principles) excluding (1) gain or losses from debt restructuring, certain
one-time charges and write-downs and sales of property, (2) depreciation of
real estate, (3) amortization other than the amortization of deferred financing
costs and (4) adjustments for unconsolidated partnerships and joint ventures
(Funds From Operations as defined by the National Association of Real Estate
Investment Trusts in March 1995). The Company
10
<PAGE> 11
HORIZON GROUP, INC.
Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued)
For the three months ended March 31, 1998
(unaudited)
cautions that the calculation of FFO may vary from entity to entity and as
such the presentation of FFO by the Company may not be comparable to other
similarly titled measures of other reporting companies. FFO does not
represent cash flow from operating activities in accordance with GAAP
and is not indicative of cash available to fund all of the Company's cash
needs. FFO should not be considered as an alternative to net income or any
other as a measure of liquidity or the ability to service debt or to pay
dividends. Funds From Operations before minority interests in the first quarter
of 1998 increased $.3 million, or 2.2%, to $11.2 million compared to $10.9
million in the corresponding period of 1997. The increase was principally due
to the Portfolio Expansion.
Review of Unaudited Consolidated Condensed Interim Financial Statements
The Company's consolidated condensed financial statements at March 31, 1998 and
for the three-month period then ended have been reviewed, prior to filing with
the Securities and Exchange Commission, by Ernst & Young LLP, the Company's
auditors, and their report is included herein.
11
<PAGE> 12
Other Information
The statements contained herein which are not historical facts are forward
looking statements based upon economic forecasts, budgets, and other factors
which, by their nature, involve known risks, uncertainties and other factors
which may cause the actual results, performance or achievements of Horizon
Group, Inc. to be materially different from any future results implied by such
statements. In particular, among the factors that could cause actual results
to differ materially are the following: business conditions and general
economy; competitive factors; interest rates and other risks inherent in the
real estate business. For further information on factors which could impact
the Company and the statements contained herein, reference is made to the
Company's other filings with the Securities and Exchange Commission.
12
<PAGE> 13
HORIZON GROUP, INC.
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits 15a Acknowledgment of Independent Accountants
Exhibit 15b Independent Accountants' Review Report
Exhibit 27 Financial Data Schedule (Edgar filing only)
(b) An 8-K was filed on February 4, 1998 to announce the revised
merger agreement with Prime Retail, Inc. and an agreement with
Castle & Cooke Properties, Inc.
An 8-K was filed on April 16, 1998 to announce the closing of
the agreement with Castle & Cooke Properties, Inc.
13
<PAGE> 14
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.
HORIZON GROUP, INC.
Registrant
Date: May 15, 1998 By: /s/ James S. Wassel
--------------------------- ------------------------------
James S. Wassel, President and
Chief Executive Officer
14
<PAGE> 1
Exhibit 15a
Acknowledgment of Independent Accountants
To the Shareholders and Board of Directors
Horizon Group, Inc.
We are aware of the incorporation by reference in the Registration
Statements (Form S-2 No. 33-95174, No. 333-09315 and No. 33-95730; and Form S-4
No. 33-91236) of Horizon Group, Inc. of our report dated May 7, 1998 relating
to the unaudited consolidated condensed interim financial statements of Horizon
Group, Inc. that are included in its Form 10-Q for the three-month period ended
March 31,1998.
We are also aware of the incorporation by reference in the Registration
Statement (Form S-8 No. 33-79784) pertaining to the Amended and Restated 1993
Stock Option Plan, the 1993 Director Stock Option Plan and the Employee Stock
Bonus Arrangement, the Registration Statement (Form S-8 No. 33-89152)
pertaining to the Profit Sharing/401(K) Plan; and the Registration Statement
(Form S-8 No. 33-95308) pertaining to the McArthur/Glen Realty Corp. 1993
Long-Term Incentive Plan of Horizon Group, Inc. of our report dated May 7, 1998
relating to the unaudited consolidated condensed interim financial statements
of Horizon Group, Inc. that are included in its Form 10-Q for the three-month
period ended March 31, 1998.
Pursuant to Rule 436 (c) of the Securities Act of 1933, our report is not a
part of the aforementioned registration statements prepared or certified by
accountants within the meaning of Section 7 or 11 of the Securities Act of 1933.
Chicago, Illinois /s/ Ernst & Young LLP
May 7, 1998 ---------------------
ERNST & YOUNG LLP
15
<PAGE> 1
Exhibit 15b
Independent Accountants' Review Report
To the Shareholders and Board of Directors
Horizon Group, Inc.
We have reviewed the accompanying consolidated condensed balance sheet of
Horizon Group, Inc. (the Company) as of March 31, 1998, and the related
consolidated condensed statements of operations and cash flows for the
three-month period then ended. These financial statements are the
responsibility of the Company's management. We did not make a similar review
of the consolidated condensed statements of operations and cash flows for the
three month period ended March 31, 1997.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquires of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated condensed financial statements at
March 31, 1998, and for the three-month period then ended for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of December 31,
1997, and the related consolidated statement of operations, shareholders'
equity and cash flows for the year then ended (not presented herein) and in our
report dated March 13, 1998 (except for the second paragraph of Note 3 and the
fourth and fifth paragraphs of Note 4, as to which the date is April 1, 1998)
we expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
condensed balance sheet as of December 31, 1997, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
Chicago, Illinois /s/ Ernst & Young LLP
May 7, 1998 ---------------------
ERNST & YOUNG LLP
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 13,960
<SECURITIES> 0
<RECEIVABLES> 6,186
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,107,553
<DEPRECIATION> 105,177
<TOTAL-ASSETS> 1,064,928
<CURRENT-LIABILITIES> 0
<BONDS> 624,708
0
0
<COMMON> 241
<OTHER-SE> 344,146
<TOTAL-LIABILITY-AND-EQUITY> 1,064,928
<SALES> 0
<TOTAL-REVENUES> 39,090
<CGS> 0
<TOTAL-COSTS> 21,981
<OTHER-EXPENSES> 3,810
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,566
<INCOME-PRETAX> (118)
<INCOME-TAX> 0
<INCOME-CONTINUING> (118)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (118)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
