<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(AMENDMENT NO. 1)
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
For the quarterly period ended June 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER 1-12566
G & L REALTY CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 95-4449388
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
439 N. BEDFORD DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 273-9930
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 ___.
---
The number of shares outstanding of the Registrant's Common Stock as
of August 8, 1997 was 4,005,700 shares.
================================================================================
<PAGE>
G&L REALTY CORP.
AMENDED REPORT ON FORM 10-Q
On August 15, 1997, G & L Realty Corp. (the "Company") acquired 100%
ownership of GL/PHP, LLC, a Delaware limited liability company ("GL/PHP") which
owns six primary health care facilities located in New Jersey. Prior to the
August 15, 1997 transaction, the Company accounted for its investment in GL/PHP
using the equity method as the Company did not have the requisite level of
voting control required by Financial Accounting Standard 94 to consolidate its
interests in GL/PHP.
The Company views each interim period as being an integral part of the
annual period, and, as a result of the August 15, 1997 transaction, the Company
will be required to report the activities of GL/PHP on a consolidated basis for
the year ending December 31, 1997. This Form 10-Q/A amends and restates the
previously reported activities of the Company for the quarter ended June 30,
1997, to show the activities of GL/PHP on a consolidated basis.
INDEX
<TABLE>
<CAPTION>
Part I Financial Information Page Number
-----------
<S> <C>
Item 1 Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1997 (unaudited) and December 31, 1996 3
Condensed Consolidated Statements of Operations for the
Three Month and the Six Month Periods Ended June 30, 1997
and 1996 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for the Six
Month Periods Ended June 30, 1997 and 1996 (unaudited) 5-6
Notes to Condensed Consolidated Financial Statements
(unaudited) 7 -13
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 14 - 18
Part II Other Information
Item 1 Legal Proceedings 19
Item 2 Changes in Securities 19
Item 3 Defaults Upon Senior Securities 19
Item 4 Submission of Matters to a Vote of Security Holders 19 - 20
Item 5 Other Information 20
Item 6 Exhibits and Reports on Form 8-K 20
Signature 21
Exhibit Index 22
</TABLE>
Page 2
<PAGE>
G&L REALTY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31,
1997 1996
-------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
- --------------------------------------------------------------
Rental properties:
Land $ 22,721,000 $ 17,096,000
Buildings and improvements, net 91,932,000 76,135,000
Total rental properties 114,653,000 93,231,000
Cash and restricted cash 2,254,000 2,232,000
Other receivables, net 1,523,000 682,000
Tenant rent and reimbursements receivable, net 1,411,000 1,048,000
Unbilled rent receivable, net 1,616,000 1,477,000
Investments in unconsolidated affiliates 5,071,000 ---
Mortgage loans and bonds receivable, net 27,828,000 14,358,000
Assets available for sale 312,000 20,523,000
Deferred charges and other assets, net 2,469,000 2,445,000
------------ ------------
TOTAL ASSETS $157,137,000 $135,996,000
============ ============
LIABILITIES AND STOCKHOLDERS'EQUITY
- -----------------------------------
Liabilities:
Notes payable 95,325,000 109,025,000
Accounts payable and other liabilities 1,664,000 1,462,000
Distributions payable 1,621,000 1,642,000
Tenant security deposits 1,044,000 1,034,000
------------ ------------
Total liabilities 99,654,000 113,163,000
Commitments and contingencies --- ---
Minority interest in consolidated affiliates (1,764,000) (2,718,000)
Minority interest in Operating Partnership 3,016,000 3,103,000
Stockholders' equity:
Preferred shares - $.01 par value, 10,000,000 shares
authorized, 1,495,000 and no shares of 10.25% Series A
Cumulative issued and outstanding as of 6/30/97 and
12/31/96 respectively 15,000
Common shares - $.01 par value, 50,000,000 shares
authorized, 4,005,700 and 4,062,500 shares issued and
outstanding as of 6/30/97 and 12/31/96 respectively 40,000 41,000
Additional paid-in capital 58,186,000 23,710,000
Distributions in excess of net income (2,010,000) (1,303,000)
------------ ------------
Total stockholders' equity 56,231,000 22,448,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER S' EQUITY $157,137,000 $135,996,000
============ ============
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
Page 3
<PAGE>
G&L REALTY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Month For the Six Month
Period Ended June 30, Period Ended June 30,
1997 1996 1997 1996
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Rental $4,903,000 $ 3,652,000 $ 9,413,000 $ 7,673,000
Tenant reimbursements 146,000 118,000 395,000 257,000
Parking 358,000 288,000 718,000 633,000
Interest, loan fees and related income 810,000 1,626,000 2,385,000 3,271,000
Other 28,000 138,000 137,000 225,000
---------- ----------- ----------- -----------
Total revenues 6,245,000 5,822,000 13,048,000 12,059,000
---------- ----------- ----------- -----------
EXPENSES:
Property operations 1,501,000 1,204,000 3,167,000 2,464,000
Depreciation and amortization 1,065,000 840,000 2,016,000 1,657,000
Interest 2,206,000 2,081,000 4,675,000 4,297,000
General and administrative 529,000 521,000 1,007,000 923,000
Loss on disposition of rental property --- 4,874,000 --- 4,874,000
---------- ----------- ----------- -----------
Total expenses 5,301,000 9,520,000 10,865,000 14,215,000
---------- ----------- ----------- -----------
Income (loss) from operations 944,000 (3,698,000) 2,183,000 (2,156,000)
Equity in earnings of unconsolidated affiliate 520,000 --- 572,000 ---
Minority interest in consolidated affiliates (46,000) (35,000) (95,000) (72,000)
Minority interest in Operating Partnership (136,000) 380,000 (272,000) 227,000
---------- ----------- ----------- -----------
Net income (loss) before extraordinary gain 1,282,000 (3,353,000) 2,388,000 (2,001,000)
Extraordinary gain on retirement of debt --- 9,311,000 --- 9,311,000
---------- ----------- ----------- -----------
Net income $1,282,000 $ 5,958,000 $ 2,388,000 $ 7,310,000
========== =========== =========== ===========
Per share data:
Before extraordinary gain $0.27 $(0.82) $0.53 $(0.49)
Extraordinary gain --- 2.29 --- 2.29
---------- ----------- ----------- -----------
Net income $0.27 $1.47 $0.53 $1.80
========== =========== =========== ===========
Weighted average number of outstanding shares 4,102,000 4,063,000 4,139,000 4,062,000
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
Page 4
<PAGE>
G&L REALTY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
----------------------------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,388,000 $ 7,310,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Extraordinary gain on retirement of debt --- (9,311,000)
Loss on disposition of rental property --- 4,874,000
Depreciation and amortization 2,016,000 1,657,000
Minority interests 367,000 (155,000)
Undistributed equity in income from affiliates (405,000) ---
Gain on sale of assets held for sale (556,000) ---
Unbilled rent receivable, net (139,000) 148,000
Allowance for doubtful notes and accounts receivable 212,000 96,000
(Increase) decrease in:
Other receivables (736,000) (342,000)
Tenant rent and reimbursements receivable (320,000) 66,000
Prepaid expense and other assets (267,000) (163,000)
Accrued interest receivable and loan fees 192,000 (300,000)
Increase (decrease) in:
Accounts payable and other liabilities 202,000 (180,000)
Tenant security deposits 10,000 16,000
------------ ------------
Net cash provided by operating activities 2,964,000 3,716,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to rental properties (613,000) (944,000)
Purchase of rental properties (22,384,000) (1,274,000)
Proceeds from sale (acquisition)of assets available for sale 4,520,000 (3,005,000)
Pre-acquisition costs --- (812,000)
Return of pre-acquisition deposits 17,000 1,115,000
Leasing commissions (42,000) (67,000)
Investment in notes and bonds receivable (net) (14,208,000) (10,377,000)
Investments in affiliates (2,038,000) ---
------------ ------------
Net cash used in investing activities (34,748,000) (15,364,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable proceeds 33,963,000 31,800,000
Repayment of notes payable (33,663,000) (14,687,000)
Deferred financing costs (367,000) (1,096,000)
Sale of preferred stock and preferred partnership units 35,415,000 ---
Sale (purchase) of common stock and partnership units (925,000) 4,000
Minority interest equity contribution 858,000 ---
Distributions (3,475,000) (2,907,000)
------------ ------------
Net cash provided by financing activities 31,806,000 13,114,000
------------ ------------
NET INCREASE IN CASH AND RESTRICTED CASH 22,000 1,466,000
CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD 2,232,000 1,280,000
------------ ------------
CASH AND RESTRICTED CASH AT END OF PERIOD $ 2,254,000 $ 2,746,000
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest $ 4,283,000 $ 4,120,000
============ ============
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
Page 5
<PAGE>
G&L REALTY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
----------------------------
(Unaudited)
<S> <C> <C>
During the period, the Company sold Series A and B Bonds for
the following non-cash consideration:
Assignment of note payable $14,000,000
Investment in affiliate 3,165,000
-----------
$17,165,000
===========
Property acquired in exchange for partnership units $ 549,000
===========
Net cost of assets transferred to lien holder:
Land $ 2,047,000
Buildings and improvements 21,601,000
Tenant improvements 477,000
Accumulated depreciation (3,557,000)
-----------
Total rental property 20,568,000
Unbilled rent receivable, net 1,109,000
Tenant and other accounts receivable 340,000
Leasing commissions, net 181,000
Prepaid expense and other assets 87,000
Accounts payable and other liabilities 589,000
-----------
Net cost of assets transferred to lien holder 22,874,000
Nonrecourse debt extinguished 28,500,000
-----------
Excess of nonrecourse debt over net cost of assets surrendered $ 5,626,000
===========
Noncash gain from transfer of property to lien holder:
Extraordinary gain on retirement of debt $ 9,311,000
Minority interest share of extraordinary gain 1,055,000
-----------
Extraordinary gain on retirement of debt 10,366,000
Extraordinary loss related to other refinancing transactions 134,000
-----------
Extraordinary gain on transfer of property to lien 10,500,000
holder
Loss on disposition of rental property (4,874,000)
-----------
Noncash gain from transfer of property to lien holder $ 5,626,000
===========
Distributions declared not yet paid $1,621,000 $ 1,642,000
========== ===========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
Page 6
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
G & L Realty Corp. (the "Company") was formed as a Maryland corporation
on September 15, 1993 to continue the ownership, management, acquisition and
development operations of medical office buildings conducted previously by G&L
Development, a California partnership, the Company's predecessor. All of the
Company's assets are held by, and all of its operations are conducted through,
the following entities:
G&L Realty Partnership, L.P., a Delaware limited partnership
(the "Operating Partnership")
G&L Realty Financing Partnership II, L.P., a Delaware limited
partnership (the "Realty Financing Partnership")*
G&L Medical Partnership, L.P., a Delaware limited partnership
(the "Medical Partnership")*
435 North Roxbury Drive, Ltd., a California limited partnership
(the "Roxbury Partnership")
GL/PHP, LLC, a Delaware limited liability company ("GL/PHP")*
*The Realty Financing Partnership, the Medical Partnership and GL/PHP
are herein defined collectively as the "Financing Entities" and individually as
a "Financing Entity".
The Company, as the sole general partner and as owner of an
approximately 89% ownership interest, controls the Operating Partnership. The
Company controls the Financing Entities through wholly owned subsidiaries
incorporated in the State of Delaware ( collectively, the "Subsidiaries" and
individually, a "Subsidiary"). Each Subsidiary owns, as sole general partner, a
1% ownership interest in its related Financing Entity. The remaining 99%
ownership interest in each Financing Entity is owned by the Operating
Partnership, acting as sole limited partner.
The Operating Partnership and PHP Healthcare Corporation, a Delaware
corporation ("PHP") own 80.5% and 19.5% interests, respectively, in GL/PHP. The
Operating Partnership is the sole manager of GL/PHP and, subject to restrictions
in GL/PHP's operating agreement, controls GL/PHP. (See subsequent event in Note
7 to these condensed consolidated financial statements).
References in these consolidated financial statements to the Company, its
operations, assets and liabilities include the operations, assets and
liabilities of the Operating Partnership, the Subsidiaries, the Financing
Entities and the Roxbury Partnership (in which the Operating Partnership owns a
61.75% partnership interest and is the sole general partner).
The Company also owns an interest in GLN Capital Co., LLC ("GLN Capital"),
a Delaware limited liability company formed in 1996. GLN Capital, an
unconsolidated affiliate, is owned 49.9% by the Operating Partnership and 50.1%
by an affiliate of Nomura Asset Capital Corp. ("Nomura"). The purpose of GLN
Capital is to fund loans to the senior care industry.
Page 7
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business- The Company is a self-administered and self-managed real estate
investment trust ("REIT") that finances, acquires, develops, manages and leases
health care properties. The Company's business currently consists primarily of
investments, either directly or through joint ventures, in health care
properties (primarily through its Medical Office Building Division) and in debt
obligations secured by health care properties (primarily through its Senior Care
Division).
Basis of Presentation - The accompanying condensed consolidated financial
statements include the accounts of the Company. The interests in 435 North
Roxbury Drive, Ltd. not owned by the Company have been reflected in minority
interests. All significant intercompany accounts and transactions have been
eliminated in consolidation. Prior period amounts have been reclassified to
conform to the current period's financial statement presentation.
The information for the six month periods ended June 30, 1997 and 1996 has
not been audited by independent accountants, but includes all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for such periods.
The results of operations for the six months ended June 30, 1997 are not
necessarily indicative of results that might be expected for the full fiscal
year.
Certain information and footnote disclosures normally included in annual
financial statements have been omitted. The Company believes that the
disclosures included in these financial statements are adequate for a fair
presentation and conform to reporting requirements established by the Securities
and Exchange Commission ("SEC"). The condensed consolidated financial
statements as presented herein should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K as filed with the SEC.
The Condensed Consolidated Balance Sheets reflect the combined assets and
liabilities of the Company. The Condensed Consolidated Statements of Operations
and Cash Flows have been prepared to reflect the operations of the Company for
the periods ended June 30, 1997 and 1996.
Cash and Restricted Cash - As of June 30, 1997, the Company had $2,153,000
in a segregated interest bearing account to be used for debt service due in July
1997, current property taxes, insurance and property improvements. Accounts
payable and other liabilities included a bank overdraft of $385,000 at June 30,
1997, which was subsequently funded by a draw against the Company's credit line.
Assets Available for Sale - The Company is currently involved in
negotiations to sell certain assets. The associated cost of these assets is
included in the Company's balance sheet as assets available for sale. No
adjustment has been made to the cost basis of these assets as Management
believes that the net realizable value of the assets available for sale
approximate their original cost.
Per Share Data - Earnings per share are computed based upon the weighted
average number of common shares outstanding during the period. The treasury
stock method is used to determine the number of incremental common equivalent
shares resulting from options granted under the Company's 1993 Stock Incentive
Plan. As of June 30, 1997, there were approximately 371,500 stock options
outstanding with a weighted average exercise price of $12.125. Using the
closing market price of $16.375 on June 30, 1997, the number of shares which may
be issued pursuant to the Plan is 96,420.
Page 8
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(UNAUDITED)
3. BUILDINGS AND IMPROVEMENTS
Buildings and improvements consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------------------------------
(Unaudited)
<S> <C> <C>
Buildings and improvements $ 98,705,000 $ 81,677,000
Tenant improvements 5,045,000 4,708,000
Furniture, fixtures and equipment 366,000 359,000
------------ ------------
104,116,000 86,744,000
Less accumulated depreciation and amortization (12,184,000) (10,609,000)
------------ ------------
Total $ 91,932,000 $ 76,135,000
============ ============
</TABLE>
4. DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
-------------------------------
(Unaudited)
<S> <C> <C>
Deferred financing costs $1,814,000 $2,061,000
Pre-acquisition costs --- 17,000
Leasing commissions 504,000 462,000
Prepaid expense and other assets 540,000 272,000
---------- ----------
2,858,000 2,812,000
Less accumulated amortization (389,000) (367,000)
---------- ----------
Total $2,469,000 $2,445,000
========== ==========
</TABLE>
Page 9
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(UNAUDITED)
5. STOCKHOLDERS' EQUITY
As described in Note 2, the Company has elected to be treated, for
federal income tax purposes, as a REIT. As such, the Company is required to
distribute annually, in the form of distributions to its stockholders, at least
95% of its taxable income. In reporting periods in which distributions exceed
net income, stockholders' equity will be reduced by the distributions in excess
of net income in such period and will be increased by the excess of net income
over distributions in reporting periods in which net income exceeds
distributions. For tax reporting purposes, a portion of the dividends declared
represents a return of capital. The following table reconciles net income and
distributions in excess of net income for the six month period ended June 30,
1997 and for the year ended December 31, 1996:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------------------------------
(Unaudited)
<S> <C> <C>
Distributions in excess of net income at beginning of period $(1,303,000) $(5,479,000)
Net income during period 2,388,000 9,701,000
Less: Distributions declared (3,095,000) (5,525,000)
----------- -----------
Distributions in excess of net income $(2,010,000) $(1,303,000)
=========== ===========
</TABLE>
6. INVESTMENT IN UNCONSOLIDATED AFFILIATE
On November 25, 1996, the Company expanded its activities in the Senior
Care Division by entering into an unconsolidated operating venture, GLN Capital,
which commenced operations in January 1997. Subsequent to the formation of GLN
Capital, GMAC Commercial Mortgage ("GMAC-CM"), which has previously funded four
loans to the Company, committed to provide to GLN Capital a $50.0 million credit
line that will be secured by loans originated by GLN Capital.
In March 1997, the Company sold Series A and B Industrial Revenue Bonds
(the "Bonds") issued by the Massachusetts Industrial Finance Agency to GLN
Capital for total consideration of $21.7 million. The Bonds, which had a book
value of $20.6 million at the time of sale, were purchased in October 1995 for
$19.9 million. At the time of sale, the Series A and B Bonds had a combined
outstanding balance of $27.7 million, including principal (at face value) and
accrued interest. Total consideration included $4.5 million in cash, a $3.2
million capital contribution to GLN Capital, and an assumption of the $14
million note due and payable to GMAC-CM (the "GMAC Loan").
On June 1, 1997 the Operating Partnership provided a loan in the amount of
$14 million (the "Loan") to GLN Capital, the proceeds of which were used to
retire the GMAC Loan. Pursuant to the terms of the Security Agreement, the Loan
will mature on June 1, 1998 and will bear interest at the prime lending rate
plus 1.5% adjusted monthly. Subject to the Security Agreement, GLN Capital
assigned a security interest in the Bonds to the Operating Partnership as
collateral for the Loan.
Page 10
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(UNAUDITED)
The following table provides a summary of the Company's investment GLN
Capital, as of June 30, 1997.
<TABLE>
<CAPTION>
GLN Capital
-----------
<S> <C>
Cash contributions $2,038,000
Non-Cash contributions 3,165,000
Equity in earnings 572,000
Unrecognized gain (537,000)
Cash distributions (167,000)
----------
BALANCE June 30, 1997 $5,071,000
==========
</TABLE>
Following is a summary of the condensed financial information, as of June
30, 1997, for GLN Capital.
<TABLE>
<CAPTION>
GLN Capital
---------------
<S> <C>
Financial Position:
- -------------------
Notes and bonds receivable, net $ 30,605,000
Other Assets 277,000
Notes payable (21,134,000)
Other liabilities (186,000)
------------
Net Assets: $ 9,562,000
Partner's equity:
- -----------------
G&L Realty Partnership, L.P. $ 5,203,000
Others 3,522,000
Current earnings 1,108,000
Cash distributions (271,000)
------------
$ 9,562,000
============
Operations:
- -----------
Revenues $ 1,847,000
Expenses 739,000
------------
Net Income $ 1,108,000
============
Allocation of net income:
- -------------------------
G & L Realty Partnership, L.P. $ 572,000
Others 536,000
------------
$ 1,108,000
============
</TABLE>
Page 11
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(UNAUDITED)
7. ACQUISITION OF RENTAL PROPERTIES
On February 26, 1997 the Company, through the Operating Partnership,
entered into a joint venture by forming GL/PHP with PHP. At the time of its
formation, the Operating Partnership and PHP contributed $4.4 million of equity
in proportion to their 80.5% and 19.5% respective interests in GL/PHP. Subject
to restrictions in the operating agreement, the Operating Partnership was the
sole manager of GL/PHP. On February 28, 1997, GL/PHP acquired six primary care
facilities in New Jersey, totaling 80,415 square feet, at a cost of
approximately $22.4 million. GL/PHP used the $4.4 million equity contribution
together with the proceeds of two new loans obtained from PHP to fund the
acquisition. The PHP loans were secured by first and second deeds of trust with
the greater of the two loans, at $15,735,000, due on August 28, 1997 and giving
PHP a right, upon default, to purchase the Company's 80.5% interest in GL/PHP.
The properties, which were acquired from Blue Cross/Blue Shield of New Jersey,
were initially leased to PHP pursuant to the terms of a 25-year net lease which
provided for fixed rent escalations during the term of the lease. Mr. Charles P.
Reilly, a director of the Company and chairman of the Compensation Committee of
the Company's Board of Directors, is Chairman of the Board of Directors of PHP.
On August 15, 1997, the Company acquired PHP's interest in GL/PHP for a
total consideration of $919,000. Concurrent with the transfer of ownership, the
following transactions were completed:
. GL/PHP redeemed PHP's 18.5% ownership interest in GL/PHP.
. The remaining 1% ownership interest was assigned to G&L Management
Delaware Corp., a newly formed Delaware corporation and wholly owned
subsidiary of the Company.
. G&L Management Delaware Corp. assumed responsibilities as the managing
member of GL/PHP from the Operating Partnership.
. GL/PHP obtained a new 10-year, $16.0 million fixed rate loan that bears
interest at 8.98% per annum and requires monthly principle and interest
payments of $155,000 per month.
. The Operating Partnership borrowed $2.0 million from PHP and contributed
the loan proceeds to GL/PHP. GL/PHP used the funds to retire the $2.0
million second trust deed payable to PHP. The Operating Partnership's new
$2.0 million loan from PHP requires quarterly interest only payments at
8.5% per annum with all unpaid interest and principal due July 31, 2007.
. The original 25-year lease between GL/PHP and PHP was renegotiated,
effective as of August 15, 1997. Under the terms of the new 17-year net
operating lease, PHP is required to make monthly payments of approximately
$221,500. The lease provides for rent increases equal to the annual
increase in the Consumer Price Index subject to a maximum annual increase
of 5%.
The table on the following page sets forth certain information regarding
each of the New Jersey properties and the respective leases at August 15, 1997.
Page 12
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR
CONSTRUCTED RENTABLE TOTAL AVERAGE
OR SQUARE ANNUALIZED RENT PER
PROPERTY REHABILITATED FEET(1) RENT(2) SQ. FT.(3)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2103 Mt. Holly Rd.
Burlington, NJ 1994 12,560 $ 434,950 $34.63
150 Century Parkway
Mt. Laurel, NJ 1995 12,560 391,310 31.16
274 Highway 35, South
Eatontown, NJ 1995 12,560 481,030 38.30
80 Eisenhower Drive
Paramus, NJ 1994 12,675 421,800 33.28
16 Commerce Drive
Cranford, NJ 1963 17,500 491,670 28.10
4622 Black Horse Pike
Mays Landing, NJ 1994 12,560 437,490 34.83
------ ----------
Total 80,415 $2,658,250 $33.06
====== ==========
</TABLE>
(1) Rentable square feet includes space used for management purposes but does
not include storage space.
(2) Rent is based on third-party leased space billed in February 1997; no rent
is assumed from management space.
(3) Average rent per square foot is calculated based upon third-party leased
space, excluding management space.
Prior to the Company's acquisition of PHP's 19.5% interest on August 15,
1997, the Company did not have the requisite level of voting control required by
Financial Accounting Standard 94 to account for its interests on a consolidated
basis. As a result of the terms of the August 15, 1997 acquisition, the
Company gained voting control of GL/PHP and is therefore required to include the
assets, liabilities and operating activities of GL/PHP in the Company's
consolidated financial statements.
The Company views each interim period as being an integral part of the
annual period, and, as a result of the August 15, 1997 transaction, the Company
will be required to report the activities of GL/PHP on a consolidated basis for
the year ending December 31, 1997. Therefore, these interim financial statements
for the quarter ended June 30, 1997, have been restated to reflect the
activities of the Company, including the assets, liabilities and operating
activities of GL/PHP, on a consolidated basis.
8. STOCKHOLDER EQUITY AND DEBT OUTSTANDING
The Company issued 1,495,000 shares (including an over allotment of 195,000
shares) of 10.25% Series A Cumulative Preferred Stock, par value $.01 (the
"Series A Preferred Stock") in May 1997. Dividends on the Series A Preferred
Stock are cumulative from the date of issue and are payable monthly to
shareholders of record on the first day of each month. The dividends, which
commenced on June 15, 1997, are payable at the rate of $2.5625 per share,
yielding 10.25% per annum based upon the $25 per share liquidation preference.
The Company may redeem the Series A Preferred
Page 13
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(UNAUDITED)
Stock at the redemption price of $25 per share plus any accumulated, unpaid
dividends at any time after June 1, 2001.
Upon consummation of the offering, the Company received net proceeds of
$35.4 million. The Company contributed the net proceeds of the Series A
Preferred Stock offering to the Operating Partnership in exchange for a new
series of preferred partnership units having terms substantially similar to
those of the Series A Preferred Stock. Approximately $28.7 million of the
proceeds were used by the Operating Partnership to repay, without prepayment
charges or penalties, the following notes payable. The excess proceeds
(approximately $6.7 million) were invested in interest-bearing accounts.
<TABLE>
<S> <C>
Credit line due August 17, 1998, collateralized by deeds of
trust, $20 million available, interest payable monthly at 30
day LIBOR plus 1.75% per annum (7.5% at pay-off)............... $16,900,000
Unsecured credit line due December 11, 1997. $3.0 million
available, interest payable monthly at the prime rate plus
2.0% (10.5% at pay-off)........................................ 1,000,000
Note due June 17, 1997, collateralized by note receivable and
deed of trust, interest payable monthly at the Citibank Prime
rate of interest (8.5% at pay-off)............................. 4,125,000
Note due May 31, 1997, collateralized by note receivable and
deed of trust, interest payable monthly at the Citibank Prime
rate of interest (8.5% at pay-off)............................. 3,000,000
Note due August 28, 1997, collateralized by equity investment
in affiliate, interest payable at 12% per annum................ 3,700,000
</TABLE>
At various times during the second quarter, the Company repurchased a total
of 56,800 shares of the Company's Common Stock at an average price of
approximately $16.30 per share.
9. COMMITMENTS AND CONTINGENCIES
Neither the Company, the Operating Partnership, the Realty Financing
Partnership, the Medical Partnership, the Roxbury Partnership, GL/PHP, GLN
Capital nor any of the assets within their portfolios of medical office
buildings, parking facilities, and retail space (the "Properties") is currently
a party to any material litigation.
Page 14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
Unaudited Condensed Consolidated Financial Statements and Notes thereto included
elsewhere in this Form 10-Q.
Except for the historical information contained herein, the matters
discussed in this Form 10-Q are forward-looking statements which involve risk
and uncertainties. The risk and uncertainties include, but are not limited to,
economic, competitive, governmental and technological factors affecting the
Company's operations, markets, products, services and prices, and other factors
discussed in the Company's filings with the SEC.
Results of Operations
- ---------------------
Comparison of the Three Month Period Ended June 30, 1997 versus the Three Month
Period Ended June 30, 1996
A comparison of net income, revenues, and expenses for the quarters ended
June 30, 1997 and June 30, 1996 will be impacted primarily by the financial
effects of the May 1996 transfer of the property located at 436 North Bedford
Drive to the lender for such property. While net income declined $4,676,000
from $5,958,000 for the quarter ended June 30, 1996 to $1,282,000 for the same
period in 1997, the primary components affecting this decline were the
$4,874,000 loss on disposition of rental property and the associated $9,311,000
extraordinary gain on retirement of the debt in 1996. Net of minority
interests, these two items contributed $4,943,000 to the Company's second
quarter 1996 earnings.
In May of 1996, the Company transferred the property located at 436 North
Bedford Drive to the lien holder in satisfaction of the debt secured by the
property. Subsequently, on August 30, 1996, the Company reacquired the 436
North Bedford Drive property. Therefore, the second quarter of 1997 includes a
full quarter of operations for this property compared to a partial quarter of
operations in 1996. The increases in revenues related to rents, tenant
reimbursements and parking during the second quarter of 1997 as compared to 1996
are primarily attributed to: (i) the May 1996 transfer of the 436 North Bedford
Drive to the lender for such property and the related absence of rents, tenant
reimbursements and parking revenues during the remainder of May and the full
month of June 1996, and (ii) the acquisition by GL/PHP of the six New Jersey
properties. The second quarter 1997 increase in property operations,
depreciation and amortization and interest expense can be attributed to the 436
North Bedford Drive transaction in 1996 and the acquisition of the GL/PHP
properties.
The Company's investment in GLN Capital contributed $520,000 to second
quarter 1997 earnings before any adjustment for minority interests. Prior to
1997, the Company invested directly in trust deeds secured by senior care
facilities. While the formation of GLN Capital expanded the Company's access to
capital, the revenues and expenses of GLN Capital are not included in the
Company's consolidated statement of operations except for the Company's
allocated share of GLN Capital's net income. The decline in revenues from
interest, loan fees and related income from $1,626,000 during the second quarter
of 1996 to $810,000 for the same period in 1997 is the result of a shift in
activity away from loans originated directly by the Operating Partnership and
toward loans originated through GLN Capital. Although the Company may, from
time to time, invest directly in trust deeds secured by senior care facilities,
the trend toward investment in GLN Capital and away from direct investments in
trust deeds by the Operating Partnership is anticipated to continue.
Page 15
<PAGE>
Comparison of the Six Month Period Ended June 30, 1997 versus the Six Month
Period Ended June 30, 1996
As discussed in the three month comparison above, net income, revenues, and
expenses for the six months ended June 30, 1997 and June 30, 1996 are impacted
primarily by the financial effects of the May 1996 transfer of the property
located at 436 North Bedford Drive to the lender for such property. Net income
declined $4,922,000 from $7,310,000 for the six months ended June 30, 1996 to
$2,388,000 for the same period in 1997. As indicated above, the primary
components affecting this decline were the $4,874,000 loss on disposition of
rental property and the associated $9,311,000 extraordinary gain on retirement
of the debt in 1996. Net of minority interests, the combination of these items
contributed $4,943,000 to the Company's net income for the first six months of
1996.
The 1996 disposition and reacquisition of the 436 North Bedford Drive
property and the GL/PHP acquisition of the six New Jersey properties also
contributed to increases in rents, tenant reimbursements and parking revenues
during the first six months of 1997 when compared to 1996 due to the related
absence of rents, tenant reimbursements and parking revenues that resulted from
the 436 North Bedford Drive and GL/PHP transactions. The first six months of
1997 reflected a similar increase in property operations, depreciation and
amortization and interest expenses as compared to 1996.
During the first half of 1997, the Company made new investments in short-
term secured loans through GLN Capital, an unconsolidated affiliate. The
subsequent $886,000 decline in interest, loan fees and related income, from the
six months ended June 30, 1996 compared to the same period in 1997, reflects the
Company's investments in secured trust deeds through the GLN Capital venture
with Nomura. The $572,000 equity in earnings of unconsolidated affiliate for
the six months ended June 30, 1997 is attributable to the Company's allocated
share of net income from the activity in GLN Capital. The Company accounts for
its investment in GLN Capital using the equity method; therefore, the Company's
allocated share of revenues are reported net of expenses and after income from
operations.
Liquidity and Capital Resources
- -------------------------------
The Company obtains its liquidity from multiple internal and external
sources. Internally, funds are derived from the operation of medical office
buildings and senior care lending activities and primarily consist of Funds from
Operations ("FFO") less dividends (see discussion below of FFO). Except for the
recently completed preferred stock offering, the Company's external sources of
capital consist of various secured loans and lines of credit. The Company's
ability to expand its medical office and senior care lending operations requires
continued access to capital to fund new acquisitions and loans either directly
or through various affiliates. During the six months ended June 30, 1997, the
Company paid dividends on its Common Stock equal to approximately 81% of its
FFO. Undistributed FFO was used internally to fund maintenance and capital
expenditures necessary to maintain the Company's existing properties.
The Company declared a quarterly distribution on its Common Stock for the
second quarter of 1997, in the amount of $0.36 per share, which was paid on July
15, 1997 to stockholders of record on June 30, 1997. In June, the Company also
declared and paid a monthly distribution of approximately $0.128 per share to
holders of the Company's newly issued Series A Preferred Stock. During the six
month period ended June 30, 1997 the Company invested approximately $648,000 to
maintain its rental properties and lease its vacant space.
Page 16
<PAGE>
As a result of the aforementioned Series A Preferred Stock offering, the
Company received approximately $35.4 million in May 1997. These funds were used
to retire various debt obligations as described in Note 7 to the Unaudited
Condensed Consolidated Financial Statements included elsewhere in this Form 10-
Q/A.
In general, the Company expects to continue meeting its short term
liquidity requirements through its working capital and the cash flow provided by
operations. The Company considers its ability to generate cash to be good and
expects to be able to meet all operating requirements and to provide sufficient
funds to maintain stockholder distributions in accordance with REIT
requirements. Long-term liquidity requirements such as refinancing mortgages,
financing acquisitions and financing capital improvements may be accomplished
through long-term borrowings, the issuance of debt securities and the offering
of additional equity securities.
Page 17
<PAGE>
G&L REALTY CORP.
FUNDS FROM OPERATIONS AND ADDITIONAL DATA
(Unaudited)
Funds from Operations
- ---------------------
Industry analysts generally consider FFO to be an appropriate measure of
the performance of a REIT. The Company presents FFO based upon the new
guidelines established by the Board of Governors of the National Association of
Real Estate Investment Trusts ("NAREIT"). FFO is calculated to include the
minority interest's share of income since the Operating Partnership's net income
is allocated proportionately among all owners of Operating Partnership units.
The number of Operating Partnership units held by the Company is identical to
the number of outstanding shares of the Company's common stock, and owners of
Operating Partnership units may, at their discretion and subject to certain
restrictions, exchange their units into shares of common stock on a one-for-one
basis.
Management believes that in order to facilitate a clear understanding of
the operating results of the Company, FFO should be examined in conjunction with
the Company's net income as presented in the Condensed Consolidated Financial
Statements and Notes thereto included elsewhere in this Form 10-Q, the
additional data presented below, and the Company's Consolidated Financial
Statements and related Notes included in the Company's annual report on Form 10-
K. FFO is only one of a range of indicators which should be considered in
determining a company's operating performance. The methods of calculating FFO
among different companies are subject to variation, and FFO therefore may be an
invalid measure of comparing companies. Also, the elimination of depreciation
and gains and losses on sales of property may not be a true indication of an
entity's ability to recover its investment in properties. The tables below
present an analysis of FFO and certain additional data for the three-month and
six-month periods ended June 30, 1997 and 1996.
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---------------------------------------------------------
(amounts in thousands)
<S> <C> <C> <C> <C>
Funds from operations (1):
Net income $1,282 $ 5,958 $2,388 $ 7,310
ADD: Minority interest in Operating Partnership 136 (380) 272 (227)
ADD: Real estate related depreciation and
amortization 816 672 1,587 1,379
ADD: Loss on disposition of rental property --- 4,874 --- 4,874
LESS: Extraordinary gain --- (9,311) --- (9,311)
LESS: Adjustment for minority interest in
consolidated partnership (27) (7) (42) (13)
LESS: Dividends on preferred stock (192) --- (192) ---
------ ------- ------ -------
Funds from Operations (1) $2,015 $ 1,806 $4,013 $ 4,012
====== ======= ====== =======
Weighted averages shares outstanding (2) 4,504 4,523 4,533 4,522
====== ======= ====== =======
</TABLE>
Table and footnotes continue on the following page.
Page 18
<PAGE>
G&L REALTY CORP.
FUNDS FROM OPERATIONS AND ADDITIONAL DATA -- (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months Ended
Ended June 30, June 30,
1997 1996 1997 1996
----------------------------------------------------
(amounts in thousands)
<S> <C> <C> <C> <C>
ADDITIONAL DATA
- ---------------
Cash Flows:
- -----------
Operating Activities 2,214 2,862 2,964 3,716
Investing Activities (9,618) (15,215) (34,748) (15,364)
Financing Activities 6,835 13,341 31,806 13,114
Capital Expenditures
- --------------------
Building improvements 167 128 269 198
Tenant improvements 217 391 337 719
Furniture, fixtures & equipment --- 25 7 27
Leasing commissions 28 34 42 67
Depreciation and Amortization
- -----------------------------
Depreciation of real estate assets 796 642 1,547 1,309
Depreciation of non-real estate assets 14 11 28 22
Amortization of deferred lease costs 20 30 40 70
Amortization of capitalized financing costs 235 157 401 256
Accrued rent in excess of billed rent 22 (114) 139 (148)
</TABLE>
_____________
(1) FFO represents net income (computed in accordance with generally accepted
accounting principles, consistently applied ("GAAP")), excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation of
real property, less preferred stock dividends and after adjustments for
consolidated and unconsolidated entities in which the Company holds a
partial interest. FFO is computed in accordance with the definition
adopted by NAREIT. FFO should not be considered as an alternative to net
income or any other indicator developed in compliance with GAAP, including
measures of liquidity such as cash flows from operating, investing and
financing activities. FFO is helpful in evaluating the performance of a
real estate portfolio considering the fact that historical cost accounting
assumes that the value of real estate diminishes predictably over time.
FFO is only one of a range of indicators which should be considered in
determining a company's operating performance. The methods of calculating
FFO among different companies are subject to variation; therefore, FFO may
be an invalid measure for purposes of comparing companies. Also, the
elimination of depreciation and gains and losses on sales of property may
not be a true indication of an entity's ability to recover its investment
in properties. The Company implemented the new method of calculating FFO
effective as of the NAREIT-suggested adoption date of January 1, 1996.
(2) Assumes that all outstanding Operating Partnership units have been
converted to common stock.
Page 19
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
Neither the Company, the Operating Partnership, the Financing
Partnership, the Realty Financing Partnership, the Medical Partnership,
the Roxbury Partnership, GL/PHP, GLN Capital nor any of their respective
properties is currently a party to any material litigation.
Item 2. Changes in Securities.
In May 1997, the Company issued 1,495,000 shares (including an over
allotment of 195,000 shares) of 10.25% Series A Cumulative Preferred
Stock, par value $.01 (the "Series A Preferred Stock"). The issuance of
the Series A Preferred Stock has the effect of modifying the rights of
the holders of the Company's Common Stock insofar as the holders of the
Series A Preferred Stock enjoy preferential rights as to dividends and
proceeds upon liquidation. See Note 8 to the Condensed Consolidated
Financial Statements included elsewhere in this Form 10-Q.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
On May 28, 1997, the Company held its 1997 Annual Meeting of
Stockholders. Three items of business were conducted at the meeting (i)
the election of directors, (ii) a proposal to approve certain future
partnership interest issuances, and (iii) a proposal to amend and restate
the Company's 1993 Stock Incentive Plan.
(i) The seven directors elected at the Annual Meeting, to serve for
the term ending at the next Annual Meeting of Stockholders or until their
successors are duly elected and qualified or until they resign or are
removed, were the following:
<TABLE>
<CAPTION>
NAME VOTES FOR VOTES WITHHELD
<S> <C> <C>
Daniel M. Gottlieb 3,218,194 29,680
Steven D. Lebowitz 3,218,077 29,797
Richard L. Lesher 3,218,694 29,180
Leslie D. Michelson 3,218,577 29,297
Reese L. Milner 3,218,994 28,880
Charles P. Reilly 3,218,994 28,880
S. Craig Tompkins 3,218,994 28,880
</TABLE>
(ii) The proposal to approve the issuance to one or more directors of
the Company, or entities in which they have a substantial interest, of
partnership interests in G&L Realty Partnership, L.P. that are
convertible into up to 5% of the outstanding shares of Common Stock of
the Company as consideration for acquisitions of property by the Company
from such persons or entities in transactions approved as fair to the
Company by a committee of independent directors and in which each such
partnership interest is valued at a premium of
Page 20
<PAGE>
$0.25 over the market value of a share of Common Stock was approved with
the following votes:
Number of Votes FOR: 1,647,834
Number of Votes AGAINST: 147,354
Number of Votes ABSTAINING: 57,846
Number of Broker Non-Votes: 1,394,840
(iii) The proposal to amend and restate the Company's 1993 Stock
Incentive Plan was approved with the following votes:
Number of Votes FOR: 2,894,733
Number of Votes AGAINST: 213,990
Number of Votes ABSTAINING: 51,607
Number of Broker Non-Votes: 87,544
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.44* Loan and Security Agreement by GLN Capital Co., LLC., a
Delaware limited liability company, and G&L Realty
Partnership, L.P., a Delaware limited partnership, dated as
of June 1, 1997.
27 Financial Data Schedule.
* Previously filed as an exhibit to the Company's interim report on form 10-Q
for the period ended June 30, 1997.
(b) Reports on Form 8-K.
(i) The Company filed a Report on Form 8-K on March 31, 1997 and an
Amended Report on Form 8-K/A on May 30, 1997 concerning the sale
of certain Series A and B Industrial Revenue Bonds issued by the
Massachusetts Industrial Finance Agency (the "Bonds"). The Bonds
had an aggregate principal amount of $25,665,000 and carried
accrued and unpaid interest of approximately $2,000,000 at the
time of sale. The Operating Partnership sold the Bonds to GLN
Capital for total consideration of $21,665,000 consisting of cash
in the amount of $4,500,000, deemed equity contribution of
$3,165,000 to GLN Capital and the assumption by GLN Capital of
$14,000,000 in indebtedness owed to GMAC-CM.
Page 21
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
G&L REALTY CORP.
Dated: October 14, 1997 By: /s/ Quentin Thompson
---------------------------------
Quentin Thompson
Secretary, Treasurer
and Chief Accounting Officer
Page 22
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10.44 * Loan and Security Agreement by GLN Capital Co., LLC., a Delaware limited liability
company, and G&L Realty Partnership, L.P., a Delaware limited partnership, dated as
of June 1, 1997.
27 Financial Data Schedule.
</TABLE>
* Previously filed as an exhibit to the Company's interim report on form 10-Q
for the period ended June 30, 1997.
Page 23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,254,000
<SECURITIES> 0
<RECEIVABLES> 34,002,000
<ALLOWANCES> 1,624,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 126,837,000
<DEPRECIATION> 12,184,000
<TOTAL-ASSETS> 157,137,000
<CURRENT-LIABILITIES> 3,285,000
<BONDS> 95,325,000
0
15,000
<COMMON> 40,000
<OTHER-SE> 56,176,000
<TOTAL-LIABILITY-AND-EQUITY> 157,137,000
<SALES> 0
<TOTAL-REVENUES> 6,765,000
<CGS> 0
<TOTAL-COSTS> 1,501,000
<OTHER-EXPENSES> 1,594,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,206,000
<INCOME-PRETAX> 1,282,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,282,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,282,000
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0
</TABLE>
