<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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 (Zip Code)
Offices)
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 May 13, 1999 was 3,934,400 shares.
===============================================================================
<PAGE>
G&L REALTY CORP.
INDEX
<TABLE>
<CAPTION>
Page
Part I Financial Information Number
<S> <C> <C>
Item 1 Financial Statements
Consolidated Balance Sheets as of March 31, 1999 (unaudited) and
December 31, 1998....................................................... 3
Consolidated Statements of Operations for the Three Month Periods
Ended March 31, 1999 and 1998 (unaudited)............................... 4
Consolidated Statements of Cash Flows for the Three Month Periods Ended
March 31, 1999 and 1998 (unaudited)..................................... 5 - 6
Notes to Consolidated Financial Statements (unaudited)..................... 7 - 17
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 18 - 22
Item 3 Quantitative and Qualitative Disclosures About Market Risk ................ 23
Part II Other Information
Item 1 Legal Proceedings.......................................................... 24
Item 2 Changes in Securities...................................................... 24
Item 3 Defaults Upon Senior Securities............................................ 24
Item 4 Submission of Matters to a Vote of Security Holders........................ 24
Item 5 Other Information.......................................................... 24
Item 6 Exhibits and Reports on Form 8-K........................................... 25 - 29
Signature........................................................................................ 30
</TABLE>
Page 2
<PAGE>
G&L REALTY CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
------
Rental properties (Note 3):
Land $ 35,059 $ 35,059
Buildings and improvements, net 148,316 142,531
Projects under development 4,988 9,161
-------- --------
Total rental properties 188,363 186,751
Cash and cash equivalents 1,708 1,379
Restricted cash 4,335 4,007
Tenant rent and reimbursements receivable, net 1,445 2,050
Unbilled rent receivable, net 1,883 1,892
Other receivables, net 244 208
Mortgage loans and notes receivable, net 12,433 12,101
Investments in unconsolidated affiliates (Note 6) 7,944 7,469
Deferred charges and other assets, net (Note 4) 4,393 3,642
-------- --------
TOTAL ASSETS $222,748 $219,499
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Notes payable $140,176 $134,880
Accounts payable and other liabilities 2,607 2,296
Distributions payable 1,817 1,768
Tenant security deposits 1,246 1,270
-------- --------
Total liabilities 145,846 140,214
Commitments and Contingencies (Note 8) --- ---
Minority interest in consolidated affiliates (2,101) (2,033)
Minority interest in Operating Partnership 1,549 1,734
STOCKHOLDERS' EQUITY (Note 5):
Preferred shares - $.01 par value, 10,000,000 shares authorized,
liquidation preference of $25.00 per share
. Series A Preferred - 1,495,000 shares issued and outstanding
as of March 31, 1999 and December 31, 1998 15 15
. Series B Preferred - 1,380,000 shares issued and outstanding as
of March 31, 1999 and December 31, 1998 14 14
Common shares - $.01 par value, 50,000,000 shares authorized,
3,968,000 and 3,995,000 shares issued and outstanding as of
March 31, 1999 and December 31, 1998, respectively 40 40
Additional paid-in capital 89,365 91,709
Distributions in excess of net income (11,980) (12,194)
-------- --------
Total stockholders' equity 77,454 79,584
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $222,748 $219,499
======== ========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
Page 3
<PAGE>
G&L REALTY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Month
Period Ended March 31,
1999 1998
----------------------
<S> <C> <C>
REVENUES:
Rental $6,912 $5,882
Tenant reimbursements 371 129
Parking 264 359
Interest, loan fees and related income 581 1,056
Other 36 58
------ ------
Total revenues 8,164 7,484
------ ------
EXPENSES:
Property operations 1,904 1,411
Depreciation and amortization 1,333 1,060
Interest 2,616 1,916
General and administrative 641 689
------ ------
Total expenses 6,494 5,076
------ ------
Income from operations 1,670 2,408
Equity in earnings of unconsolidated affiliates 7 52
Minority interest in consolidated affiliates (50) (46)
Minority interest in Operating Partnership 24 (48)
------ ------
Net income $1,651 $2,366
====== ======
Per share data:
Basic $(0.04) $0.14
====== ======
Fully diluted $(0.04) $0.13
====== ======
Weighted average shares outstanding:
Basic 3,976 4,129
====== ======
Fully diluted 3,976 4,174
====== ======
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
Page 4
<PAGE>
G&L REALTY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
----------------------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,651 $ 2,366
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,333 1,060
Amortization of deferred loan costs 54 39
Minority interests 26 94
Equity in earnings of unconsolidated affiliates (7) (52)
Unbilled rent receivable, net 9 (64)
Allowance for doubtful notes and accounts receivable --- (202)
(Increase) decrease in:
Other receivables (36) 402
Tenant rent and reimbursements receivable 605 108
Prepaid expense and other assets (143) (310)
Accrued interest receivable and loan fees (168) (396)
Increase (decrease) in:
Accounts payable and other liabilities 311 (120)
Tenant security deposits (24) 74
------- --------
Net cash provided by operating activities 3,611 2,999
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of rental properties --- (4,148)
Additions to rental properties (853) (70)
Pre-acquisition costs (327) (105)
Construction-in-progress (2,038) (431)
Leasing commissions (156) (44)
Investment in notes and bonds receivable (net) (265) (4,770)
Principal repayments on notes receivable 101 585
Contributions to unconsolidated affiliates (468) (4,786)
------- --------
Net cash used in investing activities (4,006) (13,769)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable proceeds 6,200 ---
Repayment of notes payable (904) (438)
Deferred financing costs (233) (35)
(Increase) decrease in restricted cash (328) 3,890
(Purchase) sale of common stock and partnership units (344) 114
Distributions (3,667) (3,773)
------- --------
Net cash provided by (used in) financing activities 724 (242)
------- --------
Continued...
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
Page 5
<PAGE>
G&L REALTY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
----------------------------
(Unaudited)
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 329 (11,012)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,379 13,609
------ --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $1,708 $ 2,597
====== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest $2,724 $ 1,995
====== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Distributions declared not yet paid $1,794 $ 2,405
====== ========
Concluded.
</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 to
continue the ownership, management, acquisition and development activities
previously conducted by G&L Development, a California general 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")*
G&L Gardens, LLC, an Arizona limited liability company
("Maryland Gardens")*
435 North Roxbury Drive, Ltd., a California limited partnership
(the "Roxbury Partnership")
GL/PHP, LLC, a Delaware limited liability company ("GL/PHP")*
G&L Hampden, LLC, a Delaware limited liability company ("Hampden")*
G&L Valencia, LLC, a California limited liability company ("Valencia")
G&L Tustin, LLC, a California limited liability company ("Tustin")*
G&L Holy Cross, LLC, a California limited liability company ("Holy
Cross")*
G&L Burbank, LLC, a California limited liability company ("Burbank")*
GLH Pacific Gardens, LLC, a California limited liability company
("Pacific Gardens")
G&L Hoquiam, LLC, a California limited liability company ("Hoquiam")
G&L Lyon, LLC, a California limited liability company ("Lyon")
G&L Coronado (1998), LLC, a California limited liability company
("Coronado")
* The Realty Financing Partnership, the Medical Partnership, Maryland
Gardens, GL/PHP, Hampden, Tustin, Holy Cross, and Burbank are herein
collectively referred to as the "Financing Entities" and individually as a
"Financing Entity."
The Company, as the sole general partner and as owner of an approximately
86% ownership interest, controls the Operating Partnership. The Company controls
the Financing Entities through wholly owned subsidiaries incorporated either in
the State of Delaware or the State of California (collectively, the
"Subsidiaries" and individually, a "Subsidiary"). Each Subsidiary either (i)
owns, as sole general partner or sole managing member, a 1% ownership interest
in its related Financing Entity or (ii) owns no interest and acts as the manager
of the Financing Entity. The remaining 99% ownership interest in each Financing
Entity, which is owned 1% by a Subsidiary, is owned by the Operating
Partnership, acting as sole limited partner or member. Financing Entities in
which a Subsidiary owns no interest are 100% owned by the Operating Partnership.
References in these consolidated financial statements to the Company
include its operations, assets and liabilities including the operations, assets
and liabilities of the Operating Partnership, the Subsidiaries, the Financing
Entities, the Roxbury Partnership (in which the Operating Partnership owns a
61.75% partnership interest and is the sole general partner), Valencia (in which
the Operating Partnership owns an 80% membership interest and is the sole
managing member), Pacific Gardens (in which the Operating Partnership owns a 93%
membership interest and is a co-managing member) and Hoquiam, Lyon and Coronado
(in which the Operating Partnership owns a 100% interest).
Page 7
<PAGE>
G&L REALTY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
In addition to the Subsidiaries, the Company also owns interests in various
unconsolidated affiliates. Although the Company's investment represents a
significant portion of the capital of such unconsolidated affiliates and the
Company exercises significant influence over the activities of these entities,
the Company does not have the requisite level of voting control to include the
assets, liabilities and operating activities of these entities in the
consolidated financial statements of the Company. The entities in which the
Company has unconsolidated financial interests are as follows:
. GLN Capital Co., LLC ("GLN"), a Delaware limited liability company formed
in 1996. GLN is owned 49.9% by the Operating Partnership and 50.1% by an
affiliate of Nomura Asset Capital Corp. ("Nomura"). The purpose of GLN is
to fund loans to the senior care industry.
. Valley Convalescent, LLC ("Valley Convalescent") is a California limited
liability company formed by the Company, through the Operating Partnership,
and Continuum Health Incorporated, a Delaware corporation ("Continuum").
Both the Operating Partnership and Continuum hold a 50% ownership interest
in Valley Convalescent. Continuum is the managing member of Valley
Convalescent, which was formed for the purpose of acquiring Valley
Convalescent Center located in El Centro, California.
. G&L - Grabel, San Pedro, LLC ("San Pedro") is a California limited
liability company, formed on March 10, 1998 by the Company through the
Operating Partnership, and Gary Grabel, an experienced medical office
building ("MOB") manager. Both the Operating Partnership and Gary Grabel,
who is the managing member, hold a 50% interest in San Pedro. San Pedro was
formed for the purpose of acquiring four MOBs located at 1360 West 6/th/
street in San Pedro, California.
. G&L Penasquitos, LLC ("Penasquitos LLC") is a California limited liability
company, formed by the Company on April 24, 1998, through the Operating
Partnership, and Parsons House, LLC, a California limited liability company
("Parsons"). The Company and Parsons contributed to Penasquitos LLC 75%
and 25% of the equity, respectively. However, the initial ownership
interests of the parties will be adjusted to 50% as each partner receives a
return of its initial capital contribution through preferred distributions.
Penasquitos LLC was formed for the purpose of acquiring and converting a
building located in Rancho Penasquitos, California into a senior care
facility.
. G&L Penasquitos, Inc. ("Penasquitos Inc.") is a California corporation
formed on April 21, 1998 by the Company, through the Operating Partnership,
and Parsons House, LLC, a California limited liability company . The
Company owns 75% of the total equity in Penasquitos Inc. in the form of
non-voting preferred stock. Parsons holds 25% of the total equity and all
of the voting common stock. Penasquitos Inc. was formed for the purpose of
operating a senior care facility to be built in Rancho Penasquitos,
California.
. GLH Pacific Gardens Corp. ("Pacific Gardens Corp.") is a California
corporation formed on June 25, 1998 by the Company, through the Operating
Partnership, and ASL Santa Monica, Inc., a California corporation ("ASL").
The Company owns 93% of the total equity in Pacific Gardens Corp. in the
form of non-voting preferred stock. ASL holds 7% of the total equity in the
form of common stock. Pacific Gardens Corp. was formed for the purpose of
operating a senior care facility located in Santa Monica, California, which
was purchased by the Company.
. G&L Parsons on Eagle Run, LLC ("Eagle Run") is a California limited
liability company, formed on December 29, 1998, through the Operating
Partnership and Parsons. The Company and Parsons each contributed 50% of
the total equity in Eagle Run. Eagle Run was formed for the purpose of
acquiring a vacant piece of land in Omaha, Nebraska upon which the members
intend to develop a senior care facility.
. G&L Parsons on Eagle Run, Inc. ("Eagle Run Inc.") is a California
corporation formed on December 20, 1998 by the Company, through the
Operating Partnership, and Parsons. Eagle Run Inc. was formed for the
purpose of operating a senior care facility to be constructed in Omaha,
Nebraska. As of March 31, 1999, there was no activity in Eagle Run Inc.
Page 8
<PAGE>
G&L REALTY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
GLN, Valley Convalescent, San Pedro, Penasquitos Inc., Penasquitos LLC, Pacific
Gardens Corp., Eagle Run and Eagle Run Inc. are herein collectively referred to
as the "Unconsolidated Affiliates" and individually as "Unconsolidated
Affiliate".
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
healthcare properties. The Company's business currently consists of investments
in healthcare properties and in debt obligations secured by healthcare
properties. Investments in healthcare property consists of acquisitions, made
either directly or through joint ventures, in MOBs or senior care facilities
which are leased to healthcare providers. The Company's lending activities
consist of providing short-term secured loans to facilitate third party
acquisitions either directly or through GLN.
Basis of Presentation - The accompanying consolidated financial statements
include the accounts of the Company. The interests in the Roxbury Partnership,
Valencia and Pacific Gardens not owned by the Company have been reflected as
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 presented as of and for the three month periods ended March
31, 1999 and 1998 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 three months ended March 31, 1999
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 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.
Page 9
<PAGE>
G&L REALTY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
3. BUILDINGS AND IMPROVEMENTS
Buildings and improvements consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------------------------
(in thousands)
<S> <C> <C>
Buildings and improvements.......................... $159,159 $152,618
Tenant improvements................................. 6,283 5,846
Furniture, fixtures and equipment................... 2,646 2,560
-------- --------
168,088 161,024
Less accumulated depreciation and
amortization....................................... (19,772) (18,493)
-------- --------
Total....................................... $148,316 $142,531
======== ========
</TABLE>
Rental property is recorded at cost less accumulated depreciation.
Depreciation is computed on a straight-line basis over the estimated useful
lives of the assets as follows:
<TABLE>
<S> <C>
Buildings and improvements......................... 40 years
Tenant improvements................................ Life of lease
Furniture, fixtures and equipment.................. 5 to 7 years
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations and all external costs directly related to
acquisitions are capitalized.
4. DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------------------------
(in thousands)
<S> <C> <C>
Deferred financing costs............................ $2,791 $2,558
Pre-acquisition costs............................... 376 49
Leasing commissions................................. 1,428 1,272
Prepaid expense and other assets.................... 621 478
------ ------
5,216 4,357
Less accumulated amortization....................... (823) (715)
------ ------
Total....................................... $4,393 $3,642
====== ======
</TABLE>
Page 10
<PAGE>
G&L REALTY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
5. STOCKHOLDERS' EQUITY
Distributions in excess of net income-- 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 three
months ended March 31, 1999 and for the year ended December 31, 1998:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------------------------
(in thousands)
<S> <C> <C>
Distributions in excess of net income
at beginning of period............................. $(12,194) $ (2,802)
Net income during period............................. 1,651 4,343
Minority interest adjustment......................... 1,913 ---
Less: Distributions declared......................... (3,350) (13,735)
-------- --------
Distributions in excess of net income................ $(11,980) $(12,194)
======== ========
</TABLE>
Earnings per share--Basic earnings per share is computed by dividing net
income less preferred stock dividends by the weighted average number of common
shares outstanding during each period. Fully diluted earnings per share is
computed by dividing net income less preferred stock dividends by the weighted
average number of common shares outstanding during each year plus the
incremental shares that would have been outstanding upon the assumed exercise of
dilutive stock options. The treasury stock method is used to determine the
number of incremental common equivalent shares resulting from options to
purchase shares of common stock granted under the Company's 1993 Stock Incentive
Plan, as amended. As of March 31, 1999 and 1998 there were approximately
213,500 and 198,000 stock options outstanding with weighted average exercise
prices of $14.49 and $14.00, respectively. For the three months ended March 31,
1999, the incremental shares that would have been outstanding upon the assumed
exercise of stock options would have been anti-dilutive and, therefore, were not
considered in the computation of fully diluted earnings per share. The
following table reconciles the numerator and denominator of the basic and fully
diluted per share computations for net income for the three months ended March
31, 1999 and 1998:
Page 11
<PAGE>
G&L REALTY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
----------------------------
(in thousands)
<S> <C> <C>
Numerator:
----------
Net income $ 1,651 $ 2,366
Preferred stock dividends (1,803) (1,803)
------- -------
Net (loss) income available to
common stockholders $ (152) $ 563
======= =======
Denominator:
------------
Weighted average shares - basic 3,976 4,129
Dilutive effect of stock options 18 45
------- -------
Weighted average shares - fully
diluted 3,994 4,174
======= =======
Per share:
----------
Basic $ (0.04) $ 0.14
Dilutive effect of stock options --- (0.01)
------- -------
Fully diluted $ (0.04) $ 0.13
======= =======
</TABLE>
At various times during the three months ended March 31, 1999 the Company
repurchased a total of 27,200 shares of the Company's Common Stock at an average
price of approximately $12.64 per share.
Page 12
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
The Company has investments in various unconsolidated affiliates as described in
Note 1. The following table provides a summary of the Company's investment in
each of these entities as of March 31, 1999. (In thousands).
<TABLE>
<CAPTION>
Pacific
Valley San Penasquitos Penasquitos Gardens Eagle
GLN Convalescent Pedro LLC Inc. Corp. Run Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Opening balance at beginning of
period................................ $708 $ 76 $1,165 $1,229 $270 $(149) $800 $4,099
Equity in earnings of affiliates....... 18 (9) 79 --- --- (81) --- 7
Cash contributions..................... 8 312 --- --- --- --- 5 325
Cash distributions..................... --- (2) (35) --- --- --- --- (37)
---- ------ ------ ------ ---- ----- ---- ------
Equity, before inter-company
adjustments........................... 734 377 1,209 1,229 270 (230) 805 4,394
---- ------ ------ ------ ---- ----- ---- ------
Intercompany transactions:
Receivable, net................... 58 3,222 25 203 --- 42 --- 3,550
---- ------ ------ ------ ---- ----- ---- ------
Investment in unconsolidated
affiliates............................ $792 $3,599 $1,234 $1,432 $270 $(188) $805 $7,944
==== ====== ====== ====== ==== ===== ==== ======
</TABLE>
Page 13
<PAGE>
G&L REALTY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Following is a summary of the condensed financial information of each of the
unconsolidated affiliates as of and for the three months ended March 31, 1999.
(In thousands).
<TABLE>
<CAPTION>
Pacific
Valley San Penasquitos Penasquitos Gardens Eagle
GLN Convalescent Pedro LLC Inc. Corp. Run Total
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Financial Position:
- -------------------
Land............................. $ --- $ 382 $ 1,882 $ --- $ --- $ --- $ --- $ 2,264
Buildings........................ --- 2,676 4,314 --- --- --- --- 6,990
Notes and bonds receivable,
net.............................. 1,506 --- --- --- --- --- --- 1,506
Other assets..................... 39 701 498 7,585 449 134 2,825 12,231
Notes payable.................... --- (2,799) (4,872) (5,518) (91) --- --- (13,280)
Other liabilities................ (86) (242) (332) (407) (76) (380) (1,526) (3,049)
--------- ---------- ---------- ---------- -------- --------- ---------- ----------
Net assets........................... $1,459 $ 718 $ 1,490 $ 1,660 $ 282 $ (246) $ 1,299 $ 6,662
========= ========== ========== ========== ======== ========= ========== ==========
Partner's equity (deficit):
- ---------------------------
G&L Realty Partnership, L.P...... $ 734 $ 377 $ 1,209 $ 1,229 $ 270 $ (230) $ 805 $ 4,394
Others........................... 725 341 281 431 12 (16) 494 2,268
--------- ---------- ---------- ---------- -------- --------- ---------- ----------
Total equity (deficit)............... $1,459 $ 718 $ 1,490 $ 1,660 $ 282 $ (246) $ 1,299 $ 6,662
========= ========== ========== ========== ======== ========= ========== ==========
Operations:
- -----------
Revenues......................... $ 36 $ 150 $ 302 $ --- $ --- $ 654 $ --- $ 1,142
Expenses......................... --- (168) (223) --- --- (741) --- (1,132)
--------- ---------- ---------- ---------- -------- --------- ---------- ----------
Net income (loss).................... $ 36 $ (18) $ 79 --- --- $ (87) $ --- $ 10
========= ========== ========== ========== ======== ========= ========== ==========
Allocation of net income:
- -------------------------
G&L Realty Partnership, L.P...... $ 18 $ (9) $ 79 $ --- $ --- $ (81) $ --- $ 7
Others........................... 18 (9) --- --- --- (6) --- 3
--------- ---------- ---------- ---------- -------- --------- ---------- ----------
Net income (loss).................... $ 36 $ (18) $ 79 $ --- $ --- $ (87) $ --- $ 10
========= ========== ========== ========== ======== ========= ========== ==========
</TABLE>
Page 14
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. SEGMENT INFORMATION
The Company's business currently consists of investments in healthcare
properties and in debt obligations secured by healthcare properties. Investments
in healthcare property consists of acquisitions, made either directly or
indirectly through joint ventures, of MOBs or senior care facilities which are
leased to healthcare providers. The Company's lending activities consist of
providing short-term secured loans to facilitate acquisitions of MOBs or senior
care facilities by third parties, made either directly or through GLN. The
tables on the following pages reconcile the Company's income and expense
activity for the three months ended March 31, 1999 and 1998 and balance sheet
data as of March 31, 1999.
1999 Reconciliation of Reportable Segment Information
For the three months ended March 31, 1999
<TABLE>
<CAPTION>
Property Debt
Investments Obligations Other Total
---------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Revenue:
Rents, tenant reimbursements and parking..... $7,547 $ --- $ --- $7,547
Interest, loan fees and related revenues..... 46 477 58 581
Other........................................ 36 36
------ ----- ------- ------
Total revenues............................. $7,629 $ 477 $ 58 $8,164
------ ----- ------- ------
Expenses:
Property operations.......................... 1,904 --- --- 1,904
Depreciation and amortization................ 1,224 --- 109 1,333
Interest..................................... --- --- 2,616 2,616
General and administrative................... --- --- 641 641
------ ----- ------- ------
Total expenses............................. 3,128 --- 3,366 6,494
------ ----- ------- ------
Income (loss) from operations before
minority interests............................ $4,501 $ 477 $(3,308) $1,670
====== ===== ======= ======
</TABLE>
1998 Reconciliation of Reportable Segment Information
For the three months ended March 31, 1998
<TABLE>
<CAPTION>
Property Debt
Investments Obligations Other Total
---------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Revenue:
Rents, tenant reimbursements and parking..... $6,370 $--- $ --- $6,370
Interest, loan fees and related revenues..... 45 848 163 1,056
Other........................................ 39 4 15 58
------ ----- ------- ------
Total revenues............................. 6,454 852 178 $7,484
------ ----- ------- ------
Expenses:
Property operations.......................... 1,364 47 --- 1,411
Depreciation and amortization................ 1,045 --- 15 1,060
Interest..................................... --- --- 1,916 1,916
General and administrative................... --- --- 689 689
------ ----- ------- ------
Total expenses............................. 2,409 47 2,620 5,076
------ ----- ------- ------
Income (loss) from operations before
minority interests............................ $4,045 $805 $(2,442) $2,408
====== ===== ======= ======
</TABLE>
Page 15
<PAGE>
G&L REALTY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
1999 Reconciliation of Reportable Segment Information
As of March 31, 1999
<TABLE>
<CAPTION>
Property Debt
Investments Obligations Other Total
-------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Rental properties........................ $183,375 $ --- $ --- $183,375
Mortgage loans and bonds................. --- 12,433 --- 12,433
receivable, net....................
Other assets............................. 22,083 792 4,065 26,940
-------- ------- ------ --------
Total assets......................... $205,458 $13,225 $4,065 $222,748
======== ======= ====== ========
Other assets:
Cash and cash equivalents.............. $ --- $ --- $1,708 $ 1,708
Restricted cash........................ 4,335 --- --- 4,335
Tenant rent and reimbursements
receivable, net....................... 1,445 --- --- 1,445
Unbilled rent receivable, net.......... 1,883 --- --- 1,883
Other receivables, net................. 244 --- --- 244
Investment in unconsolidated
affiliates............................ 7,152 792 --- 7,944
Deferred financing costs, net.......... --- --- 2,357 2,357
Pre-acquisition costs.................. 376 --- --- 376
Construction in progress............... 4,988 --- --- 4,988
Deferred lease costs, net.............. 1,039 --- --- 1,039
Prepaid expense and other.............. 621 --- --- 621
-------- ------- ------ --------
Total other assets................. $ 22,083 $ 792 $4,065 $ 26,940
======== ======= ====== ========
</TABLE>
8. COMMITMENTS AND CONTINGENCIES
Neither the Company, any of its consolidated or unconsolidated
affiliates, nor any of the assets within their respective portfolios of MOBs,
senior care facilities, parking facilities, and retail space is currently a
party to any material litigation.
9. RELATED PARTY TRANSACTIONS
On April 15, 1999, the Company borrowed $2.0 million from Reese L.
Milner, a director and an Operating Partnership unit holder of the Company. The
loan bears interest at 12% per annum and was due on May 13, 1999. The Company
also paid a loan fee of $20,000 to Mr. Milner. The loan is secured by a first
trust deed against a parcel of real property owned by the Company. The Company
intends to repay this amount upon obtaining new financing for this property. On
May 13, the loan was extended until this new financing is obtained.
On May 4, 1999, the Company sold a vacant parcel of real property for
$1.6 million to the Craig Corporation, whose president is S. Craig Tompkins, a
director of the Company. The Company has the option to repurchase the property
beginning on November 15, 1999 and ending on December 3, 1999 for $1.8 million
plus any costs incurred by the Craig Corporation with respect to the property.
Beginning on January 24, 2000 and ending on January 31, 2000, the Craig
Corporation has the option to sell the property to the Company for $1.9 million.
Thereafter, the option sale price will increase at a rate of 3% per month,
adjusted pro rata for any periods of less than one month. The Company intends to
account for this transaction in accordance with FAS 66 "Accounting for Sales of
Real Estate."
Page 16
<PAGE>
G&L REALTY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
10. SUBSEQUENT EVENTS
On April 1, 1999, American Health Care Associates, Inc. ("American")
assumed the operations of two skilled nursing facilities owned by the Company
located in Phoenix, Arizona and Hoquiam, Washington. Stefan Healthcare, Inc.
("Stefan") leases these facilities from the Company and previously operated
them. American signed management services agreements with Stefan in order to
operate these facilities. At such time that American obtains its own operating
licenses, it intends to lease the facilities. The management services agreements
between Stefan and American are month to month agreements. American will earn
total management fees of $15,000 per month.
On May 5, 1999, the Company presented a loan-restructuring plan to Amresco
Management, Inc. ("Amresco"), the loan servicer, in regards to the mortgage
secured by six MOBs located in New Jersey. In November 1998, the previous
tenant of these properties, Pinnacle Health Enterprises, LLC ("Pinnacle"), a
subsidiary of PHP Healthcare Corporation ("PHP"), filed a Chapter 7 bankruptcy
petition. PHP also filed a bankruptcy petition. In December 1998, the
Commissioner of the New Jersey Department of Banking and Insurance (the
"Commissioner") took over the operations of Pinnacle. The Commissioner
continued to occupy and lease the buildings through March 5, 1999. By the end
of March 1999, the Commissioner had vacated the buildings. As of May 10, 1999,
the Company had leased one of the six buildings and had a proposal for another
building. However, based on the Company's estimated schedule to lease-up the
six buildings and the projected rental rates on these leases, the Company is
attempting to restructure the loan in order to preserve its current cash flow.
On May 10, 1999, Amresco rejected the Company's restructuring plan. The Company
is continuing its efforts to lease-up the properties while evaluating its
options in regards to the future of these properties.
Page 17
<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 Quarterly Report on Form 10-Q and the Company's 1998 Annual
Report on Form 10-K as previously filed with the SEC.
Information contained in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, as amended.
These statements can be identified by the use of forward-looking terminology
such as "believe," "may," "will," "expect," "anticipate," "estimate" or
"continue" or the negative thereof or other comparable terminology. Any one
factor or combination of factors could cause the Company's actual operating
performance or financial results to differ substantially from those anticipated
by management. Factors influencing the Company's operating performance and
financial results include, but are not limited to, changes in the general
economy, the supply of, and demand for, healthcare related real estate in
markets in which the Company has investments, the availability of financing,
governmental regulations concerning, but not limited to, new construction and
development, environmental issues, healthcare services and government
participation in the financing thereof, and other risks and unforeseen
circumstances affecting the Company's investments which may be discussed
elsewhere in this Quarterly Report on Form 10-Q and the Company's 1998 Annual
Report on Form 10-K as previously filed with the SEC.
Results of Operations
- ---------------------
Comparison of the Three Month Period Ended March 31, 1999 versus the Three
Month Period Ended March 31, 1998.
Total revenues increased by $0.7 million, or 9%, from $7.5 million in the
first quarter of 1998, to $8.2 million for the same period in 1999. Rents,
tenant reimbursements and parking revenues increased an aggregate $1.2 million,
or 19%, from a combined total of $6.3 million during the first quarter of 1998,
to $7.5 million for the same period in 1999. The purchase of two senior care
facilities located in Santa Monica, California and Hoquiam, Washington during
June and August 1998, respectively, accounted for $0.5 million of this increase,
while the acquisition of five MOBs located in Valencia, California in March 1998
accounted for an additional $0.3 million. The purchase of a 49,000 square foot
MOB in Valencia, California and a 40,000 square foot office and retail complex
in Coronado, California in December 1998, accounted for an additional $0.6
million increase. Interest, loan fees and related revenues derived from loans
secured by senior care facilities decreased approximately $0.5 million, or 45%,
from $1.1 million in the first quarter of 1998, to $0.6 million for the same
period in 1999. This decrease was partially due to the repayment during 1998
of seven loans outstanding representing a total decrease of $0.2 million in
interest and loan fee income. An additional $0.2 million of this decrease was
due to the loss of interest, during the first quarter of 1999, on non-performing
loans for which the Company had previously reserved approximately $2.8 million
in December 1998. Furthermore, interest earned on cash on hand decreased in the
first quarter of 1999 by approximately $0.1 million, as the Company had
approximately $13 million of cash on hand during the first quarter of 1998 and
only $1.5 million during the first quarter of 1999.
Total expenses increased by $1.4 million, or 27%, from $5.1 million for the
three months ended March 31, 1998, to $6.5 million for the same period in 1999.
Property operating expenses increased by $0.5 million, or 35%, from $1.4 million
for the three months ended March 31, 1998, to $1.9 million for the same period
in 1999. Property acquisitions made by the Company subsequent to March 31, 1998
accounted for $0.3 million of this increase. The remaining $0.2 million
increase was due to costs related to new management personnel. Depreciation and
amortization increased $0.2 million, or 18%, from $1.1 million for the three
months ended March 31, 1998, to $1.3 million for the same period in 1999. This
increase was attributable to property acquisitions made by the Company
subsequent to March 1998. Interest expense increased $0.7 million, or 36%,
from $1.9 million for the three months ended March 31, 1998, to $2.6 million for
the same period in 1999. This increase was mainly due to interest incurred on
Page 18
<PAGE>
borrowings of $41 million made by the Company subsequent to March 31, 1998.
These borrowings accounted for an increase in interest expense of $0.8 million.
This increase was offset by an increase in the capitalization of interest
expense of $0.1 million related to real estate projects that the Company
currently has in development. General and administrative expenses decreased
approximately $0.1 million mainly due to an increase in the capitalization of
salaries related to the Company's development projects.
Net income decreased $0.7 million, or 29%, from $2.4 million for the three
months ended March 31, 1998 to $1.7 million for the same period in 1999. This
decrease was primarily due to the $0.5 million increase in property operating
expenses, the $0.7 million increase in interest expense and the $0.5 million
decrease in interest income offset by a $1.2 million increase in rents, tenant
reimbursements and parking revenues.
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1999, the Company's net investment in real estate assets
totaled approximately $188.4 million, $7.9 million in joint ventures and $12.4
million invested in notes receivable. Debt outstanding as of March 31, 1999
totaled $140.2 million.
The Company obtains its liquidity from multiple internal and external
sources. Internally, funds are derived from the operation of MOBs and senior
care facilities and senior care lending activities. These funds primarily
consist of Funds from Operations ("FFO - see discussion below of FFO). The
Company's external sources of capital consist of various secured loans and lines
of credit as well as access to public equity markets. During the first quarter
of 1999, the Company obtained $5.0 million of short-term financing on one of its
properties at an interest rate of 7.94%. This short-term loan will be repaid
upon obtaining long-term financing on this property in late 1999. In addition,
the Company also borrowed $1.2 million from a line of credit during the first
quarter at an interest rate of prime plus 1%. The line of credit expires on
February 11, 2000. All of the Company's secured loans bear interest at fixed
rates ranging from 6.75% to 8.98%, except for an $8.5 million loan which bears
interest at LIBOR plus 2.35%. The Company's ability to expand its MOB, Senior
Care Facility and senior care lending operations requires continued access to
capital to fund new investments.
The Company declared a quarterly distribution payable to holders of the
Company's Common Stock for the first quarter of 1999 in the amount of $0.39 per
common share which was paid on April 15, 1999 to stockholders of record on March
31, 1999. The Company also paid monthly dividends of $0.6 million to holders
of the Company's Preferred Stock on the fifteenth day of each month during the
first quarter to holders of record on the first day of each month. The Company
distributed dividends of $1.8 million to holders of the Company's Common Stock
in the first quarter while the Company earned $1.0 million in FFO. The Company
is actively seeking additional investments for the purpose of increasing FFO.
However, there can be no assurances that the Company will be able to acquire
such assets or if such assets are acquired and combined with the Company's other
investments, that the Company will be able to consistently produce a level of
FFO at least equal to the current level of distributions.
In general, the Company expects to continue meeting its short-term
liquidity requirements through its working capital, cash flow provided by
operations, its lines of credit and through the long term financing of its
unencumbered properties. The Company considers its ability to generate cash to
be good and expects to continue meeting all operating requirements as well as
providing 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 will be
accomplished through long-term borrowings, the issuance of debt securities and
the offering of additional equity securities.
Page 19
<PAGE>
Historical Cash Flows
- ---------------------
The Company's net cash from operating activities increased $0.6 million, or
20%, from $3.0 million for the three months ended March 31, 1998 to $3.6 million
for the same period in 1999. The increase is due primarily to a $0.5 million
decrease in tenant rent and reimbursements receivable, a $0.4 million increase
in accounts payable and other liabilities and a $0.3 million increase in
depreciation and amortization, offset by a $0.7 million decrease in net income.
Net cash used in investing activities decreased $9.8 million, or 71%, from
$13.8 million for the three months ended March 31, 1998 to $4.0 million for the
same period in 1999. The decrease was primarily due to a $4.1 million decrease
in rental property acquisitions, a $4.5 million decrease in investments in
notes and bonds receivable and a $4.3 million decrease in distributions to
unconsolidated affiliates. These decreases were partially offset by a $1.6
million increase in expenditures on construction in progress and a $0.8 million
increase in additions to rental properties.
Cash flows provided by financing activities increased by approximately $1.0
million from a use of $0.3 million for the three months ended March 31, 1998, to
cash provided of $0.7 million for the same period in 1999. The increase is due
primarily to an increase in proceeds received from notes payable of $6.2 million
offset by a decrease in restricted cash of $4.2 million, an increase in the
repayment of notes payable of $0.5 million and an increase in distributions of
$0.1 million.
Year 2000 Readiness Disclosure
- ------------------------------
The information provided below contains Year 2000 statements and is a Year
2000 Readiness Disclosure pursuant to Pub.L.No.105-271.
Many computers, software programs and other equipment which utilize
microprocessors (collectively referred to as "Systems" and individually as a
"System"), process date sensitive data in the normal course of operations. Some
of these Systems use a 2-digit field to designate the year. As the year 2000
approaches, these Systems may not be capable of distinguishing between events
occurring in the year 1900 and the year 2000, and therefore these Systems may
become inoperable or produce information that is unreliable.
Information Technology Systems
The Company's critical information technology Systems consist of its
Windows NT operating systems and related Windows software as well as its
accounting, property management and fixed assets software. The Company relies on
third party vendors for its computer hardware and software. Based upon
management's communications with the Company's Systems vendors and an outside
consultant, management believes that the Company's hardware and software Systems
are or will be Year 2000 compliant and that the Company's internal computer
hardware and software Systems will not be materially impacted by this issue.
Currently, the Company's accounting and property management software has not yet
been deemed Year 2000 compliant. However, the Company plans to upgrade to the
next version of this software, which is Year 2000 compliant. The Company has
obtained the updated version and will install it during 1999. The cost of this
upgrade will not be material to the Company.
Non-Information Technology Systems
The Company's critical non-information technology building Systems consist
of utilities, security, and elevators. The Company has not yet determined
whether all of these Systems are Year 2000 compliant. The Company relies on
third party vendors to service most of these Systems and is currently in
communication with these vendors to determine if these building Systems are or
will be Year 2000 compliant by December 31, 1999. The Company's property
managers have contacted the Company's vendors and made inquiries about the Year
2000 readiness of these Systems. Many of the Company's
Page 20
<PAGE>
vendors have confirmed in writing that these Systems are Year 2000 compliant.
The Company has also received confirmation in writing from certain vendors that
the Systems will be Year 2000 compliant by December 31, 1999. The Company is
still following up with those vendors who have only verbally confirmed Year 2000
compliance or who have not responded to the Company's inquiries. In January
1999, the Company made inquiries of all of its tenants concerning their Year
2000 compliance and what impact non-compliance would have on the Company.
Through May 13, 1999, the Company had received approximately 65 responses
representing 17% of its tenants. None of these responses indicated that the
Company would suffer any negative impact due to Year 2000 non-compliance. The
Company is currently in the process of obtaining responses from the remaining
tenants.
Risks
While the Company does not expect Year 2000 issues related to the Company's
internal Systems to have a serious impact on the Company's operations, the
Company receives most of its revenues in the form of rental payments. If any of
the Company's tenants suffer a severe disruption of their business due to a Year
2000 problem, it could affect the ability of those tenants to pay their rent.
If multiple tenants were to suffer a severe disruption of their business, the
Company can provide no assurance that its operations would not be materially
affected.
Costs
The cost to the Company to make its internal Systems Year 2000 compliant is
not anticipated to be material to the Company's financial position. However,
management is not able to adequately assess the extent to which the Company is
vulnerable to System failures of any of its tenants or other companies providing
utilities or other services to its properties. Management plans to continue
conversations with other companies with which the Company does significant
business to minimize, to the extent possible, the potential impact of Year 2000
compliance failures. A contingency plan has not been developed for dealing with
the "most reasonably likely worst case scenario" because the Company is unable
at this time to identify such a scenario. The Company will continue to evaluate
these and other potential areas of risk and develop contingency plans, as
appropriate.
Funds from Operations
- ---------------------
Industry analysts generally consider FFO to be an appropriate measure of
the performance of a REIT. The Company's financial statements use the concept of
FFO as defined by the Board of Governors of the National Association of Real
Estate Investment Trusts ("NAREIT"). FFO is calculated to include the minority
interests' share of income from the Operating Partnership 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, convert their units into shares of Common Stock on a one-for-one
basis.
The Company 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 this Form 10-Q, the Selected Financial
Data and Consolidated Financial Statements and Notes thereto included in the
Company's 1998 Annual Report on Form 10-K and the additional data presented
below. The table on the following page presents an analysis of FFO and
additional data for the three month periods ended March 31, 1999 and 1998.
Page 21
<PAGE>
G&L REALTY CORP.
FUNDS FROM OPERATIONS AND ADDITIONAL DATA
(Unaudited)
<TABLE>
<CAPTION>
For the Three Month
Periods Ended March 31,
1999 1998
----------------------------------------
(in thousands)
<S> <C> <C>
Funds from Operations/(1)/
- --------------------------
Net income................................................................. $ 1,651 $ 2,366
Minority interest in Operating Partnership................................. (24) 48
------------------- -------------------
Income (loss) for Operating Partnership.................................... 1,627 2,414
Depreciation of real estate assets......................................... 1,170 955
Amortization of deferred lease costs....................................... 54 30
Depreciation from unconsolidated affiliates................................ 21 (8)
Adjustment for minority interest in consolidated affiliates................ (22) ---
Dividends on preferred stock............................................... (1,803) (1,972)
------------------- -------------------
Funds from Operations/(1)/................................................. $ 1,047 $ 1,419
=================== ===================
Weighted average shares outstanding/(2)/
- ----------------------------------------
Basic 4,609 4,627
=================== ===================
Fully diluted 4,627 4,672
=================== ===================
Additional Data
- ---------------
Cash flows:
- -----------
Operating activities.................................................... 3,611 2,999
Investing activities.................................................... (4,006) (13,769)
Financing activities.................................................... 724 (242)
Capital expenditures
- --------------------
Building improvements................................................... 330 53
Tenant improvements..................................................... 438 15
Furniture, fixtures & equipment......................................... 85 2
Leasing commissions..................................................... 156 44
Depreciation and amortization
- -----------------------------
Depreciation of real estate assets...................................... 1,170 955
Depreciation of non-real estate assets.................................. 109 75
Amortization of deferred lease costs.................................... 54 30
Amortization of capitalized financing costs............................. 54 39
Accrued rent in excess of billed rent (7) 79
</TABLE>
1) Funds from operations ("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 paid to holders of preferred stock during the period and after
adjustments for consolidated and unconsolidated entities in which the
Company holds a partial interest. 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
operations, 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, and FFO therefore 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 NAREIT's 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 22
<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the Company's market risk as
described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 filed on April 9, 1999.
Page 23
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
Neither the Company or any of its consolidated or unconsolidated
affiliates nor any of the assets within their portfolios of MOBs,
senior care facilities, parking facilities, and retail space is
currently a party to any material litigation.
Item 2 Changes in Securities.
None.
Item 3 Defaults Upon Senior Securities.
None.
Item 4 Submission of Matters to a Vote of Security Holders.
None.
Item 5 Other Information.
None.
Page 24
<PAGE>
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Note Description
----------- ---- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
3.1 (1) Amended and Restated Articles of Incorporation of G&L Realty Corp.
3.2 (3) Amended and Restated Bylaws of G&L Realty Corp.
10.1 (c) (2) Executive Employment Agreement between G&L Realty Corp. and Daniel M. Gottlieb.
10.2 (c) (2) Executive Employment Agreement between G&L Realty Corp. and Steven D. Lebowitz.
10.3 (2) Agreement of Limited Partnership of G&L Realty Partnership, L.P.
10.4 (c) (1) 1993 Employee Stock Incentive Plan
10.5 (1) Form of Indemnity Agreement between G&L Realty Corp. and directors and certain officers.
10.8.2 (2) Option Notice with respect to Sherman Oaks Medical Plaza.
10.9.2 (1) Agreement for Purchase and Sale of Limited Partnership Interests (435 North Roxbury Drive, Ltd.)
between the Selling Partner (as defined therein) and G&L Development, dated as of October 29, 1993.
10.11 (1) Agreement for Transfer of Partnership Interests and Other Assets by and between G&L Realty Corp. and
Reese Milner, Helen Milner and Milner Development Corp., dated as of October 29, 1993.
10.12 (1) Nomura Commitment Letter with respect to the Acquisition Facility.
10.12.2 (3) Amended and Restated Mortgage Loan Agreement dated as of January 11, 1995 among G&L Financing
Partnership, L.P., Nomura Asset Capital Corporation and Bankers Trust Company of New York.
10.16 (1) Investment Banking and Financial Advisory Agreement between G&L Development and Gruntal & Co.,
Incorporated.
10.17 (1) Security Agreement dated as of December 16, 1993 by and between Daniel M. Gottlieb, Steven D.
Lebowitz and Milner Investment Corporation.
10.18 (2) Security Agreement dated as of December 16, 1993 by and between Daniel M. Gottlieb, Steven D.
Lebowitz and Reese L. Milner, II.
10.19 (2) Security Agreement dated as of December 16, 1993 by and between Daniel M. Gottlieb, Steven D.
Lebowitz and Reese L. Milner, II.
10.20 (2) Security Agreement dated as of December 16, 1993 by and between Daniel M. Gottlieb, Steven D.
Lebowitz and Reese L. Milner, II, Helen Milner and John Milner, as Trustees of the Milner Trust.
10.21 (2) Security Agreement dated as of December 16, 1993 by and between Daniel M. Gottlieb, Steven D.
Lebowitz and Reese L. Milner, II.
10.22 (4) Amended and Restated Mortgage Loan Agreement by and between G&L Realty Financing Partnership II,
L.P., as Borrower, and Nomura Asset Capital Corporation, as Lender, dated as of October 31, 1995.
</TABLE>
Page 25
<PAGE>
(c) Exhibits - (continued from previous page)
<TABLE>
<CAPTION>
Exhibit No. Note Description
----------- ---- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
10.24 (4) Property Management Agreement between G&L Realty Financing Partnership II, L.P., as owner,
and G&L Realty Partnership, L.P., as agent, made August 10, 1995
10.25 (5) Commitment Letter between G&L Realty Partnership, L. P. and Nomura Asset Capital
Corporation, dated as of September 29, 1995.
10.30 (6) Mortgage Loan Agreement dated as of May 24, 1996 by and between G&L Medical Partnership,
L.P. as Borrower and Nomura Asset Capital Corporation as Lender.
10.38 (7) Limited Liability Company Agreement by and between G&L Realty Partnership, L.P., a
Delaware limited partnership, and Property Acquisition Trust I, a Delaware business trust,
for the purpose of creating a Limited Liability Company to be named GLN Capital Co., LLC,
dated as of November 25, 1996.
10.39 (7) Limited Liability Company Agreement by and between G&L Realty Partnership, L.P., a
Delaware limited partnership, and PHP Healthcare Corporation, a Delaware corporation, for
the purpose of creating a Limited Liability Company to be named GL/PHP, LLC, dated as of
February 26, 1997.
10.40 (7) First Amendment To Limited Liability Company Agreement entered into as of March 31, 1997
by and between G&L Realty Partnership, L.P., a Delaware limited partnership, and Property
Acquisition Trust I, a Delaware business trust, for the purpose of amending that certain
Limited Liability Company Agreement of GLN Capital Co., LLC dated as of November 25, 1996.
10.41 (7) Bond Purchase Agreement dated as of March 31, 1997 by and between GLN Capital Co., LLC (as
Buyer) and G&L Realty Partnership, L.P. (as Seller).
10.42 (8) Option Agreement, dated February 28, 1997, by and among G&L Realty Partnership, L.P., GLN
Capital Co., LLC and PHP Healthcare Corporation
10.44 (9) 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.
10.45 (10) First Amendment to GL/PHP, LLC Limited Liability Company Agreement by and among G&L Realty
Partnership, L.P., a Delaware limited partnership (the "Retiring Manager"), G&L Realty
Partnership, L.P., a Delaware limited partnership ("G&L Member"), and G&L Management
Delaware Corp., a Delaware corporation ("Manager Member"), made as of August 15, 1997.
10.46 (10) Lease Agreement between GL/PHP, a Delaware limited liability company (the "Landlord") and
Pinnacle Health Enterprises, LLC, a Delaware limited liability company wholly owned by PHP
Healthcare Corporation, a Delaware corporation (the "Tenant"), dated August 15, 1997
10.47 (10) Guaranty of Lease by PHP Healthcare Corporation, a Delaware corporation (the "Guarantor"),
dated February 15, 1997.
</TABLE>
Page 26
<PAGE>
(c) Exhibits - (continued from previous page)
<TABLE>
<CAPTION>
Exhibit No. Note Description
----------- ---- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
10.48 (10) Non-Negotiable 8.5% Note Due July 31, 2007 in which G&L Realty Partnership, L.P., a
Delaware limited partnership (the "Maker"), promises to pay to PHP Healthcare Corporation
(the "Payee") the principal sum of $2,000,000.00, dated August 15, 1997.
10.49 (10) Mortgage Note in which GL/PHP, LLC a Delaware limited liability company (the "Maker")
promises to pay to the order of Nomura Asset Capital Corporation, a Delaware corporation,
the principal sum of $16,000,000.00, dated August 15, 1997.
10.50 (10) Mortgage, Assignment of Leases and Rents and Security Agreement by GL/PHP, LLC a Delaware
limited liability company (the "Mortgagor") to Nomura Asset Capital Corporation, a
Delaware corporation (the "Mortgagee"), dated August 15, 1997.
10.51 (10) Assignment of Leases and Rents by GL/PHP, LLC a Delaware limited liability company (the
"Assignor") to Nomura Asset Capital Corporation, a Delaware corporation (the "Assignee"),
dated August 15, 1997.
10.52 (10) Environmental and Hazardous Substance Indemnification Agreement by GL/PHP, LLC a Delaware
limited liability company (the "Borrower") to Nomura Asset Capital Corporation, a Delaware
corporation (the "Lender"), dated August 15, 1997.
10.53 (11) Purchase and Sale Agreement, dated October 1, 1997, by and between Hampden Nursing Homes,
Inc. and G&L Senior Care, LLC.
10.54 (11) Lease and Agreement, dated October 1, 1997, by and between G&L Hampden, LLC and Hampden
Holding Group, Inc.
10.55 (11) Loan Commitment, dated October 23, 1997, by and between G&L Realty Partnership, L.P. and
Iatros Health Network, Inc.
10.56 (11) Lease and Agreement, dated October 1, 1997, by and between G&L Hampden, LLC and Hampden
Nursing Homes, Inc.
10.57 (11) Guaranty of Lease, dated October 1, 1997, by Iatros Health Network, Inc.
10.58 (11) Limited Liability Company Agreement of G&L Hampden, LLC.
10.59 (11) Loan Agreement by and between Nomura Asset Capital Corporation and G&L Hampden, LLC.
10.60 (11) Promissory Note in the amount of $6,000,000.00 given by G&L Hampden, LLC in favor of
Nomura Asset Capital Corporation.
10.61 (11) Form of Mortgage, Assignment of Rents, Security Agreement and Fixture Filing for each of
the 3 Hampden Properties.
10.62 (12) Operating Agreement of AV Medical Associates, LLC, dated as of September 25, 1997.
10.63 (12) Real Estate Lease by and between AV Medical Associates, LLC and Hoag Memorial Hospital
Presbyterian.
</TABLE>
Page 27
<PAGE>
(c) Exhibits - (continued from previous page)
<TABLE>
<CAPTION>
Exhibit No. Note Description
----------- ---- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
10.64 (12) Assignment of Purchase Agreement and Development Management Agreement by and between G&L
Realty Partnership, L.P., Centrium Associates LLC and M&Z Aliso Associates, LLC.
10.68 (12) Promissory Note in the Amount of $2,799,490.00 given by Valley Convalescent, LLC in favor
of G&L Realty Partnership, L.P.
10.69 (12) Deed of Trust, Security Agreement, Fixture Filing with Assignment of Rents and Agreements,
dated as of August 29, 1997, by and between Valley Convalescent, LLC and G&L Realty
Partnership, L.P.
10.70 (12) Assignment of Leases and Rents, dated as of August 29, 1997, by and between Valley
Convalescent, LLC and G&L Realty Partnership, L.P.
10.77 (13) Agreement for Transfer of Property by and among G&L Coronado, LLC as Transferor and G&L
Realty Partnership, L.P. as Operating Partnership dated as of December 30, 1998.
10.78 (13) Tenant Estoppel and Real Estate Lease between G&L Coronado, LLC as Landlord and Coronado
Managers Corp. as Tenant dated December 1, 1998.
10.79 (13) Guaranty of Lease between Steven D. Lebowitz and Daniel M. Gottlieb (collectively
"Guarantor") in favor of G&L Coronado, LLC ("Landlord").
10.80 Promissory Note in the Amount of $2,000,000 given by G&L Realty Corporation in favor of
Reese L. Milner, as Trustee of The Milner Trust.
11 Computation of Per Share Earnings
21 Subsidiaries of the registrant.
27 Financial Data Schedule
</TABLE>
Page 28
<PAGE>
1) Previously filed as an exhibit of like number to the Registrant's
Registration Statement on Form S-11 and amendments thereto (File No. 33-
68984) and incorporated herein by reference.
2) Previously filed as an exhibit of like number to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993 and incorporated
herein by reference.
3) Previously filed as an exhibit of like number to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference.
4) Previously filed as Exhibits 10.1 (with respect to Exhibit 10.22), 10.2
(with respect to Exhibit 10.23), and 10.3 (with respect to Exhibit 10.24)
to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended
September 30, 1995 and incorporated herein by reference.
5) Previously filed as an exhibit of like number to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and incorporated
herein by reference.
6) Previously filed as an exhibit of like number to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996 and incorporated
herein by reference.
7) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated herein by reference.
8) Filed as an exhibit to the Company's Registration Statement on Form S-11
and amendments thereto (File No. 333-24911) and incorporated herein by
reference.
9) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 and incorporated herein by reference.
10) Filed as an exhibit to the Company's Current Report on Form 8-K (filed as
of August 15, 1997) and incorporated herein by reference.
11) Filed as an exhibit to the Company's Current Report on Form 8-K (filed as
of October 28, 1997) and incorporated herein by reference.
12) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q (filed
as of November 5, 1997) for the quarter ended September 30, 1997 and
incorporated herein by reference.
13) Filed as an exhibit to the Company's Annual Report on Form 10-K (filed as
of April 9, 1999) for the year ended December 31, 1998 and incorporated
herein by reference.
c) Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
There have been no reports filed on Form 8-K during the quarter ended March
31, 1999.
Page 29
<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.
Date: May 17, 1999 By: /s/ David E. Hamer
-----------------------------
David E. Hamer
Chief Accounting
Officer
Page 30
<PAGE>
EXHIBIT 10.80
PROMISSORY NOTE
SECURED BY DEED OF TRUST
$2,000,000.00 Irvine, California
April 13, 1999
FOR VALUE RECEIVED, the undersigned, G & L REALTY CORP., a Maryland
corporation ("Borrower"), promises to pay to REESE L. MILNER, as Trustee of The
Milner Trust ("Lender"), at 439 North Bedford Drive, Beverly Hills, California,
or at such other place as may be designated in writing by Lender, the principal
sum of Two Million and No/100 Dollars ($2,000,000.00), together with a loan fee
equal to Twenty Thousand and No/100 Dollars ($20,000.00), with interest thereon
at the rate of twelve percent (12%) per annum, compounded monthly. All sums
owing hereunder are payable in lawful money of the United States of America, in
immediately available funds.
1. Security. This Promissory Note Secured by Deed of Trust (this "Note")
is secured by, among other things, a Deed of Trust with Assignment of Rents
(Short Form) dated as of even date herewith (the "Deed of Trust"), executed by
G&L Realty Partnership, L.P., a Delaware limited partnership, as trustor, in
favor of Lender, as beneficiary, and encumbering the real property described in
the Deed of Trust (the "Property"). The holder of this Note shall be entitled to
the benefits of the security provided by the Deed of Trust and shall have the
right to enforce the covenants and agreements of Borrower contained in the Deed
of Trust.
2. Maturity and Payment. The outstanding principal balance, together with
any accrued but unpaid interest and the above-referenced loan fee, shall be due
and payable in full on or before May 13, 1999 ("Maturity Date").
3. Default. At the option of Lender, without prior notice, and regardless
of any prior forbearance, all sums remaining unpaid under this Note shall become
immediately due and payable upon the occurrence of an Event of Default (as
defined below). The occurrence of any of the following events shall constitute
an "Event of Default" under this Note:
(a) Borrower shall fail to pay within ten (10) days of when due any
sums payable hereunder; or
(b) A Default (as defined in the Deed of Trust) occurs under the Deed
of Trust or under any obligations secured thereby; or
(c) The entire property which is subject to the Deed of Trust, is
sold, transferred or conveyed, whether voluntarily or
involuntarily or by operation of law or otherwise, other than as
expressly permitted by Lender in writing; or
(d) If Borrower files, or has filed against it, a petition with the
bankruptcy court under Title 11 of the United States Code (the
"Bankruptcy Code"), or otherwise files, or has filed against it,
any petition or applies to any tribunal for appointment of a
custodian, trustee, receiver or agent of Borrower, or
-1-
<PAGE>
commences any proceeding relating to Borrower under any
bankruptcy or reorganization statute or under any arrangement,
insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction, whether now or hereafter in effect, and such
proceeding is not dismissed within ninety (90) days after the
filing thereof.
4. Attorneys' Fees. In the event of any action or proceeding to enforce
this Note, the prevailing party shall be entitled to receive, immediately upon
demand, all attorneys' fees and all costs incurred by such party in connection
therewith, together with interest thereon from the date of such demand until
paid at the rate of interest applicable to the principal balance owing hereunder
as if such unpaid attorneys' fees and costs had been added to the principal.
5. Prepayment. Borrower may, at any time, prepay any amounts outstanding
under this Note in whole or in part without premium or penalty.
6. No Implied Waivers. No previous waiver and no failure or delay by
Lender in acting with respect to the terms of this Note shall constitute a
waiver of any breach, default, or failure of condition under this Note or the
obligations secured thereby. A waiver of any term of this Note or of any of the
obligations secured thereby must be made in writing and shall be limited to the
express written terms of such waiver. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by this Note, the terms of this Note shall prevail.
7. Miscellaneous. If this Note is executed by more than one (1) person as
Borrower, the obligations of each such persons shall be joint and several.
Time is of the essence with respect to every provision hereof. This Note shall
be construed and enforced in accordance with the laws of the State of
California, and all persons and entities in any manner obligated under this Note
consent to the jurisdiction of any federal or state court within the State of
California having proper venue and also consent to service of process by any
means authorized by California or federal law. If any provision hereof is found
to be invalid or unenforceable by a court of competent jurisdiction, the
invalidity thereof shall not affect the enforceability of the remaining
provisions of this Note.
8. Usury Law Compliance. It is Borrower's and Lender's intention to
comply with any applicable usury law. If, for any reason whatsoever, fulfillment
of any provision hereof shall be prohibited by law, the obligation to be
fulfilled shall be reduced to the maximum amount so prohibited, and if for any
reason Lender should have received as interest an amount which would exceed the
highest lawful rate, such amount which would be in excess of the permitted
interest shall, at Lender's option, be applied to the reduction of principal of
this Note and not to the payment of interest, or be refunded to Borrower. All
agreements between Borrower and Lender are expressly limited so that in no
contingency or event whatsoever shall the amount paid or agreed to be paid to
Lender for the use, forbearance or detention of money under this Note exceed the
maximum permissible under applicable law. This provision shall control over any
other provision in this Note or in any other agreement between Borrower and
Lender related hereto.
[Signature on following page.]
-2-
<PAGE>
[Signature page to Promissory Note Secured by Deed of Trust.]
"Borrower"
G & L Realty Corp.,
a Maryland corporation
By: /s/ Joseph D. Carroll
-----------------------------
Joseph D. Carroll,
Senior Vice President
-3-
<PAGE>
Exhibit 11
G&L Realty Corp.
Computation of Per Share Earnings
Quarterly Report on Form 10-Q
March 31, 1999
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1999 1998
------ ------
<S> <C> <C>
Net Income $1,651 $2,366
Less: Preferred Dividends
10.25% Series A Cumulative Preferred (958) (958)
9.8% Series B Cumulative Preferred (845) (845)
------ ------
Net (loss) income available to common shareholders $ (152) $ 563
====== ======
Options outstanding 214 198
====== ======
Weighted average exercise price $14.49 $14.00
====== ======
Proceeds upon exercise of options $3,094 $2,772
====== ======
Treasury stock shares 197 153
====== ======
Common share equivalents 18 45
Average shares outstanding 3,976 4,129
------ ------
Total common and common share equivalents outstanding 3,994 4,174
====== ======
Per share earnings data:
- ------------------------
Basic $(0.04) $ 0.14
====== ======
Fully diluted $(0.04) $ 0.13
====== ======
</TABLE>
<PAGE>
Exhibit 21
G&L Realty Corp.
List of Subsidiaries
April 30, 1999
1. AV Medical Associates, LLC, a California limited liability company
2. G&L Hampden, Inc., a Delaware corporation
3. G&L Hampden, LLC a Delaware limited liability company
4. G&L Realty Partnership, L.P., a Delaware limited partnership
5. G&L Realty Financing II, Inc., a Delaware corporation
6. G&L Realty Financing Partnership II, L.P., a Delaware limited partnership
7. G&L Medical, Inc., a Delaware corporation
8. G&L Gardens, LLC, an Arizona limited liability company
9. G&L Management Delaware Corp., a Delaware corporation
10. G&L Senior Care, Inc., a Delaware corporation
11. G&L Medical Partnership, L.P., a Delaware limited partnership
12. GLN Capital Co. LLC, a Delaware limited liability company
13. GL/PHP, LLC a Delaware limited liability company
14. Theme World, L.P., a New Jersey limited partnership
15. Valley Convalescent, LLC, a California limited liability company
16. 435 N. Roxbury Drive, Ltd., a California limited partnership
17. G&L/M&Z Aliso Partners, a California general partnership
18. G&L - Grabel San Pedro, LLC
19. G&L Burbank, LLC
20. G&L Burbank Managers Corp., a California corporation
21. G&L Holy Cross, LLC
22. G&L Holy Cross Managers Corp., a California corporation
23. G&L Tustin, LLC
24. G&L Tustin Managers Corp., a California corporation
25. G&L Valencia, LLC
26. G&L Penasquitos, LLC
27. G&L Penasquitos, Inc.
28. GLH Pacific Gardens, LLC
29. GLH Pacific Gardens Corp., a California corporation
30. G&L Hoquiam, LLC
31. G&L Lyon, LLC
32. G&L Coronado (1998), LLC
33. G&L Parsons on Eagle Run, LLC
34. G&L Parsons on Eagle Run, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,708
<SECURITIES> 0
<RECEIVABLES> 21,657
<ALLOWANCES> 5,652
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 224,804
<DEPRECIATION> 19,772
<TOTAL-ASSETS> 222,748
<CURRENT-LIABILITIES> 5,670
<BONDS> 140,176
0
29
<COMMON> 40
<OTHER-SE> 77,385
<TOTAL-LIABILITY-AND-EQUITY> 222,748
<SALES> 0
<TOTAL-REVENUES> 8,164
<CGS> 0
<TOTAL-COSTS> 1,904
<OTHER-EXPENSES> 1,974
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,616
<INCOME-PRETAX> 1,670
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,651
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,651
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
