<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/x/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
/ / Transition pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
COMMISSION FILE NUMBER 1-12616
SUN COMMUNITIES, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
Maryland 38-2730780
(State of Incorporation) (I.R.S. Employer Identification No.)
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (810) 932-3100
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
15,372,008 shares of Common Stock, $.01 par value as of October 31, 1996
Page 1 of 17
<PAGE> 2
SUN COMMUNITIES, INC.
INDEX
<TABLE>
<CAPTION>
PAGES
<S> <C> <C>
PART I
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1996 and
December 31, 1995 3
Consolidated Statements of Income for the Periods Ended
September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
PART II
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Ratios of Earnings to Fixed Charges 13
Item 6.(a) Exhibits required by Item 601 of Regulation S-K 13
Item 6.(b) Reports on Form 8-K 14
Signatures 15
</TABLE>
2
<PAGE> 3
SUN COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 1996 1995
-------- --------
<S> <C> <C>
Investment in rental property, net $538,590 $310,030
Cash and cash equivalents 9,705 121
Investment in Sun Home Services, Inc. ("SHS") 3,553 3,187
Other assets 9,557 11,766
-------- --------
Total assets $561,405 $325,104
======== ========
LIABILITIES AND EQUITY
Liabilities:
Debt $180,000 $107,055
Accounts payable and accrued expenses 8,305 2,451
Deposits and other liabilities 7,550 6,123
Distributions payable 8,386 --
-------- --------
Total liabilities 204,241 115,629
-------- --------
Minority interests 69,486 31,882
-------- --------
Stockholders' equity:
Preferred stock, $.01 par value, 10,000 shares
authorized, none issued
Common stock, $.01 par value, 100,000 shares
authorized, 15,128 and 9,931 issued and
outstanding in 1996 and 1995, respectively 151 99
Paid-in capital 320,819 193,575
Officers notes (9,173) (8,650)
Distributions in excess of accumulated earnings (24,119) (7,431)
-------- --------
Total stockholders' equity 287,678 177,593
-------- --------
Total liabilities and equity $561,405 $325,104
======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
3
<PAGE> 4
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE FOR THE THREE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------ ------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Rental income $49,152 $31,374 $19,898 $11,510
Interest and other income 2,301 1,552 964 396
------- ------- ------- -------
Total revenues 51,453 32,926 20,862 11,906
------- ------- ------- -------
Expenses:
Property operating and maintenance 11,204 7,297 4,721 2,714
Real estate taxes 3,987 2,164 1,721 768
General and administrative 2,407 1,879 882 644
Depreciation and amortization 10,530 6,911 4,020 2,488
Interest 7,944 4,377 3,240 1,767
------- ------- ------- -------
Total expenses 36,072 22,628 14,584 8,381
------- ------- ------- -------
Income before extraordinary item and minority
interests 15,381 10,298 6,278 3,525
Extraordinary item, early extinguishment of debt (6,896) -- -- --
------- ------- ------- -------
Income before minority interests 8,485 10,298 6,278 3,525
Less income allocated to minority interests:
Preferred OP Units 1,043 -- 626 --
Common OP Units 968 1,429 640 541
------- ------- ------- -------
Net income $ 6,474 $ 8,869 $ 5,012 $ 2,984
======= ======= ======= =======
Earnings per share:
Income before extraordinary item $ .95 $ .91 $ .33 $.30
Extraordinary item (.46) -- -- --
------- ------- ------- -------
Net income $ .49 $ .91 $ .33 $ .30
======= ======= ======= =======
Distributions declared per common share
outstanding $ 1.81 $ 1.335 $ .455 $ .445
======= ======= ======= =======
Weighted average common shares outstanding 13,198 9,751 15,092 9,906
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
4
<PAGE> 5
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,474 $ 8,869
Adjustments to reconcile net income to net
cash provided by operating activities:
Income allocated to minority interests 968 1,429
Extraordinary item, net of prepayment penalties 1,390 --
Depreciation and amortization costs 10,530 6,911
Deferred financing costs 195 419
(Increase) decrease in prepaid expenses and other assets 193 (1,746)
Increase in accounts payable and other liabilities 7,907 410
--------- --------
Net cash provided by operating activities 27,657 16,292
--------- --------
Cash flows from investing activities:
Investment in rental properties (198,700) (35,408)
Investment in SHS (366) (4,166)
Investment in notes receivable -- (242)
--------- --------
Net cash used in investing activities (199,066) (39,816)
--------- --------
Cash flows from financing activities:
Distributions (18,206) (14,798)
Proceeds from borrowings 180,000 39,289
Repayments on borrowings (107,055) (4,794)
Net proceeds from sale of common stock 117,921 --
Retirement of Operating Partnership Units -- (1,001)
Stock options and dividend reinvestment plan 8,333 969
--------- --------
Net cash provided by financing activities 180,993 19,665
--------- --------
Net increase (decrease) in cash and cash equivalents 9,584 (3,859)
Cash and cash equivalents, beginning of period 121 5,379
--------- --------
Cash and cash equivalents, end of period $ 9,705 $ 1,520
========= ========
Supplemental information:
OP units issued for rental properties $ 39,959 $ 15,444
Issuance of common stock for officer notes $ 523 --
Debt assumed for rental properties -- $ 11,907
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
5
<PAGE> 6
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
These unaudited condensed consolidated financial statements of Sun
Communities, Inc., a Maryland corporation (the "Company"), have been
prepared pursuant to the Securities and Exchange Commission ("SEC") rules
and regulations and should be read in conjunction with the financial
statements and notes thereto of the Company as of December 31, 1995. The
following notes to consolidated financial statements present interim
disclosures as required by the SEC. The accompanying consolidated
financial statements reflect, in the opinion of management, all
adjustments necessary for a fair presentation of the interim financial
statements. All such adjustments are of a normal and recurring nature.
Certain reclassifications have been made to the prior period financial
statements to conform with current period presentation.
2. RENTAL PROPERTY:
The following summarizes rental property (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Land $ 59,048 $ 32,565
Property under development 5,612 2,075
Depreciable property 500,612 291,973
------------- ------------
565,272 326,613
Accumulated depreciation (26,682) (16,583)
------------- ------------
Rental property, net $ 538,590 $ 310,030
============= ============
</TABLE>
3. DEBT:
The following table sets forth certain information regarding debt at
September 30, 1996 (in thousands):
<TABLE>
<S> <C>
Secured term loan, interest at LIBOR
plus 1.50%, due November 1, 1997 $ 30,000
Senior notes, interest at 7.375%, due
May 1, 2001 65,000
Senior notes, interest at 7.625%, due
May 1, 2003 85,000
--------
$180,000
========
</TABLE>
6
<PAGE> 7
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. ACQUISITION:
Effective May 1, 1996, the Company acquired the portfolio of Aspen
Enterprises, Ltd. ("Aspen Properties") consisting of 25 communities for
$226 million.
On a pro forma, unaudited basis, as if the Aspen Properties acquisition had
occurred as of January 1, 1995, total revenues, income before extraordinary
item, net income, earnings per common share and common OP unit before
extraordinary item and net income per common share and common OP unit for
the nine months ended September 30, 1996 would have been $61.8 million,
$16.4 million, $9.5 million, $.97 and $.56, respectively, and total
revenues, net income and net income per common share and common OP unit for
the nine months ended September 30, 1995 would have been $54.9 million,
$11.6 million, and $.72, respectively. Pro forma net income assumes the
conversion of 1.9 million common OP Units into shares of the Company's
common stock and the elimination of the allocation of earnings to Minority
Interests. This conversion does not impact pro forma earnings per share
since the allocation to a common OP Unit is equivalent to earnings
allocated to a share of common stock.
The pro forma financial information is not necessarily indicative of what
the actual results of operations of the Company would have been had such
transactions actually occurred as of January 1, 1995, nor does it purport
to represent the results of operations of the Company for future periods.
7
<PAGE> 8
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
-------
OVERVIEW
The following discussion and analysis of the consolidated financial condition
and results of operations should be read in conjunction with the Consolidated
Financial Statements and Notes thereto. Capitalized terms are used as defined
elsewhere in this Form 10-Q.
RESULTS OF OPERATIONS
Comparison of the Nine Months Ended September 30, 1996 and 1995
For the nine months ended September 30, 1996, net income before extraordinary
item and minority interests increased by 49.4 percent from $10.3 million to
$15.4 million, when compared to the nine months ended September 30, 1995. The
increase was due to increased revenues of $18.5 million while expenses
increased by $13.4 million.
Rental income increased by $17.8 million from $31.4 million to $49.2 million or
56.7 percent, due to acquisitions ($15.4 million), lease up of sites ($1.0
million) and increases in rents and other community revenues ($1.4 million).
Other income increased by $.7 million from $1.6 million to $2.3 million or 48.3
percent due primarily to increased interest income.
Property operating and maintenance increased by $3.9 million from $7.3 million
to $11.2 million or 53.5 percent due primarily to acquisitions ($3.4 million).
Real estate taxes increased by $1.8 million from $2.2 million to $4.0 million
or 84.2 percent due primarily to acquisitions ($1.6 million).
General and administrative expenses increased by $.5 million from $1.9 million
to $2.4 million or 28.1 percent due primarily to increased staffing to manage
the growth of the company. General and administrative expenses as a percentage
of rental income declined from 6.0 percent to 4.9 percent of rental revenues as
a result of economies of scale resulting from the company's growth.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $12.3 million from $21.6 million to $33.9 million or 56.8
percent. EBITDA increased as a percentage of revenues from 65.6 percent to
65.8 percent.
Depreciation and amortization increased by $3.6 million from $6.9 million to
$10.5 million or 52.4 percent due primarily to acquisitions.
Interest expense increased by $3.5 million from $4.4 million to $7.9 million or
81.5 percent due to increased debt outstanding.
The extraordinary item results from the early extinguishment of debt and
includes prepayment penalties and related deferred financing costs.
8
<PAGE> 9
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comparison of the Three Months Ended September 30, 1996 and 1995
Rental income increased by $8.4 million from $11.5 million to $19.9 million or
72.9 percent due to acquisitions ($7.8 million), lease up of sites ($.3
million) and increases in rents and other community revenues ($.3 million).
Property operating and maintenance increased by $2.0 million from $2.7 million
to $4.7 million or 73.9 percent, due primarily to acquisitions ($1.8 million).
Real estate taxes increased by $.9 million from $.8 million to $1.7 million or
124.1 percent due primarily to acquisitions ($.8 million).
General and administrative expenses increased by $.3 million from $.6 million
to $.9 million or 37.0 percent, due primarily to increased staffing to manage
the growth of the company. General and administrative expenses as a percentage
of rental revenues declined from 5.6 percent to 4.4 percent as a result of
economies of scale resulting from the company's growth.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $5.7 million from $7.8 million to $13.5 million or 74.0 percent.
EBITDA decreased as a percentage of revenues from 65.3 percent to 64.9 percent.
Depreciation and amortization increased by $1.5 million from $2.5 million to
$4.0 million or 61.6 percent due primarily to acquisitions.
Interest expense increased by $1.4 million from $1.8 million to $3.2 million or
83.4 percent due to increased debt outstanding.
9
<PAGE> 10
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SAME PROPERTY INFORMATION
The following table reflects property-level financial information as of and for
the nine months ended September 30, 1996 and 1995. The "Same Property" data
represents information regarding the operation of communities owned as of
January 1, 1995. Site, occupancy, and rent data for those communities is
presented as of the last day of each period presented. The table excludes the
1,244 sites where the Company's interest is in the form of a shared
appreciation mortgage note.
<TABLE>
<CAPTION>
SAME PROPERTY TOTAL PORTFOLIO
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Property revenues, including other $31,438 $29,009 $49,490 $31,658
------- ------- ------- -------
Property operating expenses:
Property operating and maintenance 7,205 6,870 11,204 7,297
Real estate taxes 2,275 2,006 3,987 2,164
------- ------- ------- -------
Property operating expenses 9,480 8,876 15,191 9,461
------- ------- ------- -------
Property EBITDA $21,958 $20,133 $34,299 $22,197
======= ======= ======= =======
Number of properties 46 46 77 52
Developed sites 14,730 14,574 27,517 16,810
Occupied sites 13,906 13,541 25,234 15,704
Occupancy % 94.4% 92.9% 91.7% 93.4%
Weighted average monthly rent per site $ 241 $ 230 $ 249 $ 233
Sites available for development 1,966 1,750 3,461 2,199
Sites in development 462 109 662 169
</TABLE>
On a same property basis, property revenues increased by $2.4 million from
$29.0 million to $31.4 million, or 8.4 percent, due primarily to increases in
rents and occupancy related charges including water and property tax pass
throughs. Also contributing to revenue growth was the increase of 365 leased
sites at September 30, 1996 compared to September 30, 1995.
Property operating expenses increased by $.6 million from $8.9 million to $9.5
million, or 6.8 percent, due to increased occupancies and costs and increases
in assessments and millage by local taxing authorities. Property EBITDA
increased by $1.8 million from $20.1 million to $21.9 million, or 9.1 percent.
Sites available for development in the total portfolio increased by 1,262 from
2,199 to 3,461 with 643 of those sites in development in our markets in
Michigan, Indiana, Texas, and Missouri.
10
<PAGE> 11
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $9.6 million to $9.7 million at
September 30, 1996 compared to $.1 million at December 31, 1995 primarily
because cash provided by operating and financing activities exceeded cash used
in investing activities.
Net cash provided by operating activities was $27.7 million for the nine months
ended September 30, 1996 compared to $16.3 million for the same period in
1995. This increase was due primarily to increases in accounts payable and
other liabilities.
Net cash used in investing activities was $199.1 million for the nine months
ended September 30, 1996 compared to $39.8 million for the same period in
1995. This was primarily due to the acquisition of the 25 communities
comprising the Aspen portfolio in 1996.
Net cash provided by financing activities was $180.9 million for the nine
months ended September 30, 1996 compared to $19.7 million for the same
period in 1995. The change was primarily due to increased net borrowings and
proceeds from sale of common stock in 1996.
The Company expects to meet its short-term liquidity requirements generally
through its working capital provided by operating activities and proceeds from
the Company's Dividend Reinvestment Plan. The Company considers these sources
to be adequate and anticipates they will continue to be adequate to meet
operating requirements, capital improvements, investment in expansions, and
payment of distributions by the Company in accordance with REIT requirements in
both the short and long term.
The Company expects to meet certain long-term liquidity requirements such as
scheduled debt maturities and property acquisitions through the issuance of
equity or debt securities, or interests in the Operating Partnership. The
Company can also meet these requirements by utilizing its
$75 million line of credit which bears interest at LIBOR plus 1.50% and is due
November 1, 1999.
At September 30, 1996, the Company's debt to total market capitalization
approximated 26% (assuming conversion of all Common and Preferred OP Units to
shares of common stock on a one-for-one basis), with a weighted average
maturity of approximately 4.9 years and a weighted average interest rate of
7.4%.
Recurring capital expenditures approximated $1.9 million for the nine months
ended September 30, 1996.
11
<PAGE> 12
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OTHER
Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as "net income (computed in accordance with
generally accepted accounting principles) excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures."
Industry analysts consider FFO to be an appropriate supplemental measure of the
operating performance of an equity REIT primarily because the computation of
FFO excludes historical cost depreciation as an expense and thereby facilitates
the comparison of REITs which have different cost bases in their assets.
Historical cost accounting for real estate assets implicitly assumes that the
value of real estate assets diminishes predictably over time, whereas real
estate values have instead historically risen or fallen based upon market
conditions. FFO does not represent cash flow from operations as defined by
generally accepted accounting principles and is a supplemental measure of
performance that does not replace net income as a measure of performance or net
cash provided by operating activities as a measure of liquidity. In addition,
FFO is not intended as a measure of a REIT's ability to meet debt principal
repayments and other cash requirements, nor as a measure of working capital.
NAREIT amended the definition of FFO, effective January 1, 1996, to exclude
deferred finance costs and depreciation of corporate office assets from those
items that are added back to net income in computing FFO. The following table
restates FFO to give effect to the revised definition for the periods ended
September 30, 1996 and 1995:
<TABLE>
<CAPTION>
(in thousands)
FOR THE NINE MONTHS FOR THE THREE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Income before allocation to minority
interests $15,381 $10,298 $6,278 $3,525
Add depreciation and amortization, net
of corporate office depreciation 10,475 6,866 4,000 2,473
Deduct distribution on preferred OP Units (1,043) -- (626) --
------- ------- ------ ------
Funds from operations $24,813 $17,164 $9,652 $5,998
======= ======= ====== ======
Weighted average shares and common OP
units outstanding 15,049 11,333 17,018 11,712
FFO, per share/unit $ 1.65 $ 1.51 $ .57 $ 0.51
======= ======= ====== ======
</TABLE>
12
<PAGE> 13
PART II
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 23, 1996, the Company held its Annual Meeting of Shareholders. The
following matters were voted upon at the meeting:
(a) The election of two directors to serve until the 1999 Annual Meeting of
Shareholders or until their respective successors shall be elected and shall
qualify. The results of the election appear below:
<TABLE>
<CAPTION>
VOTES AGAINST ABSTENTIONS OR
NAME VOTES FOR OR WITHHELD BROKER NON-VOTES
------------------ ---------- ------------- ----------------
<S> <C> <C> <C>
Gary A. Shiffman 11,143,933 0 3,766,695
Ronald R. Piasecki 11,143,933 0 3,766,695
</TABLE>
(b) An amendment to the Company's 1993 Stock Option Plan to:
(i) increase the number of shares of Common Stock issuable under this
Plan.
(ii) provide that the exercise price for all options must be no less
than the fair market value of the Common Stock on the date of grant.
(iii) increase the minimum restriction period on restricted shares.
(iv) provide that the Company may not materially amend the Plan
without prior shareholder approval.
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST OR WITHHELD ABSTENTIONS OR BROKER NON-VOTES
----------- ------------------------- -------------------------------
<S> <C> <C>
10,660,041 502,054 3,748,533
</TABLE>
(c) An amendment to the 1993 Non-Employee Director Stock Option Plan to provide
that each independent director who has continuously served the Company for the
entire fiscal year shall automatically receive a non-qualified stock option to
purchase a certain number of shares of Common Stock based on the Company's
funds from operations results. The results of the election appear below:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST OR WITHHELD ABSTENTIONS OR BROKER NON-VOTES
---------- ------------------------- -------------------------------
<S> <C> <C>
10,917,086 245,009 3,748,533
</TABLE>
ITEM 5. - RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratios of earnings to fixed charges for the years December 31,
1991, 1992, 1993, 1994 and 1995, and the nine months ended September 30, 1996
were 0.95:1, 1.05:1, 1.05:1, 2.79:1, 3.03:1 and 2.53:1, respectively.
ITEM 6.(A) - EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
EXHIBIT NO. DESCRIPTION
12.1 Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
13
<PAGE> 14
ITEM 6.(B) - REPORTS ON FORM 8-K
The Company filed the following reports on Form 8-K during the period covered
by this Form 10-Q:
(a) Report on Form 8-K dated August 20, 1996, filed with the Securities
and Exchange Commission on August 22, 1996, to report a proposal to
merge with Chateau Properties, Inc.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 14, 1996
SUN COMMUNITIES, INC.
BY: /s/ Gary A. Shiffman
---------------------------
Gary A. Shiffman, President
BY: /s/ Jeffrey P. Jorissen
----------------------------
Jeffrey P. Jorissen, Chief
Financial Officer and Secretary
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
FILED NUMBER
EXHIBIT NO. DESCRIPTION HEREWITH HEREIN
----------- ---------------------------------- -------- ------
<S> <C> <C> <C>
12.1 Ratio of Earnings to Fixed Charges X
27 Financial Data Schedule X
</TABLE>
16
<PAGE> 1
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
The ratio of earnings to fixed charges for the Company (including its
predecessor-in-interest, Sundance Enterprises, Inc., the partnerships
affiliated with Sundance Enterprises, Inc., and the Company's subsidiaries and
majority-owned partnerships) presents the relationship of the Company's
earnings to its fixed charges. "Earnings" as used in the computation, is based
on net income (loss) from continuing operations (which includes a charge to
income for depreciation and amortization expense) before income taxes, plus
fixed charges. "Fixed charges" is comprised of (i) interest charges, whether
expensed or capitalized, and (ii) amortization of loan costs and discounts or
premiums relating to indebtedness of the Company and its subsidiaries and
majority-owned partnerships, excluding in all cases items which would be or are
eliminated in consolidation.
<TABLE>
<CAPTION>
YEAR ENDED
9 MONTHS DECEMBER 31,
ENDED ------------------------------------------
9/30/96 1995 1994 1993 1992 1991
-------- ---- ---- ---- ---- ----
(UNAUDITED, IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Net income (loss) $15,381* $13,591 $ 8,924 $ 288 $ 272 $ (314)
Add fixed charges other
than capitalized interest 7,944 6,420 4,894 5,280 5,522 5,825
------- ------- ------- ------- ------- ------
$23,325 $20,011 $13,818 $ 5,568 $ 5,794 $5,511
======= ======= ======= ======= ======= ======
Fixed Charges:
Interest expense $ 7,944 $ 6,420 $ 4,894 $ 5,280 $ 5,522 $5,825
Preferred OP distribution 1,043 -- -- -- -- --
Capitalized interest 230 192 58 -- -- --
------- ------- ------- ------- ------- ------
Total fixed charges $ 9,217 $ 6,612 $ 4,952 $ 5,280 $ 5,522 $5,825
======= ======= ======= ======= ======= ======
Ratio of Earnings to
Fixed Charges: 2.53:1 3.03:1 2.79:1 1.05:1 1.05:1 0.95:1
</TABLE>
* Before extraordinary item
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,705
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 565,272
<DEPRECIATION> 26,682
<TOTAL-ASSETS> 561,405
<CURRENT-LIABILITIES> 0
<BONDS> 180,000
151
0
<COMMON> 0
<OTHER-SE> 287,527
<TOTAL-LIABILITY-AND-EQUITY> 561,405
<SALES> 0
<TOTAL-REVENUES> 51,453
<CGS> 0
<TOTAL-COSTS> 15,191
<OTHER-EXPENSES> 10,530
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,944
<INCOME-PRETAX> 15,381
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,381
<DISCONTINUED> 0
<EXTRAORDINARY> (6,896)
<CHANGES> 0
<NET-INCOME> 6,474
<EPS-PRIMARY> .95
<EPS-DILUTED> .95
<FN>
<F1>
EPS excludes extraordinary loss of $.46 per share
</FN>
</TABLE>
