UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 10-Q/A
Amendment No. 1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
-------------------------------------------------
Commission file number: 1-12592
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 75-2506197
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
(Address of principal executive offices)
(972) 788-0510
(Registrant's telephone number, including area code)
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: As of
November 3, 1997, there were 17,915,267 shares of Common Stock,
$0.01, par value outstanding.
EXPLANATORY NOTE
Walden Residential Properties, Inc. (the "Company"), a Maryland
corporation, hereby amends its Quarterly Report on Form 10-Q for the
period ended September 30, 1997, by reclassifying the convertible
equity securities formerly reported as a component of stockholders'
equity in its consolidated balance sheets to minority interests and
by restating its statements of income to reflect distributions or
income on such convertible equity securities as income allocated to
minority interests which is deducted in arriving at net income. The
Company believes these changes are necessary to conform the Company's
financial statements to generally accepted accounting principles.
These changes will have no impact on the financial condition, business
or assets of the Company and do not change the Company's net income
available to common stockholders per share or funds from operations.
WALDEN RESIDENTIAL PROPERTIES, INC.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 1997 (Unaudited) and
December 31, 1996 (As Restated) . . . . . . .3
Condensed Consolidated Statements of Income
for the Three Months and Nine Months Ended
September 30, 1997 and 1996 (Unaudited)
(As Restated) . . . . . . . . . . . . . . . .4
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended
September 30, 1997 and 1996 (Unaudited)
(As Restated) . . . . . . . . . . . . . . . .5
Notes to Condensed Consolidated Financial
Statements (Unaudited) (As Restated). . . . .6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. . . . . . . . . . . . . . . . . .11
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . .19
Item 2. Changes in Securities. . . . . . . . . . . . . .19
Item 3. Defaults Upon Senior Securities. . . . . . . . .19
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . .19
Item 5. Other Information. . . . . . . . . . . . . . . .19
Item 6. Exhibits and Reports on Form 8-K . . . . . . . .20
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
WALDEN RESIDENTIAL PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (As Restated)
(In thousands)
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate assets, at cost
Land . . . . . . . . . . . . . . . . . . $ 86,171 $ 80,914
Buildings. . . . . . . . . . . . . . . . 677,043 602,601
-------- --------
763,214 683,515
Less: Accumulated depreciation . . . (61,035) (41,707)
-------- --------
702,179 641,808
Real estate assets held for sale . . . . . 6,638 --
Rent and other receivables . . . . . . . . 5,281 1,324
Prepaid and other assets . . . . . . . . . 7,778 3,146
Deferred financing costs, net. . . . . . . 5,317 5,827
Cash and cash equivalents. . . . . . . . . 4,760 29,720
Restricted cash:
Escrow deposits. . . . . . . . . . . . . 6,519 5,369
Additional collateral on loans . . . . . 2,520 2,520
-------- --------
Total assets. . . . . . . . . . . . . $740,992 $689,714
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable . . . . . . . . . $263,297 $258,908
Credit facility. . . . . . . . . . . . . 40,000 --
Accrued real estate taxes. . . . . . . . 10,578 7,960
Accounts payable . . . . . . . . . . . . 6,214 5,653
Accrued expenses and other liabilities . 5,892 5,395
Preferred distribution payable on
convertible equity securities . . . . . 391 377
-------- --------
Total liabilities . . . . . . . . . . 326,372 278,293
-------- --------
Commitments and contingencies
Minority interests . . . . . . . . . . . . 15,936 14,886
Stockholders' equity:
Preferred stock, $.01 par value per share,
(liquidation value of $25 per share),
10,000 shares authorized, 5,716 shares
issued and outstanding as of
September 30, 1997 (5,786 in 1996) . . 57 58
Common stock, $.01 par value per share,
50,000 shares authorized, 17,914 shares
issued and outstanding as of
September 30, 1997 (16,880 in 1996). . 179 169
Excess stock, $.01 par value per share,
60,000 shares authorized, no shares
issued . . . . . . . . . . . . . . . . -- --
Additional paid in capital . . . . . . . 454,565 432,974
Notes receivable from Company officers
and directors . . . . . . . . . . . . (5,263) (5,263)
Deferred compensation on Restricted
Stock . . . . . . . . . . . . . . . . (2,391) --
Distributions in excess of net income. . (48,463) (31,403)
-------- --------
Total stockholders' equity. . . . . . 398,684 396,535
-------- --------
Total liabilities and stockholders'
equity . . . . . . . . . . . . . $740,992 $689,714
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
WALDEN RESIDENTIAL PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (As Restated)
(In thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Rental income. . . . . . . . . . $34,701 $27,462 $99,288 $76,032
Other property income. . . . . . 1,374 1,064 3,979 2,810
Interest income. . . . . . . . . 424 329 1,273 1,048
Other income . . . . . . . . . . -- 44 -- 246
------- ------- ------- -------
Total revenues. . . . . . . . 36,499 28,899 104,540 80,136
------- ------- ------- -------
EXPENSES
Property operating and
maintenance . . . . . . . . . 12,174 9,848 34,187 27,319
Real estate taxes. . . . . . . . 3,516 2,600 10,077 7,249
General and administrative . . . 1,723 1,296 5,117 3,702
Interest . . . . . . . . . . . . 5,643 5,123 15,764 14,810
Amortization . . . . . . . . . . 201 272 612 666
Depreciation . . . . . . . . . . 7,071 4,997 20,192 14,262
------- ------- ------- -------
Total expenses. . . . . . . . 30,328 24,136 85,949 68,008
------- ------- ------- -------
Operating income . . . . . . . . . 6,171 4,763 18,591 12,128
Gain on disposition of real
property. . . . . . . . . . . . -- 724 -- 1,996
------- ------- ------- -------
Income before extraordinary item
and income allocated to
minority interests. . . . . . . 6,171 5,487 18,591 14,124
Extraordinary loss on debt
extinguishment. . . . . . . . . -- (488) -- (1,072)
------- ------- ------- -------
Income before minority interests . 6,171 4,999 18,591 13,052
Income allocated to minority
interests . . . . . . . . . . . (397) (387) (1,197) (1,329)
------- ------- ------- -------
Net income . . . . . . . . . . . . 5,774 4,612 17,394 11,723
Preferred distributions. . . . . . (3,282) (1,022) (9,906) (1,364)
------- ------- ------- -------
Net income available to common
stockholders. . . . . . . . . . $ 2,492 $ 3,590 $ 7,488 $10,359
======= ======= ======= =======
Income per share:
Before extraordinary item, less
preferred distributions and
income allocated to minority
interests . . . . . . . . . . $ 0.14 $ 0.28 $ 0.43 $ 0.80
Extraordinary loss on debt
extinguishment. . . . . . . . -- (0.03) -- (0.08)
------- ------- ------- -------
Net income available to common
stockholders. . . . . . . . . $ 0.14 $ 0.25 $ 0.43 $ 0.72
======= ======= ======= =======
Distributions per share of common
stock . . . . . . . . . . . . . $0.4825 $ 0.465 $1.4475 $ 1.395
======= ======= ======= =======
Weighted average number of common
stock and common stock equivalent
shares outstanding. . . . . . . 17,741 14,645 17,468 14,335
======= ======= ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
WALDEN RESIDENTIAL PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (As Restated)
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . $ 17,394 $ 11,723
Adjustments to reconcile net income to net
cash provided by operating activities:
Income allocated to minority interests . . . 1,197 1,329
Depreciation and amortization. . . . . . . . 20,804 14,928
Gain on disposition of real property . . . . -- (1,996)
Extraordinary loss on debt extinguishment. . -- 1,072
Amortization of deferred compensation on
restricted stock. . . . . . . . . . . . . 180 --
Amortization of prepaid interest expense . . -- 23
Net effect of changes in operating accounts:
Escrow deposits . . . . . . . . . . . . . (1,150) (1,455)
Other assets. . . . . . . . . . . . . . . (8,774) (2,353)
Accrued real estate taxes . . . . . . . . 2,618 2,013
Accounts payable. . . . . . . . . . . . . (390) 528
Other liabilities . . . . . . . . . . . . 541 250
-------- --------
Net cash provided by operating
activities . . . . . . . . . . . . . 32,420 26,062
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of real estate assets, net of
noncash items below . . . . . . . . . . . (55,013) (108,730)
Real estate asset additions. . . . . . . . . (23,182) (5,281)
Proceeds from disposition of real property,
net of noncash item below . . . . . . . . -- 18,696
-------- --------
Net cash used in investing activities . (78,195) (95,315)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuance, net of
issuance costs. . . . . . . . . . . . . . 25,696 79,715
Purchase of the Company's common stock . . . (6,666) (6,573)
Purchase of minority interest securities . . -- (3,975)
Distributions paid . . . . . . . . . . . . . (35,637) (22,484)
Proceeds from mortgage notes payable and
credit facility . . . . . . . . . . . . . 53,300 91,270
Payment of mortgage notes payable and
credit facility . . . . . . . . . . . . . (13,300) (61,970)
Payment of financing costs . . . . . . . . . (97) (3,550)
Additional collateral on loans . . . . . . . -- (650)
Principal reductions of debt . . . . . . . . (2,481) (4,461)
-------- --------
Net cash provided by financing
activities . . . . . . . . . . . . . 20,815 67,322
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS. . . (24,960) (1,931)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD . . . . . . . . . . . . 29,720 6,801
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . $ 4,760 $ 4,870
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest . . . . . . . . . . . $ 15,360 $ 14,786
======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Mortgage note assumed by buyer upon
disposition of property . . . . . . . . . $ -- $ 4,195
======== ========
Real estate asset additions. . . . . . . . . $ 906 $ --
======== ========
Notes receivable for officer and director
stock purchases . . . . . . . . . . . . . $ -- $ 292
======== ========
Deferred compensation on restricted stock. . $ 2,571 $ --
======== ========
Distribution payable on minority interest
securities. . . . . . . . . . . . . . . . $ 391 $ 377
======== ========
Items related to purchase of assets:
Mortgage notes assumed. . . . . . . . . . $ 6,870 $ 7,618
======== ========
Stock issued for purchase of assets . . . $ 1,050 $ --
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
WALDEN RESIDENTIAL PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM UNAUDITED FINANCIAL INFORMATION
Walden Residential Properties, Inc. (the "Company") is a self-
administered and self-managed real estate company operated as a
real estate investment trust, as defined under the Internal Revenue
Code of 1986, as amended. As of September 30, 1997, the Company
owned 75 multifamily properties, containing 23,420 apartment units,
primarily in the Southwest and Southeast regions of the United
States.
The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the Company's Forms
8-K, as amended, filed August 7, 1997, October 16, 1997 and
October 31, 1997; the consolidated financial statements and notes
thereto included in the Forms 10-Q, as amended, for the three and
six month periods ended March 31, 1997 and June 30, 1997,
respectively; and the Form 10-K, as amended, for the year ended
December 31, 1996, which were filed with the Securities and Exchange
Commission ("SEC"). The accompanying interim unaudited financial
information has been prepared pursuant to the rules and regulations
of the SEC. Certain information and footnote disclosures normally
included in the annual consolidated financial statements have been
condensed or omitted pursuant to rules and regulations of the SEC.
Management believes that the disclosures contained in this Form 10-Q
are adequate to make the information presented not misleading. In
the opinion of management, all adjustments and eliminations,
consisting only of normal recurring adjustments, necessary to
present fairly the consolidated financial position of the Company
and its subsidiaries as of September 30, 1997 and the consolidated
results of their operations for the three and nine months ended
September 30, 1997 and 1996 and their cash flows for the nine months
ended September 30, 1997 and 1996, have been included. The consolidated
results of operations for the nine months ended September 30,
1997 are not necessarily indicative of the results for the full
year.
In the first quarter of 1997, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share" and No. 129,
"Disclosure of Information about Capital Structure", both of which
will be effective for the Company's fiscal year ending December 31,
1997. In the second quarter of 1997, the FASB issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information," both of
which are effective for years beginning after December 15, 1997.
These statements are either not applicable or are not expected to
have a material impact on the Company's financial statements.
Effective July 1, 1996, the Company revised its method of
accounting to capitalize the cost of replacement carpets on a
prospective basis. The Company believes this accounting policy
change is preferable because it is consistent with policies
currently being used by the majority of the largest publicly traded
apartment real estate investment trusts and provides a better
matching of expenses with the related benefit of the expenditures.
Following is pro forma information for the nine months ended
September 30, 1996 as if the revised capitalization policy were in
effect as of January 1, 1996 (pro forma information for the three
months ended September 30, 1996 is not provided as the revised
capitalization policy was put into effect on July 1, 1996):
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1996
-------------------
(As Restated)
<S> <C>
Income before extraordinary item and income
allocated to minority interests as reported. . . . . . $14,124
Add: Adjustment for change in accounting policy to
capitalize carpet replacement costs . . . . . . 666
-------
Income before extraordinary item and income allocated
to minority interests as adjusted . . . . . . . . . . $14,790
=======
Net income as adjusted . . . . . . . . . . . . . . . . . $12,389
=======
Net income available to common stockholders as adjusted. $11,025
=======
Income per share:
Before extraordinary item, less preferred distributions
and income allocated to minority interests
as reported . . . . . . . . . . . . . . . . . . . . $ 0.80
Adjustment for effect of change in accounting policy . 0.05
-------
Income before extraordinary item, less preferred
distributions and income allocated to minority
interests as adjusted . . . . . . . . . . . . . . . $ 0.85
=======
Net income available to common stockholders as
reported. . . . . . . . . . . . . . . . . . . . . . $ 0.72
Adjustment for effect of change in accounting policy . 0.05
-------
Net income available to common stockholders as
adjusted. . . . . . . . . . . . . . . . . . . . . . $ 0.77
=======
</TABLE>
2. ACQUISITIONS
On July 30, 1997, the Company purchased a 232-unit apartment
property located near Nashville, Tennessee for approximately $9.5
million. The Company assumed a $6.9 million bond financed
mortgage, with the remainder of the acquisition funded from a
borrowing under the Company's credit facility. In connection with
the assumption of the mortgage loan, the Company executed a letter
of credit for $7.1 million as additional collateral for the loan.
3. STOCKHOLDERS' EQUITY AND MINORITY INTERESTS (As Restated)
Minority Interests
------------------
The Company has certain limited partnership interests that are
exchangeable for an aggregate of 810,128 shares of the Company's
common stock at the option of the interest holders. Prior to
exchange, the holders of the limited partnership interests will be
entitled to receive quarterly distributions equal to the greater of
the Company's actual distributions on 810,128 shares of common
stock, or $369,000 in the aggregate ($391,000 was accrued as of
September 30, 1997). These securities have been recorded as minority
interests in the accompanying balance sheets.
In conjunction with an apartment acquisition in April 1997,
the Company issued $1.1 million of limited partnership interests
which are convertible into 44,379 shares of the Company's common
stock. Prior to conversion, the holders of the limited partnership
interests will be entitled to receive quarterly distributions on
the equivalent of 44,379 shares of common stock if and when
declared and paid ($17,000 was declared and paid during the three
and nine months ended September 30, 1997). These securities have
been recorded as minority interests in the accompanying balance
sheets.
Restricted Stock
----------------
In February 1997, the Company adopted a Long-Term Incentive
Plan to attract and retain individuals to serve as directors,
officers and employees of the Company. Pursuant to this plan, the
Company issued 107,500 restricted shares of common stock
("Restricted Stock") in February 1997 for $.01 per share to its
non-employee directors, four executive officers and certain other
employees. As of September 30, 1997, 10,000 shares of Restricted
Stock were canceled upon the departure of one of the executive
officers. The shares issued to the non-employee directors vest
ratably over a three-year period; while the shares issued to the
executive officers and other employees vest over a ten-year period,
with 40% vesting after the fourth anniversary and 10% vesting
annually thereafter. Deferred compensation related to the
Restricted Stock was computed based upon the market value of the
shares at the date of issuance less the amount paid for the shares.
This deferred compensation is being amortized over the respective
vesting periods. The unamortized amount as of September 30, 1997
was $2,391,000.
Common Stock Repurchases
------------------------
For the nine months ended September 30, 1997, the Company has
repurchased and retired 278,500 shares of its common stock at an
aggregate cost of $6,666,000.
4. NET INCOME PER SHARE OF COMMON STOCK (As Restated)
Net income per share of common stock has been computed by
dividing net income available to common stockholders by the
weighted average number of common stock and common stock equivalent
shares, if material, outstanding. Net income available to common
stockholders is net income less the distributions on preferred stock.
Common stock equivalents include the weighted average number of
assumed equivalent shares outstanding from stock options, if material
and dilutive. Fully diluted net income per share of common stock is
not materially dilutive and is not presented.
SFAS No. 128, "Earnings per Share", which is effective for
periods ending after December 15, 1997, requires that companies
disclose basic earnings per share using only the weighted average
number of common shares outstanding during a period. Currently
common stock equivalents are included in this computation if they
are material. Fully diluted earnings per share will continue to be
calculated in a manner similar to the current calculation.
Compliance with SFAS No. 128 will require no change to the
Company's earnings per share for the periods presented.
5. PRO FORMA STATEMENTS OF INCOME (As Restated)
The following unaudited condensed pro forma information for
the nine months ended September 30, 1997 and 1996 was prepared from
the financial statements of the Company by adjusting for the effect
of all public offerings and property acquisitions and dispositions
through September 30, 1997, including debt used to finance acquisitions
or repaid from proceeds of dispositions, as if all of these
transactions had occurred on January 1, 1996. In addition, the
affect of the acquisition of Drever Partners, Inc. and affiliates
("Drever") which was consummated on October 1, 1997, (see Note 7) has
been included. The current carpet capitalization policy is assumed
to be in place for all properties acquired during the periods. The
following information is not necessarily indicative of what the
performance would have been had the Company owned these properties
for the entire period, nor does it purport to represent future
results of operations of the Company. (In thousands, except per
share information.)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
(Excluding Drever) (Including Drever)
------------------ ------------------
Nine Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . $108,197 $105,603 $194,694 $189,433
Expenses . . . . . . . . . 89,852 88,521 177,417 173,315
-------- -------- -------- --------
Income before minority
interests . . . . . . . 18,345 17,082 17,277 16,118
Income allocated to
minority interests. . . (1,210) (1,344) (5,612) (5,222)
-------- -------- -------- --------
Net income . . . . . . . . 17,135 15,738 11,665 10,896
Preferred distributions. . (9,906) (9,973) (9,906) (9,973)
-------- -------- -------- --------
Net income available to
common stockholders . . $ 7,229 $ 5,765 $ 1,759 $ 923
======== ======== ======== ========
Net income available to
common stockholders
per share . . . . . . . $ 0.41 $ 0.34 $ 0.10 $ 0.05
======== ======== ======== ========
Weighted average shares
of common stock
outstanding . . . . . . 17,480 17,052 17,480 17,052
======== ======== ======== ========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
As of September 30, 1997, the Company had executed contracts
to acquire two apartment properties containing 472 units which were
acquired during October and November 1997 (see Note 7). In
connection with such contracts, the Company deposited $300,000 of
earnest money.
On November 7, 1997, the Company executed a contract to
acquire two apartment properties located in Tampa, Florida,
containing 376 units for a total acquisition cost of approximately
$15.8 million. In connection therewith, the Company deposited
$150,000 of earnest money. The property acquisitions are subject
to the completion of normal due diligence procedures and there is
no assurance the Company will purchase such properties.
7. SUBSEQUENT EVENTS
On October 1, 1997, the Company acquired the assets and
business of Drever through an acquisition approved by the Company's
stockholders, the limited partners of each of the 18 limited
partnerships of Drever and Drever's shareholders in September 1997.
The Drever organization and all 79 Drever apartment properties, containing
18,118 units located in Texas, Arizona, Georgia and California,
were acquired by a partnership indirectly wholly-owned by the
Company. The transaction value is approximately $685 million,
consisting of $303 million in common and preferred limited
partnership units which are convertible into common stock and
preferred stock with detachable warrants, $95 million in cash, and
$287 million of assumed debt.
On October 1, 1997, the Company obtained a $110 million
unsecured bridge loan that was used to pay off several of the
mortgages that were assumed in the Drever acquisition. The
unsecured bridge loan matures December 15, 1997, can be extended to
December 30, 1997, and bears interest at LIBOR plus 1.375% for a
total rate of 7.0625% as of October 1, 1997.
On October 2, 1997, the Company sold a 392-unit apartment
property located in Dallas, Texas for approximately $9.1 million,
resulting in a gain of approximately $2.1 million and an
extraordinary loss on the early extinguishment of the mortgage loan
of $0.4 million, which represents prepayment penalties and the
write-off of unamortized deferred financing costs.
On October 3, 1997, the Company purchased a 216-unit apartment
property located near Fort Worth, Texas for approximately $6.6
million. The Company financed the acquisition from a borrowing
under the Company's credit facility.
On November 3, 1997, the Company purchased a 256-unit
apartment property located in Tampa, Florida for approximately
$10.0 million. The Company financed the acquisition from a
borrowing under the Company's credit facility.
On November 6, 1997, the Company declared distributions of
$0.4825 per share of common stock, $0.5725 per share of convertible
preferred stock and $0.575 per share of senior preferred stock, all
of which are payable on December 3, 1997 to stockholders of record
on November 17, 1997.
8. RESTATEMENT OF FINANCIAL INFORMATION
The Company has revised its financial statements for the fiscal
year ended December 31, 1996 and for the fiscal quarters ended
March 31, 1997, June 30, 1997, and September 30, 1997, by
reclassifying the convertible equity securities formerly reported
as a component of stockholders' equity in its consolidated balance
sheets to minority interests and by restating its statements of
income to reflect distributions or income on such convertible
equity securities as income allocated to minority interests which
is deducted in arriving at net income. The Company believes these
changes are necessary to conform the Company's financial statements
to generally accepted accounting principles. These changes will
have no impact on the financial condition, business or assets of
the Company and do not change the Company's net income available
to common stockholders per share.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
- --------
This Form 10-Q contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, which are
intended to be covered by the safe harbors created thereby. These
statements include the plans and objectives of management for
future operations, including plans and objectives relating to
capital expenditures and rehabilitation costs on the Properties.
The forward-looking statements included herein are based on current
expectations that involve numerous risks and uncertainties.
Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and
market conditions and future business decisions, all of which are
difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes
that the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that the forward-looking
statements included in the Form 10-Q will prove to be accurate. In
light of the significant uncertainties inherent in the forward-
looking statements included herein, the inclusion of such
information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the
Company will be achieved.
The Company is currently reviewing its computer systems in
order to evaluate necessary modifications for the year 2000. The
Company does not currently anticipate that it will incur material
expenditures to complete any such modifications.
Effective July 1, 1997, the Company began presenting weighted
average occupancy percentages for its properties as physical occupancy
rather than economic occupancy. This Form 10-Q reflects weighted
average physical occupancy percentages which have been computed
by dividing the properties' (1) gross potential rental income less
vacancy charges by (2) gross potential rental income.
The following discussion should be read in conjunction with
the "Supplemental Financial and Operating Data" and all of the
consolidated financial statements and notes thereto included
elsewhere in this Form 10-Q. Such financial statements and
information have been prepared to reflect the historical condensed
consolidated operations of the Company for the three and nine
months ended September 30, 1997 and 1996, and the condensed
consolidated balance sheet data of the Company as of September 30,
1997 and December 31, 1996.
The changes in revenues and expenses related to property
operations during the three and nine months ended September 30,
1997 and 1996 are primarily the result of the increased number of
units owned due to acquisitions of additional multifamily
properties by the Company. Where appropriate, comparisons are made
on a dollars-per-weighted-average-unit basis in order to adjust for
changes in the number of units owned during each period.
The Company has revised its financial statements for the fiscal
year ended December 31, 1996 and for the fiscal quarters ended
March 31, 1997, June 30, 1997, and September 30, 1997, by
reclassifying the convertible equity securities formerly reported
as a component of stockholders' equity in its consolidated balance
sheets to minority interests and by restating its statements of
income to reflect distributions or income on such convertible
equity securities as income allocated to minority interests which
is deducted in arriving at net income. The Company believes these
changes are necessary to conform the Company's financial statements
to generally accepted accounting principles. These changes will
have no impact on the financial condition, business or assets of the
Company and do not change the Company's net income available to
common stockholders per share or funds from operations.
The following financial and operating data (see Page 13) is
provided as supplemental information to all financial statements
included elsewhere in this Form 10-Q. Such supplemental
information is unaudited with the exception of the balance sheet
data as of December 31, 1996.
SUPPLEMENTAL FINANCIAL AND OPERATING DATA (As Restated)
(In thousands, except per share and property data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING DATA
Revenues
Rental income . . . . . . . $ 34,701 $ 27,462 $ 99,288 $ 76,032
Other property income . . . 1,374 1,064 3,979 2,810
Interest income . . . . . . 424 329 1,273 1,048
Other income. . . . . . . . -- 44 -- 246
-------- -------- -------- --------
Total revenues. . . . . . 36,499 28,899 104,540 80,136
-------- -------- -------- --------
Expenses
Property operating and
maintenance. . . . . . . 12,174 9,848 34,187 27,319
Real estate taxes . . . . . 3,516 2,600 10,077 7,249
General and administrative. 1,723 1,296 5,117 3,702
Interest. . . . . . . . . . 5,643 5,123 15,764 14,810
Amortization. . . . . . . . 201 272 612 666
Depreciation. . . . . . . . 7,071 4,997 20,192 14,262
-------- -------- -------- --------
Total expenses. . . . . . 30,328 24,136 85,949 68,008
-------- -------- -------- --------
Operating income . . . . . . . . 6,171 4,763 18,591 12,128
Gain on disposition of real
property. . . . . . . . . . . -- 724 -- 1,996
-------- -------- -------- --------
Income before extraordinary
item and minority interests . 6,171 5,487 18,591 14,124
Extraordinary loss on debt
extinguishment. . . . . . . . -- (488) -- (1,072)
-------- -------- -------- --------
Income before minority
interests . . . . . . . . . . 6,171 4,999 18,591 13,052
Income allocated to minority
interests . . . . . . . . . . (397) (387) (1,197) (1,329)
-------- -------- -------- --------
Net income . . . . . . . . . . . 5,774 4,612 17,394 11,723
Preferred distributions. . . . . (3,282) (1,022) (9,906) (1,364)
-------- -------- -------- --------
Net income available to common
stockholders. . . . . . . . . $ 2,492 $ 3,590 $ 7,488 $ 10,359
======== ======== ======== ========
Distribution per share of
common stock. . . . . . . . . $ 0.4825 $ 0.465 $ 1.4475 $ 1.395
======== ======== ======== ========
Weighted average number of
common stock and common
stock equivalent shares
outstanding . . . . . . . . . 17,741 14,645 17,468 14,335
======== ======== ======== ========
</TABLE>
- ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
PROPERTY DATA
Total properties
(at end of period). . . . . . 75 65 75 65
Total units (at end of period) . 23,420 19,953 23,420 19,953
Total units (weighted average) . 23,344 18,972 22,527 17,758
Weighted average monthly
property revenue per unit . . $ 515 $ 501 $ 509 $ 493
</TABLE>
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
BALANCE SHEET DATA
Real estate assets, at cost, net . . . . . . . . . . $702,179 $641,808
Mortgage notes payable and credit facility . . . . . 303,297 258,908
Minority interests . . . . . . . . . . . . . . . . . 15,936 14,886
Stockholders' equity . . . . . . . . . . . . . . . . 398,684 396,535
</TABLE>
Comparison of Three Months and Nine Months Ended September 30, 1997
to Three Months and Nine Months Ended September 30, 1996
- -------------------------------------------------------------------
The weighted average number of units owned increased 4,372
units, or 23.0%, from 18,972 units for the third quarter of 1996 to
23,344 units for the third quarter of 1997 as a result of the
acquisition of additional properties. The portfolio had a weighted
average physical occupancy of 93.6% and 93.2% for the third quarter
of 1996 and 1997, respectively.
The weighted average number of units increased 4,769 units, or
26.9%, from 17,758 units for the nine months ended September 30,
1996 to 22,527 units for the nine months ended September 30, 1997
as a result of the acquisition of additional properties. Total
units owned at September 30, 1996 and 1997 were 19,953 and 23,420,
respectively. The portfolio had a weighted average physical
occupancy of 93.6% and 92.6% for the nine months ended September 30,
1996 and 1997, respectively.
The Company owned 52 properties with 16,373 units throughout
both periods in 1997 and 1996 ("same store"). A summary of the
historical operating performance for "same store" properties is as
follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1997 1996 % Change 1997 1996 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Rental and other property
revenue (in thousands). . . . $25,019 $24,536 2.0% $74,187 $72,624 2.2%
Property operating expenses
(in thousands) (1). . . . . . 10,786 10,750 0.3% 31,578 31,453 0.4%
------- ------- ------- -------
Property operating income
(in thousands). . . . . . . . $14,233 $13,786 3.2% $42,609 $41,171 3.5%
======= ======= ======= =======
Weighted average physical
occupancy . . . . . . . . . . 92.8% 93.8% 92.5% 93.8%
======= ======= ======= =======
Average monthly revenue per
unit. . . . . . . . . . . . . $ 509 $ 500 2.0% $ 503 $ 493 2.2%
======= ======= ======= =======
Average annualized property
operating and maintenance
expenses per unit . . . . . . $ 2,050 $ 2,075 (1.2%) $ 1,991 $ 2,012 (1.0%)
======= ======= ======= =======
Average annualized real estate
taxes per unit. . . . . . . . $ 585 $ 551 6.2% $ 581 $ 549 5.8%
======= ======= ======= =======
Operating expense ratio. . . . . 43.1% 43.8% N/A 42.6% 43.3% N/A
======= ======= ======= =======
</TABLE>
(1) Consists of property operating and maintenance and real estate tax
expenses.
The operating performance of properties not owned throughout both
periods in 1997 and 1996 is summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Rental and other property
revenue (in thousands). . . . $11,056 $ 3,990 $29,080 $ 6,218
Property operating expenses
(in thousands) (1). . . . . . 4,904 1,698 12,686 3,115
------- ------- ------- -------
Property operating income
(in thousands). . . . . . . . $ 6,152 $ 2,292 $16,394 $ 3,103
======= ======= ======= =======
Weighted average number of
units . . . . . . . . . . . . 6,971 2,599 6,154 1,385
======= ======= ======= =======
Weighted average physical
occupancy . . . . . . . . . . 94.1% 92.3% 92.9% 91.2%
======= ======= ======= =======
Average monthly revenue per
unit. . . . . . . . . . . . . $ 529 $ 512 $ 525 $ 499
======= ======= ======= =======
Average annualized property
operating and maintenance
expenses per unit . . . . . . $ 2,171 $ 2,084 $ 2,110 $ 2,511
======= ======= ======= =======
Average annualized real estate
taxes per unit. . . . . . . . $ 643 $ 529 $ 639 $ 488
======= ======= ======= =======
Operating expense ratio. . . . . 44.4% 42.6% 43.6% 50.1%
======= ======= ======= =======
</TABLE>
(1) Consists of property operating and maintenance and real estate tax
expenses.
Interest income increased $95,000, or 28.9%, for the third
quarter of 1997 from $329,000 for the third quarter of 1996 to
$424,000 for the third quarter of 1997. The increase was primarily
due to interest received on a $3.8 million note receivable that was
issued in July 1997 and repaid in October 1997. Interest income
increased $225,000 for the first nine months of 1997, or 21.5%,
from $1,048,000 for the first nine months of 1996 to $1,273,000 for
the first nine months of 1997. Combined with the interest from the
note receivable in the third quarter of 1997, the remaining increase was
primarily due to increased average cash balances during the first quarter of
1997 as compared to the first quarter of 1996.
Other income of $44,000 for the third quarter of 1996 and
$246,000 for the nine months ended September 30, 1996 was
attributable to income from WDN Management Company, which was
merged into the Company and dissolved effective December 31, 1996.
General and administrative expenses increased $427,000, or
32.9%, for the third quarter of 1997 from $1,296,000 for the third
quarter of 1996 to $1,723,000 for the third quarter of 1997. This
represented a per unit increase of $22, or 8.1%, on an annualized
basis. General and administrative expenses increased $1,415,000
for the first nine months of 1997, or 38.2%, from $3,702,000 for
the first nine months of 1996 to $5,117,000 for the first nine
months of 1997. This represents a per unit increase of $25, or
9.0%, on an annualized basis. The increases in general and
administrative expenses were the result of adding corporate
personnel and higher compensation costs and professional fees, as
a result of the increased number of units over the 1996 level, as
well as increased costs due to the increased number of stockholders
(quarterly mailings to stockholders, transfer services, etc.), and
a one-time severance charge relating to the departure of an
executive of the Company during the second quarter of 1997.
Interest expense increased $520,000, or 10.2%, for the third
quarter of 1997 from $5,123,000 for the third quarter of 1996 to
$5,643,000 for the third quarter of 1997. Interest expense
increased $954,000 for the first nine months of 1997, or 6.4%, from
$14,810,000 for the first nine months of 1996 to $15,764,000 for
the first nine months of 1997. The increases were primarily due to
debt incurred in connection with the acquisition of additional
properties and partially due to a slight increase in the weighted
average interest rate on debt between periods.
Depreciation expense increased $2,074,000, or 41.5%, for the
third quarter of 1997 from $4,997,000 for the third quarter of 1996
to $7,071,000 for the third quarter of 1997. Depreciation
increased $5,930,000, or 41.6%, for the first nine months of 1997
from $14,262,000 for the first nine months of 1996 to $20,192,000
for the first nine months of 1997. The increases were due to
depreciation on additional properties acquired and cost of
renovations to existing properties.
Extraordinary loss on debt extinguishment of $1,072,000
recorded in the nine months ended September 30, 1996, resulted from
the write off of unamortized deferred financing costs due to the
refinancing of the Company's credit facility in February 1996
($488,000), the refinancing of $22 million of variable rate tax-
exempt debt in May 1996 ($96,000) and the repayment of the debt on
a property sold in September 1996 ($488,000).
Gain on disposition of real property of $724,000 for the three
months ended September 30, 1996 and $1,996,000 for the nine months
ended September 30, 1996 resulted from a gain on the sale of a
384-unit apartment property located in Wichita, Kansas, in April
1996; the sale of a 304-unit apartment property, located in Corpus
Christi, Texas, in August 1996 and a 144-unit apartment property,
located in Stone Mountain, Georgia, in September 1996. These
dispositions generated approximately $22.9 million of net proceeds
which were used to purchase additional properties.
Liquidity and Capital Resources
- -------------------------------
The Company's principal demands for liquidity are
distributions to its stockholders, property operating and
maintenance costs, capital improvements to its properties,
acquisitions of properties, interest on indebtedness and debt
repayments.
During the first nine months of 1997, cash flows from
operating activities were $32.4 million and the Company received
proceeds from stock offerings of $25.7 million, including $20.8
million from its dividend reinvestment plan. These funds, in
addition to $40.0 million of net borrowings on the Company's credit
facility, were used during the period to pay for a portion of the
acquisition of eight apartment properties (containing 2,013 units)
for $55.0 million, the distributions to stockholders and minority
interest holders of $35.6 million, the capital improvements to
properties of $23.2 million, the purchase of the Company's common
stock for $6.7 million, and principal repayments of $2.5 million.
As a result, the Company had a net decrease in cash of $25.0 million.
The Company has a $150 million unsecured credit facility (the
"Credit Facility"), which expires in February 1999. The Credit
Facility has been used to finance property acquisitions, including
capital improvements, and to meet short-term liquidity
requirements. The availability of funds to the Company under the
Credit Facility is subject, however, to certain borrowing base and
other customary covenants.
Net cash provided by operating activities increased $6.4
million for the first nine months of 1997 compared to the same
period in 1996, primarily due to an increase in property operating
income due to the increased number of units owned and partially
offset by an increase in rent receivables, prepaids and other
assets.
Net cash used in investing activities decreased $17.1 million
for the first nine months of 1997 compared to the same period in
1996, primarily due to a $53.7 million reduction in the acquisition
of real estate assets over the same period in 1996. There were
2,013 units purchased during the first nine months of 1997 compared
to 3,580 units during the comparable period of 1996. The decrease
in cash used was partially offset by an increase in capital
improvements of $17.9 million during the first nine months of 1997
compared to the same period in 1996. The capital improvement
increase during the first nine months of 1997 consisted
of non-recurring capital expenditures on "same store" properties
(i.e., construction of covered carports, installation of access
gates with perimeter fencing, energy efficient exterior lighting
and water savers and the reconstruction of balconies and exterior
stairwells) as well as rehabilitation costs on acquisition properties.
Also, during the nine month period in 1996, the Company received
$18.7 million in proceeds from the disposition of an apartment property.
Net cash provided by financing activities decreased by $46.5
million for the first nine months of 1997 compared to the same
period in 1996, primarily due to a decrease in proceeds from stock
issuances of $54.0 million and an increase in distributions of
$13.1 million. This decrease was partially offset by an increase
in net borrowings of $10.7 million, the purchase of $4.0 million of
minority interest securities and the payment of $3.5 million in
financing costs during the first nine months of 1996. Also during
the first nine months of 1996, debt reductions were $2.0 million
more than during the comparable period in 1997.
The Company intends to meet its short-term liquidity
requirements, including capital expenditures related to maintenance
and improvements of its properties, through cash flow provided by
operations and when necessary will utilize unused portions of its
Credit Facility to meet working capital needs. Historically, the
Company considers its cash provided by operating activities to be
adequate to meet both its operating requirements and distribution
obligations. The Company has expended $12.0 million and $11.2
million for capital expenditures, including non-recurring items,
and acquisition rehabilitation costs, respectively during the first
nine months of 1997. Capital expenditures and acquisition rehabilitation
costs are anticipated to be approximately $7.7 million and $5.9 million,
respectively, for the remainder of 1997.
Long-term liquidity requirements, such as refinancing mortgage
indebtedness and property acquisitions, including capital
improvements on property acquisitions, is dependent on the
Company's ability to obtain long-term borrowings, both secured and
unsecured, and to issue debt or equity securities.
As of September 30, 1997, the Company had outstanding
indebtedness in the aggregate principal amount of $303.3 million,
consisting of fixed rate debt of $212.2 million and variable rate
debt of $91.1 million. The weighted average interest rate on the
Company's outstanding indebtedness at September 30, 1997 was
approximately 7.6%.
Funds from Operations
- ---------------------
Management of the Company generally considers funds from
operations ("FFO") an appropriate measure of the performance of an
equity real estate investment trust. FFO is defined as income
before income allocated to minority interests (determined in
accordance with generally accepted accounting principles), excluding
gains (or losses) from debt restructuring and sales of property,
plus depreciation of real estate assets. The Company believes that
in order to facilitate a clear understanding of its operating
results, FFO should be examined in conjunction with net income as
presented herein. FFO does not represent cash generated from
operating, investing and financing activities in accordance with
generally accepted accounting principles and is not necessarily
indicative of cash available to fund cash needs and cash distributions.
FFO should not be considered as an alternative to net income
(determined in accordance with generally accepted accounting
principles) as an indication of the Company's performance or as an
alternative to cash flow (determined in accordance with generally accepted
accounting principles) as a measure of liquidity.
Effective January 1, 1996, the Company adopted the modified
definition of FFO as recommended by the National Association of
Real Estate Investment Trusts; however, the Company's FFO is not
necessarily comparable to similar entitled items reported by other
REITs. FFO for the three months and nine months ended September
30, 1997 and 1996 (as restated to conform to the new definition of
FFO) are as follows (unaudited):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Funds from operations:
Operating income . . . . . . . $ 6,171 $ 4,763 $18,591 $12,128
Depreciation of real estate
assets. . . . . . . . . . . 7,002 4,997 20,011 14,262
Preferred distributions on
senior (perpetual)
preferred stock . . . . . . (2,300) -- (6,900) --
------- ------- ------- -------
Funds from operations (1) . $10,873 $ 9,760 $31,702 $26,390
======= ======= ======= =======
Net cash flows provided by
(used in):
Operating activities . . . . . $ 9,172 $19,353 $32,420 $26,062
Investing activities . . . . . (10,898) (54,883) (78,195) (95,315)
Financing activities . . . . . 668 37,159 20,815 67,322
</TABLE>
(1) Represents funds from operations available for distribution to common
and convertible preferred stockholders and minority interest holders.
Inflation
- ---------
The Company leases apartments under lease terms generally
ranging from six to twelve months. Management believes that such
short-term lease contracts lessen the impact of inflation on the
cost of property operations, as well as allow for the adjustment of
rental rates to market levels as leases expire.
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------------------
None.
Item 2. Changes in Securities
---------------------------------
None.
Item 3. Defaults Upon Senior Securities
-------------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------------------
(a) A special Meeting of Stockholders of the Company was held
on September 29, 1997.
(b) (1) The Stockholders approved the issuance of up to
12,544,802 shares of Common Stock to acquire
the assets and business of Drever Partners, Inc.
and affiliates and 79 apartment communities
containing 18,118 units.
Affirmative Negative Abstentions
----------- -------- -----------
11,573,263 290,804 194,985
(2) The Stockholders approved the amendment to the
Company's Amended and Restated 1994 Stock Option Plan to
provide that the aggregate number of shares of common
stock reserved for issuance at any time thereunder shall
be equal to 10% of the number of shares of Common Stock
including the number of shares of Common Stock into
which any outstanding debt or equity securities are
exchangeable or convertible.
Affirmative Negative Abstentions
----------- -------- -----------
8,780,659 3,038,449 239,944
Item 5. Other Information
-----------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------------------
(a) Exhibits
11.1 Computation of Net Income per Share (As Restated)
12.1 Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends (As Restated)
27.1 Financial Data Schedule (As Restated)
(b) Reports
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Walden Residential Properties,
Inc. certifies that it has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Marshall B. Edwards
-----------------------
Marshall B. Edwards
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed by the following persons on
behalf of Walden Residential Properties, Inc. and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Michael E. Masterson Chairman of the Board of Directors, February 18, 1998
- ------------------------ and Director
Michael E. Masterson
/s/ Marshall B. Edwards Chief Executive Officer, President, February 18, 1998
- ------------------------ Chief Acquisitions Officer and Director
Marshall B. Edwards (Principal Executive Officer)
/s/ Mark S. Dillinger Executive Vice President, Chief February 18, 1998
- ------------------------ Financial Officer and Director
Mark S. Dillinger (Principal Financial and Accounting
Officer)
<Page E-1>
EXHIBIT INDEX
Exhibit No. Description
10.1 Purchase and Sale Agreement by and
between Windsor Park Apartments, Inc.
and Walden Residential Properties, Inc.
dated July 15, 1997.
(Windsor Park Apartments)
10.2 Real Estate Sales Contract by and
between 1990 Clover Hill Limited Partnership
and Walden Residential Properties, Inc.
dated May 12, 1997.
(Clover Hill Apartments)
11.1 Computation of Net Income per Share (As Restated)
12.1 Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred
Stock Dividends (As Restated)
27.1 Financial Data Schedule (As Restated)
</TABLE>
PURCHASE AND SALE AGREEMENT
Dated as of July 15, 1997
WINDSOR PARK APARTMENTS, INC.
Seller,
and
WALDEN RESIDENTIAL OPERATING PARTNERSHIP, L.P.,
Purchaser
<PAGE>
TABLE OF CONTENTS
SECTION HEADING PAGE
WITNESSETH . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I
PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . .1
Section 1.01. Purchase and Sale . . . . . . . . . . .1
Section 1.02. Indemnity Letter. . . . . . . . . . . .1
ARTICLE II
INSPECTION AND DOCUMENT REVIEW PERIODS. . . . . . . . . . .1
Section 2.01. Inspection Period . . . . . . . . . . .2
Section 2.02. Deliveries by Seller. . . . . . . . . .3
Section 2.03. Financing Documents; Letter of Credit.4
Section 2.04. Costs . . . . . . . . . . . . . . . . .8
Section 2.05. Indemnification . . . . . . . . . . . .8
Section 2.06. Insurance . . . . . . . . . . . . . . .8
Section 2.07. Confidentiality . . . . . . . . . . . .8
Section 2.08. Seller Shall Not Market Project . . . 10
ARTICLE III
PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . 10
Section 3.01. Purchase Price; Allocation of Purchase
Price. . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.02. Payment of Purchase Price . . . . . . 10
Section 3.03. Release of Liens. . . . . . . . . . . 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 11
Section 4.01. Seller's Representations and Warranties11
Section 4.02. Purchaser's Representations and
Warranties, Covenants and Agreements . . . . . . . . 15
ARTICLE V
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.01. Closing Date. . . . . . . . . . . . . 15
Section 5.02. Escrow Closing. . . . . . . . . . . . 16
Section 5.03. Commitment for Title Insurance and Survey
. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.04. Seller's Escrow Deposits. . . . . . . 18
Section 5.05. Purchaser's Escrow Deposits . . . . . 19
Section 5.06. Concurrent Transactions . . . . . . . 20
<PAGE>
ARTICLE VI
CLOSING COSTS AND PRORATIONS. . . . . . . . . . . . . . . 20
Section 6.01. Closing Costs . . . . . . . . . . . . 20
Section 6.02. Seller's Costs. . . . . . . . . . . . 21
Section 6.03. Proration of Income and Expenses. . . 21
Section 6.04. Post-Closing Adjustments. . . . . . . 23
Section 6.05. Delinquent Rents. . . . . . . . . . . 24
ARTICLE VII
BROKER. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.01. Brokers . . . . . . . . . . . . . . . 24
ARTICLE VIII
DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.01. Default of Purchaser. . . . . . . . . 24
Section 8.02. Default of Seller . . . . . . . . . . 25
Section 8.03. Extension of Closing Date . . . . . . 25
ARTICLE IX
CASUALTY OR CONDEMNATION. . . . . . . . . . . . . . . . . 25
Section 9.01. Casualty or Condemnation. . . . . . . 25
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.01. Time is of the Essence . . . . . . . 27
Section 10.02. Notices. . . . . . . . . . . . . . . 27
Section 10.03. Binding Agreement. . . . . . . . . . 28
Section 10.04. Counterparts . . . . . . . . . . . . 28
Section 10.05. No Assignments . . . . . . . . . . . 28
Section 10.06. No Recording . . . . . . . . . . . . 28
Section 10.07. Governing Law. . . . . . . . . . . . 29
Section 10.08. Captions . . . . . . . . . . . . . . 29
Section 10.09. Preparation of Agreement . . . . . . 29
Section 10.10. Authorized by Law. . . . . . . . . . 29
Section 10.11. Foreign Person . . . . . . . . . . . 29
Section 10.12. Return of Information to Seller. . . 29
Section 10.13. Indemnity Letter . . . . . . . . . . 29
Section 10.14. Mutual Indemnification Regarding
Determination of Taxability
. . . . . . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
Exhibit A Legal Description of Project
Exhibit B Schedule of Personalty
Exhibit C Schedule of Financing Documents
Exhibit D Rent Roll
Exhibit E Schedule of Service Contracts
Exhibit F Real Estate Tax Bill
Exhibit G Form of Assignment of Service Contracts and
Assumption Agreement
Exhibit H Form of Assignment of Tenant Leases and Assumption
Agreement
Exhibit I Form of Assignment and Assumption Agreement
Exhibit J Form of Escrow Agreement
Exhibit K Permitted Exceptions
Exhibit L Form of Special Warranty Deed
Exhibit M Form of Bill of Sale
Exhibit N Form of Audit Letter
Annex A Copy of Indemnity Letter
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT dated as of July 15, 1997 (as
hereafter amended or supplemented by written agreement, this
"Agreement"), by and between Windsor Park Apartments, Inc., an
Illinois corporation, having its principal place of business at CNA
Plaza, 333 South Wabash, 12 South, Chicago, Illinois 60685
(hereinafter referred to as the "Seller"), and Walden Residential
Operating Partnership, L.P., a Georgia limited partnership, having
its principal place of business at One Lincoln Centre, 5400 LBJ
Freeway, Suite 400, Lock Box 45, Dallas, Texas 75240 (hereinafter
referred to as the "Purchaser"):
WITNESSETH:
WHEREAS, the Seller is the owner of certain real estate
located at 100 Windsor Park Lane, in the City of Hendersonville,
Tennessee, which is legally described in Exhibit A attached hereto
and the real estate interests appurtenant thereto (collectively,
the "Site"), together with all of the buildings and improvements
located thereon (the "Improvements") and the tangible personal
property listed in Exhibit B attached hereto and located at such
Improvements (the "Personalty"; the Personalty together with the
Site and the Improvements are hereinafter collectively referred to
as the "Project"); and
WHEREAS, upon and subject to the terms and provisions of this
Agreement, the Seller desires to sell the Project to the Purchaser
and the Purchaser desires to purchase the Project from the Seller;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and representations contained herein, the Purchaser and
the Seller hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.01. Purchase and Sale. The Seller hereby agrees to
sell to the Purchaser, and the Purchaser hereby agrees to purchase
from the Seller, the Project upon the provisions and subject to the
terms and conditions of this Agreement.
Section 1.02. Indemnity Letter. The Purchaser and the Seller
hereby acknowledge and agree that in contemplation of the execution
and delivery of this Agreement and the transaction contemplated
herein, the Seller and the Purchaser entered into an agreement (the
"Indemnity Letter"), a true and correct copy of which is attached
hereto as Annex A and made a part hereof. Capitalized terms used
in the Indemnity Letter shall have the same meanings when used in
this Agreement unless otherwise provided or the context clearly
requires otherwise. In the event of any inconsistency between the
provisions of this Agreement and the Indemnity Letter, this
Agreement shall be controlling.
ARTICLE II
INSPECTION AND DOCUMENT REVIEW PERIODS
Section 2.01. Inspection Period. During the period (the
"Inspection Period") beginning as authorized in the Indemnity
Letter and ending at 12:00 p.m. Chicago time July 25, 1997 (the
"Outside Date"), the Seller shall allow the Purchaser and its
representatives, agents and contractors, during ordinary business
hours, upon twenty-four (24) hours prior telephonic notice to the
Seller (which notice shall include identification of the people who
will be making the inspection, what will be inspected and for what
purpose the inspection will be made), to make such reasonable
inspections of the Project as the Purchaser may request, and shall
assure reasonable access to the Project, subject to leases thereof
and the tenants' quiet enjoyment of the apartment units of the
Project, in connection with such inspections.
During the Inspection Period, and subject to the terms and
provisions of this Agreement, the Purchaser shall be permitted to
do the following (all at the Purchaser's sole cost and expense):
(a) Perform a physical inspection of the Project,
including but not limited to inspection of the roofs, building
structures, mechanical systems, plumbing systems, electrical
systems, utilities, drainage system and site improvements and
to perform soil tests and an environmental audit of the
Project. The Purchaser shall be permitted to engage such
professional engineers, surveyors and consultants as the
Purchaser may deem appropriate to conduct such inspections.
(b) Review all of the Seller's books and records
relating to the Project, including but not limited to
operating statements relating to the Project, which have been
certified by the Seller's property manager, RREEF Management
Company, in Chicago, Illinois (the "Project Manager") to be
true and correct in all material respects.
(c) Review all Service Contracts (as hereinafter
defined) currently in effect for the Project.
(d) Review the Project's operations, competitive market,
and position within its general market and particular sub-
market. In order to assist the Purchaser in performing such
review, the Seller agrees to make the Project's records
available to the Purchaser either at the project or at the
office of the Project Manager, wherever the Seller customarily
keeps such records.
(e) Have prepared an appraisal or analysis of the
Project which will verify, among other things, the historical
operating numbers for the Project and its competitive market.
(f) Review any of the following which are in possession
of the Seller: the tenant leases of the Project, tenant
eligibility and income verification certificates and
supporting materials and the continuing program compliance
certificates relating to the low or moderate income tenant
set-aside covenants to which the Project is subject.
Unless the Seller notifies the Purchaser otherwise, in which
event the Seller agrees to use reasonably diligent efforts to make
such items available for review by the Purchaser, the items
described in Subsection 2.01 (b) above are located at the office of
the Project Manager, and the items described in Subsections 2.01
(c) and 2.01 (f) are located at the Project.
The Purchaser shall conduct the inspections and reviews and
approve the Project and the other contingencies referenced in this
Section 2.01 on or before the Outside Date. If the Purchaser does
not approve the Project and other contingencies described in this
Section 2.01, the Purchaser must notify the Seller in writing of
its disapproval on or before 12:00 p.m. Chicago time on the Outside
Date. Failure to deliver to the Seller such notice in writing
prior to the end of such Inspection Period shall be deemed a waiver
of the Purchaser's right to terminate its obligations under this
Agreement to purchase the Project due to its disapproval of the
Project or the other contingencies described in this Section 2.01.
In the event the transaction contemplated herein does not
close, including without limitation if the obligation of the
Purchaser to purchase or the obligations of the Seller to sell the
Project is terminated for any reason, the Purchaser shall promptly
deliver to the Seller (i) true, correct and complete copies of all
appraisals, environmental audits and other written reports which
the Purchaser has commissioned or otherwise obtained with respect
to the Project and (ii) all documents and other showings,
including, without limitation, the hereinafter defined Due
Diligence Items and the hereinafter defined Financing Documents,
delivered by the Seller or the Seller's agents or attorney to the
Purchaser. If the Purchaser sends notice within such Inspection
Period of its disapproval of the Project as described hereinabove,
upon the delivery of the items described in (i) and (ii) above, the
Purchaser will be entitled to receive the Earnest Money Deposit,
subject, however, to the terms and provisions of Section 2.03(c)
hereof.
Section 2.02. Deliveries by Seller. The Seller shall deliver
to (or make available to with respect to items(b), (k), and (l))
the Purchaser within five (5) business days of the date of this
Agreement the following items, if any, which are in the possession
of the Seller:
(a) A copy of the Seller's title insurance policy for
the Project;
(b) Copies of any plans and specifications for the
Project;
(c) Copies of any "as-built" surveys of the Project;
(d) A copy of the current rent roll for the Project,
which has been certified by the Project Manager to the best of
its knowledge to be true and correct in all material respects.
(e) Copies of the most recent real estate and personal
property tax bills for the Project and any subsequent notices
of reassessment;
(f) A list of all property employees of the Project
Manager, if any, and their job titles and descriptions, their
present salaries and wages, benefits and terms of their
employment;
(g) Copies of the Project's monthly operating statements
for the past two (2) years, which have been certified by the
Project Manager to the best of its knowledge to be true and
correct in all material respects;
(h) A current schedule of any tenant security deposits
and confirmation by the Seller that such tenant security
deposits are in the Seller's possession;
(i) Copies of all operating and maintenance agreements
and service contracts, including but not limited to trash,
grounds maintenance, advertising, pest control or cable
television agreements or easements in effect at the Property
and paid by the Seller (collectively, the "Service
Contracts");
(j) A copy of the most recent environmental report of
the Project;
(k) Copies of the pool license and business license
currently in effect for the Project; and
(l) A list of all utility accounts serving the Project,
designating which are house metered, and copies of bills for
each house metered account for the preceding five (5) month
period.
In addition to the items listed in Sections 2.02(a) through
(l) above (herein collectively referred to as the "Due Diligence
Items"), the Seller will direct the Trustee under the Indenture
pursuant to which the Bonds (as hereinafter described) were issued
to allow the Purchaser to review, at the office of the Trustee
and/or Alternate Management Resource, Inc. d/b/a Kauffman
Associates (the "Monitoring Agent"), during the Inspection Period,
the filings, to the extent they are available, made by the Seller
or the previous owner of the Project which are required under the
financing documents relating to the Bonds; provided that the
Purchaser understands and agrees that failure of the Trustee and/or
the Monitoring Agent to cooperate with these requests shall not be
a default by the Seller under this Agreement.
The Purchaser shall review and approve the Due Diligence Items
and other information referenced in this Section 2.02 within the
Inspection Period. If the Purchaser does not approve such Due
Diligence Items and other information described in this Section
2.02 within the Inspection Period, the Purchaser must notify the
Seller in writing of its disapproval on or before 12:00 p.m.
Chicago Time on the Outside Date. Failure to provide the Seller
such notice in writing prior to the end of the Inspection Period
shall be deemed a waiver of the Purchaser's right to terminate its
obligations to purchase the Project under this Agreement due to the
Purchaser's disapproval of the Due Diligence Items described in
this Section 2.02. If the Purchaser sends notice within the
Inspection Period of its disapproval of the Due Diligence Items,
the Purchaser shall promptly deliver to the Seller (i) true,
correct and complete copies of all appraisals, environmental audits
and other written reports which the Purchaser commissioned or
otherwise obtained with respect to the Project and the hereinafter
defined Financing Documents and (ii) all documents and other
showings, including, without limitation, the Due Diligence Items,
delivered by the Seller or the Seller's agents or attorney upon
receipt of the items described in (i) and (ii) above, the Purchaser
shall be entitled to receive the Earnest Money Deposit, subject,
however, to the terms and provisions of Section 2.03(c) hereof.
Section 2.03. Financing Documents; Letter of Credit.
(a) The Seller has delivered to the Purchaser copies of
all documents relating to the financing of the Project in the
possession of the Seller which are listed on Exhibit C (the
"Financing Documents"). Within the Inspection Period the
Purchaser shall review and approve such Financing Documents
and the Purchaser shall obtain the approval of The Industrial
Development Board of the City of Hendersonville, Tennessee
(the "Issuer") and The Bank of New York, as successor trustee
(the "Trustee") under the Trust Indenture dated as of January
1, 1993 (the "Indenture") between the Issuer and the Trustee,
pursuant to which the Issuer issued its Multi-family Housing
Revenue Refunding Bonds (Windsor Park Project) in the original
aggregate principal amount of $6,870,000 (the "Bonds"), to the
transfer of the Project to the Purchaser. The Seller will use
its best efforts to cooperate with the Purchaser in obtaining
the required approvals by the Issuer and the Trustee. In
connection with the approvals described in this Section 2.03,
the Seller and Continental Casualty Company (the "Surety")
shall receive opinions of bond counsel and opinions of counsel
for the Purchaser for delivery on the Closing Date, obtained
at the sole cost and expense of the Purchaser, required by the
Regulatory Agreement (as defined on Exhibit C) and additional
opinions of bond counsel that the transfer of the Project to
the Purchaser will not result in a reissuance of the Bonds
under the Internal Revenue Code of 1954, as amended, and will
not cause interest on the Bonds to be included in gross income
for purposes of federal income taxation; provided that the
forms of such opinions shall be subject to the prior approval
of the Seller and the Surety. With respect to any of the
opinions or "forms of opinions" to be provided by the
Purchaser under this Section 2.03, the Purchaser shall deliver
the required opinions or "forms of opinions" not less than
five (5) days prior to the Outside Date, and if the Seller and
the Surety have not approved or rejected the opinions or the
"forms of opinions" by the Outside Date, such opinions or
"forms of opinions" shall be deemed disapproved by the Seller
and the Surety; provided that any opinions approved or deemed
approved by the Seller and the Surety shall not be deemed
approved by the Issuer, the Trustee or any other third party
entitled to approve such opinions.
(b) The Purchaser, at the sole cost and expense of the
Purchaser, shall deliver to the Surety on or before the
Outside Date a commitment letter providing for the issuance of
a letter of credit in favor of the Surety on the Closing Date
which letter of credit shall be (i) in the amount of
$6,870,000 together with an amount equal to interest on the
Bonds from the earlier of the Closing Date or August 1, 1997,
to but not including February 1, 1998 at the interest rate of
5.375% per annum, (ii) issued by BankBoston, National
Association unless such bank's short term credit rating is
downgraded from A-1 by Standard and Poor's or P-1 by Moody's
Investors Service or put on "credit-watch", in which event
such letter of credit shall be issued by an institution
satisfactory to Surety in its sole discretion (the "Bank"),
(iii) for a term expiring not less than three (3) days after
February 2, 1998, and (iv) accompanied by the proposed form of
the letter of credit, the terms and conditions of which must
be acceptable to the Surety, in its sole discretion, in all
respects (the "Letter of Credit"). On August 1, 1997, the
Surety shall pay a claim in the full amount of interest on the
Bonds. Pursuant to the terms of an Escrow Agreement to be
entered into among the Trustee, the Purchaser, the Seller and
the Surety, the parties shall and do hereby, agree as follows:
(1) On or prior to 11:00 A.M. (New York City time) on January
22, 1998 the Trustee shall submit a claim under the Surety
Bond to the Surety in an amount equal to the aggregate
principal amount of the Bonds outstanding, together with
accrued interest thereon to but not including February 1, 1998
(the "Claim Amount"); (2) On or before 11:00 A.M. (New York
City time) on January 30, 1998, and prior to payment by the
Surety of a claim under the Surety Bond on February 2, 1998,
the Purchaser shall have deposited with the Trustee an amount
equal to the aggregate principal amount of the Bonds, together
with interest accrued thereon to but not including February 1,
1998 (the "Reimbursement Funds"); (3) Immediately upon receipt
by the Trustee of the Reimbursement Funds, the Trustee shall
provide written notice (the "Trustee Notice") by telecopy to
the Surety, the Purchaser and the Seller that (i) the Trustee
has received the Reimbursement Funds and (ii) the Trustee will
wire transfer the Reimbursement Funds to the Surety on
February 2, 1998 on or before 1:30 P.M. (New York City time),
provided the Trustee has received payment from the Surety of
the Claim Amount (the "Surety Payment"); (4) Upon receipt by
the Surety of the Trustee Notice the Surety (i) shall promptly
and by the end of such business day deposit in overnight mail
the Letter of Credit to the Bank and (ii) shall promptly and
by the end of such business day deliver to Chicago Title
Insurance Company an executed and notarized release of any and
all liens held by the Surety with respect to the Project (the
"Release"); (5) On or prior to 1:00 P.M. on February 2, 1998,
the Surety shall pay to the Trustee the Surety Payment; (6) In
the event the Purchaser has not delivered payment to the
Trustee of the Reimbursement Funds, by 11:00 A.M. (New York
City time) on January 30, 1998 and the Trustee has filed a
claim under the Surety Bond with the Surety for payment on
February 2, 1998 of the Claim Amount, the Surety shall be
entitled to draw upon the Letter of Credit and use the
proceeds of the Letter of Credit to immediately reimburse the
Surety for the Surety Payment; (7) In the event the Surety
draws against the Letter of Credit pursuant to (6) above,
immediately upon receipt on February 2, 1998 by the Surety of
moneys drawn under the Letter of Credit, the Surety shall
deliver the Release to Chicago Title insurance Company; (8)
Provided the Trustee has received the Surety Payment, the
Trustee shall return the Surety Bond marked "cancelled and
discharged" to the Surety on February 2, 1998; (9) On February
2, 1998, the Trustee shall (i) pay the principal of and
interest on all of the Bonds outstanding with amounts drawn
under the Surety Bond (whether the Bonds are remarketed,
redeemed or purchased in lieu of redemption at the direction
of the Purchaser) as provided in the Indenture and shall
(ii) wire to the Surety, in accordance with wire instructions
from the Surety, an amount equal to the Reimbursement Funds;
and (10) The Trustee shall (i) instruct Chicago Title
Insurance Company in writing by telecopy to record the Release
and shall (ii) register the Bonds in the name of the Purchaser
or its designee.
Nothing contained in this Purchase and Sale Contract shall
amend, modify or limit the of the Trustee under the Indenture or
the Surety Bond, including but not limited to the obligation of the
Surety to pay the Claim Amount whether or not the Trustee receives
funds with which to reimburse the Surety.
The Purchaser hereby agrees to guarantee payment to the Surety
of all amounts due to the Surety under the Financing Documents in
respect of, and to indemnify, defend and hold the Surety harmless
from any loss, cost, damage, liability or expense arising from or
in connection with, a claim being made under the Surety Bond which
is not immediately reimbursed from Eligible Moneys or then
available to be drawn under the Letter of Credit or which is not
paid to the Surety by the Bank immediately upon drawing on the
Letter of Credit, including, without limitation, any losses, costs,
damages, liabilities and expenses (including attorneys' fees and
expenses) suffered or incurred by the Surety in enforcing its
rights and remedies in respect of the Bonds, the Surety Bond, the
Letter of Credit and this Agreement.
(c) On or before the end of the Inspection Period
described in Section 2.03(a) above, if (i) the Purchaser has
not approved the Financing Documents, or (ii) the Purchaser
has not received the approvals or the acknowledgments from the
Issuer or the Trustee referenced in Section 2.03(a) above, or
(iii) the Bank and the Surety fail to agree upon the terms of
the Letter of Credit, then the Purchaser may terminate its
obligation to purchase the Project by written notice to the
Seller, delivered not later than 12:00 p.m. Chicago time on
the Outside Date. Failure of the Seller to deliver an
instrument in writing affirmatively acknowledging that the
conditions specified in this Section 2.03(c) have been
satisfied or waived by the Seller shall be deemed to
constitute delivery by the Seller of such a termination notice
(a notice of termination from the Purchaser under this
Section 2.03(c) or a notice of disapproval from the Purchaser
under Section 2.01 or Section 2.02 is hereinafter referred to
as a "Termination Notice"). Failure of the Purchaser to
provide a Termination Notice within the time prescribed shall
be deemed a waiver by the Purchaser of the right to terminate
its obligations to purchase the Project hereunder by reason of
any of the matters specified in Section 2.01 or 2.02 hereof or
in this Section 2.03. In the event a Termination Notice by
either the Purchaser or the Seller is given or deemed given,
upon receipt by the Seller of all copies of the results of the
inspections, materials and documents (including copies of all
Due Diligence Items and all Financing Documents) relating to
the Project previously delivered to the Purchaser or its
agents or attorneys, and copies of all inspections and reports
ordered or commissioned by the Purchaser or its agents or
attorneys, and payment by the Purchaser of all of the costs
and expenses to third parties hired, commissioned or retained
by the Purchaser or its agents or attorneys, the Seller will
direct the escrowee to return the Earnest Money Deposit to the
Purchaser; provided that if the Purchaser has a dispute with
any such third parties over the amount of compensation to be
id to such third parties, the Purchaser will not be entitled
to receive all of the Earnest Money Deposit (it being agreed
that an amount equal to 150% of the aggregate of the highest
amounts claimed to be owed shall be retained by the escrowee
for the benefit of the Seller pending resolution of such
dispute(s)) until the Purchaser has resolved such dispute and
paid such third party in full; and provided further that,
notwithstanding the above provisions, in any event all third
parties shall be paid in full (which payment may be made (at
the Seller's sole discretion) from the portion of the Earnest
Money Deposit retained by the escrowee in connection with such
dispute) on the earlier of (i) the date on which the Seller is
notified or has knowledge that any such third party has
commenced a foreclosure action against all or a portion of the
Project or (ii) ninety (90) days from the end of the
Inspection Period, and any balance remaining after all such
disputes are settled in full and all costs and expenses
incurred by the Seller in connection therewith are paid in
full shall be returned to the Purchaser.
(d) If a Termination Notice is not delivered by the
Purchaser or the Seller as provided in Section 2.01 or 2.02
hereof or in this Section 2.03, the Purchaser shall then be
obligated to perform all other requirements under this
Agreement relating to the Purchaser's purchase of the Project.
(e) The aggregate principal amount of Bonds which will
be outstanding on August 1, 1997, the anticipated date for
closing the purchase of the Project by the Purchaser (the
"Closing Date") is $6,870,000. It is the understanding and
intent of the parties that (I) the Purchase Price for the
Project will be as set forth in Section 3.01 hereof and (ii)
the Purchaser will pay the portion of the Purchase Price equal
to the outstanding principal amount of the Bonds on the
Closing Date by assuming the indebtedness of the Seller under
the Financing Documents to pay, among other things, the
outstanding principal amount of the Bonds, with the balance of
the Purchase Price (subject to any prorations or adjustments
resulting in credits to the Purchaser or the Seller, as
applicable) to be paid in cash by the Purchaser. Any funds in
the Interest Account in the Revenue Fund under the Indenture
have been or will be invested prior to the Closing, at the
sole discretion of the Seller, in "Eligible Investments" as
defined in the Indenture, to mature on or before February 1,
1998 (the "Investments") in anticipation of the Purchaser's or
its designee's purchase of the Bonds or other payment in full
of the Bonds on that date to secure the release and discharge
of the Surety Bond issued by the Surety in respect of the
Bonds.
Section 2.04. Costs. All of its costs and expenses in
obtaining, receiving and returning all of the reports, materials,
documents and other items described in Sections 2.01, 2.02 and 2.03
hereof, including, without limitation, the duplication of the Due
Diligence Items and the Financing Documents, and in obtaining the
consent of the Issuer and the Trustee to the transfer of the
Project and any required opinions of counsel, shall be paid by the
Purchaser.
Section 2.05. Indemnification. The Purchaser hereby
indemnifies, agrees to defend, and hold the Seller, the Project
Manager, the Surety, and their respective successors, assigns,
affiliates, officers, employees, agents and shareholders, harmless
from and against any losses, claims, damages, liabilities and
expenses (including attorneys' fees), incurred as a result of or
arising in whole or in part from, directly or indirectly, or as a
consequence of, or in any way connected with any actions or
omissions of the Purchaser or its agents, officers, contractors or
employees, including, without limitation, the Purchaser's
inspection of the Project; provided, however, that the Purchaser
shall not be required to indemnify, defend or hold harmless such
parties if such losses, claims, damages, liabilities and expenses
(including attorneys' fees) are a result of the gross negligence or
willful misconduct of the Seller, the Project Manager and the
Surety. If the Closing does not occur, including without
limitation if the obligation of the Purchaser to purchase or the
Seller to sell the Project is terminated for any reason, the
Purchaser agrees to promptly restore or repair any damage to the
Project caused by the Purchaser, or its agents, contractors,
employees or officers.
Section 2.06. Insurance. Prior to the commencement of the
Inspection Period, the Purchaser shall provide the Seller with
evidence of general public liability insurance and property
insurance in coverages and from insurers satisfactory in all
respects to the Seller, insuring against, inter alia, death, bodily
injury and property damage resulting from the acts of the Purchaser
and its agents, officers, contractors or employees at the Project.
The Purchaser's insurance policies described in this Section 2.06
above shall name the Seller, the Surety and the Project Manager as
"additional insureds" thereunder.
Section 2.07. Confidentiality.
(a) The Purchaser covenants and agrees that the
information obtained by the Purchaser or communicated to the
Purchaser or any of its respective agents, officers,
contractors or employees in the course of discussions and
negotiations regarding the sale of the Project (other than the
Financing Documents) and the terms and provisions of this
Agreement are confidential and that knowledge by third parties
of any information (including the terms and provisions of this
Agreement) provided to, or obtained by, the Purchaser could be
damaging to the Seller and its business. For purposes of this
Agreement, such information (the "Information") includes but
is not limited to (i) information obtained by or on behalf of
the Purchaser about the Project whether from the Seller or its
officers, agents, attorneys or employees or from unrelated
third parties; (ii) written or oral information concerning or
relating to the business operations, assets, policies,
financial status or other related business information; (iii)
information contained in the financial and business books and
records of the Project and the Seller; (iv) the exhibits,
schedules and other documents delivered or to be delivered
relating to the assets, liabilities, commitments, properties
and business of the Project and the Seller; and (v)
appraisals, engineering reports, environmental reports or
other reports evaluating any aspect of the Project.
(b) Except for those attorneys, accountants,
contractors, consultants, technical advisors, lenders, escrow
agents, title insurers, surveyors, property managers and other
persons or entities retained by the Purchaser for the sole
purpose of assisting in the due diligence review of, closing
upon, or operation or maintenance of the Project, the
Purchaser covenants and agrees to take all reasonable and
prudent steps necessary to prevent disclosure of the
Information to any other third parties or entities. The
Purchaser agrees to take reasonable and prudent steps to
require any such third parties to maintain such
confidentiality. The Purchaser also agrees not to disclose
the Project's rent roll and/or tenant list to any other
parties except its property manager and lender and except for
copies of the rent roll (without identification of tenants) to
appraisers and consultants. The Purchaser and the Seller
hereby agree that any default in the Purchaser's covenant set
forth in the immediately preceding sentence will result in the
payment of damages by the Purchaser to the Seller of $10,000.
The Purchaser also agrees to obtain written confidentiality
agreements from the entities or persons assisting the
Purchaser in its due diligence, which confidentiality
agreements shall (i) be reasonably acceptable to the Seller,
(ii) be delivered to the Seller, and (iii) be enforceable by
the Seller. Further, all Information shall be used by the
Purchaser solely for the purposes contemplated by this
Agreement, except that the Purchaser (i) may disclose material
terms which are required to be disclosed by applicable
securities laws or as required by any national securities
exchange on which the Purchaser's common stock may be listed,
(ii) may disclose any and all information with respect to the
Project, its operating history or current operations, reports
or any other information concerning the Project and its
ownership deemed necessary in accordance with current
securities disclosure practice in an offering document for
remarketing or refunding the Bonds, and (iii), if so required,
may include a copy of this Agreement in its filings with the
Securities and Exchange Commission. The Seller hereby agrees
to take all reasonable and prudent steps necessary to prevent
disclosure to third parties of any non-public information the
Purchaser provides to the Seller regarding itself and Walden
Residential Properties, Inc.
(c) The Purchaser covenants and agrees with the Seller
to keep a record of all written Information furnished by or on
behalf of the Seller including its location. Further, if the
purchase and sale of the Project is not consummated, at the
request of the Seller, the Purchaser shall immediately return
all Information, in whatever tangible form provided to the
Purchaser, together with all copies of the Information the
Purchaser may have made or which is in the possession of the
Purchaser or its attorneys, officers, agents, employees or
other representatives.
(d) The Purchaser covenants and agrees that a violation
of the terms of this Section 2.07 may cause irreparable damage
to the Seller for which monetary damages may not adequately
compensate the Seller. Therefore, the Seller shall be
entitled to equitable relief to enjoin the Purchaser from
committing any breach hereof and the Purchaser hereby consents
to the Seller obtaining all injunctive relief as is necessary
and proper with respect to the breach, attempted breach or
contemplated breach of any of the terms of this Agreement.
Section 2.08. Seller Shall Not Market Project. The Seller
agrees that it will not market the Project to any other parties,
until the earlier of (i) August 2, 1997 or August 15, 1997 (in the
event the 15-day cure period becomes approved), or (ii) such time
as (A) a Termination Notice is delivered or (B) the Purchaser shall
default in any of its obligations under this Agreement.
ARTICLE III
PURCHASE PRICE
Section 3.01. Purchase Price; Allocation of Purchase Price.
The Purchase Price of the Project shall be the sum of (a) NINE
MILLION FOUR HUNDRED FIFTY THOUSAND DOLLARS ($9,450,000), plus (b)
an amount equal to the amount on deposit in the Interest Account of
the Revenue Fund under the Indenture on the Closing Date (less the
amount of the Seller's pro rata share of any interest accrued and
unpaid on the Bonds as of the Closing Date), plus (c) an amount
equal to the amount on deposit in the Administrative Expenses
Account within the Revenue Fund on the Closing Date (less the
amount of any liability of the Seller for its pro rata share of
Administrative Expenses), plus (d) an amount equal to any other
funds held by the Trustee under the Indenture.
Section 3.02. Payment of Purchase Price. The Purchaser
agrees to pay to the Seller the Purchase Price as follows:
(a) On the date of this Agreement the Purchaser is
depositing the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000)
with Chicago Title Insurance Company, (Chicago, Illinois
office) as escrowee (the "Escrowee") as its earnest money
deposit (referred to herein as the "Earnest Money Deposit"),
for the benefit of the Seller, pursuant to the terms of the
Earnest Money Escrow Agreement, a copy of which has been
previously provided to the Purchaser. Any interest earned on
the Earnest Money Deposit shall accrue to the benefit of the
Purchaser except as provided in Section 8.01.
(b) On the Closing Date, the Purchaser shall (i) assume
payment of the principal indebtedness in respect of the Bonds
in the aggregate principal amount then outstanding and unpaid
(the "Assumed Principal Indebtedness") and all interest and
other indebtedness due and payable from and after the Closing
Date under (A) that certain Secured Note dated January 15,
1993, payable to the Issuer, in the original principal amount
of SIX MILLION EIGHT HUNDRED SEVENTY THOUSAND DOLLARS
($6,870,000) (the "Note"), (B) that certain Loan Agreement
dated as of January 1, 1993 (the "Loan Agreement") between the
Issuer and the Seller, (C) that certain First Deed of Trust,
Assignment of Rents and Security Agreement dated as of January
1, 1993 (the "First Deed of Trust") from the Seller to a
trustee for the benefit of the Issuer and the Surety, (D) the
Indenture, and (E) all of the other Financing Documents;
(c) The balance of the Purchase Price, as provided in
Section 6.03 hereof, shall be deposited under the Escrow
Agreement (as defined in Section 5.02 hereof) pursuant to the
provisions thereof and shall be paid to the Seller on the
Closing Date (as defined in Section 5.01 hereof) by wire
transfer of immediately available funds pursuant to the terms
of the Escrow Agreement.
Section 3.03. Release of Liens. The Purchaser understands
and agrees that the Surety will not release or assign its interest
in the Loan Documents or the Second Deed of Trust Documents (as
defined in the Indenture) or any of the other documents to which
the Surety is a party unless and until all of the obligations
assumed by the Purchaser as of the Closing Date have been fully
satisfied and the Surety receives its Surety Bond from the Trustee
under the Indenture marked "canceled and discharged" upon payment
of the Bonds as contemplated by Section 2.03(b) of this Agreement,
without any claim being made under the Surety Bond which is not
immediately and irrevocably paid to the Surety from the proceeds of
a draw on the Letter of Credit or from other funds paid by or on
behalf of the Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Seller's Representations and Warranties. The
Seller hereby represents and warrants to the Purchaser as follows:
(a) Except as set forth in Exhibit C attached hereto,
the Seller has not consented to any amendment or modification
of the Financing Documents. To the best of the Seller's
knowledge, no uncured default of the Seller exists under the
Financing Documents, and no other event has occurred which,
after notice or lapse of time or both, would be an Event of
Default thereunder.
(b) Attached as Exhibit D hereto is the rent roll of the
Project as of June 9, 1997. To the best of the Seller's
knowledge, the rent roll and all information therein are
accurate as of its date.
(c) Except for the property management contract, there
are no Service Contracts with respect to the Project or any
part thereof except as set forth in Exhibit E attached hereto.
Each of the Service Contracts is in full force and effect and,
to the best of the Seller's knowledge, neither party is in
material default thereunder. There are no amendments to the
Service Contracts or modifications except as set forth in
Exhibit E attached hereto.
(d) Attached hereto as Exhibit F are true and correct
copies of the most recent bills for real estate taxes and
personal property taxes relating to the Project.
(e) The Seller presently maintains in full force and
effect policies of insurance against loss or damage to the
improvements located at the Project.
(f) Between the date of this Agreement and the earlier
of the delivery of a Termination Notice or the Closing Date
set forth herein, without the consent or approval of the
Purchaser:
(i) The Seller will not make any material
alterations or changes to the Project, except in the
event of emergency as required for safety of persons or
property or except as required by any governmental
authority, and will not suffer or permit any material
deterioration in the condition of the improvements
thereon, ordinary wear and tear, fire and casualty and
acts of God, the Purchaser and its consultants and agents
excepted; and
(ii) The Seller will not enter into any amendments
to the Service Contracts and the Seller will not enter
into any service agreements or other contracts with
respect to the Project, other than Service Contracts or
similar contracts entered into in the ordinary course of
business (the term "Service Contracts" shall mean and
include all such amendments and service agreements and
other contracts entered into by the Seller with respect
to the Project in compliance with this provision or
approved by the Purchaser as of the Closing Date).
(g) The Seller has all legal authority and power (i) to
execute and deliver this Agreement and the documents which the
Seller is required to execute and deliver hereunder and (ii)
to perform its obligations hereunder.
(h) To the best of Seller's knowledge, the Seller has
not been advised by the applicable city, county, state or
federal authorities that the Project is in violation of any
applicable health, building, environmental, fire or zoning
codes or ordinances.
(i) The Seller has received no notice of any claim,
action, suit, investigation or proceeding, at law, in equity
or otherwise, now pending or, to the best of the Seller's
knowledge, threatened against the Seller or with respect to
the Project to which the Purchaser might become a party except
as set forth in paragraph (1) hereof. The Seller is not
subject to the terms of any decree, judgment or other action
of any court, administrative agency or arbitrator, which has
or could result in a material adverse effect on the Project or
the operation and leasing thereof or the Seller's obligations
hereunder.
(j) The Seller has no notice or knowledge of any pending
or threatened condemnation or eminent domain proceedings which
would affect any of the Project.
(k) Except for the consents and approvals required
hereunder and under the Financing Documents, neither the
execution nor the delivery of this Agreement or the documents
contemplated hereby, nor the consummation of the conveyance of
the Project to the Purchaser, will conflict with or cause a
breach of any of the terms and conditions of, or constitute a
default under, any agreement, commitment, note, mortgage,
lease, bond, license, permit or other instrument or obligation
by which the Seller is bound.
(l) The Seller has received notice from or on behalf of
the Maples Homeowner's Association, Inc., as set forth in the
correspondence separately forwarded by the Seller to the
Purchaser, under letter dated June 26, 1997.
(m) Except as disclosed in writing to the Purchaser
during the Inspection Period and in the Environmental
Assessment - Phase I dated December, 1992 prepared by Delta
Environmental Consultants, Inc., to the best of the Seller's
knowledge, no Hazardous Materials are located on or about the
Project. To the best of the Seller's knowledge, the Project
does not contain any underground tanks for the storage or
disposal of Hazardous Materials. Further, to the best of the
Seller's knowledge, (A) the Project previously has not been
used for the storage, manufacture or disposal of Hazardous
Materials, and (B) no complaint, order, citation or notice
with regard to air emissions, water discharges, noise
emissions and Hazardous Materials, if any, or any other
Applicable Environmental Laws from any person, government or
entity has been issued to the Seller.
For the purposes of this Section 4.01(m):
(i) "Hazardous Materials" shall mean any toxic
materials, hazardous waste or hazardous substance (as
these terms are defined in the Applicable Environmental
Laws) and including, without limitation, any asbestos or
asbestos-related products or materials and any oils,
petroleum-derived compounds or pesticides, excluding,
however, materials in reasonable amounts that are
customarily used in the operation, cleaning and
maintenance of an apartment complex, and chemicals,
materials and products stored on site used in the
operation and maintenance of the pool and of the office.
(ii) "Applicable Environmental Laws" shall mean any
and all applicable laws pertaining to health or the
environment, including, without limitation, the Superfund
Reauthorization and Amendments Act of 1986 ("SARA"), the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 ("CERCLA"), and the Resource
Conservation and Recovery Act of 1976 ("RCRA " ), as well
as any and all other laws, ordinances, rules and/or
regulations created or imposed by any governmental
authority having jurisdiction with respect to the
Project, whether local, state or federal, pertaining to
environmental regulation, contamination, clean-up or
disclosure.
(n) The Seller will not amend, or reduce the coverage
under, or cancel, any existing insurance policy without the
Purchaser's prior written consent, which shall not be
unreasonably withheld. In addition to the requirements of
Section 2.06, the Purchaser, at Closing, shall obtain its own
insurance coverage. The Seller has received no notice from
any insurer of the Project requiring any improvements,
alterations, additions, correction or other work relating to
the Project which have not been cured or satisfied.
(o) Until Closing, the Seller shall continue the
operation of the Project in the normal and usual manner and in
compliance with the Regulatory Agreement, will not remove any
improvements or Personalty, except for repair or replacement,
and the Project will be managed, operated, maintained,
repaired and redecorated in the ordinary course of business
and in such manner as to maintain the Project in all material
respects in no less satisfactory condition than exists as of
the date hereof. The Purchaser shall have the right to re-
inspect the Project during the period commencing not earlier
than five (5) days prior to the Closing and ending on the
Closing solely for purposes of verifying the maintenance of
the Project in accordance with this paragraph.
(p) During the Inspection Period, the Seller shall
permit and cooperate in a review by the Purchaser and its
accountants of such books, records, leasing files, contracts,
agreements and information relating to the Project that are in
the Seller's possession or are readily available to the
Seller, and as may be required by the Purchaser's accountants
to perform a complete audit of the Project for the twelve (12)
month period ended December 31, 1996. The Seller will cause
its Project Manager, prior to Closing, to deliver a letter to
the Purchaser's accountants substantially in the form ("Audit
Letter") attached hereto as Exhibit N.
(q) To the best of Seller's knowledge, (i) no Event of
Default (as such term is used therein) currently exists under
any of the Financing Documents, and the Seller has received no
notice from the Trustee or the Issuer of any such Event of
Default, and (ii) since the Seller became owner of the
Project, the Seller has complied with all material terms of
the Regulatory Agreement relating to the federal exemption of
interest on the Bonds.
(r) Other than rental units which have been vacated
within five (5) business days prior to the Closing Date (which
the Seller and the Purchaser acknowledge may be in varying
conditions of "make ready" for leasing, as is ordinary in
Seller's course of business (the "Excluded Units")), all
rental units shall be in "market ready" rental condition as of
the Closing Date. As to such units that are not in "market
ready" rentable condition as of the Closing Date (excluding
Excluded Units), the Purchaser and the Seller understand and
agree that the Purchaser shall be entitled to credit against
the Purchase Price at Closing an amount equal to the amount
agreed upon at Closing by the Purchaser and the Seller as
being required to put such units in "market ready" rentable
condition. "Market ready" rentable condition shall be the
normal condition a unit is placed in by the Seller prior to
marketing a unit for rental.
The aforesaid representations and warranties shall not be deemed to
apply to any change in the condition of the Project created or
occurring after Closing.
The Purchaser acknowledges that, except as provided in this
Section 4.01 above, the Purchaser is entering into this Agreement
without relying on any representation or warranty from the Seller,
the Project Manager, or any other person or entity related to,
affiliated with or employed by the Seller. Other than the
representations and warranties contained in this Section 4.01
above, the Seller sells the Project, and the Purchaser purchases
and accepts the Project, AS IS - WHERE IS, and the Purchaser
assumes all risks thereof.
SELLER'S INITIALS: PURCHASER'S INITIALS:
The representations and warranties set forth in this Section
4.01 shall be made as of the date hereof and shall be continuing
and shall be true and correct on and as of the Closing Date with
the same force and effect as if made at that time, and all of such
representations and warranties shall expire twelve (12) months
after delivery of the deed conveying the Project in accordance
herewith.
Section 4.02. Purchaser's Representations and Warranties,
Covenants and Agreements.
(a) As of the Closing Date, the Purchaser will assume
all of the obligations of the Seller under the Service
Contracts then in effect pursuant to an Assignment of Service
prior to Closing, to deliver a letter to the Purchaser's
accountants substantially in the form ("Audit Letter")
attached hereto as Exhibit N".
(b) As of the Closing Date, the Purchaser will assume
all of the obligations of the Seller under the Leases then in
effect pursuant to an Assignment of Tenant Leases and
Assumption Agreement in the form of Exhibit H attached hereto
(the "Assignment of Tenant Leases").
(c) As of the Closing Date, the Purchaser will assume
the obligations to pay the principal indebtedness then
outstanding and unpaid on the Note and all interest accruing,
and all other obligations of the Seller under the Financing
Documents due and payable, from and after the Closing Date
pursuant to an Assignment and Assumption Agreement in the form
of Exhibit I attached hereto (the "Assumption Agreement").
(d) The Purchaser has all legal authority and power to
(i) execute and deliver this Agreement and the documents which
the Purchaser is required to execute and deliver hereunder and
(ii) to perform its obligations hereunder.
(e) Except for the consents and approvals required
hereunder and under the Financing Documents, neither the
execution nor the delivery of this Agreement or the documents
contemplated hereby, nor the consummation of the conveyance of
the Project to the Purchaser, will conflict with or cause a
breach of any of the terms and conditions of, or constitute a
default under, any agreement, commitment, note, mortgage,
lease, bond, license, permit or other instrument or obligation
by which the Purchaser is bound.
ARTICLE V
CLOSING
Section 5.01. Closing Date. Subject to the terms and
provisions of this Agreement, the closing of the purchase and sale
of the Project will occur on August 1, 1997 or such other date as
may be mutually agreed to by the Purchaser and the Seller, subject
to the provisions of Section 8.03 hereof (the "Closing Date"). On
the Closing Date and as conditions precedent to the Closing:
(a) the Purchaser and the Seller shall each have
delivered to the Escrow Agent each of their respective
deposits required by the Escrow Agreement (as hereinafter
defined);
(b) the Title Company will have committed to issue the
Owner's Title Policy in the form required by Section 5.03 of
this Agreement, with no additional matter of record appearing
between the date of the Title Commitment and the Closing Date
unless approved (or deemed approved) by the Purchaser and
subject to any exceptions to title of the Project which are
created or caused by actions of the Purchaser or its agents,
employees or contractors;
(c) each and every warranty and representation of the
Purchaser and the Seller set forth in this Agreement shall be
true and correct in all material respects as of the Closing
and neither party shall be otherwise in default hereunder;
(d) the Purchaser shall have complied with all terms of
the Indenture and this Agreement, including, without
limitation, the timely delivery of the Letter of Credit, and
all required opinions and other documents and showings,
including the opinions of Bond Counsel and the other items
described in Section 2.03 hereof which will be delivered to
the Seller and the Surety;
(e) all documents deposited with the Title Company (as
hereinafter defined) under the Escrow Agreement will be
released in accordance with the terms and provisions of the
Escrow Agreement;
(f) the Letter of Credit will be delivered to the Surety
(accompanied by opinions of counsel, in form and substance
satisfactory to the Surety, as to the due authorization,
execution, delivery and enforceability thereof); and
(g) the Purchase Price, less the aggregate outstanding
principal balance of the Bonds, plus or minus prorations, will
be paid to the Seller.
The occurrence of the events described in the foregoing
paragraphs (a) through (g), inclusive, shall constitute the
"Closing. " The Closing shall take place at the offices of Chapman
and Cutler, 111 West Monroe Street, Chicago, Illinois 60603-4080 or
such other place as the parties shall mutually agree. The Closing
shall be consummated pursuant to the Escrow Agreement as set forth
in Section 5.02 below.
In the event any of the above conditions are not satisfied at
the time specified for the Closing, the provisions of Sections 8.01
and 8.02 shall apply.
Section 5.02. Escrow Closing. The purchase and sale of the
Project shall be closed by means of an escrow agreement in the form
attached hereto as Exhibit J with such immaterial modifications as
may be required by the Title Company as escrowee thereunder (the
"Escrow Agreement"), with the concurrent delivery of the documents
of title, transfer of interests, assumption of liabilities and
obligations under the Financing Documents and the other items set
forth in Sections 5.04 and 5.05 hereof and the payment of the
Purchase Price pursuant to the Escrow Agreement established with
the Title Company. The Purchaser and the Seller shall each pay
one-half of the costs of the Title Company's escrow fees.
Section 5.03. Commitment for Title Insurance and Survey. The
Seller has delivered to the Purchaser at the Seller's cost a title
commitment (the "Title Commitment") issued by Chicago Title
Insurance Company (the "Title Company") in a stated amount equal to
$9,450,000. showing title to the Project in the Seller, subject to
(i) the exceptions shown in Exhibit K and the other specific
exceptions to title (hereinafter referred to as the "Title
Exceptions") and (ii) any exceptions to title of the Project which
are created or caused by the actions of the Purchaser or its
respective agents, employees or contractors, the Financing
Documents which are of record against the Project, and the other
general exceptions and exclusions contained in the Title Commitment
(hereinafter referred to as "Permitted Exceptions") to which the
Purchaser hereby consents. Such Title Commitment shall be
conclusive evidence of good title as therein shown. The Purchaser
shall have until the later of the Outside Date or five (5) days
from the date of delivery of such Title Commitment to object to the
Title Exceptions; and if the Purchaser does not object to any Title
Exceptions in writing within said period, the Purchaser shall be
deemed to have approved such Title Exceptions. The Seller has
delivered to the Purchaser a plat of survey of the Project showing
the boundary of the Site described in Exhibit A hereto and the
improvements situated thereon and all plattable easements and other
title exceptions (a "Survey"). if the Purchaser objects to a Title
Exception or the Survey shows a survey defect which is objected to
by the Purchaser during the Inspection Period (also for this
purpose an "Unpermitted Exception"), the Seller shall have until
the day prior to the Closing Date (the "Title Clearance Period") to
(i) cause the Title Company to remove or insure over by endorsement
such Unpermitted Exception or (ii) elect not to cause the Title
Company to remove or insure over by endorsement the Unpermitted
Exceptions; provided that the Purchaser may remove any Unpermitted
Exception on the Closing Date which can be removed with the payment
of money; provided, further, however, that the Seller shall notify
the Purchaser five (5) business days after the Outside Date of its
election to proceed under clause (i) or (ii) in respect of all
objections delivered by the Purchaser to any such Unpermitted
Exceptions. If the Seller elects to cause the Title Company to
remove or insure over by endorsement the Unpermitted Exceptions,
the Closing shall be held as scheduled on the Closing Date. If the
Seller elects not to have such Unpermitted Exceptions removed or
insured over by endorsement, the Purchaser may terminate this
Agreement by delivery of a Termination Notice on or before the
Outside Date. If the Purchaser does not deliver a Termination
Notice, the Purchaser shall be deemed to have elected to take title
to the Project subject to said Unpermitted Exceptions, without
recourse to the Seller with respect to said Unpermitted Exceptions.
If the Purchaser delivers a Termination Notice on or before the
Outside Date as provided in this Section by reason of an
Unpermitted Exception, the Earnest Money Deposit provided (together
with any interest earned thereon) shall be returned to the
Purchaser in accordance with the provisions of this Agreement
subject to retention for the purposes and as provided in Section
2.03(c) hereof and after receipt by the Seller of all (i) documents
(including the Financing Documents), rent rolls, surveys, all other
Due Diligence Items and all other items delivered by the Seller to
the Purchaser hereunder and (ii) inspections and reports (including
supporting materials) ordered or commissioned by or on behalf of
the Purchaser, and, subject to the above provisions of this Section
5.03, and neither the Purchaser nor the Seller shall have any
further right or obligation hereunder, except that the Purchaser's
obligations under Sections 2.04, 2.05 and 2.07 shall survive such
termination. In the event that any Unpermitted Exception or title
claim is asserted subsequent to the Closing Date, the Purchaser's
sole remedy shall be against the Title Company and the Seller shall
have no responsibility therefor.
Section 5.04. Seller's Escrow Deposits. As provided in the
Escrow Agreement, on or prior to the Closing Date, the Seller shall
deliver or cause to be delivered to the Title Company, as escrowee
under the Escrow Agreement (herein, the "Escrow Agent") the
following documents executed by the Seller:
(a) A Special Warranty Deed, in the form attached as
Exhibit L hereto, from the Seller to the Purchaser, sufficient
to convey the Project to the Purchaser subject to the Title
Exceptions and the Permitted Exceptions (the "Deed");
(b) An amount equal to the Seller's Closing Costs set
forth in Section 6.02, but only to the extent that the
Seller's Closing Costs exceed the amount of the Purchase Price
which will be paid to the Seller;
(c) A closing statement (the "Closing Statement")
showing the prorations between the Purchaser and the Seller in
accordance with Section 6.01 hereof,
(d) An Assignment of Service Contracts, assigning all of
the Seller's right, title and interest in and to all Service
Contracts, and providing for the Purchaser's assumption of the
obligations of the Seller under the Service Contracts;
(e) An Assignment of Tenant Leases, assigning all of the
Seller's right, title and interest in and to the Leases and
providing for the Purchaser's assumption of the Seller's
obligations as lessor or landlord under the Leases;
(f) Notices to tenants, in the form prepared by the
Seller and acceptable to the Purchaser, duly executed by the
Seller, advising the tenants of the sale of the Project and
directing that rent and other payments thereafter be sent to
the Purchaser (or its agent) at the address provided by the
Purchaser, unless otherwise directed by the Purchaser;
(g) A quitclaim Bill of Sale in the form of Exhibit M
attached hereto (providing warranties of title for the period
the Seller held title to the Project) transferring to the
Purchaser all of the Seller's right, title and interest in and
to each and every item of Personalty WITHOUT WARRANTY OF
QUALITY, MERCHANTABILITY, FITNESS FOR USE OR OTHERWISE;
(h) An Assumption Agreement relating to the assignment
of the obligations under the Financing Documents by the Seller
to the Purchaser and the assumption of such obligations by the
Purchaser;
(i) An updated rent roll in the form of Exhibit D
attached hereto;
(j) A certificate as required by the Foreign Investment
in Real Property Tax Act of 1980;
(k) All information required to be reported to the
Internal Revenue Service pursuant to Section 6045(e) of the
Internal Revenue Code;
(l) Written consent to the transfer of the Project to
the Purchaser from the Surety;
(m) A certified copy of the corporate resolutions of the
Seller authorizing the sale of the Project and the delivery of
the Deed and the other transfer documents;
(n) Any customary transfer declarations or any form
required to facilitate the payment of any transfer,
documentary or use taxes required by the Title Company or the
State or local governmental authorities having jurisdiction of
the Project;
(o) A customary ALTA statement; and
(p) Written direction to the escrowee holding the
Earnest Money Deposit to pay the Earnest Money Deposit, plus
interest thereon, to the Escrow Agent under the Escrow
Agreement.
The Seller shall deliver possession of the Project to the
Purchaser on the Closing Date upon completion of the Closing (as
described in Section 5.01 hereof). The Purchaser understands that
all keys, permits, leases, Service Contracts and tenants' income
certificates are maintained at the Project and the Purchaser will
take possession of those items when it takes possession of the
Project.
Section 5.05. Purchaser's Escrow Deposits. As provided in
the Escrow Agreement, on or prior to the Closing Date as required
in the Escrow Agreement, the Purchaser shall cause to be delivered
to the Escrow Agent:
(a) The Purchase Price payable to the Seller less the
aggregate outstanding principal balance of the Bonds in
immediately available funds, plus or minus prorations;
(b) The Assumption Agreement executed by the Purchaser;
(c) The Assignment of Tenant Leases executed by the
Purchaser;
(d) The Assignment of Service Contracts executed by the
Purchaser;
(e) The originally executed Letter of Credit, duly
executed by the Bank;
(f) The Closing Statement executed by the Purchaser;
(g) Any customary transfer declarations or any forms
required to facilitate the payment of any transfer,
documentary or use taxes and required by the Title Company or
the State or local governmental authorities having
jurisdiction over the Project;
(h) The opinions of counsel and other written evidence
satisfactory to Seller and the Surety that the Letter of
Credit and the Financing Documents constitute legal, valid and
binding contracts and agreements of the respective parties
thereto (other than the Seller and/or the Surety) enforceable
in accordance with their respective terms without notice to or
the consent or approval of the holders of the Bonds;
(i) A certified copy of the resolutions of the Purchaser
authorizing the purchase of the Project and the execution and
delivery of the Assumption Agreement, the Assignment of Tenant
Leases and the Assignment of Service Contracts;
(j) Written approval or acknowledgment of the Issuer and
the Trustee to the sale of the Project, as provided in
Sections 2.02(a) and 2.02(c) hereof and written evidence of
compliance with the provisions of the First Deed of Trust, the
Second Deed of Trust, the Regulatory Agreement (as defined in
Exhibit C attached hereto) and any other Financing Documents;
(k) A customary ALTA statement;
(l) The Purchaser's closing costs set forth in Section
6.01 hereof which the Purchaser has not previously paid; and
(m) Written directions to the Escrowee holding the
Earnest Money Deposit to pay the Earnest Money Deposit, plus
any interest thereon, to the Escrow Agent under the Escrow
Agreement.
Section 5.06. Concurrent Transactions. All documents or
other deliveries or deposits required to be made by the Purchaser
or the Seller at or prior to the Closing, and all transactions
required to be consummated concurrently with the Closing, shall be
deemed to have been delivered and to have been consummated
simultaneously with all other transactions and all other
deliveries, and no delivery shall be deemed to have been made, and
no transaction shall be deemed to have been consummated, until all
deliveries required by the Purchaser and the Seller shall have been
made, and all concurrent or other transactions shall have been
consummated.
ARTICLE VI
CLOSING COSTS AND PRORATIONS
Section 6.01. Closing Costs. On or before the Closing Date
the Purchaser shall pay all of the following costs:
(a) All of the fees, costs and expenses incurred by the
Purchaser for its due diligence during the Inspection Period;
(b) The investment fee for the Earnest Money Deposit and
one-half of all of the other escrow fees of the Title Company;
(c) All applicable assumption, transfer, or similar
charges and fees of the Trustee, the Issuer and the Bank (and
their respective counsel) with respect to the transfer of the
Project and the delivery of the Letter of Credit, including
without limitation all costs, fees and expenses of the Bank,
the Trustee, the Issuer and their respective counsel and other
advisors, if any, and all costs, fees and expenses required
for the delivery of the opinions of counsel required by this
Agreement and/or any of the other parties to the Financing
Documents in connection with such transactions;
(d) The cost of recording the Deed and the Assumption
Agreement and any other conveyance documents that the
Purchaser may choose to record;
(e) The fees and expenses of the Trustee, the Issuer,
the Bank, Bond Counsel, the Trustee's counsel and, the
Issuer's counsel, and all other costs and expenses required to
be paid in connection with the transfer of the Project to the
Purchaser, and the issuance of the Letter of Credit;
(f) All transfer taxes, recordation taxes, deed stamps,
document taxes, mortgage taxes, intangible taxes, and similar
taxes or charges with respect to the transaction;
(g) The cost of recording all mortgages, deeds to secure
debt, financing statements or similar documents representing
or securing the obligations of the Purchaser or its designee
to the Bank, together with the premiums and any other title
charges incurred by the Purchaser in connection with any
mortgage title insurance charges; and
(h) The cost of any endorsement to the Title Policy.
To the extent the above costs or any other related costs are
not ascertainable as of the Closing Date, the Purchaser agrees to
pay such costs promptly upon receipt of any bill or invoice.
Section 6.02. Seller's Costs. The Seller shall pay all of
the following costs:
(a) The premium and related costs charged by the Title
Company for the Owner's Title Policy;
(b) The costs of the preparation of the Survey;
(c) One-half of the escrow fees of the Title Company
(other than the investment fee for the Earnest Money Deposit);
and
(d) The Seller's and the Surety's legal fees and
expenses incurred in connection with the preparation and
negotiation of this Agreement and the other documents,
instruments and agreements required to consummate the sale of
the Project to the Purchaser as provided herein.
To the extent the above costs or any other related costs are
not ascertainable as of the Closing Date, the Seller agrees to pay
such costs promptly upon receipt of any bill or invoice.
Section 6.03. Proration of Income and Expenses.
(a) The following items shall be adjusted or prorated
between the Seller and the Purchaser on the Closing Date
(unless for those items which the Purchaser would receive a
credit, the Seller has arranged to pay such invoices or
charges to and including the Closing Date):
(i) Real estate, ad valorem and similar taxes
(including assessments) for the then current tax year
relating to the Project shall be prorated to the Closing
Date. If the Closing occurs before the tax rate is fixed
for the then current tax year, the apportionment of taxes
shall be made on the basis of the last ascertainable tax
bill for the preceding tax year, and when the taxes are
fixed for the tax year in which the Closing occurs, the
Seller and the Purchaser hereby agree to adjust the
proration of taxes and, if necessary, to refund or pay
such sums to the other party as shall be necessary to
effect such adjustment;
(ii) Special Assessments against the Project due for
the calendar year in which the Closing Date occurs;
(iii) Wages, vacation pay and other benefits of
all persons employed by the Seller in the operation of
the Project whose employment will not be terminated as of
the Closing Date;
(iv) Fuel and other supplies stored at the Project;
(v) Any permit or other fees relating to the
Project payable on a continuing basis;
(vi) Fees payable under the Service Contracts;
(vii) The fees of the Trustee, the Issuer, and
any other third parties due under the Financing Documents
in the ordinary course of the transactions contemplated
by those documents and not the transactions contemplated
by this Agreement;
(viii) Utility charges and deposits with utility
companies; and
(ix) All other operating charges of, or other
proratable items relating to, the Project.
(b) The Purchaser shall receive a credit against the
Purchase Price equal to the aggregate amount of rentals or
other income of the Project, including, but not limited to,
utility charges, tenant reimbursements, and other similar
amounts payable to the Seller as the owner of the Project
previously collected by the Seller which, as of the Closing
Date, represent advance payments attributable to periods after
the Closing Date.
(c) Any rental or other income, including, but not
limited to, utility charges, tenant reimbursements, and other
amounts payable to the Seller as the owner of the Project
which are payable for periods prior to the Closing Date but
which, as of the Closing Date, have not been received by the
Seller, whether because such amounts are delinquent or because
such amounts are not yet due, shall not be prorated as of the
Closing Date but shall be adjusted after the Closing Date but
as of the Closing Date, when and if such amounts are received
by the Purchaser, and the Purchaser covenants and agrees to
immediately pay to the Seller any such delinquent rents from
rents received by the Purchaser (after payment of current
rents) from such tenants after the Closing Date.
(d) At the Closing, the Purchaser shall receive a credit
against the Purchase Price equal to the amount of any and all
refundable deposits paid to the Seller by tenants of the
Project (collectively, the "Deposits"), as well as for the
amount of any unpaid bills (but subject to proration as set
forth in Section 6.03(a) hereof) relating to periods prior to
the Closing Date for which the Purchaser will be responsible
after the Closing. The Purchaser hereby agrees to apply the
respective Deposits in accordance with the provisions of the
respective Leases. Pursuant to the Assignment of Tenant
Leases, as of the Closing Date the Purchaser will assume all
obligations under the Leases to refund or otherwise apply the
Deposits pursuant to the provisions of the applicable Leases
and will indemnify the Seller, and hold the Seller harmless
for any failure to refund or misapplication of the Deposits.
(e) The Seller shall receive a credit for all amounts
(plus any accrued and unpaid interest or earnings thereon)
held under the Indenture by the Trustee in any of the funds or
accounts established under the Indenture (excepting, however,
amounts, if any, in the Interest Account and the
Administrative Expenses Account attributable to and held for
the payment of interest on the Bonds, and fees and expenses of
the Issuer and/or the Trustee and other Administrative
Expenses accrued and payable from such Accounts for the period
up to and including the Closing Date and not otherwise
credited to the Purchaser under Section 6.03 hereof), and the
Seller shall assign to the Purchaser all of its right, title
and interest in the amounts so held by the Trustee.
(f) Interest accruing on the Note, if any, prior to the
Closing Date which is not payable prior to the Closing Date
shall, to the extent not otherwise paid or provided for
hereunder (e.g., in the calculation of the Purchase Price or
prorations under Section 6.03), be a credit to the Purchaser,
and the Purchaser shall pay interest accruing on the Note
after the Closing Date.
(g) Subject to adjustments as set forth in this
Agreement, including, without limitation, Section 6.04 hereof,
for purposes of all prorations, the Seller will receive credit
of all income and will be responsible for the payment of all
expenses of the Project to and including the Closing Date and
the Purchaser will receive credit for all income and will be
responsible for the payment of all expenses after the Closing
Date. The Purchaser and the Seller shall indemnify each other
for its violation of this Section 6.03(g) as it relates to
responsibility for payment.
Section 6.04. Post-Closing Adjustments. The Seller and the
Purchaser agree that, to the extent items are prorated or adjusted
at the Closing on the basis of estimates, or are not prorated or
adjusted at the Closing pending actual receipt of funds or
compilation of information upon which such prorations or
adjustments are to be based, each of them will, upon a proper
accounting, pay to the other such amounts as may be necessary such
that Seller will receive the benefit of all income and will pay all
expenses of the Project accrued to and including the Closing Date
and the Purchaser will receive all income and will pay all expenses
of the Project accrued after the Closing Date. If on or after the
Closing, the Purchaser receives any bill or invoice which relates
to periods on or prior to the Closing Date, the Purchaser will
refer such bill to the Seller and the Seller agrees to pay such
bill or invoice promptly upon receipt. If on or after the Closing,
the Seller receives any bill or invoice which relates to periods
subsequent to the Closing Date, the Seller will refer such bill to
the Purchaser and the Purchaser agrees to pay such bill or invoice
promptly upon receipt. Anything in this Agreement to the contrary
notwithstanding, the provisions of this Section 6.04 shall survive
the Closing.
Section 6.05. Delinquent Rents. Any rents or other amounts
which are delinquent as of the Closing shall not be adjusted or
prorated at the Closing, but the Purchaser shall make a reasonable
attempt to collect such amounts for the benefit of the Seller after
the Closing, and when and if such amounts are received by the
Purchaser, the Purchaser covenants and agrees to immediately pay to
the Seller any such delinquent rents from rents received by the
Purchaser (after payment of current rents) from such tenants after
the Closing Date.
ARTICLE VII
BROKER
Section 7.01. Brokers. The Purchaser represents and warrants
to the Seller and the Seller represents and warrants to the
Purchaser that it has not dealt with or been contacted by any
broker, finder, or real estate agent to act on its behalf except
for CB Commercial Real Estate Group, Inc. (the "Broker"). The
Seller will pay the Broker's commission at Closing. The Purchaser
and the Seller each agree to indemnify, defend and hold harmless
the other for any loss, cost, liability or damage arising from
inaccuracy of this representation and warranty.
ARTICLE VIII
DEFAULTS
Section 8.01. Default of Purchaser.
(a) In the event that the Purchaser has not delivered
the Termination Notice by the Outside Date under Section 2.01,
Section 2.02 or Section 2.03 hereof and if the Purchaser fails
to (1) consummate the purchase of the Project on the Closing
Date, (2) deliver the Letter of Credit on the Closing Date, or
(3) fully pay and perform all of the Purchaser's covenants,
agreements, or obligations hereunder, or breaches any of its
representations and warranties hereunder, then the Purchaser
agrees that the Seller shall have the right to cancel the
Purchaser's rights to purchase the Project under this
Agreement on not less than fifteen (15) days' prior written
notice to the Purchaser and, unless the Purchaser cures such
default within said fifteen (15) day period or the Seller is
in default hereunder, the Seller shall be entitled to be paid
and retain the entire Earnest Money Deposit and any interest
earned thereon (or an amount equal to the Earnest Money
Deposit and all interest thereon if for any reason the actual
Earnest Money Deposit and all interest thereon is not
available to be immediately payable to the Seller) for
reimbursement of a portion of the Seller's out-of-pocket costs
incurred in connection with this Agreement and the
transactions contemplated hereunder and the economic loss of
taking the Project off the market. A default by the Purchaser
under this Agreement is herein sometimes referred to as a
"Purchaser's Default".
(b) In addition, the Purchaser understands and agrees
that if its rights to purchase the Project hereunder have been
terminated, nothing herein shall discharge or relieve the
Purchaser from paying all of the fees, costs and other
expenses which it is required to pay hereunder, and nothing
herein shall discharge or relieve it from its obligations
under Section 2.03(c) and Sections 2.04, 2.05 and 2.07 hereof.
Section 8.02. Default of Seller.
(a) If the Seller shall default hereunder in respect of
any covenants and agreements herein contained by the Seller to
be performed or complied with, the Purchaser may terminate
this Agreement on not less than fifteen (15) days' prior
written notice to the Seller and, unless the Seller cures such
default in said fifteen (15) day period or the Purchaser is in
default hereunder, the Purchaser shall be entitled to either
(i) return of its Earnest Money Deposit and all
interest earned thereon as its sole remedy, subject to
retention for the purposes set forth in Section 2.03(c)
hereof applicable to the return of the Earnest Money
Deposit and receipt by the Seller of all (A) documents
(including all Financing Documents), rent rolls, surveys,
all other Due Diligence Items and all other items
delivered by the Seller to the Purchaser hereunder and
(B) inspections and reports (including supporting
materials) ordered or commissioned by or on behalf of the
Purchaser, and neither the Purchaser nor the Seller shall
have any further right or obligation hereunder, except
that the Purchaser's obligations under Sections 2.04,
2.05 and 2.07 hereof shall survive, or
(ii) specific performance of the Seller's
obligations hereunder to transfer the Project in
accordance with the terms hereof, plus reimbursement of
the Purchaser's out-of-pocket third party expenses up to
$75,000 incurred in connection with enforcement of this
Section 8.02(a)(ii).
(b) It is expressly agreed by the parties that the
Purchaser hereby waives all legal and equitable right to
remedies not herein specified.
Section 8.03. Extension of Closing Date. The scheduled
Closing Date shall be August 1, 1997 which date may be extended for
up to fifteen (15) days to accommodate the cure periods provided
herein; provided, however, notwithstanding on which date the
Closing shall actually occur the Surety Bond shall be returned to
the Surety marked "canceled and discharged" on February 1, 1998 (or
if February 1, 1998 is not a business day then on the next
succeeding business day) as provided in Section 2.03(b) hereof.
ARTICLE IX
CASUALTY OR CONDEMNATION
Section 9.01. Casualty or Condemnation.
(a) The Seller and the Purchaser agree that if prior to
the Closing Date all or any material portion of the Project is
damaged or destroyed by any cause or is taken by eminent
domain or condemnation or a proceeding for the taking by
eminent domain or condemnation of all or a portion of the
Project is commenced prior to the Closing Date, the parties
shall have the following rights exercisable within ten (10)
days of receipt of notice of the first date on which the cost
of repairing or restoring the damage and the amount of
insurance proceeds or awards available to pay such cost is
known; provided that in the case of a taking or other loss in
respect of which such notice cannot be delivered by five (5)
business days prior to the Closing Date the cost of repairing
or restoring such damage shall be assumed to be more than
FIFTY THOUSAND DOLLARS ($50,000) and the Seller and the
Purchaser shall have the respective rights specified in
Sections 9.01(a)(ii) and (iii):
(i) If the cost of repairing or restoring such
damage or the award for such taking is FIFTY THOUSAND
DOLLARS ($50,000) or less, neither party shall have the
right to terminate this Agreement,
(ii) If the cost of repairing or restoring such
damage is more than FIFTY THOUSAND DOLLARS ($50,000) as
estimated by the Seller, and the Seller notifies the
Purchaser that it elects to consummate the transaction
described herein by providing for the repair or
restoration of the Project, the Purchaser shall not have
the right to terminate this Agreement if the Seller
assigns the right to insurance proceeds to the Purchaser
and deposits funds (or a surety bond from the Surety) in
an amount sufficient to cover the reasonably anticipated
costs of such repair or restoration in excess of such
insurance proceeds, or
(iii) If the cost of repairing or restoring such
damage is more than FIFTY THOUSAND DOLLARS ($50,000) as
estimated by the Seller, and the Seller notifies the
Purchaser that it does not intend to make such repair or
restoration, the Purchaser, by written notice to the
Seller within ten (10) days of receiving the Seller's
notice-that it will not repair or restore, may elect to
terminate its obligation to purchase the Project or to
proceed with the purchase of the Project without any
obligation on the part of the Seller for any such repair
or restoration. Failure to deliver a notice of election
within such ten (10) day period shall be deemed an
election by the Purchaser to proceed with the purchase.
(b) If this Agreement is not terminated as provided in
Section 9.01(a), the Seller shall assign and deliver to
Purchaser at Closing all of the Seller's right and interest in
the award for such taking or the proceeds of any insurance for
such damage or destruction (except the Seller shall be
entitled to retain all insurance proceeds received in
connection with the loss of rents or business interruption for
the period up to and including the Closing Date). If,
alternatively, this Agreement is terminated as provided in
Section 9.01(a), all obligations of the parties under this
Agreement (except the obligations of the Purchaser under
Section 2.03(c) and Sections 2.04, 2.05 and 2.07 of this
Agreement) shall be terminated and the Seller shall promptly
return, subject to retention for the purposes and as set forth
in Section 2.03(c) of this Agreement, any portion of the
Purchase Price (including, without limitation, the Earnest
Money Deposit) theretofore deposited with the Seller or
otherwise paid by the Purchaser. Notwithstanding the
foregoing, unless the parties otherwise agree in writing, in
the case of any such damage or taking in excess of FIFTY
THOUSAND DOLLARS ($50,000), if the election and notice process
provided for in this Section is not effected in time for the
Closing to occur no later than August 1, 1997, either party
may terminate this Agreement on five (5) business days after
notice, with the parties having their respective rights to the
Earnest Money Deposit as provided in the preceding sentences.
ARTICLE X
MISCELLANEOUS
Section 10.01. Time is of the Essence. All times, whether
specified herein for the performance by the Seller or the Purchaser
of their respective obligations hereunder, are of the essence of
this Agreement.
Section 10.02. Notices. All notices, approvals or
disapprovals or other communications required or permitted to be
given by either party hereunder shall be in writing and shall be
personally delivered or by overnight express courier, postage
prepaid, addressed to the party to whom such notice is to be given
as follows:
If to the Purchaser: Walden Residential Operating
Partnership, L.P.
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Lock Box 45
Dallas, Texas 75240
Attention: Mr. Eric A. Calub
Fax No.: 972-788-1550
Telephone No.: 972-788-0510
With a copy to: Robin K. Minick
Munsch Hardt Kopf Harr & Dinan
1445 Ross Avenue
4000 Fountain Place
Dallas, Texas 75202
Fax No.: 214-855-7584
Telephone No.: 214-855-7500
If to the Seller: Windsor Park Apartments, Inc.
c/o Continental Casualty Company
333 South Wabash
CNA Plaza, 12 South
Chicago, Illinois 60685
Attention: Mr. Michael J. Woolf
Fax No.: 312-822-1323
Telephone No.: 312-822-4627
With a copy to: Sandra D. Wagman, Esq.
CNA Insurance Companies
333 South Wabash
CNA Plaza, 43 South
Chicago, Illinois 60685
Fax No.: 312-817-3302
Telephone No.: 312-822-7967
With a copy to: Susan E. Rollins
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603-4080
Fax No.: 312-701-2361
Telephone No.: 312-845-3762
Either party may change said address by notice in writing to the
other party of such change Notice personally delivered shall be
deemed given when delivered. Notice mailed by overnight express
courier shall be deemed given when delivered, unless delivery is
refused, in which event notice shall be deemed given upon the date
of attempted delivery.
Section 10.03. Binding Agreement. Upon the mutual execution
and delivery of this Agreement, this Agreement will become a
binding agreement between the parties hereto and shall constitute
the entire understanding between the parties with respect to the
transaction contemplated herein, and all prior agreements,
understandings, representations and statements, warranties,
undertakings, oral or written, are merged into this Agreement.
Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument
executed by the party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and
then only to the extent set forth in such instrument.
Section 10.04. Counterparts. This Agreement may be executed
in various counterparts, and each copy so executed shall constitute
an original and all such copies shall constitute one and the same
Agreement.
Section 10.05. No Assignments. The Purchaser shall not
assign, transfer or convey its interest in this Agreement without
the prior written consent of the Seller, which consent can be
withheld for any reason or no reason, at the discretion of the
Seller, and any such assignment, transfer or conveyance without
such written consent shall be void. Subject to the foregoing
provisions of this Section 10.05, this Agreement shall be binding
upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the parties hereto.
Section 10.06. No Recording. The Purchaser agrees it shall
not record this Agreement, or a memorandum thereof, and, in the
event the Purchaser does make such recording, then the Purchaser
shall be deemed in default hereunder, and at the option of the
Seller. The Purchaser's rights under this Agreement shall be null
and void and of no further force and effect, and the Seller and the
Surety shall have all of their rights under Section 8.01 hereof.
Section 10.07. Governing Law. This Agreement shall be
governed by and shall be construed and interpreted in accordance
with the laws of the State of Tennessee.
Section 10.08. Captions. The captions in this Agreement are
inserted for convenience of reference only and in no way define,
describe or limit the scope or intent of this Agreement or any of
the provisions hereof.
Section 10.09. Preparation of Agreement. This Agreement and
the Exhibits, Appendices and Schedules attached to this Agreement
have been reviewed by the Seller and the Purchaser and therefore
neither party shall have the burden of having the construction of
ambiguous provisions hereunder construed against them.
Section 10.10. Authorized by Law. The Purchaser and the
Seller mutually covenant to each other that the execution of this
Agreement is authorized by the laws, regulations and instruments
governing the Purchaser and the Seller, and the Seller and the
Purchaser hold each other harmless in the event that this Agreement
was executed without authority.
Section 10.11. Foreign Person. The Seller hereby warrants
and represents that theSeller is not a"foreign person" within the
meaning of Section 1445(f)(d) of the InternalRevenue Code of 1954,
as amended.
Section 10.12. Return of Information to Seller. If for any
reason the purchase of the Project is not consummated, the
Purchaser shall within five (5) days of such date when it is
determined that the purchase will not be consummated, return to the
Seller all copies of the materials, documents, agreements and
Information previously delivered to the Purchaser by the Seller or
which the Purchaser has in its possession.
Section 10.13. Indemnity Letter. In the event of any
inconsistency between this Agreement and the Indemnity Letter, the
provisions of this Agreement shall supersede the Indemnity Letter
and be controlling.
Section 10.14. Mutual Indemnification Regarding Determination
of Taxability. The Seller and the Purchaser (an "Indemnifying
Party") each hereby agree to indemnify, defend, save and hold
harmless each other and their respective parents, affiliates,
officers, employees, agents, and representatives (an "Indemnified
Party") from and against any loss, liability, claim, cause of
action or damage suffered by such Indemnified Party arising from a
Determination of Taxability (as defined in the Indenture) occurring
on or before February 1, 2006 and caused solely by such
Indemnifying Party's failure to lease the Project in compliance
with the requirements of the Regulatory Agreement while such
Indemnifying Party held legal title to the Project.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Sale
and Purchase
Agreement as of the day and year first above written.
PURCHASER:
WALDEN RESIDENTIAL OPERATING PARTNERSHIP,
L.P.
By: Walden Operating, Inc., a Delaware
corporation, its general partner
By:
Its:
SELLER
WINDSOR PARK APARTMENTS, INC.
By:
Its Vice President
Sandra D. Wagman
IN WITNESS WHEREOF, the parties hereto have executed this Sale
and Purchase
Agreement as of the day and year first above written.
PURCHASER:
WALDEN RESIDENTIAL OPERATING
PARTNERSHIP, L.P.
By: Walden Operating, Inc., a Delaware
corporation, its general partner
By:
Its:
SELLER:
WINDSOR PARK APARTMENTS, INC.
By:
Its Vice President
Sandra D. Wagman
A:\windsor.agr
1 RKM:jlw 8/1/97
REAL ESTATE SALES CONTRACT
THIS REAL ESTATE SALES CONTRACT (hereinafter referred to as
the "Contract") is entered into by and between 1990 CLOVER HILL
LIMITED PARTNERSHIP, a Texas limited partnership (hereinafter
referred to as "Seller") and WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation (hereinafter referred to as "Purchaser").
FOR AND IN CONSIDERATION OF the premises and the respective
covenants, agreements and obligations hereinafter set forth, Seller
and Purchaser do hereby agree as follows:
1.
SALE AND PURCHASE
1.1 Upon and subject to the terms and conditions hereinafter
set forth, Purchaser agrees to purchase from Seller, and Seller
agrees to sell to Purchaser, the following (hereinafter
collectively referred to as the "Property"):
(a) The real property being approximately 8.7066 acres
of the northeast corner of Lot 28, J.M. Henderson Addition, an
Addition to the City of Arlington, Tarrant County, Texas which
real property is more particularly described on Exhibit "A"
attached hereto, and incorporated herein, together with all
rights, ways, privileges and appurtenances pertaining thereto,
including any right, title and interest of Seller in and to
any streets, alleys or rights-of-way adjoining said real
property (hereinafter collectively referred to as the "Real
Property");
(b) All improvements and fixtures located on the Real
Property, including, without limitation, the buildings located
thereon, which are more commonly referred to as Clover Hill
Apartments located at 903 Road to Six Flags West, Arlington,
Tarrant County, Texas (hereinafter referred to as the
"Improvements");
(c) All personal property of every kind and character
owned by Seller and situated on or used in connection with the
Real Property and Improvements (hereinafter collectively
referred to as the "Personal Property");
(d) All leases and rental agreements with tenants of the
Improvements (hereinafter collectively referred to as the
"Tenant Leases"), and all security deposits paid by the
Tenants in connection with the Tenant Leases (hereinafter
collectively referred to as the "Tenant Deposits");
(e) All management, employment, maintenance, service,
equipment, garbage disposal, guard, security, pest control,
and all other agreements, contracts, and leases (except Tenant
Leases) concerning the operation, use, management, maintenance
or lease of the Real Property, Improvements, and/or Personal
Property, or any portion thereof (hereinafter collectively
referred to as the "Collateral Agreements").
2.
PURCHASE PRICE
2.1 The Purchase Price for the Property (hereinafter referred
to as the "Purchase Price") shall be Six Million Six Hundred Twenty
Five Thousand and 00/100 Dollars ($6,625,000.00), payable all in
cash at Closing.
3.
EARNEST MONEY
3.1 Upon execution of this Contract, Purchaser shall deposit
with American Title Company located at 4949 Westgrove, Suite 200,
Dallas, Texas 75248, to the attention of Ann Sutton (hereinafter
referred to as the "Title Company"), cash in the amount of One
Hundred Thousand Dollars ($100,000.00) (the "Initial Deposit") to
assure prompt observance of this Contract by Purchaser.
3.2 On the date of the expiration of the Inspection Period
(as that term is defined in Paragraph 6.1 herein) and if Purchaser
has not terminated this Contract pursuant to Paragraph 6.1 herein,
then Purchaser shall deposit an additional One Hundred Thousand
Dollars ($100,000.00) as earnest money with the Title Company (the
"Additional Deposit"). The Additional Deposit together with the
Initial Deposit shall be collectively referred to herein as the
"Earnest Money Deposit".
3.3 The Earnest Money Deposit shall be deposited by the Title
Company and placed in an interest bearing account. All interest
accruing thereon shall be for the benefit of Purchaser.
3.4 The Earnest Money Deposit shall apply to the Purchase
Price at Closing.
4.
TITLE STATUS
4.1 Within ten (10) days after the Effective Date (as
hereinafter defined in Paragraph 14.11), Seller shall deliver to
Purchaser a Commitment for Title Insurance, Texas standard form
(hereinafter referred to as the "Commitment"), together with copies
of all instruments and documents referred to therein as exceptions
to title covering the Property, in the amount of the Purchase
Price, in favor of Purchaser, pursuant to which the Title Company
agrees, subject to the provisions thereof, to issue at Closing an
Owner Policy of Title Insurance (hereinafter referred to as the
"Owner Policy") to Purchaser.
4.2 Purchaser shall have fifteen (15) days after the latest
to be received of the Commitment, legible copies of all exception
matters referenced in the Commitment and the survey (as hereinafter
defined in Paragraph 5.1), to provide to Seller written objections
to the status of title to the Property. If such written objections
have not been received by Seller prior to the end of the said
fifteen (15) day period, Purchaser shall be deemed to have
conclusively accepted and approved the status of title to the
Property, as shown by the Commitment. If Purchaser does timely
deliver to Seller such written objections, Seller shall have ten
(10) days from the receipt of the objections to attempt to cure
such objections. If Seller is unable or unwilling to cure such
objections within such ten (10) day period, Purchaser may either
(i) waive such objections in writing and purchase the Property
notwithstanding such objections, (ii) extend Seller additional
time, not later than the date of Closing, to cure such objections
or (iii) terminate this Contract by written notice to Seller, in
which event the Earnest Money Deposit shall be returned to
Purchaser on demand, and neither Seller nor Purchaser shall have
any further obligations hereunder.
4.3 Seller shall deliver to Purchaser, at Closing, a Special
Warranty Deed (hereinafter referred to as the "Deed") conveying fee
simple title to the Property to Purchaser, subject to the
exceptions to title contained in the Commitment approved, or
waived, by Purchaser pursuant to Paragraph 4.2 hereof.
5.
SURVEY
5.1 Seller shall provide to Purchaser, within five (5) days
after the Effective Date, Seller's most recent survey (hereinafter
referred to as the "Survey") of the Property prepared by a licensed
surveyor or professional engineer. Upon the expiration of the
Inspection Period, if Purchaser has not terminated this Contract,
Seller will provide Purchaser with an updated and recertified
survey, which survey shall be in form and content sufficient to
delete the standard survey exception from the Owner Policy.
Notwithstanding the foregoing, if Purchaser desires to have a
current survey prior to the expiration of the Inspection Period,
Purchaser shall notify Seller of said desire and Seller will order
the updated Survey for Purchaser, however, Purchaser will pay for
the cost of the updated Survey if Purchaser does not close this
transaction.
5.2 Purchaser shall provide to Seller, in writing, within
fifteen (15) days after receipt of the latest to be received of the
Commitment, legible copies of all exception matters referenced in
the Commitment and the Survey, any objections to the Survey
referred to in Paragraph 5.1 hereof. If such written notice has
not been received by Seller prior to the end of said fifteen (15)
day period, Purchaser shall be deemed to have conclusively accepted
and approved the Survey. If Purchaser does timely deliver to
Seller such written objections, Seller shall have ten (10) days
from receipt of the objections to attempt to cure such objections.
If Seller is unable or unwilling to cure such objections within
such ten (10) day period, Purchaser may either: (i) waive such
objections in writing and purchase the Property notwithstanding
such objections, or (ii) terminate this Contract by written notice
to Seller, in which event the Earnest Money Deposit shall be
returned to Purchaser and neither Seller nor Purchaser shall have
any further obligations hereunder. Upon receipt of the updated and
recertified Survey, Purchaser shall have five (5) days to object in
writing to any material items which appear on the Survey for the
first time. If Purchaser so objects, Seller shall have until
Closing to cure the objections or notify Purchaser of Seller's
unwillingness to cure. If Seller is unable or unwilling to cure
such material objections, Purchaser shall either: (i) waive such
objections in writing and purchase the Property notwithstanding
such objections, or (ii) terminate this Contract by written notice
to Seller, in which event the Earnest Money Deposit shall be
returned to Purchaser and neither Seller nor Purchaser shall have
any further obligations hereunder.
6.
INSPECTION AND EXAMINATION
6.1 Purchaser shall have until the expiration of the forty-
fifth (45th) day after the Effective Date (hereinafter referred to
as the "Inspection Period"), during which time, Purchaser, or
Purchaser's authorized agent or representative, shall be entitled
to enter upon the Property for the purpose of inspecting, examining
and making tests upon the Property. If Purchaser, in Purchaser's
sole discretion, is dissatisfied with the results of Purchaser's
inspection of the Property, Purchaser may, by written notice
delivered to Seller prior to the expiration of the Inspection
Period, terminate this Contract in which event the Earnest Money
Deposit shall be returned to Purchaser on demand, and neither
Seller nor Purchaser shall have any further obligations hereunder.
If Purchaser does not terminate this Contract by delivery of such
written notice prior to the expiration of the Inspection Period,
Purchaser shall be conclusively deemed to have accepted the
Property in its present condition.
6.2 Purchaser shall have the right to obtain an updated
Environmental Report. In the event such Environmental Report is
not acceptable to Purchaser, in Purchaser's reasonable discretion,
Purchaser shall have the right to terminate the Contract prior to
the expiration of the Inspection Period and receive a full refund
of the Earnest Money Deposit. Purchaser agrees to commission this
study within fifteen (15) days from the Effective Date.
6.3 To facilitate Purchaser's inspection of the Property,
Seller shall provide to Purchaser, at Seller's sole expense, within
five (5) days from the Effective Date, the following:
(a) Access to obtain copies of all tenant leases, at
Purchaser's expense, and a Rent Roll, herein so called, for
the Property, prepared as of the first day of the month in
which this Contract is executed. Additionally, Seller will
provide Purchaser access to Seller's records regarding expense
and income in order to enable Purchaser to complete an audit
of such records;
(b) True copies of the most recent tax statements (both
real estate and personal property taxes) on the Property;
(c) An accurate schedule (the "Operating Schedule" )
reflecting, with respect to the Property for the twelve (12)
month period preceding the month of execution of this Contract
(i) all operating expenses and capital expenditures of the
Property (ii) the aggregate rent collected from tenants of the
Property during such period;
(d) A true and complete inventory of all furnishings,
fixtures, equipment and other personal property located upon
and/or comprising the tangible items used in connection with
the Property;
(e) A true and complete list of all service and other
agreements (the "Third Party Agreements") pertaining to the
Property on which Seller is obligated showing: (i) the names
of the parties to each agreement, (ii) the service rendered or
to be rendered under each agreement, (iii) the compensation
payable by Seller under each agreement, and (iv) the term and
expiration date of each agreement;
(f) Copies of all certificates of occupancy, licenses
and permits required by law and issued by all governmental
authorities having jurisdiction, if any, which may be in
Seller's possession;
(g) All environmental, engineering, pest control and
other professional reports in the possession of Seller;
(h) A copy of a tenant rent roll for the Property,
showing actual occupancies, rentals, security deposits,
assigned parking spaces (if any), free rent, rent concessions,
tenant incentives, lease terms, unit numbers, and unit types.
A current schedule of rental rates for each type of unit
within the Property, and such other pertinent information
regarding the tenant leases and rental units as is reasonably
available to Seller;
(i) A copy of the standard form of tenant lease;
(j) A copy of all utility bills for the Property for the
previous twelve (12) months, excluding individually metered
tenant utility bills; and a letter from each of the utility
providers stating that the utilities are available to the
Property; and
(k) Copies of any pertinent litigation of safety related
issues with respect to the Property.
6.4 Purchaser agrees that if for any reason the Closing is
not consummated, Purchaser will promptly return to Seller all
materials furnished to Purchaser pursuant to Paragraph 6.2.
6.5 Purchaser shall have the right to approve or disapprove
during the Inspection Period any of the Third Party Agreements
described in Paragraph 6.2(e) above existing on the Effective Date.
Seller will not enter into any Third Party Agreements after the
Effective Date that do not contain a clause that grants to Seller
the right to terminate such agreement upon thirty (30) days notice.
Any Third Party Agreement not acceptable to Purchaser must have a
thirty (30) day cancellation clause and Seller will notify such
third party of Purchaser's desire to terminate such agreement. If
such Third Party Agreement cannot be terminated within thirty (30)
days, Purchaser must purchase the Property subject to the terms of
such Third Party Agreement or terminate the Contract.
7.
CLOSING
7.1 The date of closing (hereinafter referred to as the
"Closing Date") shall be, and the event of closing (hereinafter
referred to as the "Closing"), shall occur on or before the
thirtieth (30th) day following the expiration of the Inspection
Period. Notwithstanding the foregoing, if as of the Closing Date
Seller has not received in its possession satisfactory documentary
evidence from the United States Internal Revenue Service absolving
Seller of the obligation (and related liability) of withholding a
portion of the sales proceeds in accordance with Section 1445 of
the Internal Revenue Code, as amended (the "Foreign Withholding Tax
Certificate"), then the Closing Date shall be extended to the
earlier of: (1) the date of the receipt of the Foreign Withholding
Tax Certificate or (2) October 15, 1997.
7.2 If the Closing does not occur by October 15, 1997,
Purchaser, at its election, may: (1) terminate the Contract, in
which event the Earnest Money Deposit shall be returned to the
Purchaser or (2) extend the Closing Date to a date mutually
agreeable to Seller and Purchaser.
7.3 The Closing shall take place in the offices of the Title
Company, at such hour as Seller and Purchaser may mutually agree,
but otherwise at 10:00 a.m., local time.
7.4 All recordation fees and closing cost shall be borne by
Seller and Purchaser in accordance with custom in the area in which
the Property is situated. Provided, however, Seller shall pay for
the Owner Policy and Purchaser shall pay the extra premium for the
survey deletion in connection with the Title Policy.
7.5 Real and personal property taxes for the then current tax
year shall be prorated to the Closing Date. The proration shall be
based on the taxes paid for the tax year 1996. No future
adjustments for real and personal property taxes shall be made
between the parties.
7.6 In addition to the taxes, all rents paid under the tenant
leases, expenses pursuant to the Third Party Agreements and
municipal utilities shall be prorated as of the Closing Date.
Provided, however, Seller shall be entitled to the full amount of
any deposits then held by any utility companies and the amount
thereof shall be an addition to the Purchase Price unless Seller
elects, at its sole option, to obtain a refund of any deposit
directly from any utility company holding same, in which event
Purchaser shall be required to replace any such deposit if
requested or required by the respective utility company. Any
delinquent rents for the current month collected after Closing
shall be delivered to Seller, in Seller's pro rata share. All
tenant deposits paid to Seller under the Tenant Leases as reflected
on the Rent Roll shall be paid to Purchaser at Closing.
7.7 At Closing, Seller shall deliver to Purchaser the
following documents which shall be duly executed and, where
appropriate, acknowledged, together with any and all items or
instruments necessary or appropriate thereto:
(a) The Deed;
(b) The Owner Policy, containing no exception to title
other than (i) the standard printed exceptions in Schedule B
to the Commitment, the tax exception shall refer to taxes for
the year 1997 and subsequent years, and subsequent assessments
for prior years due to change in land usage or ownership and
(ii) those exceptions to title contained in Schedule B to the
Commitment which are approved by Purchaser or waived by
Purchaser pursuant to Paragraph 4.2 hereof;
(c) An Affidavit required pursuant to Section 1445 of
the Internal Revenue Code stating, under penalties of perjury,
that Seller nor any other party so swearing, is a foreign
person within the meaning of Section 1445 of the Internal
Revenue Code;
(d) A Bill of Sale transferring to Purchaser all of the
Personal Property including but not limited to, tangible
personal property and Third Party Agreements;
(e) An Assignment of Tenant Leases and Deposits
assigning all of Seller's right, title and interest in and to
all Tenant Leases and security deposits, and other leases
covering the Property. Seller shall also deliver to Purchaser
the original leases, security deposit agreements, insurance
policies and Third Party Agreements to Purchaser; and
(f) A Tenant Notification Agreement, dated the date of
Closing, executed by Seller, notifying the tenants of the
Property that the Property has been sold to Purchaser.
7.8 At Closing, Purchaser shall deliver to Seller the cash
funds referred to in Paragraph
2.1 hereof and the statutory notice to tenants as required by
Section 92.105 (b) of the Texas Property Code.
7.9 Possession of the Property shall be delivered to
Purchaser at Closing.
8.
SELLER'S REPRESENTATION & WARRANTIES AND COVENANTS
8.1 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser the following:
(a) Seller has or will have at Closing good,
indefeasible, and fee simple title to the Property, free and
clear of all mortgages, liens, encumbrances, leases,
tenancies, security interest, covenants, conditions
restrictions, rights-of-way, easements, judgments or other
matters affecting title other than those shown on Schedule B
of the Commitment and otherwise permitted herein.
(b) This Contract has been duly authorized and executed
by Seller and is a valid and binding obligation of, and is
enforceable, in accordance with its terms, against Seller.
The documents delivered to Purchaser at Closing will be duly
authorized and executed by Seller and will be a valid and
binding obligation of, and will be enforceable in accordance
with their terms, against Seller.
(c) There is no pending or threatened condemnation or
similar proceeding affecting the Property or any portion
thereof, or pending public improvements, liens, or special
assessments, in, about or outside the Property which will in
any manner affect the Property or access to the Property, nor
any legal action of any kind or character whatsoever affecting
the Property which will in any manner affect Purchaser upon
the consummation hereof, nor is any such action presently
contemplated.
(d) To the best of Seller's knowledge, Seller has
complied with all applicable laws, ordinances, regulations,
statutes, rules and restrictions pertaining to and affecting
the Property. Performance of this Contract will not result in
any breach of, or constitute any default under, or result in
imposition of, any lien or encumbrance upon the Property under
any agreement or other instrument to which Seller is a party
or by which Seller or the Property might be bound.
(e) Seller will operate and manage the Property in
substantially the same manner it has been operated and managed
and will maintain the physical condition of the Property in
the same or better condition as it presently exists to the
date of Closing, reasonable wear and tear excepted.
(f) The rent roll delivered pursuant to Paragraph 6.2(h)
is the Current Rent Roll. Not earlier than five (5) days prior
to Closing, Seller shall deliver a Revised Rent Roll to
Purchaser, certified by Seller in writing as true and correct
which Revised Rent Roll shall set forth the following:
(i) the name of each tenant;
(ii) the lease commencement and expiration dates;
(iii) the amount of any security deposits;
(iv) a list of vacant space;
(v) the size and type of each vacant area; and
(vi) the amount and description of any concessions.
(g) Except as expressly set forth in the Rent Roll:
(i) To the best of Seller's knowledge, all of the
information contained on the Rent Roll is, and will
be, true, correct and complete as of its date.
(ii) No rent under any Tenant Lease has been, or
prior to Closing will be, prepaid for a period in
excess of thirty (30) days.
(iii) No tenant has any right of first refusal
or option with respect to the leasing of any
portion of the Property.
(iv) No one, including any tenant, has any option
or right of first refusal to purchase the Property
or any part thereof.
(v) To the best of Seller's knowledge, there are
no oral agreements with anyone, including tenants,
with respect to the Property or any portion
thereof.
(vi) All of the present Tenant Leases for rental
space in the Property are in writing, on a standard
form (which form has been provided to Purchaser)
and duly executed by all parties thereto, and, to
the best of Seller's knowledge, are (A) in full
force and effect and (B) valid and binding
agreements of, and fully enforceable in accordance
with their terms against, the tenants.
(vii) The Tenant Leases will not be amended in
any way after the Effective Date, other than in the
ordinary course of business, without the prior,
written consent of Purchaser, which consent shall
not be unreasonably withheld. Purchaser, unless it
otherwise shall advise Seller in writing within
five (5) days following Seller's request for such
consent, shall be deemed to have consented to any
such amendment.
(viii) Except as stated in the Rent Roll, there
are no uncured defaults on the part of any party to
any of the Tenant Leases, and Seller is in full
compliance with all of lessor's obligations
thereunder.
(ix) None of the rentals due, or to become due
under such leases will be assigned, encumbered, or
subject to any liens at the Closing other than the
Permitted Exceptions.
(x) Except as disclosed to Purchaser by Seller in
writing, at the time of Closing, all tenants will
be paying charges for electricity consumed in their
space, including heating and air conditioning, on
an individually metered basis.
(h) The Operating Statement delivered pursuant to
Paragraph 6.2(c) is the most recent monthly statement of
income and expense in connection with the operation and
maintenance of the Property. The balance of such statements
for the preceding months shall be made available to Purchaser
promptly upon request.
(i) No action has been taken with respect to work
performed or delivery of material which would give rise to a
lien on the Property. At Closing, there will be no claim in
favor of any person or entity which is or could become a lien
on the Real Property, the Improvements, or the Personal
Property, arising out of the furnishing of labor or materials,
other than claims or liens arising from acts of Purchaser;
there will be no unpaid assessments against the Property,
except for Property taxes assessed but not due and payable at
the time of Closing; and there will be no claim in favor of
any person or entity (including the present management
company) for any unpaid commissions or fees for leasing of the
Property. In the event of any such claims at Closing, Seller,
at its option and in lieu of the foregoing, either may: (i)
establish with the Title Company an escrow of funds in an
amount and upon conditions reasonably acceptable to Seller and
Purchaser, or (ii) provide a bond in favor of Purchaser or
Title Company (or Title Company's underwriter) in such amount,
upon such conditions and for such purposes as may be
satisfactory to Purchaser, Seller and Title Company, in either
case for the purpose of providing for such claims and/or
inducing the Title Company to insure Purchaser's title to the
Property free and clear of such claims.
(j) Seller agrees that benefits or compensations accrued
prior to Closing, and due or claimed to be due either before
or after Closing, to employees or former employees of Seller
shall constitute obligations of Seller only, and Seller agrees
to indemnify and hold Purchaser harmless from all such
obligations and claims.
(k) Seller will not borrow any money or do, or fail to
do, any other act or thing which would cause the Real
Property, the Improvements or any Personal Property to become
pledged or otherwise utilized as collateral or in any way
stand as security for any indebtedness or obligation.
(l) All ad valorem taxes and personal property taxes,
together with all assessments or other charges for utilities,
roads or the widening of such roads, or any other fees imposed
by any governmental authority with respect to the Property,
have been paid in full. The ad valorem taxes, personal
property taxes and special assessments pertaining to the
Property for calendar year 1996 were in the aggregate amount
of $123,108.00. Seller has received a Notice of Assessed
Valuation ("NOAV") establishing the ad valorem taxes for the
Property for 1997 to be $122,216.93. In the event Seller
receives any further invoices, notices or assessments that
should be included in the figure listed in this Subparagraph
(1), Seller will provide copies of same to Purchaser on or
prior to the Closing Date.
(m) The representations, warranties and covenants of the
Seller contained in this Agreement or in any document
delivered to Purchaser pursuant to the terms of this Agreement
(whether in this Section 8 or elsewhere): (i) shall be true
and correct in all material respects and not in default at the
time of Closing, just as though they were made at such time,
and Seller shall deliver to Purchaser, at Closing, an
affidavit to that effect. However, it is expressly agreed and
understood that the representations, warranties, and covenants
will merge with the Deed and will not survive the Closing of
this transaction.
(n) All rental units shall be in "market ready",
rentable condition as of the date of Closing. Provided,
however, Seller and Purchaser acknowledge that rental units
that are vacated within five (5) business days prior to the
date of Closing, will be in varying conditions of "make-ready"
for leasing, as is ordinary in Seller's course of business.
As to any units that are not in "market ready", rentable
condition as of the date of Closing, Purchaser and Seller
understand and agree that Purchaser shall be entitled to a
credit against the Purchase Price at Closing an amount equal
to the amount agreed upon at Closing by Purchaser and Seller
as being required to put in "market ready", rentable condition
any units that are not in such condition as of the date of the
Closing. Notwithstanding the foregoing, Seller will not be
required to pay an amount in excess of $500.00 per unit not in
"market ready", rentable condition. Purchaser shall have the
right to re-inspect the Property during the period commencing
not earlier than five (5) days prior to the Closing and ending
on the Closing solely for purposes of verifying the
maintenance of the Property in accordance with this Contract.
(o) To the best of Seller's knowledge, no Hazardous
Materials are located on or about the Property. For purposes
of this Paragraph the phrase, "To the best of Seller's
knowledge", is strictly limited to the information contained
in an environmental report prepared in connection with
Seller's acquisition of the Property. Seller agrees to
provide Purchaser with a copy of such environmental report.
(p) To the best of Seller's knowledge, the Improvements
and Personal Property are in good working order and are
structurally sound. For purposes of this Paragraph, the
phrase, "To the best of Seller's knowledge", is strictly
limited to the information contained in an engineer's report
prepared in connection with Seller's acquisition of the
Property. Seller agrees to provide Purchaser with a copy of
such engineer's report.
(q) Except as otherwise specifically stated in this
Contract, Seller shall disclose to Purchaser any and all
information Seller may have in its possession regarding the
following, but Seller hereby specifically disclaims any
warranty, guaranty or representation, oral or written, past,
present or future, of, as to, or concerning: (i) the nature
and condition of the Property, including, "without limitation,
the water, soil and geology, and the suitability thereof and
of the Property for any and all activities and uses which
Purchaser may elect to conduct thereon, and the existence of
any environmental hazards or conditions thereon (including the
presence of asbestos) or compliance with all applicable laws,
rules or regulations; (ii) except for any warranties contained
in the Deed to be delivered by Seller at the Closing, the
nature and extent of any right-of-way, lease, possession,
lien, encumbrance, license, reservation, condition or
otherwise; and (iii) the compliance of the Property or its
operation with any laws, ordinances or regulations of any
government or other body. Purchaser acknowledges that it will
inspect the Property and, except for the specific
representations, warranties and covenants contained herein,
Purchaser will rely solely on its own investigation of the
Property and not on any information provided or to be provided
by Seller. Purchaser further acknowledges that the
information provided and to be provided with respect to the
Property was obtained from a variety of sources and Seller:
(i) has not made any independent investigation or verification
of such information; and (ii) does not make any
representations as to the accuracy or completeness of such
information, except for the specific representations,
warranties and covenants contained herein. THE SALE OF THE
PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS" BASIS,
AND PURCHASER EXPRESSLY ACKNOWLEDGES THAT, IN CONSIDERATION OF
THE AGREEMENTS OF SELLER HEREIN, EXCEPT AS OTHERWISE SPECIFIED
HEREIN, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IN
RESPECT OF THE PROPERTY. NOTHING IN THIS PARAGRAPH SHALL BE
CONSTRUED OR DEEMED TO CONSTITUTE OR CREATE AN AFFIRMATIVE
OBLIGATION OF SELLER TO UNDERTAKE ANY ACTION OR TO INCUR ANY
EXPENSE IN PROCURING ANY INFORMATION OR REPORT RELATING TO
SELLER'S OBLIGATIONS HEREUNDER.
8.2 Notwithstanding the provisions of Paragraph 8.1, if,
within ten (10) days from the date this Contract is fully executed,
Seller gives written notice that any representation or warranty
contained in this Paragraph 8.1 is incorrect, Seller will not be
bound by such representation or warranty. However, within ten (10)
days after Seller's delivery of such notice to Purchaser, Purchaser
may terminate this Contract (in which event the Earnest Money
Deposit shall be immediately returned to Purchaser).
9.
DEFAULT
9.1 In the event that Purchaser shall fail to purchase the
Property in accordance with the terms and conditions of this
Contract, or otherwise default in the performance of Purchaser's
obligations pursuant to this Contract, for any reason whatsoever
other than Seller's default or as otherwise permitted hereunder,
Seller shall be paid and shall retain the Earnest Money Deposit as
liquidated damages as Seller's sole remedy hereunder.
9.2 In the event that Seller shall default in the performance
of Seller's obligations hereunder, for any reason whatsoever other
than Purchaser's default or as otherwise permitted hereunder, as
Purchaser's only remedies hereunder, Purchaser may, at Purchaser's
option: (i) purchase the Property notwithstanding such default
pursuant to the remaining terms and provisions of this Contract, in
which event such default shall be deemed waived, (ii) terminate
this Contract, in which event Purchaser shall be entitled to return
of Purchaser's Earnest Money Deposit, and neither Seller nor
Purchaser shall have any further obligation hereunder, or (iii)
seek specific performance of this Contract.
10.
CASUALTY LOSS
10.1 If, prior to the date of the Closing, all or any material
portion of the Property is either destroyed, damaged by fire or
other casualty, Purchaser shall have the right to cancel this
Contract by written notice to Seller and the Title Company within
ten (10) days after delivery to Purchaser of notice of the
occurrence of any such event (and the Closing shall be extended
such additional time as is necessary to make such election).
Provided, however, failure to so elect shall be deemed an election
by Purchaser to complete Purchaser's purchase obligations
hereunder. If, upon any such occurrence, Purchaser elects or is
deemed to have elected to complete Purchaser's purchase obligations
hereunder, Purchaser shall be entitled to receive all insurance
proceeds, as compensation for such loss and Seller shall, in this
regard, execute all documents and perform such acts as shall be
necessary or proper for Purchaser to receive such proceeds. In the
event Purchaser elects to complete the purchase of the Property and
accept an assignment of the insurance proceeds, Seller agrees to
pay to Purchaser an amount equal to the insurance policy
deductible.
11.
BROKER FEES AND COMMISSIONS
11.1 Seller and Purchaser each hereby warrant and represent to
the other that all claims for brokerage fees, commissions or
finders' or other similar fees in connection with the transactions
contemplated in this Contract, insofar as such claims shall be
based on agreements made by either of the parties, shall be paid by
the party making such agreements, and the party hereto making such
agreement does hereby indemnify and hold the party hereto which
does not make such agreement harmless from and against all
liability, loss, cost, damage or expense (including but not limited
to reasonable attorney's fees and costs of litigation) which the
party hereto which does not make such agreement shall suffer or
incur because of any claim by any broker, agent or finder claiming
any compensation pursuant to such agreement with respect to the
sale and purchase of the Property or the execution of this
Contract. The provision of this Paragraph 11.1 shall survive
Closing.
11.2 Seller shall pay to Windsor Advisors, L.C. d/b/a Windsor
Realty Advisors (R.J. Hall) (hereinafter referred to as "Realtor"),
a commission in cash equal to three percent (3%) of the Purchase
Price. Provided, however, such commission shall be payable only in
the event that the sale of the Property as contemplated in this
Contract is consummated.
12.
NOTICE
12.1 All notices, objections and approvals referred to in this
Contract must be given in writing and will be effective on the day
the notice is: (i) actually received by the addressee thereof after
being sent by overnight delivery (such as Federal Express) or
having been personally hand delivered by the sender or (ii)
deposited in the United States Mail, postage prepaid, registered or
certified mail, return receipt requested, and properly addressed to
the party to receive said notice, or (iii) sent to the addressee by
telecopier, facsimile or similar transmitting machine. The notice
addresses of the parties shall be those specified below unless
modified in writing by the appropriate party:
SELLER:
1990 Clover Hill Limited Partnership
4002 Beltline Road, Suite 110
Addison, Texas 75244
(972) 980-6836
(972) 980-0384 (Facsimile)
With a copy to:
Mr. R. Steven Jones
Hesse & Jones, P.C.
4949 Westgrove, Suite 200
Dallas, Texas 75248
(972) 733-3117
(972)733-3119 (Facsimile)
PURCHASER:
Walden Residential Properties, Inc.
5400 LBJ Freeway
Suite 400, L.B. 45
Dallas, Texas 75240
(214) 788-0510
(214) 788-1550 (Facsimile)
With a copy to:
Ms. Robin Minick
Munsch, Hardt, Kopf, Harr & Dinan
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202-2790
(214) 855-7500
(214)855-7584 (Facsimile)
13.
CONTINGENCY
13.1 This Contract is expressly subject to (and Seller's
obligation to close is expressly contingent upon) the provisions of
Addendum Eight of the First Deed of Trust and Security Agreement
recorded in Volume 10172, Page 1962 of the Deed of Trust Records,
Tarrant County, Texas, executed by Seller which grants General
Electric Capital Corporation a "First Option to Purchase" the
Property. Seller will use Seller's best efforts to secure within
ten (10) days from the Effective Date, the waiver of General
Electric Capital Corporation of its First Option to Purchase. In
the event General Electric Capital Corporation exercises the First
Option to Purchase in accordance with the terms of the above
described deed of trust, this Contract shall terminate and the
Earnest Money Deposit shall be returned to Purchaser and neither
Purchaser nor Seller shall have any further obligations to the
other.
13.2 Seller's obligation to close this Contract is further
expressly contingent upon Seller using Seller's best efforts to
obtain the approval and consent of any lienholder to the herein
proposed sale and the agreement of such lienholder to release any
and all liens or security interests it holds with regard to the
Property on or before ten (10) days from the Effective Date. In
the event Seller is unable to obtain the approval within the above
described time period, this Contract shall terminate and the
Earnest Money Deposit shall be returned to Purchaser and neither
Purchaser nor Seller shall have any further obligations to the
other.
14.
MISCELLANEOUS
14.1 The execution of this Contract by the first party
constitutes an offer to buy or sell the Property. Unless this
Contract is accepted by the other party within five (5) working
days from the execution of this Contract by the first party, and a
fully executed copy is delivered to the Title Company, the offer of
this Contract shall be automatically revoked and terminated.
14.2 This Contract and all of the terms, provisions and
covenants contained herein shall apply to, be binding upon and
inure to the benefit of the parties hereto, their respective
successors and assigns.
14.3 The captions employed in this Contract are for
convenience only and are not intended in any way to limit or
amplify the terms and provisions of this Contract.
14.4 Time is of the essence of this Contract.
14.5 This Contract shall be construed in accordance with the
laws of the State of Texas,
and venue for any cause of action arising hereunder shall lie in
Dallas County, Texas.
14.6 This Contract contains the entire agreement of the
parties with respect to the subject matter hereof, and shall not be
varied, amended, or superseded except by written agreement between
the parties hereto.
14.7 This Contract may be executed in counterparts, each of
which shall constitute an original and all which taken together
shall constitute an original and all which taken together shall
constitute a single agreement.
14.8 The Purchaser hereby acknowledges that, at the time of
the execution of this Contract, the undersigned Realtor advised the
Purchaser by this writing that the Purchaser should have the
abstract covering the real estate which is the subject of this
Contract examined by an attorney of the Purchaser's own selection
or that the Purchaser should be furnished with or obtain a policy
of title insurance.
14.9 The Realtor, its agents and/or employee's may act in the
dual capacity of broker and undisclosed principal in the
transaction described hereunder.
14.10 If any date of significance hereunder falls upon a
Saturday, Sunday or recognized Federal holiday, such date will be
deemed moved forward to the next day which is not a Saturday,
Sunday or recognized Federal holiday. The terms "working day"
shall mean days elapsed exclusive of Saturday, Sunday or recognized
Federal holidays.
14.11 This Contract (or a counterpart hereof) must be
executed by Purchaser and Seller and a fully executed copy hereof
(or executed counterparts) deposited with the Title Company not
later than five (5) days after execution hereof by the latter of
Purchaser or Seller (the actual date of deposit being herein
referred to as the "Effective Date"), or this Contract shall become
null, void and of no effect whatsoever.
SELLER:
1990 CLOVER HILL LIMITED PARTNERSHIP,
a Texas limited partnership
Date Executed by Seller By: C.H. Apartments, Inc.,
a Texas corporation
Its: Managing Partner
By:
Ron E. Collins
President
PURCHASER:
WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation
Date Executed by Purchaser By:
Printed Name:
Title:
REALTOR:
WINDSOR REALTY ADVISORS, INC.
By:
R. J. Hall
ACCEPTANCE BY TITLE COMPANY
The undersigned title company, AMERICAN TITLE COMPANY,
referred to in the foregoing Contract as the "Title Company",
hereby acknowledges receipt of a fully executed copy (or executed
counterparts) of the foregoing Contract and $100,000.00 of the
Earnest Money Deposit referred to therein, and accepts the
obligations of the Title Company as set forth therein.
By:
Date:
"Effective Date"
EXHIBIT A
DESCRIPTION
BEGINNING at an iron rod found at the northeast corner of Lot 28 of
J M Henderson Addition, an addition to the City of Arlington,
Tarrant County, Texas according to the Plat filed at Volume 388-
159, Page 37 of the plat records of Tarrant County, Texas, said
point also being in the South Right-of-Way line of Interstate
Highway 30;
THENCE South 00 degrees 05 minutes 09 seconds West a distance of
638.37 feet to a point for corner in the North line of Road to Six
Flags West;
THENCE North 89 degrees 44 minutes 09 seconds West and along said
North line of Road to Six Flags West, a distance of 618.96 feet to
a point for corner;
THENCE North 02 degrees 24 minutes 34 seconds East a distance of
636.46 feet to a point for corner in the South Right-of-Way line of
Interstate Highway 30;
THENCE North 89 degrees 57 minutes East and along said South Right-
of-Way line of Interstate Highway 30, a distance of 593.14 feet to
the point of beginning and containing 8.7066 acres of land more or
less.
Exhibit 11.1
WALDEN RESIDENTIAL PROPERTIES, INC.
COMPUTATION OF NET INCOME PER SHARE (1) (As Restated)
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income before extraordinary
item and minority
interests. . . . . . . . . . $ 6,171 $ 5,487 $18,591 $14,124
Extraordinary loss on debt
extinguishment . . . . . . . -- (488) -- (1,072)
------- ------- ------- -------
Income before minority
interests. . . . . . . . . . 6,171 4,999 18,591 13,052
Income allocated to minority
interests. . . . . . . . . . (397) (387) (1,197) (1,329)
------- ------- ------- -------
Net income. . . . . . . . . . . 5,774 4,612 17,394 11,723
Preferred distributions . . . . (3,282) (1,022) (9,906) (1,364)
------- ------- ------- -------
Net income available to common
stockholders . . . . . . . . $ 2,492 $ 3,590 $ 7,488 $10,359
======= ======= ======= =======
Income per share -- Primary:
Before extraordinary item,
less preferred
distributions and minority
interests. . . . . . . . . $ 0.14 $ 0.28 $ 0.43 $ 0.80
Extraordinary loss on debt
extinguishment . . . . . . -- (0.03) -- (0.08)
------- ------- ------- -------
Net income available to
common stockholders. . . . $ 0.14 $ 0.25 $ 0.43 $ 0.72
======= ======= ======= =======
Income per share -- Additional
Primary (2):
Before extraordinary item,
less preferred
distributions and minority
interests. . . . . . . . . $ 0.14 $ 0.27 $ 0.42 $ 0.79
Extraordinary loss on debt
extinguishment . . . . . . -- (0.03) -- (0.07)
------- ------- ------- -------
Net income available to
common stockholders. . . . $ 0.14 $ 0.24 $ 0.42 $ 0.72
======= ======= ======= =======
Income per share -- Fully
diluted (2):
Before extraordinary item,
less preferred
distributions and minority
interests. . . . . . . . . $ 0.14 $ 0.27 $ 0.42 $ 0.79
Extraordinary loss on debt
extinguishment . . . . . . -- (0.03) -- (0.07)
------- ------- ------- -------
Net income available to
common stockholders. . . . $ 0.14 $ 0.24 $ 0.42 $ 0.72
======= ======= ======= =======
Weighted average number of
shares outstanding:
Primary . . . . . . . . . . . 17,741 14,645 17,468 14,335
Dilutive effect of
outstanding options. . . . 130 61 154 60
------- ------- ------- -------
Additional Primary (2). . . . 17,871 14,706 17,622 14,395
Fully dilutive effect of
outstanding options. . . . 41 10 29 11
------- ------- ------- -------
Fully diluted (2) . . . . . . 17,912 14,716 17,651 14,406
======= ======= ======= =======
</TABLE>
(1) Fully diluted net income per share is not presented because
the convertible equity securities and preferred stock are
anti-dilutive.
(2) This calculation is submitted in accordance with Securities
Exchange Act of 1934 Release No. 9083, although not required
by APB Opinion No. 15, because it results in dilution of less
than three percent. For the three months ended September 30, 1997,
the actual calculation before considering the effects of rounding
results in dilution of less than three percent.
Exhibit 12.1
WALDEN RESIDENTIAL PROPERTIES, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (As Restated)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income before extraordinary
item and minority interests. . $ 6,171 $ 5,487 $18,591 $14,124
Add:
Interest on indebtedness. . . . 5,643 5,123 15,764 14,810
Amortization. . . . . . . . . . 201 272 612 666
------- ------- ------- -------
Earnings . . . . . . . . . . $12,015 $10,882 $34,967 $29,600
======= ======= ======= =======
Fixed charges and preferred
stock dividends:
Interest on indebtedness. . . . $ 5,643 $ 5,123 $15,764 $14,810
Amortization. . . . . . . . . . 201 272 612 666
------- ------- ------- -------
Fixed charges. . . . . . . . 5,844 5,395 16,376 15,476
Add:
Preferred stock
dividends (1) . . . . . . 3,690 1,409 11,109 2,693
------- ------- ------- -------
Combined fixed charges
and preferred stock
dividends . . . . . . . $ 9,534 $ 6,804 $27,485 $18,169
======= ======= ======= =======
Ratio of earnings to fixed
charges. . . . . . . . . . . . 2.06x 2.02x 2.14x 1.91x
Ratio of earnings to fixed
charges and preferred stock
dividends. . . . . . . . . . . 1.26x 1.60x 1.27x 1.63x
</TABLE>
(1) Includes dividends on preferred stock and distributions to minority
interest holders.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,760
<SECURITIES> 0
<RECEIVABLES> 953
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 763,214
<DEPRECIATION> (61,035)
<TOTAL-ASSETS> 740,992
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
57
<COMMON> 179
<OTHER-SE> 398,448
<TOTAL-LIABILITY-AND-EQUITY> 740,992
<SALES> 0
<TOTAL-REVENUES> 103,267
<CGS> 0
<TOTAL-COSTS> 44,264
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,764
<INCOME-PRETAX> 18,591
<INCOME-TAX> 0
<INCOME-CONTINUING> 18,591
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,488
<EPS-PRIMARY> .43
<EPS-DILUTED> .42
</TABLE>
