<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996 Commission File Number 001-12684
COLUMBUS REALTY TRUST
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-2509086
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
15851 DALLAS PARKWAY, SUITE 855
DALLAS, TEXAS 75248
(Address of Principal Executive Offices)
(214) 387-1492
(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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
There were 11,717,208 common shares of beneficial interest, $0.01 par value per
share, outstanding at August 8, 1996.
Index to exhibits: 21
Total pages: 22
1
<PAGE>
COLUMBUS REALTY TRUST
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets of Columbus Realty Trust as
of June 30, 1996 and December 31, 1995......................... 3
Consolidated Statements of Operations of Columbus
Realty Trust for the three and six months
ended June 30, 1996 and 1995................................... 4
Consolidated Statements of Cash Flows of Columbus
Realty Trust for the six months ended June 30, 1996 and 1995... 5
Notes to Consolidated Financial Statements...................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................... 20
Item 2. Changes in Securities........................................... 20
Item 3. Defaults Upon Senior Securities................................. 20
Item 4. Submission of Matters to a Vote of Security Holders............. 20
Item 5. Other Information............................................... 21
Item 6. Exhibits or Reports on Form 8-K................................. 21
SIGNATURES................................................................ 22
</TABLE>
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
COLUMBUS REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------------------------
ASSETS (Unaudited)
<S> <C> <C>
Real estate:
Land $ 53,109 $ 48,104
Buildings and improvements 249,892 232,428
Furniture, fixtures, and equipment 4,589 4,433
Construction in progress 67,244 50,081
---------------------------
374,834 335,046
Less accumulated depreciation (34,951) (31,667)
---------------------------
Real estate held for investment 339,883 303,379
Real estate held for sale 4,131 -
---------------------------
344,014 303,379
Cash and cash equivalents 6,112 11,224
Accounts receivable 894 861
Receivables from affiliates 125 418
Deferred charges, net of accumulated
amortization 2,114 2,249
Other assets 4,532 2,845
---------------------------
Total assets $357,791 $320,976
===========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable $183,803 $145,492
Accrued dividends 4,607 4,322
Accounts payable and accrued expenses 6,020 4,912
Accrued interest 359 292
Accrued property taxes 3,035 5,203
Tenant security deposits 1,515 1,273
Prepaid rent 526 592
Minority interest 2,063 2,063
---------------------------
Total liabilities 201,928 164,149
Shareholders' equity:
Preferred shares, $ .01 par value;
10,000,000 shares authorized;
none issued or outstanding
Common shares, $ .01 par value;
100,000,000 shares authorized;
11,662,438 and 11,524,618 shares
issued at June 30, 1996, and
December 31, 1995, respectively 116 115
Additional paid-in capital 178,554 176,061
Retained earnings (deficit) (22,801) (19,343)
---------------------------
155,869 156,833
Less 900 common shares in treasury, at cost (6) (6)
---------------------------
Total shareholders' equity 155,863 156,827
---------------------------
Total liabilities and shareholders' equity $357,791 $320,976
===========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
COLUMBUS REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
--------------------------------------------------------
Revenue:
Rental $ 11,066 $ 9,739 $ 21,367 $ 18,650
Property management 74 141 149 294
Interest and other 622 391 1,180 741
--------------------------------------------------------
Total revenue 11,762 10,271 22,696 19,685
Expenses:
Repairs and maintenance 912 772 1,702 1,464
Other property operating 601 474 1,191 908
Advertising 168 135 281 258
General and administrative - properties 811 714 1,622 1,348
General and administrative - corporate 538 600 1,046 1,066
Real estate taxes 1,516 1,254 2,937 2,429
Interest 1,869 1,404 3,364 2,515
Interest related to amortization of
deferred financing costs 92 143 159 274
Depreciation and amortization 2,488 2,284 4,931 4,386
--------------------------------------------------------
Total expenses 8,995 7,780 17,233 14,648
--------------------------------------------------------
Income from operations 2,767 2,491 5,463 5,037
Gain on sale of real estate (Note 2) 42 - 42 -
--------------------------------------------------------
Net income $ 2,809 $ 2,491 $ 5,505 $ 5,037
========================================================
Net income per common share, primary
and fully diluted:
Income from operations $0.24 $0.22 $0.47 $0.44
Gain on sale of real estate - - - -
--------------------------------------------------------
Net income $0.24 $0.22 $0.47 $0.44
========================================================
Weighted average number of common
shares outstanding (including common
share equivalents):
Primary 11,756,208 11,523,665 11,718,145 11,489,820
Fully diluted 11,767,043 11,531,302 11,723,562 11,509,047
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
COLUMBUS REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1995
-------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,505 $ 5,037
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 4,931 4,386
Amortization of deferred financing
costs 159 274
Gain on sale of real estate (42) -
Net effect of changes in operating
assets and liabilities (6,490) (1,784)
----------------------------
Net cash provided by operating
activities 4,063 7,913
INVESTING ACTIVITIES
Payment of construction costs (32,694) (22,579)
Acquisition of property (5,805) (6,594)
Improvements to real estate investments (1,126) (1,722)
Purchase of furniture, fixtures, and
equipment (206) (336)
Proceeds from sale of real estate 91 -
----------------------------
Net cash used in investing activities (39,740) (31,231)
FINANCING ACTIVITIES
Proceeds from notes payable 38,725 30,286
Payment of notes payable (414) (57)
Payment of financing costs (257) (460)
Payment of dividends (8,678) (8,571)
Proceeds from employee and shareholder
plans 1,262 332
Payment of offering costs (73) (29)
----------------------------
Net cash provided by financing
activities 30,565 21,501
----------------------------
Net decrease in cash and cash
equivalents (5,112) (1,817)
Cash and cash equivalents at beginning
of period 11,224 4,943
----------------------------
Cash and cash equivalents at end of
period $ 6,112 $ 3,126
============================
Supplemental cash flow information:
Interest payments, including
approximately $2,920 and $1,286
interest capitalized in 1996 and 1995,
respectively $ 6,217 $ 3,638
Noncash financing activity:
Issuance of shares under employee plans $ 1,305 $ 576
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND FORMATION
Columbus Realty Trust (the Company) was organized as a Texas real estate
investment trust on October 12, 1993, to continue the multifamily operations of
Columbus Realty Holdings, Inc. (CRH) and certain of its affiliates and
predecessors (collectively, the Columbus Group). The Company commenced
operations December 29, 1993, upon completion of an initial public offering of
6,898,566 common shares at a price of $17.25 per share.
Net proceeds from the public offering were $111,549,812 (before offering costs)
and, in connection with the offering, the Company had drawn $15,000,000 on the
credit facility, for total proceeds of $126,549,812. The proceeds were
primarily used to pay off mortgage notes payable and the related debt prepayment
penalties of the Columbus Group and of Texana-RAT II Associates, Inc. and
certain of its affiliates (collectively, the Texana Group), and for the
acquisition of the ownership interests of the Columbus Group and the Texana
Group (collectively, the predecessors to Columbus Realty Trust).
Upon consummation of the public offering, the ownership interests of the
Columbus Group in seven multifamily residential properties were transferred to
the Company. Concurrently, the ownership interests of the Texana Group in five
multifamily residential, two industrial, and one retail property were
transferred to the Company. The properties are located primarily in the greater
Dallas, Texas, metropolitan area.
In addition, the property management contracts of Single Star Realty, Inc. (an
affiliate of the Texana Group) and CRH Management (an affiliate of the Columbus
Group), were transferred to Columbus Management Services, Inc. (CMSI), a wholly
owned subsidiary of the Company. CMSI manages the properties of the Company, as
well as properties owned by other parties.
For financial reporting purposes, the ownership interests acquired were recorded
by the Company at their historical values, with the exception of the payments
made to the third-party owners, which have been accounted for under the purchase
method of accounting. The payments made to third-party owners have been
allocated to the related real estate based on their estimated fair values.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany transactions and accounts have
been eliminated.
6
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COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INTERIM UNAUDITED FINANCIAL INFORMATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In management's opinion, the interim financial statements reflect all
adjustments necessary for a fair presentation of the financial position of the
Company. All adjustments were of a normal recurring nature except for the
adjustments to reflect real estate transactions more fully described in Note 2.
The operating results for the interim period ended June 30, 1996, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1996. For further information, refer to the financial
statements and accompanying footnotes included in the Columbus Realty Trust Form
10-K for the fiscal year ended December 31, 1995 (the "1995 Annual Report").
Certain prior year amounts have been reclassified to conform to the current year
presentation.
2. REAL ESTATE TRANSACTIONS
ACQUISITIONS OF DEVELOPMENT SITES
On January 23, 1996, the Company purchased two tracts of land in the Uptown
district of Dallas, Texas, for approximately $5.0 million. Two smaller tracts
of land adjacent to one of the sites were purchased during the second quarter of
1996 for approximately $185,000. Substantially all of the aggregate purchase
prices for the sites were funded through the Company's credit facility.
On February 23, 1996, the Company acquired a multifamily development site in
Ridgeland, Mississippi, for approximately $620,000. The purchase was funded
through the Company's credit facility. Construction of a 240-unit apartment
project, Columbus Pointe, began on the site in the second quarter of 1996.
COMPLETED CONSTRUCTION
The Company completed construction of three multifamily apartment projects
during the second quarter of 1996. The aggregate development and construction
costs of the projects as set forth in the table below have been reclassified
from construction in progress to buildings and improvements in the Company's
consolidated financial statements as of June 30, 1996.
<TABLE>
<CAPTION>
Development
and
Number Construction
Project Name Location of Units Completion Date Cost
------------ ---------- -------- --------------- ------------
<S> <C> <C> <C> <C>
(in thousands)
Hackberry Creek II Dallas, TX 192 April 1996 $ 9,503
The Abbey Dallas, TX 34 April 1996 4,287
The Vineyard Dallas, TX 116 May 1996 7,272
--- -------
342 $21,062
=== =======
</TABLE>
7
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. REAL ESTATE TRANSACTIONS (CONTINUED)
REAL ESTATE HELD FOR SALE
On June 1, 1996, the Company began marketing efforts to sell 130 condominium
units owned in the Springstead and Villas of Valley Ranch condominium
communities located in Dallas, Texas. The aggregate net book value of the
condominium properties (cost, net of accumulated depreciation) totaling
approximately $4.1 million has been classified as real estate held for sale in
the Company's consolidated financial statements as of June 30, 1996, in
accordance with Statement of Financial Accounting Standards No. 121, Accounting
for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.
On June 28, 1996, the Company sold one condominium unit in the Villas of Valley
Ranch condominium community for a net gain of approximately $42,000, as shown in
the following table (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Sales price $ 91
Cost of sale:
Net book value of real estate (33)
Closing costs (9)
Other (a) (7)
----
Net gain on sale $ 42
====
</TABLE>
(a) Includes marketing and sales costs.
3. SHAREHOLDER'S EQUITY
NET INCOME PER COMMON SHARE
Net income per common share has been computed by dividing net income by the
weighted average number of common shares and dilutive common share equivalents
outstanding during the periods presented.
SHARE BONUS PLAN NO. 2
On March 15, 1996, the Company issued 56,710 shares to certain employees under
the Company's Share Bonus Plan No. 2 for a purchase price equal to par value
($.01 per share). The Share Bonus Plan No. 2 is more fully described in the
1995 Annual Report. The difference between the purchase price and the market
price on the issuance date is approximately $1.1 million and will be recognized
as compensation expense ratably over a three-year vesting period beginning on
the issuance date. The issuance of the shares has been reflected in the
Company's consolidated financial statements as noncash increases in other assets
and paid-in capital.
8
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. SHAREHOLDER'S EQUITY (CONTINUED)
MANAGEMENT INCENTIVE PLAN
On January 30, 1996, the Company established the Long-Term Management Incentive
Plan (the "Management Incentive Plan") for the purpose of attracting and
retaining individuals who will contribute to the Company's success while serving
as Trust Managers, officers, and employees. The Management Incentive Plan will
be administered by a committee of the Trust Managers, which will have the
authority to grant a maximum of 500,000 common share option awards under the
plan.
On March 15, 1996, the Company issued 11,124 common shares to executive
employees for a purchase price equal to par value ($.01 per share) under the
Management Incentive Plan. The difference between the purchase price and the
market price on the grant date is approximately $214,000 and will be recognized
as compensation expense ratably over a three-year vesting period beginning on
the issuance date. The issuance of the shares has been reflected in the
Company's consolidated financial statements as noncash increases in other assets
and paid-in capital.
On May 20, 1996, the Company entered into Nonqualified Option Agreements (the
"Option Agreements") with each of the Company's five non-employee Trust Managers
pursuant to the Management Incentive Plan. The Option Agreements grant each
Trust Manager the right to purchase up to 10,000 common shares at a purchase
price of $19.125 per share. The options vest six months after the grant date
and expire ten years after the grant date.
On May 30, 1996, the Company entered into Share Purchase Award Agreements (the
"Award Agreements") with each of the Company's five non-employee Trust Managers
pursuant to the Management Incentive Plan. The Award Agreements grant the non-
employee Trust Managers the right to purchase up to 15,384 common shares for a
purchase price of $19.50 per share and expire one year from the grant date.
Such purchases under the Award Agreements may, at the option of the participant,
and subject to certain other restrictions, be funded with proceeds from a loan
from the Company. The maximum loan amount under each of the Award Agreements is
$150,000. Any such loans made pursuant to the Award Agreements will be
evidenced by promissory notes bearing interest at a rate equal to the Company's
cost of funds, with a maximum term of ten years and shall be secured by the
stock purchased.
DISTRIBUTIONS
On January 16, 1996, the Company paid a dividend of approximately $4.3 million,
or $0.375 per share, to shareholders of record on December 29, 1995. The
Company received approximately $409,000 in proceeds from the sale of 21,122
shares issued concurrently with the dividend payment pursuant to the Dividend
Reinvestment Plan.
On April 15, 1996, the Company paid a dividend of approximately $4.4 million, or
$0.375 per share, to shareholders of record on March 25, 1996. The Company
received approximately $780,000 in proceeds from the sale of 44,065 shares
issued concurrently with the dividend payment pursuant to the Dividend
Reinvestment Plan.
9
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. NOTES PAYABLE
On June 7, 1996, Addison Circle One, Ltd., closed on a $21.3 million
construction loan with Wells Fargo Realty Advisors Funding, Inc. (Wells Fargo).
The loan will be funded in increments corresponding to the development and
construction costs incurred to complete the Addison Circle One multifamily
residential and retail project more fully described in the 1995 Annual Report.
The Company, as general partner of Addison Circle One, Ltd., funded the initial
development and construction costs of the project with a capital contribution of
approximately $8.6 million in the fourth quarter of 1995. Construction of the
project began in the first quarter of 1996.
The Wells Fargo loan is secured by a first lien deed of trust on the land and
improvements comprising the project and a security interest in its rents and
leases. Interest is due and payable monthly at LIBOR plus 165 basis points
applied to the daily principal balance outstanding. The loan matures in June
1999 when the principal balance then outstanding is due. There were no draws on
the construction loan as of June 30, 1996.
5. TRANSACTIONS WITH AFFILIATES
<TABLE>
<CAPTION>
Receivables from affiliates include the JUNE 30, DECEMBER 31,
following (in thousands): 1996 1995
------------------------
<S> <C> <C>
Advanced to condominium homeowners'
associations $ 57 $ 47
Advanced to non-management employees 33 12
Receivable from Employee Stock Purchase
Plan 2 1
Receivable from owners of predecessors
in connection with the acquisition of
their interests 28 5
Advanced to affiliates in ordinary
course of business for third-party
property management 5 353
----- -----
$ 125 $ 418
===== =====
</TABLE>
During the six months ended June 30, 1996, the Company received payments
totaling approximately $247,000 from an affiliate for commissions and prepaid
management fees related to the sale of a commercial property formerly managed by
CMSI. The management fee portion of approximately $197,000 will be recognized
ratably as income during the twelve month period ending December 31, 1996.
6. CONTINGENCIES
The Company is subject to certain legal proceedings, claims and liabilities
which arise in the ordinary course of its business. In the opinion of the
Company, none of such proceedings is material in relation to the Company's
consolidated financial statements.
7. SUBSEQUENT EVENTS
DISTRIBUTION
On July 15, 1996, the Company paid a quarterly dividend of approximately $4.6
million, or $0.395 per share, to shareholders of record on June 28, 1996. The
Company received approximately $987,000 in proceeds from the sale of 54,502
shares issued concurrently with the dividend payment pursuant to the Dividend
Reinvestment Plan.
10
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. SUBSEQUENT EVENTS (CONTINUED)
ACQUISITION OF DEVELOPMENT SITE
On July 18, 1996, the Company acquired a multifamily development site in the
Uptown district of Dallas for approximately $1.2 million. The purchase was
funded from the Company's working capital reserves. The purchase price will be
included in a draw on the Company's credit facility when construction of the
project begins.
REGISTRATION STATEMENT
On August 8, 1996, the Company filed a Registration Statement with the
Securities and Exchange Commission on Form S-3 pursuant to Rule 415 of the
Securities Act of 1933. The Registration Statement registered an aggregate of
$200 million of debt securities, common shares, preferred shares and securities
warrants (collectively, the "Offered Securities"). The Offered Securities may
be issued separately or together, in separate series, and in amounts and at
prices and terms to be determined by the Company.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion is based primarily on the consolidated financial
statements of Columbus Realty Trust as of June 30, 1996 and 1995, and for the
three and six month periods then ended. This information should be read in
conjunction with the accompanying consolidated financial statements and notes
thereto.
As of June 30, 1996, the Company owned 4,883 completed residential units in its
real estate portfolio, a net increase of 428 units or approximately 10% over the
4,455 units held as of June 30, 1995. The increase in the number of residential
units in the operating portfolio is the result of the Company's development and
construction programs. One multifamily residential project was completed in the
third quarter of 1995, and three additional multifamily residential projects
were completed in the second quarter of 1996. As more fully described below,
the projects completed in 1995 and 1996 have had a significant impact on the
Company's results of operations upon completion of their leasing programs and
stabilization of operations. The three projects completed in the second quarter
of 1996 had an average occupancy rate of 98% as of June 30, 1996. As of June
30, 1996, the Company had five multifamily residential projects comprising 1,718
apartment units under construction.
Management believes that the presentation of funds from operations ("FFO")
provides an appropriate measure of the Company's performance relative to other
real estate investment trusts. The Company's calculation of FFO has been made
in accordance with the definition of FFO approved by the National Association of
Real Estate Investment Trusts (NAREIT) (i.e., net income, computed in accordance
with generally accepted accounting principles, excluding gains and losses from
debt restructuring and sales of property, plus depreciation and amortization of
real estate investments, and after adjustments for unconsolidated partnerships
and joint ventures). FFO does not represent cash flow and is not necessarily
indicative of cash flow or liquidity available to the Company, nor should it be
considered as an alternative to net income as an indicator of operating
performance. The Company believes that in order to facilitate a clear
understanding of the historical operating results of the Company, FFO should be
disclosed in conjunction with net income as presented in the financial
statements and data included elsewhere in this Form 10-Q.
Funds from operations for the second quarter of 1996 totaled approximately $5.3
million or $0.45 per common share, compared with funds from operations of
approximately $4.7 million or $0.41 per common share in the comparable prior
period. During the six-month period ended June 30, 1996, funds from operations
totaled approximately $10.4 million, or $0.88 per common share, compared with
funds from operations of approximately $9.3 million or $0.81 per common share
for the six months ended June 30, 1995. The increases in funds from operations
of $540,000 or 11% in the three month period ended June 30, 1996, over the same
three month period of 1995, and approximately $1.0 million or 11% in the six
months ended June 30, 1996, over the comparable prior period are primarily
attributable to the net operating income provided by the increased number of
apartment units in Company's portfolio, partially offset by increases in the
amount of expensed debt service in the current three and six-month periods.
Interest expense increased due to the completion of two construction projects in
the second and third quarters of 1995 and three construction projects in 1996.
Interest on debt incurred for construction projects is capitalized prior to
completion of construction. After construction is concluded, interest on such
debt is expensed. The Company's operating results are more fully described
below under "Results of Operations."
The following table reflects a reconciliation of net income as reported in the
Company's consolidated financial statements to funds from operations for each of
the three and six month periods ended June 30, 1996, and 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1996 1995 1996 1995
--------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Net income $2,809 $2,491 $ 5,505 $5,037
Depreciation of real property 2,409 2,185 4,770 4,199
Amortization related to real property 48 50 97 96
------ ------ ------- ------
Funds from operations (1) $5,266 $4,726 $10,372 $9,332
====== ====== ======= ======
</TABLE>
(1) Computed in accordance with NAREIT guidelines effective January 1, 1996.
12
<PAGE>
The Company recognizes rental revenue from commercial tenants on a straight-line
basis over the terms of the related leases. Net income includes the recognition
of $1,000 and $9,000 of deferred rental income in the three months ended June
30, 1996, and 1995, respectively, and $2,000 and $5,000 of deferred rental
income in the six months ended June 30, 1996, and 1995, respectively.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTH PERIOD ENDING JUNE 30, 1996 TO THREE MONTH PERIOD
- ---------------------------------------------------------------------------
ENDING JUNE 30, 1995
- --------------------
The Company's net income increased approximately $318,000 to approximately $2.8
million or $0.24 per common share for the three months ended June 30, 1996,
compared with net income of approximately $2.5 million or $0.22 per common share
for the three months ended June 30, 1995. Five multifamily apartment projects
which were under construction at the beginning of 1995 are now completed and
have contributed to the Company's operating results in the second quarter of
1996. Included in net income for the three months ended June 30, 1996, is a net
gain of $42,000 from the sale of a condominium unit at one of the Company's
properties.
During the three months ended June 30, 1996, rental revenues totaled
approximately $11.1 million, an increase of approximately $1.3 million or
approximately 14% over rental revenues of approximately $9.7 million in the same
three-month period of 1995. The Uptown Village and Ascension Point II
multifamily residential development projects, which were completed and leased
during May and September 1995, respectively, generated combined rental revenues
of approximately $829,000 in the second quarter of 1996, an increase of $417,000
over the $412,000 generated by Uptown Village alone in the second quarter of
1995. The completion of the Hackberry II, Abbey and Vineyard projects in the
second quarter of 1996 resulted in additional rental revenues of approximately
$700,000 for the three months ended June 30, 1996 over 1995. Property
management income decreased $67,000 or 48% in the second quarter of 1996 from
the comparable prior period due to a decrease in apartment units and retail
space managed for third-party owners. Interest and other revenues increased
$231,000 or 59% in the three months ended June 30, 1996 over 1995 primarily due
to increased non-rental income from the multifamily residential properties,
including the incremental increase in non-rental income from the recently
completed multifamily development projects, and increased yields earned on
invested funds.
Total expenses during the three months ended June 30, 1996, were approximately
$9.0 million, an increase of approximately $1.2 million or 16% over total
expenses of approximately $7.8 million in the three months ended June 30, 1995.
The increase in total expenses is primarily due to the growth in the size of the
Company's multifamily residential operating portfolio, an increase in expensed
interest, and higher accrued property tax expense on certain of the properties.
The increase in the number of stabilized multifamily apartment units was the
primary reason for the $140,000 or 18% increase in repairs and maintenance
expenses during the second quarter of 1996 compared with 1995. The $127,000 or
27% increase in other property operating expenses in 1996 over 1995 is due to
the additional apartments operating in 1996, as well as increased utilities and
contract services costs at certain of the properties. Advertising expenses
increased $33,000 or 24% in the second quarter of 1996 over 1995 primarily as a
result of increased advertising and marketing incurred to support the leasing
programs at the newly completed multifamily development projects and to maintain
high occupancies at the remaining multifamily properties. Property
administrative expenses increased $97,000 or 14% in the three months ended June
30, 1996, over 1995 primarily due to salaries and benefits for personnel
managing the newly completed multifamily development properties. General and
administrative expenses incurred for the Company's corporate activities
decreased $62,000 or 10% in 1996 primarily due to lower franchise tax accruals.
Real estate tax expense increased $262,000 or 21% in the three months ended June
30, 1996, over the respective prior period due to the additional properties
operated in 1996 and higher accruals for increased tax assessments expected on
certain of the properties.
Interest expense increased $465,000 or 33% in the second three months of 1996
compared with 1995 as a result of the increase in non-development debt
outstanding at the end of each of the two periods. The Company's average non-
development debt outstanding under the Credit Facility (as defined below), plus
other fixed-rate debt, was approximately $102.3 million in the second quarter of
1996 compared with an average non-development debt balance of approximately
$72.0 million in the second quarter of 1995. The Company's average interest
rate for non-development debt under the Credit Facility was 7.123% in the three
months ended June 30, 1996, compared with an average interest rate of 7.856% on
non-development debt under the Credit Facility in the same period of
13
<PAGE>
1995. Interest related to amortization of deferred financing costs decreased
$51,000 or 36% in 1996 from 1995 primarily due to a decrease in amortization of
capitalized bank fees. The Company incurred deferred bank commitment fees of
approximately $800,000 in fiscal 1993 when it obtained its original $80 million
credit facility. The fees became fully amortized in the fourth quarter of 1995,
corresponding to the credit facility's original maturity date.
Depreciation and amortization expense increased approximately $204,000 or 9% in
the second three months of 1996 compared with the same three month period of
1995. The additional apartment units added to the Company's operating portfolio
in 1995 and 1996 resulted in $263,000 of additional depreciation and
amortization expense. This increase was partially offset by decreases in
depreciation of computer equipment and furnishings which have become fully
depreciated at certain properties and at the Company's corporate offices.
The Company invested approximately $21.2 million, in total, in its real estate
portfolio during the three months ended June 30, 1996. Approximately $20.2
million was invested in the development and construction of eight multifamily
residential apartment projects. The Company invested approximately $200,000 to
purchase two tracts of land adjacent to two multifamily residential development
sites purchased in the first quarter of 1996. Additionally, the Company
invested approximately $800,000 in total for capital improvements and purchases
of furniture, fixtures, and equipment in the second three months of 1996. The
components of these capital investments were (a) $572,000 invested in
improvements to the multifamily residential properties held in the Company's
real estate portfolio for one year or longer, (b) $185,000 invested in capital
improvements to a property acquired in the first quarter of 1995, (c) $23,000
invested in tenant improvements and capital expenditures for the Company's
retail and industrial properties, and (d) $20,000 invested in furniture,
fixtures, and equipment for the corporate offices. More detailed information
regarding the capital investments made in the three months ended June 30, 1996,
is set forth in the following table.
Summary of capital improvements for the three months ended June 30, 1996:
<TABLE>
<CAPTION>
Stabilized Properties (1) Acquisition Properties (2) Totals
------------------------------ ------------------------------ ------------------------------
Amount Per Unit Amount Per Unit Amount Per Unit
-------------- -------------- -------------- -------------- -------------- --------------
(in thousands) (in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Multifamily residential properties
- ----------------------------------
Recurring expenditures
Floor coverings (3) $ 67 $ 14.04 $ 5 $ 35.43 $ 72 $ 14.74
Appliances 8 1.79 13 81.81 21 4.43
Exterior repairs 124 26.37 10 68.07 134 27.74
Furniture, fixtures, & equipment 91 19.63 70 434.62 161 33.34
Other 38 7.90 1 5.87 39 7.83
------------------------------------------------------------------------------------------------
Subtotal - recurring 328 69.73 99 625.80 427 88.08
Revenue generating 39 8.30 - - 39 8.03
Major renovations 205 43.86 86 539.37 291 60.22
------------------------------------------------------------------------------------------------
Total multifamily residential $572 $121.89 $185 $1,165.17 757 $156.33
============================================================== ==============
Industrial and retail properties (4) Per Sq. Ft
- ----------------------------------- ----------
Tenant improvements 9 $ 0.01
Commissions 3 .01
Other 11 .02
----------------------------------
Total industrial and retail 23 $ 0.04
==============
Corporate purchases of furniture,
fixtures, and equipment 20
-------------
Total $800
=============
</TABLE>
- -------------------------------------------------
Notes:
(1) Multifamily residential properties owned for one year or more as of January
1, 1996, and multifamily development projects completed and stabilized
subsequent to the Company's initial public offering (December 29, 1993). Per
unit computations are based on the average monthly stabilized and completed
apartment units during the period. The average number of completed units for the
three months ended June 30, 1996, was 4,685.
14
<PAGE>
(2) Multifamily residential property acquired and owned by the Company for less
than one year as of January 1, 1996. Per unit computations are based on 160
units.
(3) Carpet additions of $8,000 at Windhaven Apartments are included, but have
been charged against an escrow established pursuant to a master lease on the
property.
(4) Total leasable retail and industrial square footage totals approximately
525,300 sq. ft. Includes one retail shopping center, two industrial properties,
and retail space integrated into four primarily multifamily residential
properties.
COMPARISON OF SIX MONTH PERIOD ENDING JUNE 30, 1996 TO SIX MONTH PERIOD ENDING
- ------------------------------------------------------------------------------
JUNE 30, 1995
- -------------
The Company's net income increased $468,000 to approximately $5.5 million or
$0.47 per common share for the six months ended June 30, 1996, compared with net
income of approximately $5.0 million or $0.44 per common share for the six
months ended June 30, 1995, primarily as a result of operations from the five
multifamily construction projects that were completed and leased during the
second half of 1995 or the first six months of 1996. Included in net income for
the six months ended June 30, 1996, is a net gain of $42,000 from the sale of a
condominium unit at one of the Company's properties.
Rental revenues totaled approximately $21.4 million during the six months ended
June 30, 1996, an increase of $2.7 million or 14% over rental revenues of
approximately $18.7 million in the comparable six month period of 1995. During
the six months ended June 30, 1996, the Company received approximately $1.1
million of additional rental income from the four multifamily development
projects completed and leased during the latter half of 1995 or in the second
quarter 1996. The Uptown Village Apartments, which was completed in May 1995,
contributed approximately $856,000 more in rental income in the six months ended
June 30, 1996, than it generated in the first half of 1995. The remaining
increase in rental revenues in the first half of 1996 over 1995 is the result of
rental rate increases at the remaining properties. Property management income
decreased $145,000 or 49% in the six months ended June 30, 1996 from the same
six month period of 1995 due to a decrease in apartment units and retail space
managed for third-party owners. Interest and other revenues increased $439,000
or 59% in 1996 over 1995 primarily due to increased non-rental income from the
properties, including the incremental increase in non-rental income from the
recently completed development projects, increased yields earned on invested
funds, and a $50,000 nonrecurring marketing commission earned pursuant to the
sale of a commercial property formerly managed for an affiliate of the Company.
Total expenses during the six months ended June 30, 1996, were approximately
$17.2 million, an increase of approximately $2.6 million or 18% over total
expenses of approximately $14.6 million in the same six month period of 1995.
The increase in total expenses is primarily due to the growth in the size of the
Company's residential operating portfolio as a result of its development and
construction program, an increase in expensed interest, and higher property tax
accruals on certain of the properties. The increase in the number of stabilized
apartment units was the primary reason for the $238,000 or 16% increase in
repairs and maintenance expenses and the $283,000 or 31% increase in other
property operating expenses. Advertising expenses increased $23,000 or 9% in
1996 over 1995 primarily as a result of increased advertising and marketing
incurred to support the leasing programs at the newly completed development
projects and to maintain high occupancies at the remaining properties. Property
administrative expenses increased $274,000 or 20% in the six months ended June
30, 1996, over 1995 due to annual salary and benefits increases and the
additional salaries and benefits for personnel managing the newly completed
development properties. General and administrative expenses incurred for the
Company's corporate activities decreased $20,000 or 2% in the six months ended
June 30, 1996, primarily as a result of lower travel expenses and franchise tax
accruals. Real estate tax expense increased $508,000 or 21% in the first six
months of 1996 over the comparable prior period due to the additional properties
operated in 1996 and due to higher accruals for increased tax assessments
expected on certain of the properties.
Interest expense increased $849,000 or 34% in the six months ended June 30, 1996
compared with the six months ended June 30, 1995 as a result of the increase in
non-development debt outstanding in the two periods. The Company's average non-
development debt outstanding under the Credit Facility, plus other fixed-rate
debt, was approximately $92.1 million for the six months ended June 30, 1996,
compared with an average non-development debt balance of $64.5 million in the
comparable six-month period of 1995. The Company's average interest rate for
non-development debt under the Credit Facility was 7.093% in the six months
ended June 30, 1996, compared with an average interest rate of 7.925% on non-
development debt under the Credit Facility in the same period of 1995.
15
<PAGE>
Interest related to amortization of deferred financing costs decreased $115,000
or 42% in 1996 from 1995 because certain deferred bank fees became fully
amortized in the fourth quarter of 1995, and as a result of increased
proportionate borrowings under the Credit Facility for development activities,
which decreased the pro-rata share of amortization attributable to operating
activities.
Depreciation and amortization expense increased approximately $545,000 or 12% in
the six months ended June 30, 1996, compared with the six months ended June 30,
1995. The addition of five multifamily residential properties to the operating
portfolio in 1995 and 1996 resulted in $435,000 of additional depreciation and
amortization expense. Depreciation and amortization of the real property and
fixed assets on the remaining operating portfolio and on furnishings and
equipment at the corporate offices increased $110,000 overall. The increased
depreciation and amortization due to capital improvements undertaken at certain
properties in 1995 and 1996 more than offset decreases in depreciation and
amortization of short-lived equipment and furnishings which have become fully
depreciated at certain properties and at the Company's corporate offices.
The Company invested approximately $39.8 million, in total, in its real estate
portfolio during the six months ended June 30, 1996. Approximately $32.7
million was invested in the development and construction of eight multifamily
residential apartment projects. The Company acquired two new multifamily
residential development sites for approximately $5.8 million, in aggregate, in
the six months ended June 30, 1996. Additionally, the Company invested
approximately $1.3 million in total for capital improvements and purchases of
furniture, fixtures, and equipment in the first half of 1996. The components of
these capital investments were (a) approximately $1.0 million invested in
improvements to the multifamily residential properties held in the Company's
real estate portfolio for one year or longer, (b) $233,000 invested in capital
improvements to a property acquired in the first quarter of 1995, (c) $62,000
invested in tenant improvements and capital expenditures for the Company's
retail and industrial properties, and (d) $50,000 invested in furniture,
fixtures, and equipment for the corporate offices. More detailed information
regarding the capital investments made in the six months ended June 30, 1996, is
set forth in the following table.
Summary of capital improvements for the six months ended June 30, 1996:
<TABLE>
<CAPTION>
Stabilized Properties (1) Acquisition Properties (2) Totals
------------------------------ ----------------------------- -------------------------------
Amount Per Unit Amount Per Unit Amount Per Unit
-------------- -------------- -------------- -------------- -------------- --------------
(in thousands) (in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Multifamily residential properties
- ----------------------------------
Recurring expenditures
Floor coverings (3) $ 91 $ 19.97 $ 10 $ 63.73 $ 101 $ 21.46
Appliances 10 2.29 13 81.81 23 5.00
Exterior repairs 222 48.87 21 134.06 243 51.78
Furniture, fixtures, & equipment 135 29.86 100 623.61 235 50.10
Other 56 12.31 3 16.54 59 12.46
--------------------------------------------------------------------------------------------
Subtotal - recurring 514 113.30 147 919.75 661 140.80
Revenue generating 48 10.61 - - 48 10.24
Major renovations 444 97.96 86 539.37 530 113.01
--------------------------------------------------------------------------------------------
Total multifamily residential $1,006 $221.87 $233 $1,459.12 1,239 $264.05
========================================================= ==============
Industrial and retail properties (4) Per Sq. Ft
- -------------------------------------- ----------
Tenant improvements 33 $ 0.06
Commissions 3 .01
Other 26 .05
-----------------------------------
Total industrial and retail 62 $ 0.12
==============
Corporate purchases of furniture,
fixtures, and equipment 50
--------------
Total $1,351
==============
</TABLE>
16
<PAGE>
Summary of capital improvements for the six months ended June 30, 1996,
continued:
- -------------------------------------------------
Notes:
(1) Multifamily residential properties owned for one year or more as of January
1, 1996, and multifamily development projects completed and stabilized
subsequent to the Company's initial public offering (December 29, 1993). Per
unit computations are based on the average monthly stabilized and completed
apartment units during the period. The average number of completed units for
the six months ended June 30, 1996, was 4,534.
(2) Multifamily residential property acquired and owned by the Company for less
than one year as of January 1, 1996. Per unit computations are based on 160
units.
(3) Carpet additions of $19,000 at Windhaven Apartments are included, but have
been charged against an escrow established pursuant to a master lease on the
property, and are reflected in the net effect of changes in other assets and
liabilities in the Company's statements of cash flows.
(4) Total leasable retail and industrial square footage totals approximately
525,300 sq. ft. Includes one retail shopping center, two industrial properties,
and retail space integrated into four primarily multifamily residential
properties.
During the six-month period ended June 30, 1995, the Company invested
approximately $31.2 million in total for the acquisition of and improvements to
real estate investments. Included in this total are: (a) approximately $22.6
million of incremental costs on nine projects under development and
construction, (b) the March 1995 acquisition of a multifamily residential
property for approximately $6.6 million, and (c) approximately $2.0 million
incurred for capital improvements and purchases of furnishings and equipment at
the Company's operating properties, principally those acquired during 1994 and
1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of cash flow, totaling approximately $44.1 million
during the six months ended June 30, 1996, were approximately $38.7 million
provided from borrowings on the Credit Facility more fully described below,
approximately $4.1 million provided by operations, and approximately $1.3
million of proceeds from sales of common shares through employee and shareholder
plans. The Company's primary uses of cash, totaling approximately $49.2 million
during the same six-month period, were approximately $32.7 million for
construction costs on eight development projects, approximately $8.7 million for
payments of dividends, approximately $5.8 million for acquisition of real estate
development sites, approximately $1.3 million for capital improvements and
purchases of furniture, fixtures, and equipment, $414,000 for principal payments
on notes payable, and $257,000 for financing costs.
The Company has historically used cash flow from operations to meet its dividend
payments and short term liquidity requirements, and a combination of equity,
mortgage debt, and credit line debt to finance its development and acquisition
activities. The Company has established a $170 million credit line (the "Credit
Facility") with several lenders as the primary source of acquisition and
development capital, with a view towards replacing that debt following
acquisition (or completion, in the case of a development property) as market
conditions warrant, with either long term fixed rate debt or permanent equity.
As of August 8, 1996, the Company had a total of $187.7 million in outstanding
debt, consisting of $127.4 million under the Credit Facility (of which $82.1
million was drawn for development in progress) and $60.3 million in fixed rate
debt with an average maturity of 5.7 years.
Long-term Financing Arrangements
- --------------------------------
The Company's long-term financing includes a $50 million loan from Nationwide
Life Insurance Company ("the Nationwide Loan") which bears interest at a fixed
rate of 7.45% and matures in December 2002, with a 25-year principal
amortization schedule. The loan has a current outstanding balance of $49.5
million, and is collateralized by eight properties formerly pledged as part of
the collateral pool securing the Credit Facility. In November 1995 the Company
used the gross proceeds from the Nationwide Loan to retire an equivalent amount
of variable rate debt outstanding under the Credit Facility, simultaneously
releasing the eight properties as collateral for the Nationwide Loan. The
Company completed the refinancing with the goal of fixing its cost on a
significant portion of the Company's debt and reducing exposure to future
interest rate increases.
On March 15, 1996, the Company and its lenders under the Credit Facility agreed
to amend the terms of the Company's $170 million loan to (a) increase the
allowable collateral value of the properties securing the loan, (b) reduce the
interest
17
<PAGE>
rate to LIBOR plus 165 (previously 175) basis points on completed property debt
and to LIBOR plus 205 (previously 225) basis points on development property
debt, subject to an average minimum yield maintenance of a 185 basis point
spread, and (c) modify certain financial loan covenants. Full use of the $170
million available in the facility is subject to the Company's ability to provide
acceptable incremental collateral to the lenders during the term of the loan.
While such collateral is not currently available to fully utilize the committed
loan amount, the Company believes it will be able to meet collateral
requirements under the terms of the Credit Facility well in advance of its
funding requirements. The latest modifications in the terms of the Credit
Facility reflect the desire of the Company and its lenders to bring the pricing
and collateral value specified in the loan agreement in line with current market
conditions for similar financing, and to establish financing commitments
sufficient to complete the Company's five developments in progress. It is also
contemplated that the Credit Facility will be used for partial funding of two
future developments on sites which were acquired in January 1996 and a third
development site acquired in July 1996. These eight developments are presently
expected to contain a total of approximately 2,287 residential units with a
projected total cost of approximately $179.5 million, of which $156.1 million is
anticipated to be funded from the Credit Facility and internally generated cash
flow, and $23.4 million from other third party development debt or joint venture
partner equity. All except two of the identified developments are expected to be
completed and funded prior to December 31, 1997, the maturity date of the Credit
Facility.
In order to fund the remaining cost of its developments in progress, and to
start and complete new developments on the acquired sites, the Company will
require funds of approximately $31.4 million in excess of that available under
the Credit Facility. Because of this, while the Company currently intends to
continue to use the Credit Facility as its primary source of development
financing, it may in the future use additional third party debt, cash flow from
operations, and other sources of debt or equity to fund acquisitions and
development costs, or to refinance a portion of the Credit Facility before
maturity when deemed appropriate. With respect to any development properties,
the Company intends to fund interest payments through additional draws on the
Credit Facility or other loan sources until such properties are completed and
begin to provide sufficient income to satisfy debt service requirements and
operating expenses. When the Credit Facility matures on December 31, 1997, the
Company will be required to secure substitute financing for any balance then
outstanding.
On June 7, 1996, Addison Circle One, Ltd., closed on a $21.3 million
construction loan with Wells Fargo Realty Advisors Funding, Inc. The loan will
be funded in increments corresponding to the development and construction costs
incurred to complete the Addison Circle One multifamily and retail project. The
Company, as general partner of Addison Circle One, Ltd., funded the initial
development and construction costs of the project with a capital contribution of
approximately $8.6 million funded from the Credit Facility in the fourth quarter
of 1995. Construction of the project began in the first quarter of 1996. The
loan is secured by a first lien deed of trust on the land and improvements
comprising the project and a security interest in its rents and leases.
Interest is due and payable monthly at LIBOR plus 165 basis points applied to
the daily principal balance outstanding. The loan matures in June 1999 when the
principal then outstanding is due. There had been no draws on the construction
loan as of August 8, 1996.
On August 8, 1996, the Company filed a Registration Statement with the
Securities and Exchange Commission on Form S-3 to register an aggregate of $200
million of debt securities, common shares, preferred shares and securities
warrants (collectively, the "Offered Securities"). The Offered Securities may
be issued separately or together, in separate series, and in amounts and at
prices and terms to be determined by market conditions at the time of offering.
The proceeds from any future sales of the Offered Securities would be used for
general Company purposes, which may include the development and acquisition of
multifamily residential properties and the repayment of secured or unsecured
indebtedness.
RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENTS
This Form 10-Q, together with other statements and information publicly
disseminated by the Company, contain certain forward looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
are based on current expectations which involve a number of risks and
uncertainties, including, but not limited to, risks due to the market
concentration of the Company's properties in Dallas, Texas and particularly the
Uptown District; risks associated with the acquisition, construction and
development of multifamily residential properties, including the risk of
oversupply of units or a
18
<PAGE>
reduction in demand for apartment units, risks associated with delays in
construction and lease-up, cost overruns, and risks that the Company's
acquisition and development properties will fail to perform as expected; real
estate financing risks such as availability of debt or equity financing in the
future and the risk of increasing rates for such financing as well as other
risks listed from time to time in the Company's reports filed with the SEC.
19
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
Neither the Company nor its properties are presently subject to any material
litigation nor, to the Company's knowledge, is any material litigation
threatened against the Company or its properties, other than routine litigation
and administrative proceedings arising in the ordinary course of business, some
of which are expected to be covered by liability insurance and none of which are
expected to have a material adverse effect on the business, financial condition
or results of operations of the Company.
ITEM 2. CHANGES IN SECURITIES
Pursuant to the Credit Facility described more fully in the Company's 1995
Annual Report, the Company is prohibited from paying or declaring dividends in
excess of the sum of 90% of the Company's funds from operations (as defined
therein) and net taxable gains realized in each year from property sales. This
restriction has not, to date, affected the distributions declared or payable to
shareholders nor does the Company anticipate that this restriction will affect
the distributions payable to shareholders in the future.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company's annual meeting of shareholders was held
May 20, 1996.
(c) (1) The shareholders reelected the three Trust Managers
(Class II) nominated by the Board of Trust Managers to
serve three year terms:
Affirmative Negative Abstentions
------------ --------- -----------
Richard L. Bloch 10,096,284 77,458 N/A
James C. Leslie 10,049,940 123,802 N/A
Jack Kemp 10,094,677 79,065 N/A
The terms of office of Robert L. Shaw, Will Cureton,
Roger T. Staubach, Hugh G. Robinson, and Gregg L. Engles
continued after the meeting.
(2) The shareholders approved an amendment of the Company's
Declaration of Trust to reflect certain revisions to the
Texas Real Estate Investment Trust Act.
Affirmative Negative Abstentions
------------ --------- -----------
8,183,382 172,298 25,105
(3) The shareholders approved the Company's Employee Stock
Purchase Plan pursuant to which employees of the Company
may purchase the Company's common shares for 85% of the
fair market value of the shares on the exercise date. Up
to 100,000 common shares may be issued pursuant to the
plan.
Affirmative Negative Abstentions
------------ --------- -----------
8,181,621 171,093 28,070
20
<PAGE>
(4) The shareholders approved the Company's Management
Incentive Plan pursuant to which a committee of the
Trust Managers may award share options to Trust
Managers, officers and employees of the Company. Options
to purchase up to 500,000 common shares may be awarded
under the plan.
Affirmative Negative Abstentions
----------- -------- -----------
5,919,110 2,420,058 41,117
(5) The shareholders ratified the appointment of Ernst &
Young LLP as independent auditors of the Company for the
year ending December 31, 1996.
Affirmative Negative Abstentions
----------- -------- -----------
10,141,026 12,621 20,094
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description
----------- -----------
19.1 Renewal Promissory Note between the Company and Wells
Fargo Realty Advisors Funding, Inc. dated June 12, 1996.
27 Financial Data Schedule
(b) Reports on Form 8-K - None.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
COLUMBUS REALTY TRUST
(Registrant)
\s\ Robert L. Shaw August 14, 1996
- ------------------------------------------ ---------------
Robert L. Shaw Date
Chief Executive Officer and Trust Manager
(Principal Executive Officer)
\s\ Richard R. Reupke August 14, 1996
- ------------------------------------------ ---------------
Richard R. Reupke Date
Chief Financial Officer
(Principal Financial and Accounting
Officer)
22
<PAGE>
EXHIBIT 19.1
RENEWAL PROMISSORY NOTE
$21,291,000.00 June 7, 1996
FOR VALUE RECEIVED, ADDISON CIRCLE ONE, LTD., a Texas limited partnership
(hereinafter called "Maker", whether one or more), promises to pay to the order
of WELLS FARGO REALTY ADVISORS FUNDING, INCORPORATED, a Colorado corporation
(hereinafter, together with all subsequent holders of this Note, called
"Payee"), on or before the 7th day of June, 1999 (the "Maturity Date"), as
hereinafter provided, the principal sum of TWENTY-ONE MILLION, TWO HUNDRED
NINETY-ONE THOUSAND AND NO/100 DOLLARS ($21,291,000.00), or so much thereof as
may actually be advanced from time to time, together with interest on the unpaid
principal balance from time to time outstanding at the rate per annum equal to
the lesser of:
(1) Commencing on the date hereof and continuing until the Maturity Date,
the rate of interest (the "Applicable Rate") equal to the "Prime Rate"
(as defined below), provided, however, subject to the limitations
stated herein, the Maker may elect in accordance with the procedures
set forth below to have interest accrue and be paid on all or a portion
of the outstanding principal balance hereof at a rate per annum equal
to the "Fixed Increment Rate" (as defined below); or
(2) The maximum lawful rate (the "Maximum Rate") which may be contracted
for, charged, taken, received or reserved by Payee in accordance with
the applicable laws of the State of Texas (or applicable United States
federal law to the extent that it permits Payee to contract for,
charge, take, receive or reserve a greater amount of interest than
under Texas law), taking into account all charges made in connection
with the loan evidenced hereby which are treated as interest under
applicable law.
If Maker elects to have the Fixed Increment Rate apply, it shall advise
Payee in writing of its election and the Fixed Period (as herein defined) and
Fixed Increment (as herein defined) for which Maker desires said rate to apply
not later than 11:00 a.m. Pacific Standard Time or Pacific Daylight Time (as
applicable), three (3) business days prior to the Fixed Period Commencement Date
(as herein defined). Any such election may be made only (i) once during any
thirty (30) day period and (ii) while no Event of Default is in existence and no
event has occurred or condition exists which with notice and/or lapse of time
constitute an Event of Default. After Maker has designated a Fixed Increment to
which the Fixed Increment Rate shall apply, such rate shall apply to the Fixed
Increment for the duration of the Fixed Period. At any one time during the term
hereof, no more than five (5) Fixed Increments may be outstanding. If Maker
elects the Fixed Increment Rate, but the applicable Fixed Period will commence
on a date which is not a Business Day, such Fixed Period shall be deemed to
commence on the next Business Day after it would otherwise commence, and any
interest which accrues hereunder in the interim shall accrue at the Applicable
Rate.
--------------
Initialed for
Identification
PROMISSORY NOTE - Page 1
<PAGE>
Notwithstanding anything herein to the contrary, if the Maker elects the
Fixed Increment Rate to apply, but Payee is unable for any reason to obtain
funds from Wells Fargo Bank (as hereinafter defined) in the amount of the Fixed
Increment elected for the applicable Fixed Period and Fixed Period Commencement
Date elected, interest on the outstanding principal balance of this Note shall
accrue at the Applicable Rate unless and until an election, in accordance with
the provisions hereof, of a new Fixed Increment Rate, Fixed Increment, Fixed
Period and Fixed Period Commencement Date is made by Maker, and Payee is then
able to obtain such funds from Wells Fargo Bank. Payee shall exercise good
faith efforts to obtain funds from Wells Fargo Bank in the amount of any Fixed
Increment elected by Maker, but Payee shall have no liability or obligation to
Maker if for any reason it is unable to do so. If Payee is unable to obtain
such funds from Wells Fargo Bank, Payee will so advise Maker within two (2)
Business Days after receipt of Payee's written election to have the Fixed
Increment Rate apply.
In the absence of an effective election by Maker of the Fixed Increment
Rate in accordance with the above procedures prior to the expiration of the then
current Fixed Period with respect to any Fixed Increment, interest on such Fixed
Increment shall accrue at the Applicable Rate, effective immediately upon the
expiration of such Fixed Period.
Notwithstanding anything in the preceding paragraphs to the contrary, if at
any time (i) the Applicable Rate or Fixed Increment Rate, whichever is
applicable, or both to the extent that both are applicable, (ii) interest at the
Default Rate, if applicable, as provided for herein or in any of the other
Security Documents, together with (iii) all fees and charges, if any, contracted
for, charged, received, taken or reserved by Payee in connection with the loan
evidenced hereby which are treated as interest under applicable law
(collectively, the "Charges") computed over the full term of this note, exceed
the Maximum Rate, the rate of interest payable hereunder, together with all
Charges, shall be limited to the Maximum Rate; provided, however, that any
subsequent reduction in the Prime Rate or any subsequent expiration of a Fixed
Period during which the Fixed Increment Rate exceeds the Maximum Rate, if
applicable, shall not cause a reduction of the rate of interest payable
hereunder below the Maximum Rate until the total amount of interest earned
hereunder, together with all Charges, equals the total amount of interest which
would have accrued at the Applicable Rate if such interest rate had at all times
been in effect (except for any Fixed Increments during its applicable Fixed
Period) and, if applicable, at the Fixed Increment Rate for any Fixed Increment
during its applicable Fixed Period. Changes in the Applicable Rate resulting
from a change in the Prime Rate shall be subject to the provisions of this
paragraph.
"Business Day" shall mean any day on which all major departments of Wells
------------
Fargo Bank are open for business at its downtown headquarters in San Francisco,
California.
"Fixed Increment" shall mean the portion of the outstanding principal
---------------
balance hereof specified by Maker to Payee effective as of the applicable Fixed
Period Commencement Date; provided, however, in no event shall any such Fixed
Increment be less than One Million and No/100 dollars ($1,000,000.00).
"Fixed Increment Rate" shall mean one and sixty-five one hundredths of one
--------------------
percent (1.65%) above the Libor Rate (as defined below), as it fluctuates.
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PROMISSORY NOTE - Page 2
<PAGE>
"Fixed Period" shall mean a period as designated by Maker of thirty (30),
------------
sixty (60), ninety (90), one hundred eighty (180), or three hundred sixty (360)
days, or such longer period as Payee may approve, from the Fixed Period
Commencement Date. Notwithstanding the foregoing, in no event shall any Fixed
Period extend beyond the Maturity Date.
"Fixed Period Commencement Date" shall mean the proposed commencement of
------------------------------
the applicable Fixed Period.
"LIBOR Rate" shall mean the rate per annum which is equal to the sum of the
----------
quotient of (a) the rate determined by Payee (whose determination shall be
conclusive) to be the rate per annum, as of 11:00 A.M. (London Time) on the
Business Day of the Fixed Period Commencement Date to which such rate is to
apply, offered by Wells Fargo Bank to leading banks in the London Interbank
Market for U.S. dollar deposits for periods based on the next highest 30 day
incremental interest rate period approximately corresponding to the Fixed Period
elected by Maker in an amount equal to the Fixed Increment elected by Maker
divided by (b) one minus the Reserve Requirement (as defined below) expressed as
a decimal. The LIBOR Rate shall be rounded, if necessary, to the next highest
one one-hundredth of one percent (.01%).
Maker acknowledges and agrees that Payee may incur costs, expenses and
losses, including, without limitation, any costs, expenses and losses resulting
from the occurrence of any of the events referred to in this paragraph which
increase the cost to Payee of maintaining the loan evidenced hereby at a Libor
Rate. Accordingly, Maker shall pay to Payee on demand, in addition to all other
amounts due under this Note and under the Security Documents, all amounts
reasonably determined by Payee required to compensate Payee for all such costs,
expenses and losses, if any, to the extent that such costs, expenses and losses
increase the cost to Payee of maintaining the loan evidenced hereby on a Libor
Rate, provided that Payee agrees, as soon as reasonably possible, to give Maker
notice of any such increased costs, expenses or losses. If any change in
applicable laws or regulations or any interpretation thereof by any government,
central bank or agency or instrumentality of any of them ("Governmental
Authority") charged with the administration thereof shall make it unlawful for
Payee to have access to Eurodollar deposits, or to continue to maintain or use
the Libor Rate to comply with its obligations in connection with the maintenance
of the Fixed Increment Rate (based on the Libor Rate) as contemplated by this
Note, then such Libor Rate shall forth with and thereafter, upon demand by Payee
to Maker, bear interest at the Prime Rate, and Maker shall pay for any costs,
expenses or losses (including loss of anticipated profits) which Payee may incur
in connection with the provisions of this Note as a result of such change in
applicable law or regulations or interpretation thereof. If any change in
applicable laws or regulations or any interpretation thereby by any Governmental
Authority charged with the administration thereof shall:
(i) impose, modify or deem applicable any reserve, special deposit or
special requirements against assets held by, or deposits in or for the
account of, or loans by, or any other acquisition of funds for advances by
Payee; or
(ii) impose on Payee any other conditions regarding this Note; or
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Identification
PROMISSORY NOTE - Page 3
<PAGE>
(iii) subject Payee (or make it apparent that Payee is subject) to
any tax (including, without limitation, any international interest
equalization tax), levy, impost, duty, charge, fee, deduction or
withholding on or from payment due Maker, other than income and franchise
taxes of the United States and its political subdivisions; or
(iv) change the basis of taxation on payments due from Maker to Payee
hereunder (otherwise than by a change in the statutory rate of taxation of
the overall income of Payee);
and any of the foregoing results in an increase in the cost to Payee of
maintaining the loan evidenced hereby on a Libor Rate, then upon demand made by
Payee to Maker, Maker shall pay to Payee, from time to time, as determined and
certified by Payee, additional amounts which shall compensate Payee for such
increased costs. Payee will notify Maker of any event that entitles Payee to
additional amounts and will furnish Maker with an explanatory certificate in
reasonable detail as to the increased cost as a result of any such event
mentioned in this paragraph. Maker shall immediately pay such additional
amounts to Payee. All such determinations by Payee that are certified to Maker
shall be presumed to be correct, absent manifest computational errors, provided
they are made in good faith. Maker shall pay Payee on the days on which
interest is payable under this Note the actual costs to Payee, as determined in
good faith by Payee and evidenced by an explanatory notice delivered to Maker by
Payee, of Payee's complying with any reserve, special deposit or similar
requirements (including, but not limited to, state law requirements and
Regulations K and D of the Board of Governors of the Federal Reserve System of
the United States) imposed or deemed applicable against foreign assets held by,
or deposits in or for the account of, or loans by, or any other acquisition of
funds for advances by Payee by any Governmental Authority charged with the
administration of such requirements, to the extent that such requirements
increase the cost to Payee of maintaining the loan evidenced hereby on a Libor
Rate.
"Prime Rate" shall mean the base rate of interest per annum established
from time to time by WELLS FARGO BANK, N.A., San Francisco, California ("Wells
Fargo Bank"), and designated as its prime rate. Changes in the Applicable Rate
resulting from changes in the Prime Rate shall become effective on the date each
such change in such Prime Rate is established by Wells Fargo Bank.
Interest based on a three hundred sixty (360) day year will be accrued on
the number of days funds are actually outstanding. Interest shall be calculated
on a daily basis and shall be payable monthly on the first (1st) day of each and
every month following the date hereof until the Maturity Date, at which time all
accrued and unpaid interest and the unpaid principal balance hereof shall be due
and payable in full.
All payments on this Note shall, at the option of Payee, be applied first
to the payment of accrued but unpaid interest, and any remainder shall be
applied to reduction of the principal balance hereof. All payments hereunder
shall be made to Payee at 2120 Park Place, Suite 100, El Segundo, California
90245, or via wire transfer to ABA No. 12100024B, WFBREG Disbursement Center,
Account No. 2934507203, Reference Columbus/Addison, WFREG No.
--------------
Initialed for
Identification
PROMISSORY NOTE - Page 4
<PAGE>
8466ZMD, or at such other address in Dallas County, Texas as Payee may from time
to time designate in writing to Maker.
Maker may at any time and from time to time prepay all or any part of this
Note without payment of any premium or penalty; provided, Maker shall pay to
Payee an amount equal to any costs and expenses incurred by Payee resulting from
repayment of any part of the loan bearing interest at the Fixed Increment Rate
prior to the end of the applicable Fixed Period.
Except as specifically provided in the Security Documents (as defined in
the Deed of Trust referred to herein), Maker and any endorsers or guarantors
hereof severally waive presentment and demand for payment, notice of intent to
accelerate maturity, notice of acceleration of maturity, protest and notice of
protest and non-payment, bringing of suit and diligence in taking any action to
collect any sums owing hereunder or in proceeding against any of the rights and
properties securing payment hereof. Maker and any endorsers or guarantors hereof
agree that the time for any payments hereunder may be extended from time to time
without notice and consent to the acceptance of further security or the release
of any existing security for this Note all without in any manner affecting their
liability under or with respect to this Note. No extension of time for the
payment of this Note or any installment hereof shall affect the liability of
Maker under this Note even though Maker is not a party to such agreement.
If default be made in the payment, in whole or in part, of any sum provided
for herein and same is not paid within fifteen (15) days from the date same was
due or if an Event of Default shall occur under any of the Security Documents,
then Payee may, at its option, without notice or demand, declare the unpaid
principal balance and accrued interest on this Note at once due and payable,
foreclose all liens securing payment hereof, pursue any and all other rights,
remedies and recourses available to Payee or pursue any combination of the
foregoing, all remedies hereunder and under the Security Documents being
cumulative.
If Maker shall fail to pay, in full, any installment of principal or
interest required hereunder on or before fifteen (15) days following the date on
which it becomes due, then in addition to the payments otherwise specified
herein, Maker shall automatically become liable for and shall pay to Payee a
late charge equal to four percent (4%) of the amount of such delinquent payment.
Upon the occurrence of a default in the payment, in whole or in part, of
any sum provided for herein or upon the occurrence of an Event of Default under
any of the Security Documents, at the option of the Payee, all amounts then
outstanding hereunder or under the Security Documents shall bear interest for
the period beginning with the date of occurrence of such default at a rate of
interest per annum (the "Default Rate"), payable on the first day of each and
every month, equal to the lesser of: (a) four percent (4%) above the Applicable
Rate, as its fluctuates, or (b) the Maximum Rate.
Failure to exercise any of the foregoing options upon the happening of one
or more of the foregoing events shall not constitute a waiver of the right to
exercise the same or any other option at any subsequent time in respect to the
same or any other event. The acceptance by Payee of any
--------------
Initialed for
Identification
PROMISSORY NOTE - Page 5
<PAGE>
payment hereunder that is less than payment in full of all amounts due and
payable at the time of such payment shall not constitute a waiver of the right
to exercise any of the foregoing options at that time or at any subsequent time
or nullify any prior exercise of any such option without the express written
consent of the Payee.
All amounts payable hereunder are payable in lawful money of the United
States of America. Maker agrees to pay all costs of collection hereof when
incurred, including reasonable attorneys' fees, whether or not any legal action
shall be instituted to enforce this Note.
This Note is issued pursuant to a Construction Loan Agreement of even date
herewith executed by Maker and payee and is secured, inter alia, by a Renewal
----------
Deed of Trust and Security Agreement ("Deed of Trust") of even date herewith
executed by Maker in favor of STEPHEN P. PRINZ, TRUSTEE, for the benefit of
Payee, covering certain real property situated in Dallas County, Texas, as more
particularly described therein. This Note shall be governed by and construed
according to the applicable laws of the State of Texas (or applicable United
States federal law to the extent that it permits Payee to contract for, charge,
take, reserve or receive a greater amount of interest than under Texas law).
It is expressly stipulated and agreed to be the intent of Maker and payee
at all times to comply with the applicable Texas law governing the maximum rate
or amount of interest payable on this Note or the indebtedness evidenced hereby
and by the other Security Documents (or applicable United States federal law to
the extent that it permits the Payee to contract for, charge, take, reserve or
receive a greater amount of interest than under Texas law). If the applicable
law is ever revised, repealed or judicially interpreted so as to render usurious
any amount called for under this Note or under any of the Security Documents, or
contracted for, charged, taken, reserved or received with respect to the
indebtedness, or if Payee's exercise of the option herein contained to
accelerate the maturity of this Note, or if any prepayment by Maker results in
Maker having paid any interest in excess of that permitted by applicable law,
then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by Payee be credited on the principal balance of this Note
(or, if this Note has been or would thereby be paid in full, refunded to Maker),
and the provisions of this Note and the other Security Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder.
All sums paid or agreed to be paid to Payee for the use, forbearance or
detention of the indebtedness evidenced hereby and by the other Security
Documents shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the usury ceiling from time to time in effect and
applicable to such indebtedness evidenced hereby for so long as the debt is
outstanding.
To the extent that Payee is relying on Article 5069-1.04, as amended, of
the Revised Civil Statutes of Texas to determine the Maximum Rate payable on
such indebtedness, Payee will utilize
--------------
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Identification
PROMISSORY NOTE - Page 6
<PAGE>
the indicated (weekly) rate ceiling from time to time in effect as provided in
Article 5069-1.04, as amended. To the extent United States federal law permits
Payee to contract for, charge or receive a greater amount of interest, Payee
will rely on United States federal law instead of such Article 5069-1.04, as
amended, for the purpose of determining the Maximum Rate. Additionally, to the
extent permitted by applicable law now or hereafter in effect, Payee may, at its
option and from time to time, implement any other method of computing the
Maximum Rate under such Article 5069-1.04, as amended, or under other applicable
law by giving notice, if required, to Maker as provided by applicable law now or
hereafter in effect. In no event shall the provisions of Article 5069, ch. 15 of
the Revised Civil Statutes of Texas (which regulates certain revolving credit
loan accounts and revolving tri-party accounts) apply to the loan evidenced
hereby. Notwithstanding anything to the contrary contained herein or in any of
the other Security Documents, it is not the intention of Payee to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.
All notices hereunder shall be given at the following addresses: If to
Maker, 15851 North Dallas Parkway, Suite 855, Dallas, Texas 75248; if to Payee,
c/o Wells Fargo Real Estate Group, 12377 Merit Drive, Suite 300, Dallas, Texas
75251, with a copy of all notices to c/o Chief Credit Officer - Real Estate
Group, Wells Fargo Bank, N.A., 420 Montgomery Street, 6th Floor, San Francisco,
California 94163. Either party may change its address for notice hereunder to
any other location within the continental United States by giving thirty (30)
days prior notice thereof to the other party in accordance with this paragraph.
All notices given hereunder shall be in writing and shall be considered properly
given if mailed by first class United States Mail, postage prepaid, registered
or certified with return receipt requested, or by delivering same in person to
the intended addressee, or by prepaid telegram. Any notice mailed as above
provided shall be effective two (2) days after its deposit in the custody of the
United States Postal Service; all other notices shall be effective upon receipt
by the addressee.
If this Note is executed by more than one party, each such party shall be
jointly and severally liable for the obligations of Maker under this Note. If
Maker is a partnership, each general partner of Maker shall be jointly and
severally liable here under, and each such general partner hereby waives any
requirement of law that in the event of a default hereunder Payee exhaust any
assets of Maker before proceedings against such general partner's assets.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
NOTE IS PERFORMABLE IN DALLAS COUNTY, TEXAS. Any action or proceeding under or
in connection with this Note against Maker or any other party ever liable for
payment of any sums of money payable on this Note may be brought in any state or
federal court in Dallas County, Texas. Maker and each such other party hereby
irrevocably (i) submits to the nonexclusive jurisdiction of such courts, and
(ii) waives any objection it may now or hereafter have as to the venue of any
such action or proceeding brought in such court or that such court is an
inconvenient forum.
--------------
Initialed for
Identification
PROMISSORY NOTE - Page 7
<PAGE>
This note is given in renewal, extension and rearrangement, and not in
extinguishment, of that certain promissory note dated January 12, 1996 in the
original principal amount of NINETEEN MILLION, SEVEN HUNDRED NINETY-ONE THOUSAND
AND NO/100 DOLLARS ($19,791,000.00) executed by the Maker payable to the order
of Columbus Realty Trust (all of the rights, titles and interests of Columbus
Realty Trust in and to said promissory note and all security therefor having
been assigned to the Payee). All liens, assignments and security interests
securing the payment of said promissory note (including without limitation that
certain Deed of Trust and Security Agreement dated January 12, 1996 executed by
the Maker in favor of Trustee, upon and covering certain property situated in
Dallas County, Texas, more fully described therein, and filed for record at
Volume 96009, Page 3228 of the Real Property Records of Dallas County, Texas)
are hereby ratified, confirmed, brought forward, renewed, extended and
rearranged, as security for the payment of this note, in addition to and
cumulative of all other security for this note.
Columbus Realty Trust ("CRT") is the general partner of Maker. In
accordance with the Amended and Restated Declaration of Trust of CRT, notice is
hereby given that all persons dealing with CRT shall look to the assets of CRT
for the enforcement of any claim against CRT, as neither the trustees, officers,
employees nor shareholders of CRT assume any personal liability for obligations
entered into by or on behalf of CRT.
EXECUTED as of the date and year first above written.
MAKER:
-----
ADDISON CIRCLE ONE, LTD.,
a Texas limited partnership
By: Columbus Realty Trust,
a Texas real estate investment trust
By:________________________________________
J. Michael Lewis
Senior Vice President
Signature Page to $21,291,000.00 Promissory Note dated June 7, 1996,
executed by Addison Circle One, Ltd. in favor of Wells Fargo Realty Advisors
Funding, Incorporated.
--------------
Initialed for
Identification
PROMISSORY NOTE - Page 8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
FINANCIAL STATEMENTS OF COLUMBUS REALTY TRUST FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,112
<SECURITIES> 0
<RECEIVABLES> 1,019
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,532
<PP&E> 378,965
<DEPRECIATION> 34,951
<TOTAL-ASSETS> 357,791
<CURRENT-LIABILITIES> 16,062
<BONDS> 0
0
0
<COMMON> 116
<OTHER-SE> 155,747
<TOTAL-LIABILITY-AND-EQUITY> 357,791
<SALES> 0
<TOTAL-REVENUES> 22,696
<CGS> 0
<TOTAL-COSTS> 8,779
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,523
<INCOME-PRETAX> 5,505
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,505
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,505
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
</TABLE>
