<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 Commission File Number
ended March 31, 1997 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)
(972) 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 13,247,306 common shares of beneficial interest, $0.01 par value per
share, outstanding at May 12, 1997.
Index to exhibits: Page 16
Total Pages: 19
1
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COLUMBUS REALTY TRUST
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
INDEX
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements
Consolidated Balance Sheets of Columbus
Realty Trust as of March 31, 1997 and..................... 3
and December 31, 1996....................
Consolidated Statements of Operations of
Columbus Realty Trust for the three months................ 4
ended March 31, 1997 and 1996.....
Consolidated Statements of Cash Flows of
Columbus Realty Trust for the three months................ 5
ended March 31, 1997 and 1996.....
Notes to Consolidated Financial Statements................ 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............ 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings........................................ 16
Item 2. Changes in Securities.................................... 16
Item 3. Defaults Upon Senior Securities.......................... 16
Item 4. Submission of Matters to a Vote of Security Holders...... 16
Item 5. Other Information........................................ 16
Item 6. Exhibits or Reports on Form 8-K.......................... 16
Signatures.......................................................... 19
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
COLUMBUS REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
------------------------------------
ASSETS (Unaudited)
<S> <C> <C>
Real estate:
Land $ 55,821 $ 54,399
Buildings and improvements 291,040 285,104
Furniture, fixtures, and equipment 4,798 4,696
Construction in progress 76,741 55,614
------------------------------------
428,400 399,813
Less accumulated depreciation 43,389 40,492
------------------------------------
Real estate held for investment 385,011 359,321
Real estate held for sale 3,665 3,980
------------------------------------
388,676 363,301
Cash and cash equivalents 2,313 2,641
Restricted cash and cash equivalents 223 554
Accounts receivable 996 663
Receivables from affiliates 213 152
Deferred assets, net of accumulated 402 420
amortization
Deferred financing costs, net of 1,170 1,316
accumulated amortization
Other assets 9,825 5,529
------------------------------------
Total assets $403,818 $374,576
====================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable $208,116 $179,855
Accounts payable and accrued expenses 7,596 3,536
Accrued interest 323 288
Accrued property taxes 1,839 6,727
Tenant security deposits 1,750 1,671
Prepaid rent 163 358
Minority interest 2,063 2,063
------------------------------------
Total liabilities 221,850 194,498
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;
13,245,755 and 13,059,137 shares 132 131
issued at March 31, 1997, and
December 31, 1996, respectively
Additional paid-in capital 210,311 206,564
Retained earnings (deficit) (28,469) (26,611)
------------------------------------
181,974 180,084
Less 900 common shares in treasury,
at cost 6 6
------------------------------------
Total shareholders' equity 181,968 180,078
------------------------------------
Total liabilities and shareholders' $403,818 $374,576
equity
====================================
</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 MARCH 31,
1997 1996
------------------------------
Revenue:
<S> <C> <C>
Rental $ 12,861 $ 10,301
Property management 33 75
Interest and other 594 558
------------------------------
Total revenue 13,488 10,934
Expenses:
Repairs and maintenance 914 790
Other property operating 617 590
Advertising 236 113
General and administrative - properties 842 811
General and administrative - corporate 646 508
Real estate taxes 1,976 1,421
Interest 2,152 1,495
Interest related to amortization of 102 67
deferred financing costs
Depreciation and amortization 2,956 2,443
------------------------------
Total expenses 10,441 8,238
------------------------------
Income from operations 3,047 2,696
Gain on sale of real estate 285 -
------------------------------
Net income $ 3,332 $ 2,696
==============================
Net income per common share, primary
and fully diluted:
Income from operations $0.23 $0.23
Gain on sale of real estate 0.02 -
------------------------------
Net income $0.25 $0.23
==============================
Weighted average number of common
shares outstanding (including 13,363,743 11,680,081
common share equivalents):
</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>
THREE MONTHS ENDED MARCH 31,
<S> <C> <C>
1997 1996
----------------------------
OPERATING ACTIVITIES
Net income $ 3,332 $ 2,696
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 2,956 2,443
Amortization of deferred financing 102 67
costs
Gain on sale of real estate (285) -
Net effect of changes in operating (6,902) (8,281)
assets and liabilities
-------------------------------
Net cash used in operating activities (797) (3,075)
INVESTING ACTIVITIES
Acquisition of real estate (6,930) (5,620)
Payment of construction costs (18,288) (12,429)
Proceeds from sale of real estate 774 -
Improvements to real estate investments (424) (448)
Purchase of furniture, fixtures, and (102) (92)
equipment
Decrease in restricted cash and cash 331 273
equivalents
-------------------------------
Net cash used in investing activities (24,639) (18,316)
FINANCING ACTIVITIES
Proceeds from notes payable 28,482 24,384
Payment of notes payable (221) (205)
Payment of financing costs (38) (248)
Proceeds from employee and shareholder 2,082 458
plans
Payment of dividends (5,190) (4,322)
Payment of offering costs (7) (22)
-------------------------------
Net cash provided by financing 25,108 20,045
activities
-------------------------------
Net decrease in cash and cash (328) (1,346)
equivalents
Cash and cash equivalents at beginning 2,641 10,754
of period
-------------------------------
Cash and cash equivalents at end of $ 2,313 $ 9,408
period
===============================
Supplemental cash flow information:
Interest payments, including $1,395
and $1,514 interest capitalized $ 3,512 $ 2,977
in 1997 and 1996, respectively
Noncash financing activity:
Issuance of shares under employee plans $ 1,673 $ 1,298
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(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 approximately $111.6 million before
offering costs. In connection with the offering, the Company drew $15 million on
its credit facility, for total proceeds of approximately $126.5 million. 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.
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. Certain prior year financial statement amounts have been
reclassified to conform with current year presentation.
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 March 31, 1997, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1997. For further information, refer to the financial
statements and accompanying footnotes included in the Columbus Realty Trust Form
10-K for the year ended December 31, 1996 (the 1996 Annual Report).
6
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
RESTRICTED CASH AND CASH EQUIVALENTS
Restricted cash includes an escrow account established for property taxes on a
property and a construction deposit for public infrastructure improvements made
on one of the Company's development projects.
REAL ESTATE ASSETS AND RELATED DEPRECIATION
Real estate assets held for investment are stated at depreciated cost unless the
asset is determined to be impaired. The Company records impairment losses on its
real estate assets when events and circumstances indicate that the assets might
be impaired and the expected undiscounted cash flows are less than the carrying
amounts of those assets. In cases where the Company does not expect to recover
its carrying costs, the Company reduces its carrying costs to fair value. No
such impairment losses have been recognized to date.
Real estate assets held for sale are stated at the lower of depreciated cost, or
fair market value less selling costs at the date the Company begins marketing
efforts to sell the properties. The Company records impairment losses on real
estate investments held for sale if the Company determines the fair market value
less selling costs is less than depreciated cost. No such impairment losses have
been recognized to date. The Company began marketing efforts with respect to
certain of its condominium units in 1996 (see Note 2). No depreciation of the
real estate assets held for sale has been recognized since the inception of the
marketing efforts for the properties.
2. REAL ESTATE TRANSACTIONS
PROPERTY ACQUISITION
On February 24, 1997, the Company purchased a 158-unit multifamily residential
property known as The Commons at Turtle Creek, located in Dallas, Texas, for a
purchase price of approximately $6.9 million. The purchase was funded from the
Company's credit facility (the Credit Facility) more fully described in the 1996
Annual Report.
DEVELOPMENT PROJECTS
On February 27, 1997, the Company executed a forty year land lease agreement for
a redevelopment project, The Rice Hotel, located in Houston, Texas. The Rice
Hotel is an 18-story structure originally built in 1913. Under terms of the
agreement, the Company will fund redevelopment of the hotel into a mixed-use
residential and retail facility comprised of 317 loft-style apartments and
21,000 square feet of retail space. The Company, in partnership with a Houston-
based development company, will manage all aspects of the renovation (currently
budgeted at approximately $33.3 million) and operations of the project upon
completion. The Houston Housing Finance Corporation (HHFC), owner of the land,
will fund approximately $6.6 million of abatement and infrastructure costs.
Concurrently with closing the lease agreement, the Company guaranteed a $20.0
million construction loan for the project. The remainder of the partnership's
renovation costs will be funded from draws on a short term unsecured credit line
more fully described in Note 3, the Credit Facility, cash flow from operations,
or other short term financing.
On January 16, 1997, the Company paid a deposit of $300,000 pursuant to an
earnest money contract to purchase and redevelop a ten-acre tract known as the
St. Luke's Hospital Campus located in Denver, Colorado. The Company expects to
complete a purchase of the site when the seller completes demolition of certain
existing buildings and meets other conditions.
None of the Company's development projects were completed during the three
months ended March 31, 1997.
7
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. REAL ESTATE TRANSACTIONS (CONTINUED)
SALES OF CONDOMINIUM UNITS
Five units in the Villas of Valley Ranch condominium community and five units in
the Springstead condominium community were sold during the three months ended
March 31, 1997, for net proceeds of $774,000 resulting in a net gain of
$285,000.
3. NOTE PAYABLE
The Company obtained a short term $15 million unsecured credit line (the
Unsecured Credit Line) from Bank One, Texas, N.A. in the three months ended
March 31, 1997. The Unsecured Credit Line may be drawn upon in increments
determined by the Company, and may be repaid at any time without penalty.
Interest only payments are due monthly on the unpaid principal balance at LIBOR
plus 205 basis points (7.4875% at March 31, 1997). Approximately $2.6 million
was outstanding on the Unsecured Credit Line at March 31, 1997. The original
maturity date of May 1, 1997, was subsequently extended to August 2, 1997.
4. SHAREHOLDERS' 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.
In February 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS 128), which
specifies the computation, presentation and disclosure requirements for basic
earnings per share and diluted earnings per share. The Company believes the
adoption of SFAS 128 will not have a material effect on earnings per share of
the Company.
DISTRIBUTIONS
On March 25, 1997, the Company paid a dividend of approximately $5.2 million
($0.395 per common share) to shareholders of record on March 21, 1997. The
Company received approximately $2.0 million in proceeds from the sale of 106,935
common shares issued concurrently with the dividend payment pursuant to the
Dividend Reinvestment Plan.
5. SHARE BONUS AND INCENTIVE PLAN
The Company has established certain bonus and incentive plans for the purpose of
advancing the long term interests of the Company and its shareholders by
increasing the grantees' ownership in the Company, and providing additional
incentive to promote its success and growth.
During the three months ended March 31, 1997, pursuant to the Columbus Realty
Trust Employee Incentive Plan (Employee Incentive Plan), the Company granted
48,280 restricted common shares to certain executive officers, at their
election, in lieu of payment of annual base salary, such shares having a fair
market value on the date of grant of approximately $1.0 million, equal to 150%
of the annual base salary otherwise payable. In addition, the Company granted
1,232 restricted common shares (having a fair market value on the date of grant
of $25,000) to certain Trust Managers equal to 150% of the quarterly trust
manager fee otherwise payable. The determination to grant common shares having a
fair market value of 150% over the base salary or trust manager fees otherwise
payable was based upon the risks of forfeiture of the shares awarded and the
other restrictions on transfer of the shares described below.
8
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. SHARE BONUS AND INCENTIVE PLAN (CONTINUED)
In addition, the Company granted 30,264 restricted common shares having a fair
market value on the date of grant of $636,000 to certain executive officers and
other employees as bonuses. The restricted common shares are generally subject
to forfeiture in the event of termination of the recipient's employment with the
Company within the three year period following the date of grant and may not be
transferred until the end of the three-year restricted period.
Each of the restricted common shares was granted for a purchase price of $0.01
per share. The difference between the purchase prices of the common shares and
the aggregate fair market values of the common shares on the dates of grant
(approximately $1.6 million) will, to the extent such amounts are allocable to
operations, be amortized as compensation expense ratably over the three-year
periods commencing on the dates of grant. Accordingly, during the three months
ended March 31, 1997, the Company did not recognize the compensation expense
which would have been recognized if such annual base salaries, trust manager
fees and cash bonuses had been paid. However, for the three months ended March
31, 1997 and 1996, the Company recognized $29,000 and $11,000, respectively, as
amortization of deferred compensation expense, and $33,000 and $16,000,
respectively, as bonus expense, based upon the portion of the amortization of
the fair market values of restricted common shares granted in 1997, 1996, and
1995 allocable to operations.
6. TRANSACTIONS WITH AFFILIATES
<TABLE>
<CAPTION>
Amounts receivable from affiliates
include the following (in thousands): MARCH 31, DECEMBER 31,
1997 1996
-------------------------
<S> <C> <C>
Amounts advanced to condominium $ 80 $ 54
homeowners' associations
Amounts advanced to non-management 37 34
employees
Receivable from Employee Stock Purchase 5 3
Plan
Amounts receivable from owners of
predecessors in connection 57 55
with the acquisition of their
interests
Amounts advanced to affiliates in
ordinary course of business for third 34 6
party property management
-------------------------
$ 213 $ 152
=========================
</TABLE>
7. COMMITMENTS AND CONTINGENCIES
GENERAL
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.
OPERATING LEASE
In March 1997 the Company executed an agreement to extend its lease for the
corporate offices. The lease agreement, which expires in December 1998, requires
minimum rent payments of $306,000 for the year ended December 31, 1997, and
$347,000 for the year ended December 31, 1998.
9
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. SUBSEQUENT EVENTS
On May 7, 1997, the Company purchased a redevelopment site, The American Beauty
Mill, located in Dallas, Texas, for $565,000. The Company expects to renovate
the property, formerly a flour mill and office complex, for adaptive reuse as a
multifamily residential project. The project is budgeted at approximately $5.0
million and will include 82 loft-style residential units upon completion. The
acquisition was funded from the Company's Unsecured Credit Line.
On May 12, 1997, the Company purchased a development site for a multifamily
residential project in the Uptown district of Dallas, Texas, from an
unaffiliated third party for approximately $2.3 million. The purchase was funded
with seller financing of approximately $2.0 million.
10
<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 March 31, 1997, and 1996, and for the
three month periods then ended. This information should be read in conjunction
with the accompanying consolidated financial statements and notes thereto.
RESULTS OF OPERATIONS
As of March 31, 1997, the Company owned 5,558 completed residential units in its
real estate portfolio, a net increase of 1,016 units or approximately 22% over
the 4,542 units held as of March 31, 1996. The increase in the number of
residential units in the operating portfolio is the result of the Company's
development and construction activities. Three multifamily residential projects
were completed in the second quarter of 1996, two were completed in the third
quarter of 1996, and one multifamily residential property was acquired in the
first quarter of 1997. As more fully described below, the projects completed and
acquired in 1996 and 1997 have had a significant impact on the Company's results
of operations. As of May 12, 1997, the Company has seven multifamily residential
projects comprising 1,986 apartment units under construction.
COMPARISON OF THREE MONTH PERIOD ENDING MARCH 31, 1997 TO THREE MONTH PERIOD
- ----------------------------------------------------------------------------
ENDING MARCH 31, 1996
- ---------------------
The Company's net income increased approximately $636,000 to approximately $3.3
million or $0.25 per common share for the three months ended March 31, 1997,
compared with net income of approximately $2.7 million or $0.23 per common share
in the three months ended March 31, 1996. During the three months ended March
31, 1997, rental revenue totaled approximately $12.9 million, an increase of
approximately $2.6 million or 24.8% over rental revenue of approximately $10.3
million in 1996. The five development projects completed in 1996 generated
combined rental revenue of approximately $2.2 million in the first quarter of
1997. The remaining $383,000 increase in rental revenue is the result of rental
rate increases and higher average occupancy rates at several of the Company's
properties, and additional rental revenue from a property acquired in February
1997. Property management income decreased $42,000 or 56.0% in the first quarter
of 1997 from the comparable prior period due to a decrease in apartment units
managed for third-party owners. Interest and other revenue increased $36,000 or
6.5% in 1997 over 1996 primarily due to increased non-rental income from the
development properties completed in 1996, partially offset by a $50,000 non-
recurring marketing commission earned in the first quarter of 1996.
Total expenses during the three months ended March 31, 1997, were approximately
$10.4 million, an increase of approximately $2.2 million or 26.7% over total
expenses of approximately $8.2 million in 1996. 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 acquisition and development activities.
The increase in the number of stabilized apartment units was the primary reason
for the $124,000 or 15.7% increase in repairs and maintenance expenses and the
$27,000 or 4.6% increase in other property operating expenses during the first
quarter of 1997 compared with 1996. Advertising costs increased $123,000 or
108.8% in the three months ended March 31, 1997, over 1996, due to a $13,000
increase in advertising to maintain occupancies and an incremental increase of
$110,000 attributable to the increased number of apartment units owned and
operated in 1997. Property administrative expenses increased $31,000 or 3.8% in
the three months ended March 31, 1997, over 1996 due to salaries and benefits
for personnel managing the newly completed development properties and as a
result of annual salary increases. Real estate tax expense increased $555,000 or
39.1% in the first quarter of 1997 over the respective prior period primarily
due to the additional properties operated in 1997.
General and administrative expenses incurred for the Company's corporate
activities increased $138,000 or 27.2% in 1997 over 1996 primarily as a result
of higher salary and benefits expenses. During the three months ended March 31,
1997, and the years ended December 31, 1996, and 1995, the Company awarded
restricted common shares to certain of its executive officers and Trust Managers
in lieu of compensation and to certain of its executive officers and employees
as bonuses as more fully described in the notes to financial statements included
elsewhere in this 10-Q and the 1996 Annual Report. As a result, the Company did
not recognize compensation expense which would have been recognized in 1997 and
1996 if such annual base salaries and bonuses had been paid without
restrictions. However, the Company amortized a portion of the restricted share
awards as compensation and bonus
11
<PAGE>
expense over the three-year periods from the dates of the respective grants to
the extent such amortization is allocable to operations. Accordingly, during the
three months ended March 31, 1997 and 1996, the Company recognized compensation
expense for amortization of restricted common share awards of $62,000 and
$27,000, respectively.
Interest expense increased $657,000 or 43.9% in the first three months of 1997
compared with the first three months of 1996 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 $118.8 million in the first quarter of 1997 compared
with an average non-development debt balance of approximately $81.8 million in
the first quarter of 1996. The Company's average interest rate for non-
development debt under the Credit Facility was 7.113% in the three months ended
March 31, 1997, compared with an average interest rate of 7.063% on non-
development debt under the Credit Facility in the same period of 1996. Interest
related to amortization of deferred financing costs increased $35,000 or 52.2%
in 1997 from 1996 as a result of loan fees paid in the first quarter of 1997.
The $513,000 or 21.0% increase in depreciation and amortization expenses in 1997
over 1996 relates primarily to the five development properties added to the
Company's operating portfolio in 1996, a 1997 property acquisition, and an
increase in depreciable assets after capital improvement programs at certain of
the other properties.
The Company invested approximately $25.7 million, in total, in the real estate
portfolio during the three months ended March 31, 1997. Approximately $18.3
million was invested in the development and construction of six multifamily
residential apartment projects. The Company acquired an existing multifamily
residential property for approximately $6.9 million in the three months ended
March 31, 1997. Additionally, the Company invested approximately $526,000 in
total for capital improvements and purchases of furniture, fixtures, and
equipment in the first three months of 1997. The components of these capital
investments were (a) $367,000 invested in improvements to the multifamily
residential properties held in the Company's real estate portfolio for one year
or longer, (b) $4,000 invested in capital improvements to a property acquired in
the first quarter of 1997, (c) $87,000 invested in tenant improvements and
capital expenditures for the Company's retail and industrial properties, and (d)
$68,000 invested in furniture, fixtures, and equipment for the corporate
offices. More detailed information regarding the capital investments made in the
three months ended March 31, 1997, is set forth in the following table.
Summary of capital improvements for the three months ended March 31, 1997:
<TABLE>
<CAPTION>
Stabilized Properties (1) Acquisition Property (2) Totals
-------------------------- ------------------------ ------
Amount Per Unit Amount Per Unit Amount Per Unit
------ --------- ------ -------- ------ --------
(in thousands) (in thousands) (in thousands)
Multifamily residential properties
- -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Recurring expenditures
Floor coverings $118 $22.34 $1 $ 6.37 $119 $21.88
Appliances 13 2.48 - - 13 2.41
Exterior repairs 122 22.95 - - 122 22.29
Furniture, fixtures, & equipment 61 11.57 2 10.60 63 11.55
Other 7 1.37 1 5.22 8 1.48
-----------------------------------------------------------------------------
Subtotal - recurring 321 60.71 4 22.19 325 59.61
Revenue generating 2 .30 - - 2 .29
Major renovations 45 8.50 - - 45 8.25
-----------------------------------------------------------------------------
Total multifamily residential $368 $69.51 $4 $22.19 372 $68.15
====================================================== =============
Industrial and retail properties (3) Per Sq. Ft
- -------------------------------------- ----------
Tenant improvements 56 $ 0.11
Commissions 21 .04
Other 9 .02
-----------------------
Total industrial and retail 86 $ 0.17
=============
Corporate purchases of furniture, fixtures, and equipment 68
-----------
Total $ 526
===========
</TABLE>
- ------------------------------------------------------------------
12
<PAGE>
Notes:
- ------
(1) Multifamily residential properties owned for one year or more as of
January 1, 1997, and multifamily development projects completed and stabilized
subsequent to the Company's initial public offering (December 31, 1993). Per
unit computations are based on the average monthly stabilized and completed
apartment units during the period. The average number of completed units during
the three months ended March 31, 1997, was 5,299 units.
(2) Multifamily residential property acquired and owned by the Company for
less than one year as of January 1, 1997. Per unit computations are based on 158
units.
(3) 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 three-month period ended March 31, 1996, the Company invested
approximately $18.6 million in total for the acquisition of and improvements to
its real estate portfolio. Included in this total were: (a) the acquisition of
three multifamily residential development sites for approximately $5.6 million
in the aggregate, (b) approximately $12.4 million of incremental costs on
development projects, and (c) $540,000 incurred for capital improvements and
furnishings, fixtures, and equipment at the Company's operating properties and
corporate offices.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of cash flow, totaling approximately $31.7 million
during the three months ended March 31, 1997, were approximately $28.5 million
provided from borrowings, approximately $2.1 million proceeds from sales of
common shares through employee and shareholder plans, $774,000 from the sales of
condominiums units in two of the Company's properties, and a $331,000 reduction
in an escrow account for payment of property taxes. The Company's primary uses
of cash, totaling approximately $31.9 million during the same three-month
period, were approximately $18.3 million for construction costs on six
development projects, approximately $6.9 million for the acquisition of a
multifamily residential property, approximately $5.2 million for payment of
dividends, $797,000 for operations, $526,000 for capital improvements and
purchases of furniture, fixtures, and equipment, and $221,000 for principal
payments on notes payable.
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 May 12, 1997, the Company had a total of $215.0 million in outstanding
debt, consisting of $144.4 million under the Credit Facility (of which $77.5
million was drawn for development in progress), $59.7 million in fixed rate debt
with an average maturity of 4.9 years, $7.7 million in development debt from
Wells Fargo Realty Advisors in connection with Addison Circle I, and $3.2
million in short-term, unsecured debt drawn for development costs to date on two
redevelopment projects: The Rice Hotel located in Houston, Texas, and The
American Beauty Mill located in Dallas, Texas. Prior to its extended maturity
date of August 2, 1997, the Company intends to retire the balance then
outstanding on the short term unsecured credit line with an incremental draw on
the Credit Facility, or from other financing sources.
The Company's long-term financing includes of a $50 million loan from Nationwide
Life Insurance Company which bears interest at a fixed rate of 7.45% and matures
in December 2002, with a 25-year principal amortization schedule. The loan is
collateralized by nine properties. As of May 12, 1997, approximately $49.0 was
outstanding under the Nationwide loan.
The Company currently has under construction a total of 1,986 units in seven
multifamily residential communities, and has acquired one additional site upon
which it intends to construct approximately 346 multifamily residential units.
These eight developments are expected to cost approximately $180 million, of
which $114 million is anticipated to be funded from the Credit Facility and
internally generated cash flow. The remaining $66 million is anticipated to be
funded from third party debt and other sources. Full use of the $170 million
available under the Credit Facility is subject to the Company's ability to
provide sufficient collateral to the lenders during the term of the loan. Such
collateral is currently available to fully utilize the committed loan amount.
Additionally, collateral to secure $12 million of excess borrowing capacity
exists under the loan-to-value requirements of the Credit Facility. Added
collateral value will
13
<PAGE>
become available during 1997 as existing developments in progress are completed
and become operational. This should allow the Company to meet the funding
requirements currently contemplated under the Credit Facility to complete its
planned developments in progress by either (a) increasing the facility's current
commitment, subject to agreement with the existing lenders, or (b) releasing
certain collateralized assets from the facility for use in securing additional
third party debt. The Company and its lenders are negotiating to effect an
increase in amount and extension of maturity in the Credit Facility prior to its
maturity date of December 31, 1997.
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, unsecured public debt, cash flow from operations, and other
sources of debt or equity to fund acquisitions and development costs, or to
refinance the Credit Facility before maturity if the Company and its lenders are
unable to reach agreement on an extension of the maturity date. With respect to
its development properties, the Company intends to fund interest payments
through additional draws on the various loan sources until such properties are
completed and begin to provide sufficient income to satisfy debt service
requirements and operating expenses.
The Company believes that the presentation of funds from operations, as
hereinafter defined, when considered with the financial data determined in
accordance with generally accepted accounting principles, provides a useful
measure of the Company's performance. However, funds from operations 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 calculates funds
from operations in accordance with the definition approved by the Board of
Governors of the National Association of Real Estate Investment Trusts (NAREIT)
in March 1995 which defines funds from operations as net income (loss), computed
in accordance with generally accepted accounting principles, excluding gains and
losses from debt restructuring and sales of property, plus real estate related
depreciation and amortization (excluding amortization of financing costs), and
after adjustments for unconsolidated partnerships and joint ventures.
The Company believes that presentation of funds from operations provides
investors with an industry accepted measurement which helps facilitate
understanding of the Company's ability to meet required dividend payments,
capital expenditures, and principal payments on its debt. Although the Company
calculates funds from operations in accordance with the NAREIT approved
definition, there can be no assurance that the Company's basis for computing
funds from operations is comparable with that of other real estate investment
trusts. Computed in accordance with the definition described above, funds from
operations for the three months ended March 31, 1997, and 1996 was approximately
$6.3 million and $5.1 million, respectively. The Company's net cash flows from
its operating, investing, and financing activities were ($328,000) and
approximately ($1.3 million) for the three months ended March 31, 1997, and
1996, respectively. More information with respect to the Company's funds from
operations is shown in the table below (in thousands). Refer also to the
Company's financial statements included elsewhere in this Form 10-Q.
<TABLE>
<CAPTION>
<S> <C> <C>
Three months ended March 31,
1997 1996
-------------------------------
Net income $ 3,332 $ 2,696
Depreciation of real estate assets 2,884 2,361
Amortization of tenant allowances and
capitalized leasing costs 39 49
-------- --------
Funds from operations $ 6,255 $ 5,106
======== ========
Net cash used in operating activities $ (797) $ (3,075)
Net cash used in investing activities (24,639) (18,316)
Net cash provided by financing
activities 25,108 20,045
-------- --------
Net decrease in cash and cash
equivalents $ (328) $ (1,346)
======== ========
</TABLE>
14
<PAGE>
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 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; and
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.
15
<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 Company's Credit Facility, 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 herein) and net taxable gains realized by the Company 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
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NO. DESCRIPTION
---------- ------------
3.1 --Amended and Restated Declaration of Trust of the Company (9)
3.2 --Bylaws of the Company (9)
4.1 --Form of certificate representing common shares of beneficial
interest, par value $.01 per share, of the Company (3)
10.1 --Form of Registration Rights Agreement among the Company and the
persons named therein (1)
10.4+ --Employment Agreement between the Company and Richard L. Bloch
(15)
10.5+* --Amendment No. 1 to Employment Agreement between the Company and
Richard L. Bloch
10.6+ --Employment Agreement between the Company and Robert L. Shaw (15)
10.7+* --Amendment No. 1 to Employment Agreement between the Company and
Robert L. Shaw
10.8+ --Employment Agreement between the Company and Will Cureton (15)
10.9+* --Amendment No. 1 to Employment Agreement between the Company and
Will Cureton
10.10+ --Employment Agreement between the Company and Richard R. Reupke
(15)
10.11+ --Employment Agreement between the Company and Thomas L. Wilkes
(15)
10.12+ --Employment Agreement between the Company and J. Michael Lewis
(15)
10.13+ --Employment Agreement between the Company and Arthur E. Lomenick
(15)
10.14+ --Employment Agreement between the Company and James F. Duffy (15)
10.15 --Form of Indemnification and Trust Managers (1) Agreement by and
between the Company and its executive officers and Trust
Managers (1)
16
<PAGE>
10.16 --Fourth Amendment to Systems Corporation Master Lease Agreement
pertaining to Windhaven between the Company and Village (6)
Electronic Data
10.17 --Lease Agreement between the Company and Madison Office Building,
Inc. pertaining to the Madison Office Building (2)
10.18* --Fifth and Sixth Amendments to Lease Agreement between the
Company and Utah State Retirement Investment Fund.
10.19+ --Columbus Realty Trust 1993 Share Bonus Plan (4)
10.20+ --Columbus Realty Trust 1993 Share Option Plan (4)
10.21 --Second Amended and NA, Bank United of agent for the Banks (8)
Restated Loan Agreement Texas FSB, Comerica between the Company,
Bank Bank-Texas and Bank One, Texas, One, Texas NA, as
10.22 --First Modification to the Company, Bank One, Advisors Funding,
and Bank One, Second Amended and Restated Texas, NA, Bank United
Incorporated, Texas Texas NA, as Loan Agreement between the of
Texas FSB, Wells Commerce Bank NA, agent for the Fargo Realty
Comerica Bank - Texas, Banks (14)
10.23 --Second Modification to the Company, Bank One, Advisors Funding,
and Bank One, the Second Amended and Texas, NA, Bank United
Incorporated, Texas Texas NA, as Restated Loan Agreement of
Texas FSB, Wells Commerce Bank NA, agent for the between Fargo
Realty Comerica Bank - Texas, Banks (14)
10.24 --$50,000,000 Mortgage Note Company (14) between the Company and
Nationwide Life Insurance
10.25 --Form of Assignment of Limited Partnership Interests (1)
10.26 --Form of Waiver and Contribution Agreement (3)
10.27+ --Columbus Realty Trust 401(k) Plan and Trust (5)
10.28 --Columbus Realty Trust Amended and Restated Dividend Reinvestment
and Share Purchase Plan (7)
10.29+ --Columbus Realty Trust Share Bonus Plan (No. 2) (8)
10.30+ --Columbus Realty Trust Employee Stock Purchase Plan (10)
10.31+ --Columbus Realty Trust Long Term Management Incentive Plan (11)
10.32+ --Columbus Realty Trust Long Term Employee Incentive Plan (12)
10.33 --Form of Long Term Equivalent Award Shaw and Will Cureton.
Management Incentive Plan Agreement by and (15) Performance -
Based Stock between the Company and and Dividend Richard Bloch,
Robert L.
10.34 --Third Modification to the Second Amended and Restated Texas
N.A., Bank United Loan Agreement between Company, Bank One, the
of Texas FSB, Wells Fargo Realty Advisors Funding Bank One,
Texas N.A., Incorporated, Texas Commerce Bank N.A., Comerica
Bank-Texas, and as agent for the Banks. (15)
10.35* --$15,000,000 Promissory Note and Extension Agreement between The
Company and Bank One, Texas, N.A.
11 --Statement regarding computation of net income per common share
(13)
27.1* --Financial Data Schedule
- ----------------------------------
+ Management Contract or Compensatory Plan or Arrangement
* Filed herewith
(1) Previously filed with Amendment No. 1 to the Company's Registration
Statement on Form S-11 (Registration No. 33-70218) filed with the
November 26, 1993 and incorporated herein by Securities and Exchange
Commission on reference.
(2) Previously filed with Amendment No. 2 to the Company's Registration
Statement on Form S-11 (Registration No. 33-70218) filed with the
December 13, 1993 and incorporated herein by Securities and Exchange
Commission on reference.
(3) Previously filed with Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-11 (Registration No. 33-70218)
Commission on December 23, 1993 and incorporated filed with the
Securities and Exchange herein by reference.
17
<PAGE>
(4) Previously filed with the Company's Registration Statement on Form S-11
(Registration No. 33- 80544) filed with the Securities and Exchange
Commission on June 21, 1994 and incorporated herein by reference.
(5) Previously filed with Amendment No. 1 to the Company's Registration
Statement on Form S-11 (Registration No. 33-80544) filed with the
Securities and Exchange Commission on June 30, 1994 and incorporated
herein by reference.
(6) Previously filed with Amendment No. 1 to the Company's Registration
Statement on Form S-3 (Registration No. 33-88672) filed with the
Securities and Exchange Commission on January 30, 1995 and incorporated
herein by reference.
(7) Previously filed with Post Effective Amendment to the Company's
Registration Statement on Form S-3 (Registration No. 33-90146) filed
with the Securities Exchange Commission on and September 28, 1995 and
incorporated herein by reference.
(8) Previously filed with the Company's Registration Statement on Form S-8
(Registration No. 33-90492) filed with the Securities and Exchange
Commission on March 21, 1995 and incorporated herein by reference.
(9) Previously filed with the Company's Registration Statement on Form S-3
(Registration No. 333-09775) filed with the Securities and Exchange
Commission on August 8, 1996 and incorporated herein by reference.
(10) Previously filed with the Company's Registration Statement on Post
Effective Amendment No. 1 to Form S-8 (Registration No. 33-94798) on
filed with the Securities and Exchange Commission by August 28, 1995
and incorporated herein reference.
(11) Previously filed with the Company's Registration Statement on Form S-8
(Registration No. 333-02276) filed with the Securities and Exchange
Commission on March 12, 1996 and incorporated herein by reference.
(12) Previously filed with the Company's Registration Statement on Form S-8
(Registration No. 333-22307) filed with the Securities and Exchange
Commission on February 25, 1997 and incorporated herein by reference.
(13) Incorporated by reference to Note 4 of Item 1 - Financial Statements of
this Form 10-Q.
(14) Previously filed with the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
(15) Previously filed with The Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
(b) Reports on Form 8-K - None.
18
<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
- ------------------------------------ ------------------------
Robert L. Shaw Date
Chief Executive Officer and Trust Manager
(Principal Executive Officer)
/s/ Richard R. Reupke
- ----------------------------------- ------------------------
Richard R. Reupke Date
Chief Financial Officer
(Principal Financial and Accounting
Officer)
- ----------------------------
19
<PAGE>
EXHIBIT 10.5
AMENDMENT NO.1
TO
EMPLOYMENT AGREEMENT
--------------------
THIS AMENDMENT NO.1 (the "Amendment") to the Employment Agreement dated as
of November 15,1996 (the "Employment Agreement"), is made and entered into
effective as of the 1st day of January, 1997, by and between Richard L. Bloch
(the "Executive") and Columbus Realty Trust, a Texas real estate investment
trust (the "Company").
RECITALS:
WHEREAS, the Executive and the Company have entered into the Employment
Agreement; and
WHEREAS, the Executive and the Company wish to amend the Employment
Agreement as set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration,
the adequacy and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
A. Capitalized terms used herein and not defined herein shall have the
respective meanings assigned to such terms in the Employment Agreement.
B. Paragraph 3(a) of the Employment Agreement is hereby amended to
include the following paragraph at the end of such Section:
"Notwithstanding the foregoing, for the period from January 1,1997
through December 31, 1997, Executive hereby waives his right to receive his
annual base salary. Executive shall receive, however, on the effective date
of this Amendment or as soon thereafter as is practicable, Six thousand
nine hundred and ninety (6,990) restricted Common Shares of the Company
issued pursuant to the Company's Long-Term Employee Incentive Plan (the
"Plan"). Such Common Shares shall have such vesting provisions and be
subject to such other terms and conditions as the committee which
administers the Plan shall deem appropriate and as shall be set forth in
the operative award agreement evidencing the foregoing award of restricted
Common Shares.
C. Except as expressly modified herein, the terms and provisions of the
Employment Agreement shall remain in full force and effect and such Employment
Agreement, as amended by this Amendment is hereby ratified and confirmed in all
respects.
<PAGE>
D. This Amendment 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.
IN WITNESS WHEREOF, the undersigned have executed this Amendment on March
___, 1997, effective as of the date first above written.
THE COMPANY
------------
Columbus Realty Trust,
a Texas real estate investment trust
By:/s/ Will Cureton
--------------------------------------------
Will Cureton
Chief Operating Officer
EXECUTIVE
---------
/s/ Richard L. Bloch
----------------------------------------
Richard L. Bloch
-2-
<PAGE>
EXHIBIT 10.7
AMENDMENT NO.1
TO
EMPLOYMENT AGREEMENT
--------------------
THIS AMENDMENT NO.1 (the "Amendment") to the Employment Agreement dated as
of November 15, 1996 (the "Employment Agreement"), is made and entered into
effective as of the 1st day of January, 1997, by and between Robert L. Shaw (the
"Executive") and Columbus Realty Trust, a Texas real estate investment trust
(the "Company").
RECITALS:
WHEREAS, the Executive and the Company have entered into the Employment
Agreement; and
WHEREAS, the Executive and the Company wish to amend the Employment
Agreement as set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration,
the adequacy and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
A. Capitalized terms used herein and not defined herein shall have the
respective meanings assigned to such terms in the Employment Agreement.
B. Paragraph 3(a) of the Employment Agreement is hereby amended to
include the following paragraph at the end of such Section:
"Notwithstanding the foregoing, for the period from January 1,1997
through December 31,1997, Executive hereby waives his right to receive his
annual base salary. Executive shall receive, however, on the effective date
of this Amendment or as soon thereafter as is practicable, Eighteen
thousand three hundred and fifteen (18,315) restricted Common Shares of the
Company issued pursuant to the Company's Long-Term Employee Incentive Plan
(the "Plan"). Such Common Shares shall have such vesting provisions and be
subject to such other terms and conditions as the committee which
administers the Plan shall deem appropriate and as shall be set forth in
the operative award agreement evidencing the foregoing award of restricted
Common Shares.
C. Except as expressly modified herein, the terms and provisions of the
Employment Agreement shall remain in full force and effect and such Employment
Agreement, as amended by this Amendment is hereby ratified and confirmed in all
respects.
<PAGE>
D. This Amendment 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.
IN WITNESS WHEREOF, the undersigned have executed this Amendment on March
___, 1997, effective as of the date first above written.
THE COMPANY
------------
Columbus Realty Trust,
a Texas real estate investment trust
By: /s/ Will Cureton
--------------------------------
Will Cureton, Chief Operating Officer
EXECUTIVE
---------
/s/ Robert L. Shaw
----------------------------------
Robert L. Shaw
-2-
<PAGE>
EXHIBIT 10.9
AMENDMENT NO.1
TO
EMPLOYMENT AGREEMENT
--------------------
THIS AMENDMENT NO. 1 (the "Amendment") to the Employment Agreement dated as
of November 15, 1996 (the "Employment Agreement"), is made and entered into
effective as of the 1st day of January, 1997, by and between Will Cureton (the
"Executive") and Columbus Realty Trust, a Texas real estate investment trust
(the "Company").
RECITALS:
WHEREAS, the Executive and the Company have entered into the Employment
Agreement; and
WHEREAS, the Executive and the Company wish to amend the Employment
Agreement as set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration,
the adequacy and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
A. Capitalized terms used herein and not defined herein shall have the
respective meanings assigned to such terms in the Employment Agreement.
B. Paragraph 3(a) of the Employment Agreement is hereby amended to include
the following paragraph at the end of such Section:
"Notwithstanding the foregoing, for the period from January 1, 1997
through December 31,1997, Executive hereby waives his right to receive his
annual base salary. Executive shall receive, however, on the effective date
of this Amendment or as soon thereafter as is practicable, Eighteen
thousand three hundred and fifteen (18,315) restricted Common Shares of the
Company issued pursuant to the Company's Long-Term Employee Incentive Plan
(the "Plan"). Such Common Shares shall have such vesting provisions and be
subject to such other terms and conditions as the committee which
administers the Plan shall deem appropriate and as shall be set forth in
the operative award agreement evidencing the foregoing award of restricted
Common Shares.
C. Except as expressly modified herein, the terms and provisions of the
Employment Agreement shall remain in full force and effect and such Employment
Agreement, as amended by this Amendment is hereby ratified and confirmed in all
respects.
<PAGE>
D. This Amendment 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.
IN WITNESS WHEREOF, the undersigned have executed this Amendment on March
___, 1997, effective as of the date first above written.
THE COMPANY
-----------
Columbus Realty Trust,
a Texas real estate investment trust
By: /s/ ROBERT L. SHAW
-------------------------------------------
Robert L. Shaw,
Chief Executive Officer
EXECUTIVE
---------
/s/ WILL CURETON
---------------------------------------------
Will Cureton
-2-
<PAGE>
EXHIBIT 10.18
FIFTH AMENDMENT TO LEASE AGREEMENT
The Fifth Amendment (the "Amendment") is entered into as of March 1, 1997
(the "Effective Date"), between UTAH STATE RETIREMENT INVESTMENT FUND, an
independent agency of the State of Utah, as successor in interest to Madison
Office Building, Inc., a Texas corporation ("Landlord") and. COLUMBUS REALTY
TRUST ("Tenant"), for the purpose of amending the Lease Agreement between
Landlord and Tenant, dated January 1, 1994 (the "Original Lease") and amended
February 1, 1994, May 16, 1994, August 25, 1994 and October 14, 1995. The
Original Lease, as amended, is herein called the "Lease". Unless otherwise
specified, all capitalized terms used herein shall have the meanings assigned to
them in the Original Lease.
RECITALS
Tenant is currently leasing 11,363 rentable square feet (RSF) of space in
the Building under the Lease. Tenant desires to expand the Premises and to
extend the term of the Lease. Tenant and Landlord have agreed to such expansion
and extension on the terms and conditions contained herein.
AGREEMENTS
For valuable consideration, whose receipt and sufficiency are acknowledged,
Landlord and Tenant agree as follows:
1. Term. The Term as defined in Article I of the Fourth Amendment to Lease
----
Agreement is extended from December 31, 1996, until 5:00 p.m. Dallas, Texas time
on December 31, 1998, on the terms and conditions of the Lease, as modified
hereby.
2. Premises. Landlord and Tenant agree that effective April 1, 1997, the
--------
Premises shall consist of the Suites totalling 13,603 rentable square feet
outlined in Exhibit "A" attached hereto.
3. Base Rental. Effective January 1, 1997, the monthly Base Rental shall
-----------
be as follows:
January 1, 1997 - March 31, 1997 $l5,150.67/month
April 1, 1997 - December 31, 1998 $23,878.96/month
The Base Rent set forth in this Section 3 is a negotiated figure and shall
govern whether or not the actual gross rentable square footage of the Premises
is the same as set forth in Section 2 hereof or changes pursuant to the
standards set in the definition of Net Rentable Area. Tenant shall have no right
to withhold, deduct or offset any amount of the monthly Base Rent or any other
sum due hereunder even if the actual gross rentable square footage of the
premises is less than that set forth in Section 2 hereof or changes pursuant to
the standards set forth in the definition of Net Rentable Area.
4. Expense Stop. Landlord and Tenant agree that effective April 1, 1997
------------
the Base Operating Expense Rate set forth in Paragraph 1.T of the Primary Lease
shall change from the actual operating expenses for calendar year 1994 to $6.55
per rentable square foot.
5. Parking. Effective April 1,1997, Landlord agrees to provide Tenant
-------
with free parking in the attached garage on a first come, first served basis at
a ratio of 1:333 RSF leased. Tenant may lease eleven (11) reserved parking
spaces for a monthly fee of $75.00 per space.
6. Notice to Landlord. Tenant acknowledges that the address of Landlord
------------------
is as follows:
Utah State Retirement Investment Fund
c/o Robert J. Axley
7557 Rambler Rd., Suite 932
Dallas, Texas 75231
-1-
<PAGE>
Rental payments should be made to the following:
------------------------------------------------
Madison Office Building
c/o Cottonwood Management Services
15851 Dallas Parkway, Suite 950
Dallas, TX 75248
7. Ratification. Tenant hereby ratifies and confirms its obligations
------------
under the Lease, and represents and warrants to Landlord that it has no defenses
thereto.
8. Binding Effect: Governing Law. Except as modified hereby, the Lease
-----------------------------
shall remain in full force and effect and this Amendment shall be binding upon
Landlord and Tenant and their respective successors and assigns. This Amendment
shall be governed by Texas law.
Executed as of the date first written above.
LANDLORD: UTAH STATE RETIREMENT INVESTMENT FUND,
an independent agency of the State of Utah
By: Wallace Realty Advisors, Ltd.,
a Texas limited partnership
By: Wallace Realty Advisors I, Inc.,
a Texas corporation, its general partner
By:
-----------------------------------------
Robert J. Axley
Chairman
By:
-----------------------------------------
John L. West
President
TENANT: COLUMBUS REALTY TRUST,
a Texas corporation
By:
------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-2-
<PAGE>
SIXTH AMENDMENT TO LEASE AGREEMENT
The Sixth Amendment (the "Amendment") is entered into as of April 1, 1997
(the "Effective Date"), between UTAH STATE RETIREMENT INVESTMENT FUND, an
independent agency of the State of Utah, ("Landlord") and. COLUMBUS REALTY TRUST
("Tenant"), for the purpose of amending the Lease Agreement between Landlord and
Tenant, dated January 1, 1994 (the "Original Lease") and amended February 1,
1994, May 16, 1994, August 25, 1994, October 14, 1995 and March 1, 1997. The
Original Lease, as amended, is herein called the "Lease". Unless otherwise
specified, all capitalized terms used herein shall have the meanings assigned to
them in the Original Lease.
RECITALS
Tenant is currently leasing 13,604 rentable square feet (RSF) of space in
the Building under the Lease. Tenant desires to expand the Premises. Tenant and
Landlord have agreed to such expansion on the terms and conditions contained
herein.
AGREEMENTS
For valuable consideration, whose receipt and sufficiency are acknowledged,
Landlord and Tenant agree as follows:
1. Premises. Landlord and Tenant agree that effective April 1, 1997, the
--------
Premises shall be expanded from 13,604 rentable square feet by 2,884 rentable
square feet in Suite 765 for a new total of 16.488 rentable square feet.
------
2. Base Rental. Landlord and Tenant agree effective April 1, 1997 the
-----------
Base Rental shall increase from $23,878.96 per month by $5,047 per month for a
new total of $28,925.96 per month.
The Base Rent set forth in this Section 2 is a negotiated figure and shall
govern whether or not the actual gross rentable square footage of the Premises
is the same as set forth in Section 1 hereof or changes pursuant to the
standards set in the definition of Net Rentable Area. Tenant shall have no right
to withhold, deduct or offset any amount of the monthly Base Rent or any other
sum due hereunder even if the actual gross rentable square footage of the
premises is less than that set forth in Section 1 hereof or changes pursuant to
the standards set forth in the definition of Net Rentable Area.
3. Landlord agrees to reimburse Tenant for Leasehold Improvements made
-----------------------------------------------------------------------
within the Premises not to exceed $5.000.00. Landlord will reimburse Tenant
- ---------------------------------------------------------------------------
within thirty (30) days following Landlord's receipt of paid invoices.
- ----------------------------------------------------------------------
4. Ratification. Tenant hereby ratifies and confirms its obligations
------------
under the Lease, and represents and warrants to Landlord that it has no defenses
thereto.
5. Binding Effect: Governing Law. Except as modified hereby, the Lease
-----------------------------
shall remain in full force and effect and this Amendment shall be binding upon
Landlord and Tenant and their respective successors and assigns. This Amendment
shall be governed by Texas law.
Executed as of the date first written above.
LANDLORD: UTAH STATE RETIREMENT INVESTMENT FUND,
an independent agency of the State of Utah
By: Wallace Realty Advisors, Ltd., a Texas limited
partnership
By: Wallace Realty Advisors I, Inc.,
a Texas corporation, its general partner
By: /s/ Robert J. Axley, Chairman
------------------------------------------
Robert J. Axley, Chairman
By: /s/ John L. West
------------------------------------------
John L. West, President
TENANT: COLUMBUS REALTY TRUST, A Texas corporation
By: /s/ Will Cureton
-----------------------------------------------
Name:
---------------------------------------------
Title: C.O.O.
---------------------------------------------
-1-
<PAGE>
EXHIBIT 10.35
PROMISSORY NOTE
---------------
$15,000,000 February 26, 1997
1. FOR VALUE RECEIVED, the undersigned ("Borrower"), promises to pay to
--------
the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Bank") at its offices in
----
Dallas County, Texas, at 1717 Main Street, Dallas, Texas 75201, the principal
amount of $l5,000,000 (the "Total Principal Amount"), or such lesser amount
----------------------
which is outstanding from time to time under this Promissory Note (this "Note"),
----
together with interest on such portion of the Total Principal Amount which has
been advanced to Borrower from the date advanced until paid at a fluctuating
rate per annum which shall be equal to the lesser of (a) the Maximum Rate (as
hereinafter defined) or (b) a rate (the "Contract Rate"), equal to the Adjusted
-------------
Eurodollar Rate (as defined in Schedule 1 of the Second Amended and Restated
----------
Loan Agreement) plus 2.05% per annum. All terms and conditions relating to the
Adjusted Eurodollar Rate as provided in the Second Amended and Restated Loan
Agreement shall be applicable to this Note. Each change in the rate to be
charged on this Note will be effective without notice to Borrower on +he
effective date of each change in the Maximum Rate or the Adjusted Eurodollar
Rate, as the case may be; however, if the Contract Rate ever exceeds the Maximum
Rate, then any subsequent reduction in the Adjusted Eurodollar Rate shall not
reduce the rate of interest on this Note below the Maximum Rate until the total
amount of interest accrued on this Note equals the amount of interest which
would have accrued on this Note if the Contract Rate had at all times been in
effect.
2. The term "Maximum Rate," as used herein, means the maximum rate of
------------
interest which, under applicable law, may then be charged on this Note at the
time in question. If the maximum rate of interest changes after the date hereof
and this Note provides for a fluctuating rate of interest, the Maximum Rate
shall be automatically increased or decreased, as the case may be, without
notice to Borrower from time to time as of the effective date of each change in
such maximum rate. If applicable law ceases to provide for a maximum rate of
interest, the Maximum Rate will equal eighteen percent (18%) per annum.
3. The principal of, and all accrued but unpaid interest on, this Note
shall be due as follows:
(a) Interest shall be due monthly as it accrues, commencing on March
31, 1997, and continuing on the first day of each successive month thereafter
until the Maturity Date (defined below).
(b) The outstanding principal balance of this Note, together with all
accrued but unpaid interest, shall be due on the earlier of (i) May 1, 1997, or
(ii) the date when Borrower closes permanent financing or refinancing in an
aggregate amount of $30,000,000 or more which is used, in whole or in part, for
any Eligible Project (the "Maturity Date").
-------------
If any interest is not paid by the fifth day after it is due, Bank
may, at its option, add such accrued interest to the principal of this Note.
Notwithstanding anything herein to the contrary,
1
<PAGE>
upon a Default (as hereinafter defined) or at maturity, whether by acceleration
or otherwise, all principal of this Note shall, at the option of Bank, bear
interest at the Maximum Rate until paid.
4. This Note evidences obligations and indebtedness from time to time
owing by Borrower to Bank under the Letter Loan Agreement of even date herewith
between Borrower and Bank (the "Loan Agreement"). This Note, the Loan Agreement,
--------------
and all other documents, now or hereafter, evidencing, securing, governing,
guaranteeing or pertaining to this Note are hereinafter collectively referred to
as the "Loan Documents." The holder of this Note is entitled to the benefits and
--------------
security provided in the Loan Documents.
This Note may be prepaid in whole or in part without premium or fee. All
regularly scheduled payments of the indebtedness evidenced by this Note and by
any of the other Loan Documents shall be applied first to any accrued but unpaid
interest then due and payable hereunder or thereunder and then to the principal
amount then due and payable. All non-regularly scheduled payments shall be
applied to such indebtedness in such order and manner as the holder of this Note
may from time to time determine in its sole discretion. All payments and
prepayments of principal of or interest on this Note shall be made in lawful
money of the United States of America, at the address of Bank indicated above,
or such other place as the holder of this Note shall designate in writing to
Borrower. If any payment of principal of or interest on this Note shall become
due on a day which is not a Business Day (as hereinafter defined), such payment
shall be made on the next succeeding Business Day and any such extension of time
shall be included in computing interest in connection with such payment. As used
herein, the term "Business Day" shall mean any day other than a day on which
------------
commercial banks in the State of Texas are authorized to be closed. The books
and records of Bank shall be prima facie evidence of all outstanding principal
----- -----
of and accrued and unpaid interest on this Note.
5. Borrower agrees that no advances under this Note shall be used for
personal, family or household purposes, and that all advances hereunder shall be
used solely for business, commercial, investment or other similar purposes.
6. Upon the occurrence of (a) a default hereunder or under any of the Loan
Documents and the continuance thereof for a period five days after Bank has
delivered to Borrower written notice thereof, (b) a default under the Second
Amended and Restated Loan Agreement dated February 3, 1995, between Borrower,
Bank, Bank United of Texas of FSB, Wells Fargo Realty Advisors Funding,
Incorporated, Texas Commerce Bank National Association, and Comerica Bank-Texas,
as subsequently amended and modified (the "Second Amended and Restated Loan
--------------------------------
Agreement"), or under any other indebtedness now or hereafter owing to Bank by
- ---------
Borrower, in each case after the expiration of any applicable cure periods, or
(c) the commencement or filing by or on behalf of Borrower of any voluntary or
involuntary dissolution, winding up, total or partial liquidation, sale of all
or a substantial portion of assets, marshaling of assets or liabilities,
receivership, conservatorship, assignment for the benefit of creditors,
insolvency, bankruptcy, reorganization, arrangement, composition, adjustment or
readjustment of Borrower (whether or not pursuant to bankruptcy or insolvency
laws) or any other proceedings involving Borrower or any of its assets under
laws for the protection of debtors (each, a "Default"), the holder of this Note
-------
may without further notice or demand, (i) declare the outstanding principal
balance of and accrued, unpaid interest on this Note at once due, (il) pursue
any and all other rights, remedies and recourses available to the holder hereof,
including but not limited to any such rights, remedies or recourses
2
<PAGE>
available to the holder hereof, including but not limited to any such rights,
remedies or recourses under the Loan Documents, at law or in equity, or (iii)
pursue any combination of the foregoing.
The failure to exercise the option to accelerate the maturity of this
Note or any other right, remedy or recourse available to the holder hereof upon
the occurrence of a Default shall not waive the right of the holder of this Note
to exercise it at that time or at any subsequent time with respect to such
Default or any other Default. The rights, remedies and recourses of the holder
hereof, as provided in this Note and in any of the other Loan Documents, are
cumulative and concurrent and may be pursued separately, successively or
together as often as occasion therefor arises, at the sole discretion of the
holder hereof. The acceptance by the holder hereof of any payment under this
Note which is less than the payment in full of all amounts due when such payment
is made shall not (iv) constitute a waiver of or impair, reduce, release or
extinguish any right, remedy or recourse of the holder hereof, or nullify any
prior exercise of any such right, remedy or recourse, or (v) impair, reduce,
release or extinguish the obligations of any party liable under any of the Loan
Documents as originally provided herein or therein.
7. This Note and all of the other Loan Documents are intended to be
performed in accordance with, and only to the extent permitted by, all
applicable usury laws. If any provision hereof or any other Loan Documents or
the application thereof to any person or circumstance shall, for any reason and
to any extent, be invalid or unenforceable, neither the application of such
provision to any other person or circumstance nor the remainder of the
instrument in which such provision is contained shall be affected thereby and
shall be enforced to the greatest extent permitted by law. It is expressly
stipulated and agreed to be the intent of the holder hereof to at all times
comply with the usury and other applicable laws now or hereafter governing the
interest payable on the indebtedness evidenced by this Note. If the applicable
law is ever revised, repealed or judicially interpreted so as to render usurious
any amount called for under the Loan Documents, or contracted for, charged,
taken, reserved or received with respect to the indebtedness evidenced by this
Note, or if Bank's exercise of the option to accelerate the maturity of this
Note, or if any prepayment by Borrower results in Borrower having paid any
interest in excess of that permitted by law, then it is the express intent of
Borrower and Bank that all excess amounts theretofore collected by Bank shall be
credited on the principal balance of this Note (or, if this Note and all other
indebtedness arising under or pursuant to the other Loan Documents have been
paid in full, refunded to Borrower), and the provisions of this Note and the
other Loan Documents shall immediately be deemed reformed and the amounts
thereafter collectable hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the then applicable
law, but so as to permit the recovery of the fullest amount otherwise called for
hereunder or thereunder that may be lawfully collected. All sums paid, or agreed
to be paid, by Borrower for the use, forbearance, detention, taking, charging,
receiving or reserving of the indebtedness of Borrower to Bank under this Note
or arising under or pursuant to the other Loan Documents shall, to the maximum
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
for so long as such indebtedness is outstanding. To the extent federal law
permits Bank to contract for, charge or receive a greater amount of interest,
Bank will rely on federal law instead of TEX. REV. CIV. STAT. ANN. art. 5069-
l.04, as amended, for the purpose of determining the Maximum Rate. Additionally,
to the maximum extent permitted by applicable law now or hereafter
3
<PAGE>
in effect, Bank may, 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 by law, to Borrower as provided by
applicable law now or hereafter in effect. Notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents, it is not the
intention of Bank 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.
8. In no event shall TEX. REV. CIV. STAT. ANN. art. 5069 Ch. 15 (which
regulates certain revolving loan accounts and revolving tri-party accounts)
apply to this Note. To the extent that TEX. REV. CIV. STAT. ANN. art. 5069-1.04,
as amended, is applicable to this Note, the indicated rate ceiling" specified in
such article is the applicable ceiling; however, if any applicable law permits
greater interest, the law permitting the greatest interest shall apply.
9. If this Note is placed in the hands of an attorney for collection, or
is collected in whole or in part by suit or through probate, bankruptcy or other
legal proceedings of any kind, Borrower shall pay, in addition to all other sums
payable hereunder, all costs and expenses of collection, including but not
limited to reasonable attorneys' fees.
10. Except otherwise provided in the Loan Documents, Borrower and any and
all endorsers and guarantors of this Note severally waive presentment for
payment, notice of nonpayment, protest, demand, notice of protest, notice of
intent to accelerate, notice of acceleration and dishonor, diligence in
enforcement and indulgences of every kind and without further notice hereby
agree to renewals, extensions, exchanges or releases of collateral, taking of
additional collateral, indulgences or partial payments, either before or after
maturity.
11. THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT AS SUCH LAWS ARE
PREEMPTED BY APPLICABLE FEDERAL LAWS.
Executed as of the date first written above.
COLUMBUS REALTY TRUST,
a Texas real estate investment trust
By: /s/ J. Michael Lewis
----------------------------------------
J. Michael Lewis
Senior Vice President and Treasurer
4
<PAGE>
LOAN EXTENSION AGREEMENT
------------------------
This Loan Extension Agreement (this "Agreement") is executed between BANK
---------
ONE, TEXAS, NATIONAL ASSOCIATION ("Lender") and COLUMBUS REALTY TRUST
------
("Borrower").
--------
RECITALS:
A. Lender and Borrower entered into a $15,000,000 Letter Loan Agreement
(the "Loan Agreement") dated February 26, 1997 relating to a $15,000,000 loan to
--------------
Borrower (the "Loan"), as evidenced by the $15,000,000 Promissory. Note dated
----
February 26, 1997, executed by Borrower payable to the order of Lender (the
"Note").
- ------
B. Borrower and Lender desire to extend the maturity of the Loan.
AGREEMENTS:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Lender and Borrower agree that the
Maturity Date (as defined in the Note) is hereby extended to August 2, 1997, on
which date all the outstanding principal balance of the Note, together with all
accrued but unpaid interest, shall be due. Contemporaneously with the execution
hereof and as a condition to the effectiveness of this Agreement, Borrower shall
pay to Lender an extension fee in the amount of $10,000. Borrower shall pay all
costs incurred by Lender in connection herewith and in negotiating, preparing,
and enforcing the Loan Documents (as defined in the Loan Agreement).
The undersigned have executed this Agreement as of May 1, 1997.
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By /s/ Dale W. Renner
----------------------------------------------
Dale W. Renner, Vice President
1
<PAGE>
AGRERD AND ACCEPTED May 1, 1997:
COLUMBUS REALTY TRUST,
a Texas real estate investment trust
By: J. Michael Lewis
------------------------------------
J. Michael Lewis
Senior Vice President and Treasurer
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM FORM 10-Q
FOR MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRIETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,536
<SECURITIES> 0
<RECEIVABLES> 1,209
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,745
<PP&E> 432,065
<DEPRECIATION> 43,389
<TOTAL-ASSETS> 403,818
<CURRENT-LIABILITIES> 11,671
<BONDS> 0
0
0
<COMMON> 132
<OTHER-SE> 181,842
<TOTAL-LIABILITY-AND-EQUITY> 403,818
<SALES> 12,861
<TOTAL-REVENUES> 13,488
<CGS> 0
<TOTAL-COSTS> 8,187
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,254
<INCOME-PRETAX> 3,332
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,332
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,332
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
